Connect to share and comment

The big picture view of an ever-changing global economy.

Macro chatter: JPMorgan is swimming in alphabet soup

Around the world in business: US debt ceiling drama 2.0 could be coming up later this year. Lots of Feds are sniffing around JPMorgan and the world's biggest telecom company is getting closer to adding Apple's iPhone to its lineup.
A sign outside JP Morgan Chase headquarters on Park Avenue in New York City. (Mario Tama/Getty Images)

Need to know:
The world may be in for another US debt ceiling battle.

US Treasury Secretary Tim Geithner already is lobbying Congress to increase the country’s debt ceiling later this year without all the drama that happened last time around.

Talking Points Memo reports that House Speaker John Boehner isn’t planning to play along. He plans to use the US approach toward its debt limit as an opportunity to push for spending cuts equal to the the amount of extra borrowing room the Treasury is seeking — again. 

Want to know:
JPMorgan is quite literally swimming in alphabet soup.

The FBI, SEC, DOJ and Federal Reserve are sniffing around JPMorgan’s $2 billion-and-counting trading loss.

Meanwhile, CEO Jamie Dimon managed to hang on to his role as chairman of his company’s board and his $23 million pay package. Some shareholders had been pushing for Dimon to step aside as board chairman to make way for an independent director.

At least four people so far are out of jobs at JPMorgan and Dimon has said the bank may pursue opportunities to claw back some of their pay.

Just because:
The world’s biggest telecom carrier may soon be getting the iPhone.

China Mobile, the lone Chinese operator that doesn’t officially carry the Apple iPhone, is trying to figure out a way to get the popular smartphones onto its network, Reuters reported.

Apple’s iPhone isn’t currently compatible with China Mobile’s network, but Reuters said analysts expect the next generation model will be. 

Dull but true:
The world could be getting closer to a Grexit.

IMF Chief Christine Lagarde told France24 a Grexit could happen if Greece isn’t able to get its finances in order.

Meanwhile, Greece still hasn’t gotten a new government in place, and many of its people already have decided its time for them to make a Grexit of their own. Many Greeks have been draining their bank accounts in recent days, Dow Jones reported

Strange but true:
One student loan debt collector made twice as much as the US secretary of education in 2010, Bloomberg reported.


Macro chatter: Facebook is bigger than Facebook thought

Around the world in business: Facebook ups its IPO price. Moody's is down on Italian banks. Ferrari's new hybrid will save you 40 percent on gas, but it still costs $850,000.
Facebook CEO Mark Zuckerberg delivers a keynote during a Facebook f8 Developer Conference at the San Francisco Design Center in September. (KIMIHIRO HOSHINO/AFP/Getty Images)

Need to know:
Prices for used cars, airfare and rents rose in the US last month, according to the latest government inflation data.

The key measure of inflation most closely watched by Federal Reserve policymakers came in just above their 2 percent target. 

Want to know:
Facebook is a bigger deal than Facebook thought.


Euro: Is this how it ends?

The dark scenarios are piling up. Here's a roundup of who's saying what about Europe's never-ending crisis.
Storm cloudsEnlarge
What's that on the horizon again? (Win McNamee/Getty Images)
It's the story that just doesn't seem to end, and one that could affect the entire global economy. Yes, dear readers, Greece is back in the global business and economics headlines today. In a big fat way.

Macro chatter: "You're fired," love JPMorgan and Yahoo

Around the world in business: The euro zone imagines itself without Greece. JPMorgan and Yahoo oust a few execs, and the US is down one Facebook wealthy taxpayer.
Greece election 2012 5 7Enlarge
Supporters wave flags as Greek New Democracy leader Antonis Samaras (not pictured) addresses a pre-election rally, on May 03, 2012 in Athens, Greece. The country held an election May 6, with poll results showing the center-right New Democracy and socialist PASOK parties losing their long-held political dominance. (Milos Bicanski/AFP/Getty Images)

Need to know:
Euro zone central bankers' are thinking of a post-Greece world.

The European Commission won't ease up on the rules of Greece's bailout, and the country's still fledgling government doesn't want to play along. That's increasing the likelihood that Greece will have to leave the euro zone.

European officials are trying figure out how the handle the fallout, Bloomberg reported

Euro zone finance ministers are scheduled to meet today in Brussels. 

Want to know:
The casualties are piling up at JPMorgan and Yahoo.

The hedge fund that’s been trying to win power by getting Scott Thompson booted from Yahoo has finally succeeded.

Thompson stepped down Sunday, just a few months after he started the job. Patti Hart, the board member who helped recruit Thompson, is also gone. Daniel Loeb's Third Point is getting three board spots. 

At JPMorgan, one of the most powerful women on Wall Street is out.

