Monday Digest #82
Weekly summary of finance, economic and tech news. Vision from Russia. With 💜
The Bank of England. Results of the meeting:
The base rate has been reduced to 0.25% per annum — the rate was the lowest since the founding of the Bank of England. The repurchase program of government bonds was expanded to £ 60 billion (16%) — its former limit (£ 375 billion) was chosen in 2013. The Regulator was reducing the rate during seven years ago till March 2009. It was a reaction to the global financial crisis of 2008.
The Regulator explained it to 0.8% expectations of deceleration of economic growth in 2017 and made it clear that the measures taken are not final: incentives may be extended in the autumn when Brexit impact estimations will become more accurate.
Reserve Bank of Australia cut the interest rate in response to the record low level of inflation and a slowdown in the labor market. The rate was reduced by a quarter of 0.25% to 1.5% for the first time since May 2016.
Later on last week, the regulator issued a statement that the rate may decrease further.
Several OPEC members are in favor of discussing the possibility of restricting oil production in September.
#macro #finance
The number of jobs in the US increased by 255 thousand in July 2016. At the same time, the unemployment rate remained unchanged at 4.9%. Before the publication of these data, none of the experts did expect the US Federal Reserve will raise the interest rates in September, but now the opinions are divided equally — 50/50.
US trade deficit in June increased by 8.7% to a ten-month high of $ 44.5 billion. The increase was affected by the growth of prices for oil and imports of consumer goods such as mobile phones and medicines.
The British increasingly prefer to keep their money in cash, not in bank accounts. After Brexit, almost everybody expects for stimulus control, including a further reduction of interest rates and even the introduction of negative interest rates. In such circumstances, keeping money in banks is impractical, so people take their savings.
Rosstat: Russia recorded the first weekly deflation over the past five years. From 25 July to 1 August consumer prices decreased by 0.1%. In order to avoid further speculative pressure on the Russian currency, the Central Bank sharply reduced the amount of liquidity. In the seven-day repo auction, through which banks obtain liquidity, the Central Bank on Tuesday reduced the amount of funds issued by almost 40 times to 10 billion rubles. This is low from autumn 2011. According to experts, the demand for loans from the Central Bank exists and it is quite high — at least 10 times more than the Central Bank suggested yesterday.
Now Central Bank of India will accept applications for banking licenses always, not once in 10 years. So it wants to increase competition in the industry.
On Monday, the company STOXX Ltd. — The index of Deutsche Burse — reported a change in the composition Stoxx Europe 50 — the leading European index of “blue chips”. Deutsche Bank and Credit Suisse have been excluded from the stock indicator. Changes will take effect today, August 8, 2016 The reason: as we know, the two financial giants are experiencing serious financial problems, and Deutsche Bank considered as the main threat to the financial stability of the entire global system. The existence of shares of the two largest banks in Europe in the index leaves him under pressure. Therefore it was decided to review its composition.
* The graph shows the dynamics of the shares of companies that have been excluded from the index and those have been added to it.
1.4282 trillion rubles. — The amount of credit institutions’ correspondent accounts in the Bank of Russia at the beginning of July 2016. This is 41% more than a year ago. One of the reasons — loss of banks’ confidence to each other, that’s why they prefer to keep their money in the Central Bank.
Major US companies report the fourth consecutive quarterly decline in profits and disappointing sales. This fact and the reduction in companies’ investments cause for concern about the US economy, despite the growth in consumer spending.
#commodities
Bloomberg: — Mexico fixed a record revenue from hedging transactions in the oil market of $ 6,4 billion in 2015. Mexico is the world leader in terms of hedging in the oil market. Usually, it fixes oil prices for the next year in the summer by a series of transactions with banks, among which Goldman Sachs Group Inc. and JPMorgan Chase & Co were previously. Oil hedge used by the government from 1990 for the period from December 1 to November 30 of the following year. For the current year, Mexico hedged 212 million barrels of oil at $ 49 per barrel using put options that give the right to sell oil at a predetermined price but does not oblige countries to do so.
The chief economist for Mexico, Bank of America: “The government has done a good job by buying the options because they help to smooth the transition to the new budget reality based on low oil prices.”
S & P has reported the onset of default on foreign debts in the Republic of Congo affected by the fall in oil prices. In 2014, revenues from oil exports accounted for 70% of all revenues of the Congo. Financial Times: Congo defaulted due to non-payment of a debt of $ 478 million. Money should be transferred on June 30 but the government did not pay its debts until the end of July.
Reuters: OPEC oil output this month is going to update the historical maximum. According to the study, supply from OPEC rose to 33.41 million barrels per day in July compared to 33.31 million barrels per day in June. Also, oil production growth was recorded in Russia.
#interesting
Bloomberg: Bitcoin/USD has fallen by 5.3% during trades in Tokyo on August 3 and increased its two-day drop to 13% after hackers hacked one of the world largest cryptocurrency Bitfinex exchanges.
Amazon has outperformed Exxon (the largest private oil company in the world) and became the 4th by market capitalization company in the US. Last week Amazon has risen from seventh place in terms of capitalization due to the positive quarterly reports and the data of the sales growth of Fire tablets.Now all the top 4 companies in the USA belong to the high-tech sector:
- Apple Inc. ($ 565.9 billion)
- Alphabet Inc. (Maternal Google holding $ 549.6 billion)
- Microsoft Corp. ($ 440 billion)
- Amazon ($ 364 billion)
Chinese Uber is uniting with his main competitor Didi in the company which will worth $ 35 billion. The US company will receive 5.89% of the capital of Didi meaning “17.7% of economic interest” in a joint project. In exchange for this share, Didi will receive “Uber brand, business, and the company’s data.”
#opinion [Press]
Kommersant, Aleksandr Butmanov: “Deflation goes hand in hand with severe depression”.
