Weekly Overview: Deutsche Bank; Italy; US Unemployment

Deutsche Bank

Apparently, the new CEO of Deutsche Bank is “sick and tired of bad news”. Here are some recent events,

April 8: Christian Sewing is appointed new CEO of Deutsche Bank.
April 15: The European Central Bank (ECB) asks Deutsche Bank to estimate the cost of winding down its investment bank.
Thursday, May 31: The Financial Times reported that Deutsche Bank’s US subsidiary was added to the Federal Deposit Insurance Corporation’s list of “problem banks,” or those with weaknesses that threaten their financial survival.
Thursday, May 31: Deutsche Bank shares hit an all-time low.
Friday, June 1: Standard & Poor’s cut Deutsche Bank’s credit rating from A- to BBB+. The ratings agency also questioned whether Deutsche Bank’s new CEO Christian Sewing would be able to return the bank to profit.
Friday, June 1: Deutsche Bank is going to face new cartel and criminal charges in Australia.
Friday, June 1: Deutsche Bank shares hit new all-time low.

Continue reading “Weekly Overview: Deutsche Bank; Italy; US Unemployment”

Healthcare could soon be the largest expenditure of households in the U.S.

Healthcare could be the largest personal consumption expenditure of households in the U.S. within months exceeding spend on Housing and utilities.

Households in the U.S. are likely to spend some $2.45 trillion this year on healthcare. The spending on healthcare is quickly catching up with the largest expenditure item – Housing and utilities. Here are charts,

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Weekly Overview: The Baltic Dry Index is up 48% over the past month; Argentina seeks IMF bailout; UK House Prices; Brazil 10-year bond tops 10%; Coal prices soaring

Baltic Dry Index

The Baltic Dry Index is a trade indicator that measures shipping prices of major raw materials and is often seen as a global growth indicator.

Over the past month, it has zoomed 48%. It is up 45% over the past year and is up 8% since the start of the year. This despite weaker US, UK and France Q1 2018 GDP growth. The Baltic Dry index generally falls in the first quarter on back of lower trading activity due to the Chinese New Year but this time it hadn’t recovered until very recently.

Here is a chart of the index over the past month,

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The curious case of low U.S. money velocity

From the Federal Reserve’s definition of Money Velocity and Money Supply,

Money Velocity

The velocity of money is the frequency at which one unit of currency is used to purchase domestically- produced goods and services within a given time period. In other words, it is the number of times one dollar is spent to buy goods and services per unit of time. If the velocity of money is increasing, then more transactions are occurring between individuals in an economy. Continue reading “The curious case of low U.S. money velocity”

Weekly Overview: UK interest rate hike expectations; Argentina hikes interest rate to 40%; LIBOR OIS; US Money Supply growth accelerating again; Bank of Canada and Bank of England speeches

UK interest rate hike expectations

The Monetary Policy Committee of the Bank of England meets on Thursday, May 10 to decide the direction of interest rates.

Following a weak UK Q1 2018 GDP growth of only 0.1%, the slowest since Q4 2012 (read here) and inflation falling from 2.7% in February to 2.5% in March (against a Bank of England target of 2%), the market is now pricing in a 17% of a rate rise in May. The market had factored in a 100% chance of a hike just a few weeks ago.

UK 10-year bond yields fell 5bps during the week. The 10-year bond now yields 1.4% (up 0.32% over the past year)

Continue reading “Weekly Overview: UK interest rate hike expectations; Argentina hikes interest rate to 40%; LIBOR OIS; US Money Supply growth accelerating again; Bank of Canada and Bank of England speeches”