Ina Drew has resigned over the bank’s $2 billion-and-counting trading loss. Two other traders also are gone.

Meanwhile Bruno Iksil, the London Whale whose bad bets led to the losses, appears to have joined Twitter. He  tweets that he'll be hanging around awhile longer. 

Dull but important:
China, Japan and South Korea want to do more business together.

The countries are planning to set up a three-way free trade area, but it won’t be easy. Each of the countries has a at least one powerful business sector that will likely have a problem with the increased competition they'll face.  

China, Japan and South Korea already trade a combined nearly $700 billion among them. Combined, the countries are home to 1.5 billion people. 

Just because:
Facebook co-founder Eduardo Saverin is renouncing the US citizenship his parents emigrated to get him.

Saverin, who was born in Brazil and lives in Singapore, will likely save about $600 million by giving up his US passport, Pando Daily’s Farhad Manjoo calculated.

Saverin owns about 4 percent of Facebook’s shares. While he may be among the wealthier Americans renouncing their citzenship, he definitely is not alone.

Nearly 1,800 people gave up their citizenship next year to avoid the IRS.

Strange but true:
You too can be in charge of the Fed, at least on the Internet.


Macro chatter: $2 billion bad quarter for JP Morgan and a pinstripe hoodie for Mark Zuckerberg

Around the world in business: JP Morgan is bleeding money. The US makes money. China's slows down, and a San Francisco company has a new pinstripe hoodie for Mark Zuckerberg.
(L-R) Lloyd Blankfein, CEO of Goldman Sachs Group, Inc., Jamie Dimon, CEO of JPMorgan Chase & Company, John Mack, former CEO of Morgan Stanley and Brian Moynihan, CEO and president of the Bank of America Corporation during the first public hearing of the Financial Crisis Inquiry Commission. The commission was formed to investigate the causes of the financial crisis. (Tim Sloan /AFP/Getty Images)

Need to Know:

Two bits of bad news for China: both export growth and import growth slowed way down in April, suggesting China’s economy may be losing more steam than the world realizes.

Europe’s troubles zapped demand for Chinese exports, which people had been expecting. But the slowdown in imports was a surprise from the country that has been the largest single contributor to the world’s recent economic growth.

China’s economy is growing at its slowest pace in years, partly by design, but there are signs of trouble emerging in real estate and credit markets. 

Want to know:

Today is probably a really bad day for Jamie Dimon.

His JP Morgan Chase & Co. came clean Thursday and revealed that it made a $2 billion screw up. 

JP Morgan made some really bad trades with a hedging strategy was "flawed, complex, poorly reviewed, poorly executed and poorly monitored," Dimon said in a surprise conference call Thursday

The Twitterverse sums it up well:

Dull but important:

The US actually made money in April for the first month in nearly four years. Of course, it’s partly a function of how the Treasury paid the bills and all the taxes people paid.

The government reported a $59 billion surplus, which is the first ever since the Obama administration took over and way more than a lot of people were expecting. The government still will come in about $1.2 trillion in the red this year.

The US government has been running deficits for four consecutive years. It will come close to hitting the debt ceiling that caused it so much drama last summer later this year.

With any luck, there’ll be a little less drama next time around.

Strange but true:

In case you haven’t been keeping up, Mark Zuckerberg’s hoodie is so popular it now has its own Twitter handle. But some Wall Streeters just don’t like it.

They think Zuck looks immature for not wearing suits like theirs. Zuckerberg only dresses up for heads of state. But soon he’ll be able to keep the hoodie and give Wall Street the pinstripes it wants.

Betabrands has an “executive pinstripe hoodie” coming out in June. The $148 Merino wool hoodie is fitted, features a couple of pockets and boasts a “luxuriously lined hood.” It’s also dry clean only and seems tailor made for Zuckerberg.

No word yet on whether he's placed an order, but if he decides he wants to kiss up to Wall Street, at least he'll have something to wear. 


China economy: weak and weaker

Don't look now, but the world's second-largest economy isn't doing so well.
China economy slowsEnlarge
A Chinese stock investor checks his share prices at a security firm in Hefei, east China's Anhui province on February 22, 2012. (STR/AFP/Getty Images)

Maybe China's leaders —currently embroiled in a complex leadership transition — should worry less about politics at the moment, and more about economics.

The latest numbers out of Beijing today are anemic, particularly on the domestic economy. 

Here are two key stats to consider:

Growth in April exports fell to 4.9 percent measured year-on-year, down from a growth rate of 8.9 percent in March.

That's not too surprising, considering China's close trade ties with Europe, which is in the midst of a severe economic slump. After all, it's hard for the Chinese to sell stuff to Europeans who don't have money to spend.

