Banker, heal thyself (second time around). Tonight, global banking giant HSBC outlines a second major revamp in four years — an announcement that could result in up to 20,000 people sacked around the world, businesses sold off and even the bank’s head office moved out of the UK and back to Hong Kong. It will be CEO Stuart Gulliver’s second go since he took the reins at the bank in 2011, when 40,000 jobs were cut between 2010 and 2013 — and profits still fell. The bank has also been pinged by regulators for sanctions-busting and money-laundering. The changes are a very big deal for the world’s most international of banks (which has lost close to US$100 billion in the United States, due to fines and write-downs over the past decade). Will HSBC’s Australian operations go on the block, just as General Electric, RBS and several other big banks have done in the past couple of years? Not even the top bankers are safe these days after “Bloody Sunday” in Germany on Sunday, with Deutsche Bank sacking its joint CEOs (just two weeks after giving one of them more power to revamp the bank) and replacing them with an executive with a reputation for ruthless cost-cutting. Could Deutsche Bank “de-Australianise” as well? — Glenn Dyer
America’s productivity swoon. Did anyone notice that, for all America’s jobs growth, US productivity continues to weaken? The US added a massive 280,000 jobs in May and another 32,000 were found in the previous couple of months, so really it was a huge month with over 310,000 new jobs added. “Rate rise looms” screamed the markets, and with the Fed meeting in 10 days, some even went as far to say the looming might be realised at that gabfest. But September remains the best bet. The US unemployment rate rose to 5.5% as more people look for work (from 5.4% in April). That means more than 4.2 million new jobs reported since the start of 2014. But the day before the downside of the strong jobs growth was confirmed with the news that US productivity fell 3.1% in the March quarter (the first estimate was a fall of 1.9%), helping explain the weak GDP performance in the first quarter (but not totally). Productivity also fell in the December quarter, so America has now seen its first back-to-back quarters of productivity decline since the heady days of 2006. The fall in productivity is a function of the dip in production in the first quarter, the addition of more jobs over the past 17 months and the ageing work force — just we are seeing in Australia, the UK and other advanced economies. — Glenn Dyer
Turbo powering China? Just as the latest data from China shows the economy weakening and running in low gear (like our’s) the country’s sharemarket has soared, soared and soared. Around 7.30 am tomorrow, Sydney time, the influential index and research group MSCI Inc will announce whether it will include China’s top yuan-denominated stocks into its influential Emerging Markets Index tracked by managers controlling an estimated US$1.7 trillion in assets worldwide, according to The Wall Street Journal estimates. Many analysts inside and outside China reckon the market has reached a boomlet/bubble stage and inclusion in the MSCI index, even if it is staged over the next year, will trigger a rush of demand. The Shanghai index cracked the 5000-point level last week for the first time since 2008, so there is more to go before previous highs are topped. That would push the Chinese market’s value well past US$10 trillion and second only to the US, which has a value of around US$25 trillion. Sounds like Monopoly money, and dangerous to boot. — Glenn Dyer
Fee clippers clipped. Not only is America’s biggest public pension fund, Calpers, the Californian government employees’ retirement fund, it has just revealed it plans to take similar action to cull many of its existing fund managers, in every class of asset. So from dealing with 212 managers across shares, bonds, property, alternative investments and the like, Calpers wants to cut that back to 100. The reasoning for the move should send a chill through fund managers, large and small, the world over — they are too costly, add little or no value and don’t achieve the sorts of returns that give Calpers needs for its pensioners. This means some of the biggest names in global finance — Carlyle Group, KKR, Blackstone and more — face some tough questioning and could be pitted against each other to remain on Calpers’ favoured-manager list. US analysts say that because Calpers is so big — it has US$300-plus billion of assets — its move is certain to trigger similar moves by other big pension funds. — Glenn Dyer
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