Fear on Wall Street of an Economic Slowdown

U.S. stocks fell broadly in midday trading Wednesday as central banks around the world cut interest rates and increased fears that global growth is being crimped by the U.S.-China trade war.

Every major U.S. index fell and put stocks back on a course for losses after briefly breaking a six-day losing streak on Tuesday. The losses eased as the day progressed, though investors remained in a defensive mode and headed for relatively safe holdings.

Bond prices spiked again, sending the yield on the 10-year Treasury down to 1.64% from 1.74% late Tuesday, a large move.

Yields are at their lowest level in nearly three years. That benchmark yield has retreated from its recent high of 3.23% last November as expectations of economic growth have steadily faded.


“The Treasury market is trading much higher this morning as investors continue to seek a safer haven, completely unsure as to what may happen next,” Kevin Giddis, head of fixed income capital markets at Raymond James wrote in a report.

Banks sustained some of the worst losses. Lower bond yields mean lower interest rates on mortgages and other kinds of loans, which mean lower profits for banks. JPMorgan Chase fell 3.1% and Bank of America fell 3.3%.

The dimming expectations for global growth also send the price of crude oil sharply lower. Benchmark U.S. crude plunged 4.5% at $51.20 a barrel. That helped pull energy sector stocks lower. Occidental Petroleum gave up 3.3%.

Big technology stocks, longtime investor favorites, also posted hefty losses. IBM lost 1.8%.

Safe-play stocks, including consumer staples and utilities, held up far better than the rest of the market.

The S&P 500 index fell 0.5% as of 11:12 a.m. Eastern time. The Dow Jones Industrial Average fell 238 points, or 0.9%, to 25,790. It was down as much as 589 earlier.

The Nasdaq fell 0.1%

China on Monday allowed its currency, the yuan, to weaken against the U.S. dollar in response to U.S. threats to add more tariffs to Chinese goods.

China stabilized the yuan on Tuesday and that helped lift U.S. stocks a day after they endured their worst day of the year. The volatile trading has already put a dent in the major indexes yearly gains. The S&P 500 is down 3.8% for August.

Central banks in New Zealand, India, and Thailand cut key interest rates on Wednesday and investors around the world fear that the escalating trade war between the U.S. and China will severely damage global growth.

After the surprise interest-rate cuts, bond yields sank around the world as investors scrambled for safety. They also poured into gold, which jumped to its highest price in more than six years.

“There is almost a paranoia amongst central bankers to avoid any potential financial hiccups that might hurt the real economy and cause a slowdown,” Jefferies strategist Sean Darby wrote in a report.

U.S. stocks have been on a wild ride since Jan. 22, 2018, when Trump first imposed tariffs on solar products and washing machines to help U.S. manufacturers, but they’re virtually back to where they started.

The S&P 500 closed at 2,832.97 that day and has since been down as much as 17% and up as much as 7%, with moves often driven by waxing and waning worries about the trade war. On Wednesday morning, the S&P 500 sat at 2,862.45, up 1% from that early 2018 starting point.

Since Trump tweeted in March 2018 that “trade wars are good, and easy to win” after raising tariffs on steel and aluminum, the S&P 500 is up 6.3%, though that gain has nearly halved in the last couple weeks as worries about the trade war have surged.

A key gauge of fear in the marketplace surged 6.2%. The VIX index, which measures how much traders are paying to protect themselves from swings in the S&P 500, was still below where it was at the start of the year when recession fears were surging, but it’s close to its highest level of the year.

European and Asian indexes were mixed.

Disney fell 5.1% after disappointing investors with a sharp third-quarter profit plunge that fell far short of Wall Street forecasts.

The entertainment company said underperformance from its Fox movie and TV studio helped weigh down the fiscal third-quarter financial results. It bought Fox’s entertainment business in March for $71 billion.

Match Group shares jumped 25.2% after the operator of Tinder, OkCupid and other dating sights beat Wall Street’s second-quarter earnings forecasts. The company reported a surge in Tinder subscribers and raised its revenue forecast for the year.

