27th May 2013
1) The man who is arguably the world’s most important banker – outside of central banks at least – JP Morgan’s Jamie Dimon has held on to his two jobs chairman and chief executive seeing off a shareholder revolt which had demanded he separate the roles of chairman and chief executive as NPR reports. There are now calls for regulators to step in.
2) Much was made of the fact that the IMF toned down its language when it visited the UK to vet George Osborne’s policies. It didn’t say the Chancellor was playing with fire (again), but it has said spending on public infrastructure should be increased to make up for spending cuts planned for 2013/14 of around £10bn. The big question surely is not whether the Government accepts a change of course publicly – it won’t – but whether it moves to the IMF plan without admitting it has done so. And there are still plenty of voices to who say the IMF is wrong. The Guardian’s economics editor Larry Elliott espouses the Keynesian line. On the Telegraph blog, Jeremy Warner says the IMF should be doing something completely different – sorting out Europe through debt restructuring or even by breaking up the euro.
3) Those with shares in Severn Trent will be watching for a second bid after the firm rejected a £4.7bn offer or just under £20 a share from a consortium including UK universities superannuation scheme, the Kuwait Investment Office and Canadian group Borealis infrastructure Management. Shareholders are said to be holding out for £23 a share. The market isn’t sure a renewed offer will meet their expectations as Reuters reports.
4) Japan is seeing some uncomfortably elevated bond prices with ten year yields around one per cent. The Economist wonders if the wheels are coming off Abenomics or if the market is simply taking some time to adjust.
5) Markets can go down as well as up. Well, any investor worth their salt knows that, but they also now know that this rally is very sensitive and that a huge amount rests on quantitative easing and how the world weans itself off it. When the Fed chief Ben Bernanke indulged in some ‘what ifs?’ about the end of QE, markets got the jitters. Some were scathing, but on MarketWatch Chuck Jaffe suggests he may be trying to get markets to start thinking about a change of direction, so when the end of QE finally comes the reaction is not so severe. Is Bernanke being clever or is he being two clever by half?