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☆ Banks dress up for a business-casual recession
▼ + stars: | 2023-01-13 | by ( John Foley | ) www.reuters.com time to read: +4 min

NEW YORK, Jan 13 (Reuters Breakingviews) - A recession is coming for U.S. banks, but it’s wearing comfortable shoes. Bank of America is writing off 1.7% of its card loans, on an annualized basis, compared with an average of 2.7% since 2013. America’s collective credit card limit is growing at a 9% annual clip, according to the New York Federal Reserve, the fastest since 2008. Citi has put aside enough to cover 7.6% of its credit card loans going up in smoke - more than triple the current level. It said 1.7% of credit card loans had been written off, on an annualized basis, compared with a 2.7% average rate since 2013.

☆ Tim Cook’s pay re-enters earth’s atmosphere
▼ + stars: | 2023-01-13 | by ( ) www.reuters.com time to read: +2 min

His pay has been out of this world, but then so has the iPhone maker’s share price performance. Nonetheless Apple, its investors and its board have agreed Cook’s pay should orbit closer to Earth in 2023. On Friday, Apple said Cook’s targeted pay will fall to $49 million. Apple says it will target his pay between 80th and 90th percentile among peers in future years. A bigger improvement is making Cook’s pay less of a giveaway.

☆ Banks’ profit picnic will attract ant invasion
▼ + stars: | 2023-01-12 | by ( John Foley | ) www.reuters.com time to read: +7 min

JPMorgan (JPM.N), Bank of America (BAC.N), Wells Fargo (WFC.N) and Citigroup (C.N) all report fourth-quarter earnings on Friday. The good news is that for the year ahead, rising interest rates twinned with growing loan books should more than make up for sliding investment banking fees. The CFPB squeezed a $3.7 billion settlement from serial miscreant Wells Fargo in December for wrongly levying charges on customers. CONTEXT NEWSJPMorgan, Bank of America, Citigroup and Wells Fargo will report fourth-quarter 2022 earnings on Jan. 13. The CFPB said that Wells Fargo will also allocate over $2 billion in redress to customers.

☆ Southwest and Twitter are on a similar flight path
▼ + stars: | 2023-01-11 | by ( Robert Cyran | ) www.reuters.com time to read: +3 min

NEW YORK, Jan 11 (Reuters Breakingviews) - Twitter has slashed about three-quarters of employees since Elon Musk completed his buyout. But it’s also possible Twitter is building up what software developers call “technical debt” – where today’s underinvestment becomes tomorrow’s liability. The holiday meltdown at Southwest Airlines (LUV.N) is an example of how technical debt can build up even in non-technology companies. Twitter doesn’t have airplanes to keep aloft, but it too could be building up a kind of technical debt. The company had about $6 billion of operating costs in the four quarters before it went private, compared with $5 billion of revenue, which suggest there was fat to cut.

NEW YORK, Jan 10 (Reuters Breakingviews) - Microsoft (MSFT.O) is mulling a heads-I-win, tails-I-also win, AI deal. A mooted $10 billion investment, reported by Semafor, in the maker of the popular ChatGPT, could reshape Microsoft’s software business. And the investment is a pittance compared to Microsoft’s market capitalization of $1.7 trillion and $107 billion of cash on hand. Even then, Microsoft’s investment may not be wasted. The proposed investment means OpenAI can grow its business faster, which also benefits Azure, a part of Microsoft that investors value highly.

☆ Wells Fargo labors under $100 bln sin discount
▼ + stars: | 2023-01-10 | by ( John Foley | ) www.reuters.com time to read: +6 min

Wells Fargo shows what happens when misbehavior becomes a feature rather than a bug. TRAGIC NUMBERSerial mischief has cost Wells Fargo investors in three ways. Second, there are the expenses Wells Fargo has incurred from its internal deep clean. A little more than seven years ago, Wells Fargo, Bank of America (BAC.N) and JPMorgan (JPM.N) were roughly the same size in terms of market cap. At $161 billion, Wells Fargo now sits $110 billion short of Bank of America and a whopping $243 billion below JPMorgan.