But the more troubling figure has to do with imports in China, which rose just 0.3 percent year-to-year. That's the lowest number since October 2009, when the world was reeling from the global economic crisis.

Moreover, analysts were expecting a much larger gain of 11 percent, so the sharp slowdown at home is telling.

Here's what Alistair Thornton, China economist at IHS Global Insight in Beijing told Reuters in classic econo-speak:

"We know the external climate is not particularly conducive to strong export growth and digging into the data you can see primarily it is a euro zone story, which is to be expected. But the headline number on import growth is less expected and more worrying. It does point to a real weakness in the domestic economy and shows that we have not yet turned the corner into a sustained recovery."

And, as the New York Times points out this morning in a wide-ranging and smart analysis, demand is slowing for iron ore, semiconductors and other goods.

“The business environment is getting tougher and tougher,” Tom Zhang, the sales manager at Hebei Haihao High Pressure Flange and Pipe Fitting Group told the New York Times. “Competition is very intense to get more business — our domestic sales are down from last year, though our export sales are more or less stable.”

So why does this matter?


Macro chatter: Ron Paul and Ben Bernanke play nice

Around the world in business: Chinese banks are coming to the US. Facebook is launching its own App Store, and Ben Bernanke and Ron Paul meet for breakfast.
Customers leave an ICBC branch in Beijing. (MARK RALSTON/AFP/Getty Images)

Need to know:
China’s banking system has gotten the US seal of approval.

Regulators have cleared the way for three Chinese banks to begin gaining a foothold in the US.

China’s largest bank, Industrial & Commercial Bank of China is set become the first state-owned Chinese bank to buy a US bank. ICBC has gotten the green light to buy a big chunk of the US subsidiary of Hong Kong’s Bank of East Asia, which operates in New York and California.

Bank of China and Agricultural Bank of China have been cleared to build branches in Chicago and New York.

Want to know:
is about to get its own App Store.

Facebook plans to launch its App Center in the next few weeks. The App Center will allow software developers to sell apps directly to consumers on Facebook with Facebook taking a 30 percent cut.

The move, revealed in a regulatory finding Wednesday, is Facebook’s latest effort to find new ways to make money from its growing audience, particularly as users are increasingly accessing the site from mobile devices.

Facebook said its daily user base is growing faster than the number of ads it is delivering because of mobile. Facebook offers limited number of mobile ads and mobile has yet to become a significant contributor to the company’s bottom line.

Dull but important:
Spain is bailing out its fourth largest bank, BBC reported.

The Spanish government is pumping about $6 billion into Bankia, which has been struggling under the weight of bad debt linked to a big bust in the Spanish real estate market. In exchange for its rescue funds, Spain will get a 45 percent stake in the bank.

Just because:
A day after holding a hearing to explore abolishing the Federal Reserve, Republican presidential hopeful Rep. Ron Paul sat down for breakfast with Fed Chairman Ben Bernanke.

Paul told the Wall Street Journal the pair had an open discussion. Neither he nor the Fed have disclosed any details, which is too bad since the pair usually have pretty spirited discussions.

It is unclear whether the they paid their breakfast tab with gold or greenbacks.

Strange but true:
The Rent Is Too Damn High Party
could soon win some new fans in Canada.


Why abandoning the euro would mean even more Greek austerity

Greece is closer than ever to leaving the euro zone. But that won't stop the pain; on the contrary.
Munch the screamEnlarge
Madeline Wilson from the National Gallery of Victoria mimics the scream from Edvard Munch's famous hand-coloured lithograph version of 'The Scream.' (William West/AFP/Getty Images)

In today's Wall Street Journal, journalist Charles Forelle has an excellent analysis of the grim options facing the euro zone and Greece, since Sunday's elections piled political crisis on top of its debt crisis.

Forelle explains why monetary divorce, which looks increasingly likely, would be terribly messy for both sides. He foresees not only investors but also foreign businesses fleeing Europe's periphery if they fear that contracts would be fulfilled in devalued local currencies rather than euros. In other words, a Greek withdrawal could trigger not just the kind of financial panic that we saw in 2008-2009, but a broader systemic panic. He also cites sources who argue that markets have not yet priced in the gravity of the dilemma. 

Still, if the ragbag of leaders that Greece elected rushes to jilt the troika, abandon austerity and flee the euro zone, Forelle points out that this course of action is hardly going to endear them with voters in the short term:


Macro chatter: Shakeup at Yahoo and a Google car that barely needs you

Around the world in business: While Yahoo deals with its CEO's fudged resume mess, Google's been in Vegas getting a driver's license for its self-driving car.
Carlos Yerbes, member of the le Private Cannabis club, prepares a coffee on November 30, 2010 in Madrid. (Dominique Faget /AFP/Getty Images)

Need to know:
The US is still about 1 million job openings short of where it was in early 2007.

