It was hardly a surprise to markets when Federal Reserve chairman Ben Bernanke said yesterday that the Fed's economic stimulus plan - known as quantitative easing (QE) - could be tapered off. There has been speculation in recent weeks, which has been driving global market volatility, that the Fed could change its buying strategy soon. After his comments, markets everywhere moved in reaction, with Asian shares dropping the most in a week.
But few people seem to have read the small print. While Bernanke signalled that QE could be wound down and ended by as early as mid-2014, he added a very important caveat. He stressed that the Fed would only change its QE strategy if the 'data' showed that the US economy was growing in line with its projects. One of the key factors is a reduction in joblessness to 7% - it is currently 7.6%.
Bernanke, who also coyly avoid any questions about his own job prospects - his current Fed term ends in early 2014 - was very clear about QE: “Our policy is in no way predetermined and will depend on the incoming data and the outlook."
Nearly 600 Australians at ANZ may lose their jobs, according to an internal document leaked to the Sydney Morning Herald. The positions, all in Melbourne, are in the call centre operations. According to the document, ANZ plans to cut the number of ANZ's call staff in Melbourne by more than half, and send the jobs overseas.The Finance Sector union has previously accused ANZ of being one of the most aggressive 'offshorers' among the country's big four banks.
Goldman Sachs has been ruled out of consideration to advise one of the biggest cross-border deals planned this year - the USD$4.7 billion bid by Chinese company Shuanghui to buy US pork processor Smithfield Foods. Apparently a conflict of interest is to blame - the Wall Street Journal cites sources who said that Goldman didn't get the role it had been promised advising Smithfield when the Virginia-based company learned that Goldman owns a stake in Shuanghui.
The Chinese company may be facing a battle to buy Smithfield. One of the US company's investors, Starboard Value LP, a fund that owns 5.7% of Smithfield Foods' shares, told Smithfield's board earlier this week that the bid "significantly understates" the company's value.
Drug dealing, arms dealing, and now dodgy dealing? The Securities and Exchange Commission (SEC) and the Parliamentary Commission on Banking Standards are both pushing for criminal sanctions and possible jail terms for finance professionals (like bankers) who break the rules. The new SEC boss, Mary Jo White - who joined the commission in April, and has a background in prosecuting organised crime and terrorists - says she is going to push for admissions of guilt in investigations into fraud. In the past, defendants got off lightly - settling cases, without admitting or denying charges. If White gets her way, more 'banksters' will face trial, and potentially join mobsters in prison.
The UK is pushing for similar penalties. The Parliamentary Commission on Banking Standards, which yesterday came out with its much anticipated review on British banking, recommends jail terms for bankers who behave recklessly in relation to their stated responsibilities.
Prudential Financial Inc has hired Eryck Su as managing director and chief investment officer of its Asia-Pacific real estate business as the second-largest US life insurer pursues deals in China. Su joins Prudential Real Estate Investors from Grosvenor Fund Management, and will lead PREI’s strategy in China and oversee regional acquisitions and dispositions while helping with portfolio management. He’ll be based in Hong Kong.
Singaporean author Kevin Kwan underscores the incredible pools of wealth in Asia being chased by the world's leading wealth managers. He tells the Daily Beast that his new novel, Crazy Rich Asians, is based on personal experience of just how much money has been accumulated in the region, which now boasts 122 billionaires. Singapore alone is home to the largest concentration of millionaires in the world, at 17% of resident households.He cites the example of Boeing, which apparently has made custom 737s planes for wealthy Chinese customers that included putting greens, pizza ovens and mah-jongg tables.