Citigroup reported earnings today — coincidentally the same day the Justice Department announced a $7 billion settlement with the bank over crisis-era mortgage securities. Its quarterly earnings fell 96 percent to $181 million and its return on equity was a mere 0.2 percent — mostly due to the aforementioned fines. However, the numbers are nonetheless stronger than expected, largely because of a strong quarter in its fixed income business.
Reuters has an interactive graphic showing Citi’s performance versus other big banks. Below is a still — the interactive is here.
When you say the word start-up, many people think of the wild proliferation of tech companies in Silicon Valley: Stanford grads sitting in a basement with their friends being offered obscene amounts of money for a mobile app that simply sends a one-word message to a user’s contacts. But economically speaking, a startup is any business that’s less than five years old and has fewer than 20 employees. And, tech bubble or not, start-ups in general have not done so well in the wake of the Great Recession.
A new research note out from the San Francisco Fed concludes that “low growth among start-ups at the beginning of the current recovery may have contributed to slow employment growth overall.”
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“Insider Trading 2.0,” New York attorney general Eric Schneiderman’s war on high-frequency trading abuses, wages on. At the end of June, Schneiderman filed a complaint against Barclays over the activity of the firm’s dark pool, Barclays LX, which is the second-most active alternative trading system in the United States. Schneiderman is accusing Barclays of fraud, suggesting that instead of protecting investors in the dark pool from high-frequency traders (as advertised), the firm did the opposite, and actually “operated its dark pool to favor high frequency traders.”
A dark pool is a non-public place to trade, which is advantageous for big institutional clients because they can buy and sell in large blocks without the transparency of public exchanges. Big investors see this as a good thing, because they can trade without the interference of high-speed trading firms that have the ability to affect the price of the trade between the time a trade order is announced and when it is executed. (Here’s a longer explanation). According to Schneiderman, Barclays sold this narrative to institutional investors to get them to trade on Barclays LX. It then also invited HFT firms into the dark pool, and, to add insult to injury, charged the HFT firms lower fees than their other clients.
Non-farm payrolls for June were released Thursday, and by most accounts this was a great month for job growth. The economy added 288,000 jobs, way more than the 215,000 that were expected. Reuters has a full live blog of the commentary that came out after the report. Here are some of the best charts from the blog:
Almost every industry expanded this month, and many were at the high end of the range of monthly changes over the last four years.
Today at the IMF, Janet Yellen gave a speech on financial stability. More specifically, she talked about monetary policy’s shortcomings as a tool for financial stability. Neil Irwin calls it “the most significant speech yet in her still-young Federal Reserve chairmanship.”
Monetary policy’s “effects on financial vulnerabilities, such as excessive leverage and maturity transformation, are not well understood and are less direct than a regulatory or supervisory approach,” she said. She clarified that she’s not against raising interest rates to stem financial bubbles, but, she said, oversight and regulation should play the primary role (things like the Fed’s stress tests). Tighter monetary policy, she said, would not have been sufficient to stop the 2008 crisis.
Eurozone employment is stuck in a bad place. Numbers out yesterday show the unemployment rate hovering at 11.6 percent for a second consecutive month. While at least it isn’t rising, the rate needs to drop a lot further for Europe to truly get back on track from the 2008 financial crisis. Nineteen million people remain out of work across the eurozone, Reuters reports, and the unemployment rates in Spain and Greece both remain above 25 percent.
“We can only really speak of a proper recovery when Europe’s economy creates new jobs in hundreds of thousands every month on a sustained basis,” European Commissioner for Employment Laszlo Andor said.
In an interview at the Aspen Ideas Festival Monday, PepsiCo CEO Indra Nooyi was asked about whether women can have it all (because what else would a CEO be asked to talk about other than her children?). She gave some very honest answers. While a lot of people latched on to the fact that she’s not sure her daughters will think she was a good mom, the much more important excerpt is the story she tells of the night she found out she was going to become the president of PepsiCo (emphasis mine):
Rather than stay and work until midnight which I normally would’ve done because I had so much work to do, I decided to go home and share the good news with my family. I got home about 10, got into the garage, and my mother was waiting at the top of the stairs. And I said, “Mom, I’ve got great news for you.” She said, “let the news wait. Can you go out and get some milk?” I looked in the garage and it looked like my husband was home. I said, “what time did he get home?” She said “8 o’clock.” I said, “Why didn’t you ask him to buy the milk?” “He’s tired.” Okay. We have a couple of help at home, “why didn’t you ask them to get the milk?” She said, “I forgot.” She said just get the milk. We need it for the morning. So like a dutiful daughter, I went out and got the milk and came back.
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When we left off two weeks ago, the Supreme Court denied to hear the Elliott v. Argentina case. Federal district court judge Thomas Griesa’s decision stands, giving the sovereign nation until today to either pay its holdout creditors (who did not restructure their bonds when the country defaulted in the early 2000s), settle with them, or default on its debts again. In the interim, Argentina has attempted to do anything but those three things. “Argentina is not lying when it says that it simply can’t afford to do what the U.S. courts are demanding of it — which is to pay all the holdouts in full,” writes Felix Salmon.
Last week, Argentina attempted to do exactly what Judge Griesa told it not to: it deposited the $539 million in interest payments due to its (non-holdout) bondholders with the Bank of New York. After that, “things went variously pear-shaped in court,” says Matt Levine. More specifically, Judge Griesa ordered the payment nullified. “This payment is illegal and will not be made. Anybody who attempts to make it will be in contempt of court,” he said, ordering the Bank of New York to return Argentina’s money.
West Africa is experiencing the worst ever outbreak of Ebola, the deadly virus that can kill up to 90 percent of those who contract it. Since this outbreak was first documented in February in Guinea, 635 people have been infected and nearly 400 have died, according to Reuters. So far, cases have been contained to Guinea, Sierra Leone, and Liberia, but a World Health Organization report out this week warned that neighboring nations should be prepared for outbreaks there as well.
Dr. Bart Janssens, director of operations at Doctors Without Borders (DWB), has said the problem is an epidemic that’s “out of control.” As the disease has spread, so has the fear of it. In April, a mob descended on a DWB treatment center in Guinea, accusing healthcare workers of bringing Ebola to the region.
Reuters has a story out this week delving into Fed chair Janet Yellen’s views about employment. Yellen wants to see more wage growth before she really believes the employment situation is improving, as “research from the Fed’s staff and her own past academic work both suggest there may be more slack in the economy than inflation hawks believe,” according to the Reuters piece.
But wage growth continues to be stagnant:
Here are more details about her research:
Her research outlined a number of possibilities, including that companies realize upsetting workers may only cost companies more in the long run as some will quit or become less productive, while rehiring in a recovery will prove more costly.