☆ Peloton will pay a $19 million penalty for failing to act fast enough over treadmill incidents that included the death of a 6-year-old child
▼ + stars: | 2023-01-07 | by ( Jyoti Mann | ) www.businessinsider.com time to read: +3 min

Peloton will pay a $19 million penalty to settle charges by the Consumer Product Safety Commission. The CPSC said Peloton failed to immediately report injuries and stop distributing treadmills. Peloton received 150 incident reports, including the death of a child trapped under a treadmill. It also said Peloton violated the Consumer Product Safety Act by distributing 38 recalled treadmills after the product was jointly recalled by the CPSC and the company in May 2021. It added: "We are pleased to have reached this settlement agreement with the U.S. Consumer Product Safety Commission (CPSC) and look forward to working cooperatively with the CPSC to further enhance Member safety.

It’s the start of a class known as high-intensity interval training, a combination of treadmill and weight-lifting, at the boutique fitness studio Barry’s. The brothers and Rondeau, who now serves as Planet Fitness’ chief executive, hit upon a concept. Planet Fitness’ tag, “judgement free zone” is true to form. Part of the appeal is its $10 a month basic membership fee – which hasn’t changed – that Planet Fitness primarily collects through electronic funds transfers. Still, with solid and regular profits and a reasonable amount of debt, Planet Fitness has staying power, even if shareholders lose their shirts while its valuation comes in line.

☆ Smaller raises aid inflation fight
▼ + stars: | 2023-01-06 | by ( ) www.reuters.com time to read: +2 min

WASHINGTON, Jan 6 (Reuters Breakingviews) - All things being equal, strong job growth is a bad sign in the fight against inflation. While employment is rising, wage growth is not. The Fed’s rate-setting committee had forecast an unemployment rate of 3.7% by the end of 2022. San Francisco Fed President Mary Daly said in November that wage growth of 3.5% to 4% would be consistent with the Fed’s 2% inflation target. As long as Americans’ raises stay modest, the country can shed its inflation problem without shedding jobs.

☆ Crypto bank run vindicates watchdogs’ vigilance
▼ + stars: | 2023-01-05 | by ( John Foley | ) www.reuters.com time to read: +4 min

What happened to Silvergate was a classic – and these days rare – bank run. Deposits from crypto firms fell to $3.8 billion in December from $11.9 billion in September. Silvergate hadn’t locked up customers’ deposits in loans, instead stacking its $15 billion balance sheet with government bonds and other easy-to-sell assets. But bank regulators too have kept crypto on a tight leash: They warned on Tuesday that they are closely watching banks with crypto-focused business models. If a go-to crypto bank can lose most of its deposits without failing or spreading chaos to other institutions, it suggests the firewall between digital and traditional finance is holding up.

☆ Peloton fined $19 million for unsafe treadmills
▼ + stars: | 2023-01-05 | by ( Alexandra Peers | ) edition.cnn.com time to read: +2 min

New York CNN —Peloton has agreed to pay a $19 million fine for failing to promptly report treadmill hazards and for distributing recalled treadmills, the Consumer Products Safety Commission said Thursday. The fine resolves charges that the company had “knowingly failed to immediately report” to the US regulator defects with its Tread+ treadmill, it said in a statement. The civil penalty also settles charges that Peloton distributed recalled treadmills in violation of the Consumer Product Safety Act. In May, then CEO John Foley said Peloton “made a mistake in our initial response to the CPSC’s request. Peloton had received reports of “entrapment” by its Tread+ treadmills as early as 2018, it said.

☆ The race to make electric cars cheaper is making electric cars more expensive
▼ + stars: | 2023-01-01 | by ( Alexa St. John | ) www.businessinsider.com time to read: +4 min

Electric cars aren't exactly the most affordable right now. The world of batteries influences your EV's price tagAutomakers are pouring more than $515 billion into all-electric lineups over the next several years. Mercedes is only making newly launched cars electric starting in 2025. Scaling up will inherently make electric cars less expensive over time. But, driving costs back down, he says: "The lithium prices will trigger more supply to enter the market."

