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Money for Nothing

Presenter: Bryan Curtis
Markets news wrap / Western banks / The U.S. Leading Economic Index


This morning on Money For Nothing, we'll look at earnings for the Bank of China and Bank of Communications. Why are US banks looking to divorce themselves from China? We'll ask Mike Werner of Sanford Bernstein. We'll also discuss the Leading Economic Index for the US with Ken Goldstein, an economist at The Conference Board. All this, after the markets with our regular contributor, Uwe Parpart of the Reorient Group. (8am-8.30am,  facebookmoneyfornothing@rthk.hk)

8.03 am - News highlights of the day

* Commodities get a bounce

* US jobless claims look good but in Spain jobless numbers look horrific

* UK avoids a triple dip recession

* German Chancellor Angela Merkel said the ECB would have to raise interest rates if it were looking at Germany alone but varied economic performance across the euro zone makes this a challenge

Uwe Parpart, Head of Research at the Reorient Group does not agree with Ms. Merkel: "She shouldn't do that, she should respect the independence of the central bank."

The Bundesbank said there will be a final finding on the safety of the ECB/ESM. "Even though the Bundesbank was in favor of the findings of the first ESM, Draghi's OMT (outright monetary transactions), his 'big bazooka,' undermines that," said Uwe Parpart.


8.20 am - Why are Western banks "divorcing" themselves from China?

HSBC Group is expected in the next few months to sell its 8% stake in the Bank of Shanghai. Other banks appear to be doing the same. What's happening?

"Banks have been re-deploying capital away from China into their own markets," said Mike Werner, analyst at Sanford Bernstein. "HSBC wants to grow more on an organic basis rather than outsource their risk to China. The question is are there any buyers out there."

Mike said the Goldman Sachs sell off is more tied to Basel 3. "When they bought it, they were a broker-dealer, now it's a lot more difficult for them to hold on to stakes like that."


8.25 am - Chinese industrial subsidies

After three consecutive gains, the U.S. Leading Economic Index dipped slightly in March. Ken Goldstein, an economist at the Conference Board said that things are different now to what they were a year ago.

"The sequester wasn't there a year ago but what was there, is the uncertainty that keeps businesses and consumers cautious. While tomorrow morning, we'll get a report saying 3.5% GDP, we might not see anything close to that in the next quarter," said Ken Goldstein.