Drugstore operator CVS Health rose 6% after swinging to a second-quarter profit and handily beating Wall Street forecasts. The company attributed part of the gains to health insurer Aetna, which it bought for $69 billion in November.

source: usa.inquirer.net

Paypal moves to offer traditional banking services

Paypal expands its feature set by offering basic traditional banking services on top of it existing digital wallet.

These new services include Federal Deposit Insurance Corp. insurance for balances up to government-set limits, debit cards for ATM cash withdrawals, employer direct-deposit for earnings, and funds top-up through taking a picture of a paper check, reports The Wallstreet Journal.

Unlike traditional banks, which pay interest on balances, Paypal will charge 1 percent for paper check photo deposits and added fees for ATM withdrawals.

The goal of the company is not to replace traditional banks. Rather it offers an option to people with small balances, which is mostly overlooked by traditional banking systems.

“If you don’t have a bank account, you can’t take an Uber ride, can’t stay in a room on Airbnb,” said Paypal chief operating officer Bill Ready.

To build this system, Paypal worked with several small banks, which will largely work behind the scenes. Ready said this allows the company to get products to customers faster than banks.  Alfred Bayle /ra

source: technology.inquirer.net

Wall Street clings to records, helped by banks; tech falters

The S&P 500 ended slightly higher on Monday as financial stocks rose ahead of a Federal Reserve meeting, but the Nasdaq pared gains sharply as technology stocks lost ground late in the session.

Five of the 11 major S&P sectors ended lower. Rising U.S. Treasury yields boosted financial stocks, as higher interest rates tend to lift bank profits, but rate-sensitive sectors such as utilities were the weakest.

The Fed meeting, which starts Tuesday, is expected to yield details on how the central bank will unwind its $4.2 trillion portfolio of Treasuries and mortgage-backed securities, nearly a decade after the global financial crisis.

After pushing the S&P above its 2,500-point milestone last week, investors were holding their fire as they awaited more clues on the timing of the next rate hike from Fed Chair Janet Yellen.

"You just had that little momentum spurt after it went through 2,500 but it is kind of running out of steam and is going to bide its time until Wednesday, when they listen to Janet" said Ken Polcari, director of the NYSE floor division at O’Neil Securities in New York.

However, the Dow still clocked a closing record for the fifth day in a row while the S&P had a closing record for the second consecutive session.

"There's momentum in the market. There's lots of cash. Even though the Fed's about to reduce their balance sheet, you continue to have incredibly aggressive monetary policy. That continues to lead to money flowing into the market almost in an indiscriminate fashion," said Stephen Massocca, senior vice president at Wedbush Securities in San Francisco.

The Dow Jones Industrial Average rose 63.01 points, or 0.28 percent, to 22,331.35, the S&P 500 gained 3.64 points, or 0.15 percent, to 2,503.87 and the Nasdaq Composite added 6.17 points, or 0.1 percent, to 6,454.64.

Big technology stocks such as Microsoft and Google parent Alphabet came under pressure late in the session after Amazon said it would move to charging businesses in one-second increments for use of its servers.

"That competes with Google and Microsoft, and it's going to weigh on the entire tech space" because of price competition, said Michael O'Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut.

Microsoft shares ended down 0.2 percent while Alphabet was off 0.6 percent, with both stocks seeing a pickup in volume late in the day.

Advancing issues outnumbered declining ones on the NYSE by a 1.36-to-1 ratio; on Nasdaq, a 1.55-to-1 ratio favored advancers.

About 5.97 billion shares changed hands on U.S. exchanges on Monday, compared with the 5.91 billion average for the last 20 sessions. — Reuters

Chaos as millions in India crowd banks to exchange currency

NEW DELHI—Long lines have grown longer, scuffles have broken out and chaotic scenes are being seen across India as millions of people wait to change old currency notes that have become worthless after the government demonetized high-value bills.

Angry scuffles broke out Saturday in New Delhi after ATM machines ran out of bills. Minor stampedes occurred in two places when thousands of people waiting in line surged forward to enter the building.

