20th September 2013
1) J.P. Morgan receives a whale sized fine for a whale sized blunder. US and UK regulators have fined the giant bank £920m (£572m) as the BBC reported. The fine relates to huge derivative losses of around $6bn in its London offices focused on one trader in particular known as the London whale. £138m goes to the UK’s Financial Conduct Authority. There are still other actions pending from US regulators so the bank cannot draw a line under the issue just yet.
2) Ireland is out of recession as the Irish Times reports. GDP rose 0.4 per cent in the second quarter. But the Government is warning that it is not the end of austerity or as the finance minister Michael Noonan cautioned: “There’s no reason for us to be throwing our hats in the air or anything like that.”
3) Did it catch you out? The market was caught out by the Fed’s decision not to taper and is still digesting the news. The prevailing view is that risk assets will benefit, particularly emerging markets and perhaps high yield bonds as Mindful Money reported. The Fed was worried about employment and the fact that many US workers have dropped out of the figures, which may be flattering the unemployment rate. It is also concerned about higher mortgage rates which have subdued the US housing market. But it’s got to end sometime. Critics are questioning the decision to flag up tapering in the first place.
4) Yet not everyone’s a critic. The Sage of Omaha Warren Buffett says that the Fed is the biggest hedge fund in history. This may sound damning but Buffett is praising the Fed and the way it is run. Buffett says it may be generating $80 to $90bn a year for the US as Investment Week reported.
5) Estate agent’s Foxtons makes its full stock market debut on Wednesday next week. It has been valued at £649m with shares priced at 230p each as the BBC reported. Conditional trading this week saw the price at around 280p suggesting it could go much higher. A good short term bet? Mindful Money carried this insightful contribution from Justin Urquhart Stewart this week on understanding IPOs.