Were they doing a “great job” or just a “good job?”

At a conference in London on Wednesday, Bank of America’s CFO Bruce Thompson was asked to comment on the accounting error that wrongly inflated the bank's capital ratios but he demurred, saying that the bank would "get back to doing a great job" on the stress test process and share buybacks, which were derailed by the error.   The stock has dropped from $18 to $14 due to the schoolboy error, resulting in the loss of $40 billion in market capitalization.

Fahrvergnügen (driving enjoyment). European auto sales accelerate

Europe is getting back in gear.  Ford announced that European sales rose 6.6% in April (industry 4.2%).  This was the 11th straight month of European sales improvement.  VW’s western European sales did even better: 8.2%.

On what planet does the Bank of England reside?

The UK has been reporting strong employment and good growth.  Meanwhile, Bank of England's Carney said that rates will stay low into next year anyway at a 0.5% level because inflation will stay near the bank's target of 2% through 2017 and growth will be modest.  Odd, since inflation, which is was 1.6% in the last report, was well above 2% all of last year and the economy is now accelerating.

Is the UK on the verge of a boom?

The UK just reported the strongest quarterly increase in jobs since records began in 1971.  The jobless rate fell to 5-year low of 6.8%, and the number of people out of work dropped by 133,000.  The total number of people working rose to 30.43 million, also the highest absolute number since 1971.  Self-employed workers now number 4.55 million, an increase of 183,000 for the quarter.

US banks will lend less to Russia, but the Russians don’t mind.

With a balanced budget, a current account surplus, and little sovereign debt, the Russian state is relatively indifferent to banking sanctions.  According to the central bank, Russia’s total external debt (public and private) is about $700 bn, most of it long; reserves are $500 bn.  The trade surplus is running at $170 bn. Banking sanctions are the favored kind of showy gesture that the US can make without the risk of affecting anything.  As such, they serve a useful public relations function.

Land of hope and baloney

The Indian stock market is rallying on expectations of a Modi victory.  Shares have risen 17% in three months.  Rodham Desai of Morgan Stanley is quoted in the FT as saying, "the market has turned hugely exuberant; there is a big hope that this incoming government will fix all of the country's macroeconomic problems.” 

The European defense industry is still downsizing even as global threats increase.

 Airbus is restructuring and cutting 5,800 defense jobs in response to a steep reduction in European defense spending.  It would appear that Europe is not particularly worried about security despite events in Ukraine.  Will this change?