☆ Boardrooms will rediscover the value of gray hair
▼ + stars: | 2022-12-29 | by ( John Foley | ) www.reuters.com time to read: +3 min

To firms keen to avoid repeating past mistakes, the graying of the Western workforce may not be a bad thing in 2023. The share of European over-55s in jobs grew to 20% in 2019, from 12% in 2014, according to official data. The typical incoming CEO is 55, a decade older than the average in 2005, according to Crist Kolder Associates. Money markets are pricing in U.S. rates of 5% by the summer. Financial markets will always love the next new thing, but for the time being, gray is good.

☆ Global finance unknowns are more “who” than “what”
▼ + stars: | 2022-12-27 | by ( Aimee Donnellan | ) www.reuters.com time to read: +4 min

LONDON, Dec 27 (Reuters Breakingviews) - After British pension funds narrowly dodged catastrophe in 2022, regulators are hunting enthusiastically for hidden risks in the non-bank financial industry. The key to stopping a crisis isn’t locating the landmines – it’s working out who’s most likely to stand on them. As a result, regulators everywhere, including the G20’s financial stability task force, are on high alert looking for hidden leverage. Emerging market funds are one place to start the search. Before the pandemic, banks, hedge funds and other investors were happy to back corporate takeovers with high levels of debt.

☆ Kentucky revokes license and orders children removed from foster care facility where 7-year-old boy died
▼ + stars: | 2022-12-22 | by ( Safia Samee Ali | Safia Samee Ali Is A Reporter For Nbc News Digital | Based In Chicago. | ) www.nbcnews.com time to read: +4 min

An NBC News investigation into the facility that revealed allegations of wrongdoing at that site and its sister campus several years before Ja’Ceon died. "We have also worked cooperatively with all investigations, including those by local law enforcement.”The monthslong investigation by the Cabinet’s Office of Inspector General and Department for Community Based Services cited several “failures” at the Brooklawn facility. The state, which stopped placing children in foster care at Brooklawn following Ja’Ceon’s death, directed Uspiritus to safely transition any children who remain at Brooklawn to alternate placements within 15 days. “This outcome is necessary, but nothing we do will bring back Ja’Ceon Terry.”Kentucky mother Autumn Janeway wrote accusations against the foster care facility on the back window of her car. Michael Swensen for NBC NewsFriedlander's office is also investigating allegations by the mother of a developmentally delayed child that the child was choked, scratched and taunted at the Brooklawn facility.

☆ Missing jobs mystery puts Fed on back foot
▼ + stars: | 2022-12-22 | by ( Ben Winck | ) www.reuters.com time to read: +3 min

A study published by the Philadelphia Federal Reserve last week said 10,500 new jobs were added in the second quarter of 2022. Yet the national statistics bureau had previously reported a total over the same period of more than 1 million. Those seemingly missing jobs put the Federal Reserve, which uses the job market as a signal in its fight against inflation, on the back foot. The BLS jobs report includes job counts from both a household survey and a survey of businesses’ payrolls. The federal government releases monthly jobs data, but revises its numbers once a year as part of a process known as benchmarking, which factors in more comprehensive data only released quarterly.

LONDON/NEW YORK, Dec 22 (Reuters Breakingviews) - Private credit has grown into a $1.3 trillion mountain over the last decade. When banks stopped lending to private equity firms in 2022, private credit firms stayed active. High-yield loans issued by banks and then sold on to investors in the market fell 80% in the first nine months of 2022, according to Fitch Ratings. Specialist private lenders, however, had some $390 billion of spare capital to spend, according to Preqin data. Investors who funded private lenders may be in for a shock.

☆ Climate change will become a CEO dealbreaker
▼ + stars: | 2022-12-22 | by ( John Foley | ) www.reuters.com time to read: +6 min

While StarMark Financial again delivered record earnings in 2022, my own views on climate change are no longer compatible with my duties as the CEO of a global financial firm. A Pew Research survey last year showed that respondents in nine countries including the United Kingdom, France and Spain ranked climate change as the most pressing of five threats to the country. While we believe that supporting measures that advance climate change mitigation creates value, it is clear that some large public-sector clients disagree. At the same time, some Democrat-led local governments have threatened to take business away from us if we take too mild a stance on climate risk. I believe we face the risk that climate change will prove catastrophic within our lifetimes.

