Banks battered
Forex fines
Six major global banks were hit with $5.6bn of further fines this week in relation to alleged manipulation of foreign exchange markets. The six – Bank of America, Barclays, Citigroup, JP Morgan, Royal Bank of Scotland and UBS – reached deals with the US Department of Justice and other regulatory bodies which should draw a line under various investigations against the industry. Fines levied against banks for forex manipulation now total $10bn and have surpassed those paid for Libor misdemeanours. Barclays is being hit the hardest, paying $2.3bn in total.
Deflation arrives
Prices slide
After months of falling prices in the UK the inevitable happened in April as deflation arrived on our shores for the first time in at least 50 years. The Consumer Prices Index of inflation dipped to -0.1 per cent, the lowest it has been since the series began in 1996, and lower than previous data recorded going back to 1960. After months of falling oil prices acting as a weight the price of crude has begun to tick back up but this was unable to offset falling transport and air fare prices and the ongoing price war in the supermarkets in the most recent data set. The negative reading is likely to be short lived though with most economists expecting inflation to pick up again towards the end of the year.
Doubling up
Apple value
Not satisfied with holding a chunky stake in the world's most valuable company, activist investor Carl Icahn reckons tech giant Apple should be valued at double its current market capitalisation. The renowned activist made his bold call this week when he said Apple shares should be changing hands for around $240 a pop rather than the current $128. Reiterating his call for the Apple board to ramp up its share buy backs and cash returns to investors, Mr Icahn also cited what he believes to be an imminent entry into the huge television and automotive markets as validation for his new price target.
Chinese unease?
Outflows surge
The pace of capital outflows from China's economy in recent months suggest serious unease among investors. Despite a healthy trade surplus, helped by lower commodity input prices, and a soaraway stock market capital has been flooding out of the Chinese economy. In the opening three months of the year the balance of payments deficit in the Chinese economy was a yawning $80bn, created by record outflows of $159bn. But, taken in the context of the Chinese economy, such outflows do not yet constitute a crisis but they are making it more difficult for the Chinese authorities to enact further monetary easing as the central bank has previously preferred to create money in China’s banking system through the purchase of foreign exchange inflows.
Scots filip
Prices up
After years of trailing in London's wake, house prices in the regions may be playing catch up. With London gripped by pre-election inertia as buyers fretted about the prospect of a mansion tax being introduced, Scotland led the way in March with Office for National Statistics figures showing house prices there up 14.6 per cent year on year. Across the whole country, average prices were up 9.6 per cent year on year. Market watchers suggested that sellers were reluctant to put their property on the market in the run up to the election and anecdotal evidence suggests an uplift in instructions to sell in the past two weeks which may take some steam out of the market.
Mongolian hoard
Rio deal
Mining giant Rio Tinto has finally inked a deal to develop what many consider to be the best undeveloped project any of the world's major diversified miners holds. The deal signed with the Mongolian authorities to develop the underground elements of the Oyu Tolgoi copper project releases $5bn of investment and will establish the project as one of the world's top 10 copper projects and is forecast to boost the Mongolian economy by up to a third once up and running although commercial production is not likely before the end of the decade.
Moment of truth
Grexit looming?
The Greek issue just won't go away. With another €300m (£214.61m) payment due to the International Monetary Fund on 5 June Greek officials have admitted that the country is facing its 'moment of truth'. And data from the Greek economy lays bare the dire straits it is in, with estimates suggesting it is losing €22m a day in GDP and 600 jobs a day as the noose tightens. Greece is now estimated to have lost more than a quarter of its gross domestic product since 2009, the worst reversal recorded in a developed economy since the Great Depression of the 1930s.
