The Trump administration nominated Randal Quarles to be vice-chairman for supervision at the Federal Reserve. Mr Quarles is a former investment manager and Treasury official. He is sympathetic to the industry’s push for a lighter regulatory touch, and has supported a Republican recommendation to restrict the Fed’s flexibility on interest rates by basing those decisions on a mathematical formula. See article.
Steady as she goes
Speaking to Congress, Janet Yellen said that although inflation remained an uncertainty, the Fed was on course to unwind the asset portfolio it had accumulated since the financial crisis and to continue with rate rises. The guessing game has already begun about whether Donald Trump will choose a new chairman of the Fed when Ms Yellen’s term is up in February.
The Bank of Canada raised interest rates for the first time in seven years, increasing its benchmark rate by a quarter of a percentage point to 0.75%. The central bank said it was responding to strong economic growth. Higher rates could temper a sharp rise in housing prices and in household debt.
Royal Bank of Scotland agreed to pay $ 5.5bn to settle claims brought by America’s Federal Housing Finance Agency relating to risky mortgage-backed securities that RBS sold between 2005 and 2007. The bank has set aside money to pay for this fine, and for another whopping penalty expected from the Department of Justice later this year.
Elliott, an activist hedge fund founded by Paul Singer, launched a counter-bid for an electricity-distribution company that Warren Buffett’s Berkshire Hathaway recently offered to buy for $ 18bn. Energy Future Holdings (which used to be known as TXU) has been in a bankruptcy-protection programme for three years. The source of its allure is its stake in Oncor, the biggest electricity distributor in Texas, which is independently managed. Elliott is Energy Future’s biggest creditor and has a stake in any final deal.
A French court ruled that Google did not have a “permanent” base in France and therefore did not have to pay the government $ 1.3bn in taxes. The decision applies to France only, but it was a rare victory for Google in its battles with European tax and regulatory authorities.
Snap’s share price fell below $ 17, the price at which it made its stockmarket debut in March. Investors were spooked by a note from one of the flotation’s underwriters that said it had been wrong about the social-media company’s “ability to innovate and improve its ad product”.
Pearson sold almost half its 47% stake in Penguin Random House to Bertelsmann, lifting the German media company’s holding in Penguin to 75%. Pearson has been selling off its assets in conventional publishing in order to focus on its digital education business.
What’s the skinny?
The share price of Abercrombie & Fitch fell by 20% after the fashion retailer said it had not been able to find a buyer for its business. Once the favourite brand of svelte teenagers, Abercrombie has struggled to compete with fast-fashion rivals, such as H&M and Zara.
With China’s new cyber-security law in mind, Apple said it would open its first data centre on the Chinese mainland to store the personal information of Chinese iPhone and iPad users. The data have been mostly held on Apple’s servers in America. Apple stressed that privacy and security protections will remain in place.
Marking a retreat from its ambition to become a global entertainment powerhouse, Dalian Wanda, a Chinese conglomerate, struck a deal to sell its 13 tourism projects in China and 76 hotels to Sunac China, a property developer, for $ 9.3bn. Wanda’s expansion over the years, such as buying cinema chains in America, has been fuelled by debt, which it will pay down with proceeds from the sale. The Chinese government warned recently that the build-up of company debt could pose a risk to China’s banking system.
In another big Chinese acquisition, COSCOShipping offered to buy Orient Overseas, a smaller Hong Kong-listed rival, for $ 6.3bn, the latest deal in a wave of consolidation in the shipping industry. COSCO will be the world’s third-biggest container line.
Proving that not every item is suitable for the sharing economy, a Chinese entrepreneur, Zhao Shuping, who launched an umbrella-sharing service in April, reported that nearly all his brollies had gone missing. Customers paid a small deposit to unlock a code in the umbrella handle, but most have not been returned to their stands after use. Undeterred, Mr Zhao still plans to roll out his scheme across the country, come rain or shine.