It was one of Donald Trump’s most prominent pre-election pledges, so when the much-vaunted repeal of Obamacare failed to secure the support it needed in Congress, Wall Street signalled its disapproval via a massive share dump, bringing the stock market’s seemingly unstoppable rise to a screeching halt.
If the stellar performance of the S&P over the past few months demonstrated a level of confidence in the ability of the new president to deliver on his promises, this abrupt volte-face is a reflection of a more sombre mood. Tumbling US shares prefaced similar dips in Tokyo, Frankfurt, Paris and London as global markets wobbled over the prospect of the Trump administration’s ability to deliver on a raft of growth-boosting measures.
In the same week Barclays pleaded guilty to charges of rigging foreign exchange rates, potentially embarrassing details have emerged that one of the bank’s traders was paid more than $260m in a period of just five years.
Jonathan Hoffman earned the breathtaking salary at the same time as banks were under pressure to scale down bonuses in a bid to restrict the reckless behaviour that triggered the global economic crisis in the late noughties. The payment raises the issue of the huge sums of money that were still being paid to bankers even in the wake of the recession.
It’s an unlikely story. A solo British trader stands accused of being instrumental in triggering a multi-billion-dollar US stock market crash from his parent’s suburban west London home.
Dubbed ‘the Hound of Hounslow’ in a wry reference to Leonardo DiCaprio’s role in the 2013 film, The Wolf of Wall Street, Navinder Singh Sarao is currently being held at the request of US authorities over allegations that he was involved in causing the 2010 ‘flash crash’ which caused a brief but significant 6% plunge in the world’s biggest stock market.
Thirty-six-year-old Sarao is fighting extradition to the US and so far hasn’t been able to raise the £5million bond required as bail money. He faces 22 charges including wire fraud, commodities fraud and market manipulation, carrying sentences totalling a up to 380 years. The US Justice Department claims Sarao and his company, Nav Sarao Futures Limited, made £26 million illegally over a five-year period using an ‘automated trading programme’ to manipulate the market for futures contracts on the Chicago Mercantile Exchange.
It seems there’s to be no early rise in US interest rates following a statement from the Federal Reserve that indicated it would be looking for significantly stronger economic performance before it could agree an increase in borrowing costs.
The move follow news that growth has stalled, with data showing that the world’s largest economy grew by an annualised rate of just 0.2% in the first quarter of 2015, with only some of the poor performance due to ‘transitory’ factors like the record-breaking winter weather that affected large areas of the country in the early part of the year.
There can be few more potent symbols of hope than that of a building rising from the ashes. For New Yorkers, the pride at seeing the 104-storey World Trade Center assert itself in the famous skyline is surely tempered by the loss of the iconic Twin Towers that once stood on the same spot. But it’s a triumph all the same; a resounding affirmation of the service-as-usual philosophy that so eloquently defined this city’s response to the unthinkable.
In its latest meeting, the Federal Reserve noted improvements in both U.S. economic strength and broad labor market while inflation remains in check. The current environment allows the Fed to reduce its monthly pace of asset purchases while maintaining low rates–good signs for the corporate titans of Wall Street and the average Joes of Main Street. Continue reading →