Weekly Overview: ECB sells yet another corporate bond after spotting an error; US Banks report Q1 results; Facebook moves user data from Ireland to the US

ECB sells yet another bond after spotting an error

The European Central Bank (ECB) via Bundesbank has sold yet another bond issued by Telefonica Deutschland a year after it bought it. The bond which was due to mature in 2021 breached an ECB rule that they should not hold bonds that pay a step-up coupon (one that could go up in value if certain conditions are met – in this case if the company was acquired).

This was the fourth time they found an error in 2018 and sold a corporate bond. When this happened a couple of weeks ago, we reported it here and asked how many more errors will the ECB find? Well, it would appear traders have taken notice. The ECB sold this bond just after a sharp fall in the price of the bond, implying traders know what all bonds the ECB has bought in error and is likely to sell.

US Banks report Q1 earnings

In brief: With great volatility come great results. Like we covered here, volatility is exactly what banks wanted. Investment banking divisions have done great, retail banking not so great. US tax cuts have helped significantly too in Q1 2018.

Here are the key metrics from the results,

Morgan Stanley

Net revenue Q1 2018 compared to Q1 2017: +14%
Earnings Q1 2018 compared to Q1 2017: +40%
Pre-tax profit margin in Q1 2018: 31% (Q1 2017: 29%)
Effective tax rate in Q1 2018: 20.9% (Q1 2017: 29.0%)

Goldman Sachs

Net revenue Q1 2018 compared to Q1 2017: +25%
Earnings Q1 2018 compared to Q1 2017: +27%
Pre-tax profit margin in Q1 2018: 34% (Q1 2017: 31.6%)
Effective tax rate in Q1 2018: 17.2% (Q1 2017: 11.2%)

Citigroup

Net revenue Q1 2018 compared to Q1 2017: +3%
Earnings Q1 2018 compared to Q1 2017: +13%
Pre-tax profit margin in Q1 2018: 32.3% (Q1 2017: 32.6%)
Effective tax rate in Q1 2018: 24% (Q1 2017: 31%)

Wells Fargo

Net revenue Q1 2018 compared to Q1 2017: -2%
Earnings Q1 2018 compared to Q1 2017: +5%
Pre-tax profit margin in Q1 2018: 35.1% (Q1 2017: 38%)
Effective tax rate in Q1 2018: 18.3% (Q1 2017: 27.1%)

J P Morgan

Net revenue Q1 2018 compared to Q1 2017: +12%
Earnings Q1 2018 compared to Q1 2017: +35%
Pre-tax profit margin in Q1 2018: 38.2% (Q1 2017: 33.4%)
Effective tax rate in Q1 2018: 18.3% (Q1 2017: 22.7%)

Bank of America

Net revenue Q1 2018 compared to Q1 2017: +4%
Earnings Q1 2018 compared to Q1 2017: +30%
Pre-tax profit margin in Q1 2018: 36.4% (Q1 2017: 32.9%)
Effective tax rate in Q1 2018: 17.9% (Q1 2017: 27.4%)

Facebook moves user data from Ireland to the US

Facebook had until now dodged the question over what the company will do when it comes to the new privacy requirements around the EU GDPR laws and whether it will extend them to non-Europeans.

We now know what Facebook has done. It has moved all user data from its data centre in Clonee, County Meath, Ireland to the US. That would let users be governed by slightly different data privacy laws. We reported here that Facebook’s spend on lobbying in the US increased 5500% since 2009 and they spent most lobbying on changes to data privacy.

For those wondering what GDPR is, the General Data Protection Regulation (GDPR) regulation is for data protection and privacy for all individuals within the European Union with the aim to give control back to residents over their personal data. The law goes live from May 25, 2018.

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