A 40-day strike at Hongkong International Terminals that slowed but didn’t halt traffic at the world’s third-largest port has ended after dock workers agreed to a compromise 9.8% pay increase—along with the newly guaranteed right to take a bathroom break.
Another day, another round of cringe-worthy economic data out of Europe. The Markit Economics composite purchasing managers’ index (PMI) of 46.9 showed that economic output in the euro area continued to decline in April (pdf), though at a slightly slower pace than it did in March (anything less than 50 signals contraction). German business activity declined for the first time in five months.
It’s the Berkshire Hathaway shareholder meeting this weekend, a sort of folksy celebration of the investing prowess of the conglomerate’s iconic chief executive. As part of the proceedings, Warren Buffett will be fielding questions both from shareholders and members of the press. Here’s what we think they should be asking:
The European Central Bank cut interest rates from 0.75% to 0.50% yesterday, a long overdue attempt to loosen credit in a recession that has seized peripheral Europe and is seeping into the euro zone’s strongest economies. Although big companies may be able to borrow money, small- and medium-sized ones can’t—and these businesses are the drivers behind economic growth.
Like it or not, really small US banks are a thing of the past. New regulations, advantages to diversity and economy of scale, and increasingly high overhead costs are slowly eliminating the smallest banks in the United States. Although bank profits in 2012 were the highest they’ve been since 2006, most of those profits were accrued at the countries largest banks and not at the smallest ones. Bill Haraf and Mike Phleger, both advisors from Promontory Financial Group, explain (pdf):
Although the European Central Bank (ECB) announced a welcome—and perhaps overdue—rate cut today, analysts aren’t happy. Not happy at all.
Update 9:30 AM ET: The European Central Bank cut its target rate from 0.75% to 0.5%, in a long-demanded and widely expected move. That’s the first interest rate cut since July 2012. The central bank also surprisingly cut the marginal lending rate–the rate at which banks can borrow overnight funds–from 1.5% to 1%. Banks rarely use the marginal lending facility, even at low rates, except in times of emergency.
Journalists (including ourselves) and banks have been quick to gush about the ways in which cellphones and other mobile devices are bringing banking to those with little access to bank accounts, particularly in Africa. But the newest innovation in banking may be a whole lot simpler—and a lot more surprising.
High hopes ride on the European Central Bank, which is set to make its latest monetary policy announcement on Thursday. Despite the fact that poor economic data continues to flow out of the euro zone, investors seem convinced that the euro area is a fleeting concern, and certain that the ECB will cut rates from their current level of 0.75% in order to relax credit.
Clay Calvert, the director of cybersecurity for MetroStar Systems, has a strategy for banking online designed to increase its security. MetroStar is a consultancy that has worked with government agencies—from the Federal Reserve Bank of Philadelphia to the FBI—to create systems that protect highly sensitive data from cyber attacks. Calvert banks online, but with one caveat: he only does it on his phone or tablet.
What’s often missed about alternative currencies like bitcoin is that they weren’t just made for buying and selling things. Nor are they simply tools for financial speculation. Bitcoin is also a payment system, allowing anyone to transfer money anonymously, immediately, irreversibly—and, if you like, illicitly.
Frank Bisignano, JP Morgan’s co-chief operating officer and an employee of the firm since 2005, becomes the latest in a string of key departures from the investment bank, which has been under fire since a trading loss of more than $6 billion last year. The circumstances on the face seem straightforward enough; Bisignano was offered the top job at First Data Corp., a global payment processing company which posted revenue over $10 billion last year, something Bisignano called an “unbelievable opportunity.”
Analysts increasingly expect the European Central Bank (ECB) to cut its target interest rate when it meets later this week, particularly if inflation data continues to show prices falling across the euro area. Not only is Greece in its sixth year of recession, but even almighty Germany is beginning to show signs of weakness. Time to call in the big, inflation-tempting guns and cut rates!
Thought we were done talking about Cyprus? Think again. The FT reports that the Cypriot government will keep many capital controls (paywall)—meant to prevent money from flooding out of the Cypriot financial system—in place until September at the earliest, to prevent a run on deposits. This is hardly a sign that Cyprus is on the road to recovery.
Today, Italian president Giorgio Napolitano named Enrico Letta as the country’s newest prime minister, tasking him with uniting a divided parliament. After elections in late February left the country without a stable government, Napolitano decided earlier this week to stay on as Italy’s president rather than to further fan the flames of political uncertainty by retiring, as he had previously planned to do. In return, Italy’s political leaders apparently promised to work with Napolitano’s choice of premier to form a coalition government.
When stock markets momentarily plunged today, following an erroneous tweet by the Associated Press reporting explosions at the White House, someone somewhere could have made a whole lot of money.
Stock markets momentarily plunged after a tweet sent by the Twitter account of the Associated Press, which was apparently hacked, erroneously reported that explosions at the White House had injured US president Barack Obama.
Iran and the United Arab Emirates love Turkish gold. In fact, those two countries received so much Turkish gold last year that the trade affected their export data, according to Standard Chartered research.
In an unprecedented move, 87-year-old Italian president Giorgio Napolitano agreed not to retire, and instead won re-election as Italy’s president for another seven-year term. Italy has been without a government since parliamentary elections in February, and with Napolitano’s current term ending in May, analysts feared that the country would be without a president too—a role that is important in brokering political disputes.
Fitch just slashed the United Kingdom’s long-term credit rating to AA+, becoming the second of the big three rating agencies to strip the country of its prized AAA-rating. Moody’s cut the UK’s rating in February, but Standard & Poor’s announced that the UK was still AAA in its books earlier this month.
Massachusetts governor Deval Patrick’s decision to shut down the city of Boston and nearby suburbs—the tenth-largest metropolitan area of the US and the ninth-largest by GDP—may be scary, but Americans are growing ever-familiar with lockdown mode.
Censorship or investor war? That’s a subject of debate in Russia, after a fund managed by a Russian businessman with close ties to the Kremlin acquired 48% of the country’s largest social-networking site, V Kontakte (“in touch”), which is similar to Facebook.
In a press conference, the US Federal Bureau of Investigation produced still images of two “persons of interest” wanted in connection with the Boston Marathon bombings. It also has a video of one of the suspects.
The numbers: Morgan Stanley’s earnings beat analyst expectations, with earnings per share of $0.61 versus $0.56 that analysts expected. Net income totaled $958 million, compared to a loss of $119 million in the first quarter of last year.
