capital

Federal Reserve governor Lael Brainard gave a speech on financial stability yesterday afternoon. The big takeaway is that the "Powell Put" is not very strong. The Fed will stress economic tailwinds and inflation concerns. And it will not…

The existence of capital controls eliminates contagion and makes it possible to bail-in deposits that would normally be considered to have systemic consequences. The more I look at it, the less benign this bailout deal appears. Indeed it…

There are no big themes dominating the news today. So it is a perfect time to hit a couple of themes with an economic and market theme approach. Let’s talk banks, Japanese trade, the currency wars and deflation.

Themes for today Emerging market political risk is now front and center. US data suggests consumption growth is vulnerable to poor wage trends. The European periphery banks are benefitting from lower sovereign yields. The potential…

While JPMorgan's Loan to deposit ratio is particularly low, the bank is by no means unique. LTD in the US is at the lows not seen in decades. On an absolute basis the gap between deposits and loans is now at some $2.4 trillion and growing.…

Credit underwriters pride themselves in their ability to cut lending when they sense that economic fundamentals have changed for the worse. For example one often hears bankers talking about passing on deals in 2007 because of "not liking…

European banks continue to be engaged in deleveraging. It is partly driven by new capital requirements and partly by preparing for the next year's ECB's asset quality review and stress test. The deleveraging process includes reducing…

Yesterday the European Central Bank cut the interest rate on its main refinancing operations by 25 basis points to a record low 0.25%. It also cut the rate on the marginal lending facility by 25 basis points to 0.75%. The news was…

The Eurozone's banks are continuing to deleverage, with total loan balances to euro area residents now at the lowest level in 5 years. What makes the situation even more troubling is that many Eurozone banks banks are repeating the Japanese…

In the links today, the biggest threads outside of the NSA scandal were on Greece and Europe. I believe the economy there is bottoming and I want to discuss some of the news flow. There was also a rate decision by the Japanese central bank…