The US in March of this year had 3.7 million job openings, the Labor Department reported. That boils down to 3.4 unemployed people per opening.

It’s a vast improvement from the recession’s end when nearly twice as many people were vying for each job.

When the recession began there were fewer than two unemployed people per job opening in the US.

Want to know:
The fallout over Yahoo CEO Scott Thompson’s padded resume is still shaking things up at the troubled tech company.

Patti Hart, a Yahoo board member who led the search that resulted in Thompson’s hiring, said she won’t try and keep her seat on the company’s board. Hart already is busy running International Game Technology, and her company’s board wanted her to focus more on it, All Things Digital reported.

Of course, Yahoo may have been trying to oust her.

Thompson had claimed a bachelor’s in computer science and in accounting, but really only received the accounting degree. An activist investor vying for more power over the company’s board revealed Thompson’s embellishment hoping to win some wiggle room to put his own plans for Yahoo in place.

Dull but important:
It’s a tough time to be the euro. The pressured currency has been hovering around a three-month low.

Political uncertainty in Europe is continuing to pressure the single currency, which has been having trouble cracking and staying above the $1.30 mark.

The Euro hit a low of around $1.29 on Monday, and Reuters said it could go even lower.

Just because:
The Netherlands decision to ban tourists from its famed cannabis coffee shops could provide an opportunity for Spain and Portugal to generate some new revenue.

The countries take a more liberal approach to policing marijuana, and one Spanish village has already been exploring whether it make money by getting into the marijuana business, GlobalPost’s Paul Ames reported.

Spain already tolerates co-ops that produce marijuana for members’ consumption, but those clubs aren’t open to tourists — yet. 

Strange but true:
Google’s self-driving test car has gotten its license in Nevada. It just can’t go out alone.


Macro chatter: Ron Paul takes on the Fed โ€” again

Around the world in business: As Mark Zuckerberg hawks Facebook to Wall Street pre-IPO, he dons his trademark hoodie. The US may have turned a rare profit in April. And Ron Paul aims at the Fed (again).
Mark zuckerberg suitEnlarge
Facebook CEO Mark Zuckerberg wore a suit to meet with Japanese Prime Minister Yoshihiko Noda in March. He wore a hoodie to meet with Wall Street bankers about Facebook's big IPO. (Yuriko Nakao/AFP/Getty Images)

Need to know:
Ron Paul plans to take another whack at the Fed today.

The federal committee he chairs is scheduled to consider his Federal Reserve Board Abolition Act and several other bills that aim to alter the course of the US central bank.

The Fed so far has been able to heartily withstand Paul’s attempts to topple it, but Paul has been able to get the Fed’s books audited and gotten Fed Chairman Ben Bernanke to reveal that he does his own grocery shopping.

Bernanke meanwhile may remain a lonesome dove on the Fed board a while longer. President Barack Obama’s latest nominees to join Bernanke on the board will have to face so many hurdles to get approved that the Senate may just give up on them, Reuters reported.

Want to know:
The US may actually have made money in April for the first time in a very long time.

We’ll have have to wait until the official numbers come out on Thursday. But for now, the Congressional Budget Office is expecting the government last month generated its first surplus is nearly four years.

A profit wouldn’t exactly mean the US has turned a big economic corner, though. Much of April’s gains are attributed to timing and the US still isn’t yet expected to break its streak of $1 trillion annual deficits.

Dull but important:
Spain has its own too big to fail problem. Spain plans to spend billions of euros to bail out its third largest bank, Financial Times reported.

Bankia is struggling under the weight of bad real estate loans as Spain battles its second recession in three years. The bank could need up to $13 billion to weather the euro zone crisis, but it’s not clear how the government might finance a bailout, Reuters said.

Bankia, which used to be seven smaller banks until a series of a mergers a few years ago, poses the biggest risk to the Spanish banking sector, according to the IMF.

Meanwhile newly elected leaders in Greek parliament still are struggling to form a ruling coalition and talk that Greece could be forced out of the euro zone is growing. 

Just because:
The euro zone may have problems, but India's could be worse, according to one economist.  

While US Secretary of State Hillary Clinton is trying to help American retailers like Wal-Mart gain new customers in India, American economist Tyler Cowen is worrying about just how much the country’s economy has slowed down.

Even though India’s economy still is growing faster than the US economy, its having a disproportionately negative effect on the poor, he wrote in The New York Times.

If India's economy doesn't pick of steam, another generation of millions of Indians may fail to rise out of extreme poverty, according to Cowen. 

Strange but true:
Mark Zuckerberg won't wear a suit for Wall Street, not even for Facebook’s big IPO.