☆ Barbarians at the check-in desk
▼ + stars: | 2022-12-22 | by ( ) www.reuters.com time to read: +2 min

While Vivion’s equity is unlisted, Muddy Waters was betting against its debt. The price of bonds due in 2024 fell to 72% of face value after Block’s report, according to Refinitiv data. Vivion contends that Muddy Waters has overestimated the number of vacant properties, and that its shareholders have put cash in the company in recent years, not taken it out. If so, though, Vivion could always step up its purchase of its own debt at the current low prices. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

☆ Stocks steady, yields rise as rate risks cloud 2023 outlook
▼ + stars: | 2022-12-19 | by ( Danilo Masoni | ) www.reuters.com time to read: +5 min

By 1152 GMT, the index was broadly unchanged after a heavy week for rate increases on Friday sent it to its lowest point since Nov. 10. Long-term borrowing costs rose for a fourth straight session and short-dated yields remained not far off their highest levels in more than a decade. It wreaked havoc even on rate markets," said Carlo Franchini, head of institutional clients at Banca Ifigest in Milan. Ten-year Treasury yields rose 4 basis points (bps) to 3.522%. Gold inched 0.1% higher at $1,764 an ounce, as a softer dollar countered pressure from expectations of higher U.S. rates.

Summary Global stocks index up 0.1%Japan could tweak inflation target - sourceshttp://tmsnrt.rs/2yaDPgnhttp://tmsnrt.rs/2egbfVhMILAN, Dec 19 (Reuters) - World stocks inched higher on Monday but stayed near 6-week lows as investors started the year's last full trading week still mindful of interest rate hike risks to the economy in 2023. By 0902 GMT, the index rose 0.1% after a heavy week for interest rate increases on Friday sent it to its lowest point since Nov. 10. It wreaked havoc even on rate markets," said Carlo Franchini, head of institutional clients at Banca Ifigest in Milan. "Except for the BOJ and perhaps the Bank of England, there's little confidence in the other central banks. Japan's Nikkei (.N225) fell 1.05% to a six-week low and the yen rose 0.5% to 135.9 per dollar.

☆ Key things to watch out for in the Jan. 6 report beyond Trump
▼ + stars: | 2022-12-18 | by ( Michael Conway | Michael Conway Was Counsel For The House Judiciary Committee In The Impeachment Inquiry Of President Richard Nixon In In That Role | He Assisted In Drafting The Committee'S Final Report To The House In Support Of The Three Articles Of Impeachment Adopted The Committee. Conway Is A Graduate Of Yale Law School | ) www.nbcnews.com time to read: +8 min

The expected recommendation that former President Donald Trump be prosecuted would be a political thunderbolt. For initial news reporting, journalists will gravitate to it rather than the report itself, and so will the general public. The expected recommendation that former President Donald Trump be prosecuted would be a political thunderbolt. On Thursday, House Democrats introduced legislation to bar Trump from holding federal office in the future. For prosecutors who have subpoenaed key witnesses to testify to a federal grand jury, this would create a unique advantage.

☆ Who will be Wall Street’s un-American idol?
▼ + stars: | 2022-12-16 | by ( John Foley | ) www.reuters.com time to read: +8 min

Europeans have been losing the battle against Wall Street’s cozy club for a decade. Deutsche Bank has done the former. BNP has made smaller steps, buying Bank of America’s prime broking business in 2008, then Deutsche Bank’s in 2019. Even with the best intentions, European banks must contend with their own regulators, which affects their ability to take risk elsewhere. JPMorgan, Bank of America, Citigroup, Morgan Stanley and Goldman Sachs together took the top five slots for debt capital markets and merger advisory, as they also did in 2021.

☆ Satellites can fly higher in private
▼ + stars: | 2022-12-16 | by ( ) www.reuters.com time to read: +2 min

NEW YORK, Dec 16 (Reuters Breakingviews) - Volatile revenue makes for a volatile share price. That’s one explanation for private equity firms Advent International and British Columbia Investment Management’s purchase of satellite firm Maxar Technologies (MAXR.N) for $6.4 billion, including debt. The chunky 129% premium suggests they think the company can fly higher off public markets. A decline in demand for construction of big projects, and the failure of a satellite Maxar built, hit the firm hard, as insurance only partly covered losses and customers shied away. Maxar plans to launch imaging satellites faster in private than it had when it was public.

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