Paramilitary troops posted at banks in some of the most congested areas of the city walked among the crowd urging people to stay calm.

Earlier in the week, India’s government made a surprise announcement that all 500- and 1,000-rupee notes had no cash value in an effort to tackle corruption and tax evasion.

source: newsinfo.inquirer.net

Asian stocks lower on renewed worries about banking sector

SEOUL, South Korea—Asian stock markets were lower on Friday as investor sentiment was dented by overnight losses on Wall Street and renewed worries about the health of Deutsche Bank.

KEEPING SCORE: Japan’s Nikkei 225 slumped 1.5 percent to 16,449.84 and South Korea’s Kospi fell 1.1 percent to 2,045.43. Hong Kong’s Hang Seng index sank 1.7 percent to 23,334.07. Australia’s S&P/ASX 200 dropped 0.7 percent to 5,435.90. China’s Shanghai Composite Index was up 0.3 percent to 3,005.86. Stocks in Singapore and other Southeast Asian countries were also lower.

ANALYST’S TAKE: “Risk sentiment waned overnight as worries about global banks weighed on markets,” said Alex Wijaya, senior sales trader at CMC Markets in Singapore. “Stock markets worldwide are rattled by the latest development at Deutsche Bank.”

BANK WOES: US authorities are seeking $14 billion from Deutsche Bank to settle legal claims over its sales of mortgage securities in 2007 and 2008, which helped kick off a global financial crisis. The bank said it had struck a deal to sell a subsidiary and stressed that it was not seeking government help but investors are worried what will happen to Germany’s biggest lender and to the broader financial system if Deutsche Bank runs low on capital. Analysts said the troubles at Deutsche Bank are raising scrutiny over other banks in Europe, which are also in talks regarding mortgage settlement with the US authorities.

CHINA OUTPUT: The Caixin monthly purchasing managers’ index, which is closely watched for insights into China’s economy, ticked up to 50.1 for September from the previous month’s 50.0 reading. The tiny expansion in activity and gains in overall new orders for the third straight month offered a glimmer of hope for the world’s second-largest economy that has been grappling with a prolonged slowdown. But the private survey result was not strong enough to relieve investors outside China.

WALL STREET: US stocks finished lower on Thursday as drug companies and banks absorbed large losses. The Dow Jones industrial average lost 195.79 points, or 1.1 percent, to 18,143.45. The Standard & Poor’s 500 index sank 20.24 points, or 0.9 percent, to 2,151.13. The Nasdaq composite dropped 49.39 points, or 0.9 percent, to 5,269.15.

OIL: Benchmark US crude lost 54 cents to $47.29 per barrel in New York. The contract gained 78 cents, or 1.7 percent, to close at $47.83 a barrel on Thursday. Oil prices surged earlier this week after the nations of OPEC, which collectively produce more than third of the world’s oil, agreed to a small cut in production in a surprise decision Brent crude, the international benchmark, fell 67 cents to $49.14 a barrel in London.

CURRENCIES: The dollar fell to 100.93 yen from 101.16 yen while the euro fell to $1.121 from $1.122./rga

source: business.inquirer.net

British vote on leaving the EU rocks world financial markets

SEOUL, South Korea — World financial markets were rocked Friday by Britain’s unprecedented vote to leave the European Union, with stock markets and oil prices crashing and the pound hitting its lowest level in three decades.

The uncharted, unexpected path of a European Union without Britain sparked the sell-offs, with more jitters expected as global markets try to digest the shock result.

Tokyo stocks plummeted about 8 percent, their biggest fall since 2008, while South Korea’s Kospi tumbled about 3 percent. Britain’s FTSE 100 futures tanked 8.3 percent.

Crude oil prices and US futures also took a big hit. The British pound plummeted more than 10 percent in six hours while the yen surged about 3 percent to the US dollar as investors seeking safety snapped up the Japanese currency.

By early afternoon in Asia, a tally by the BBC showed Britain had voted to leave the 28-nation European Union by about a 52 percent to 48 percent margin.

Japan’s Nikkei 225 plunged 8.3 percent to 14,897.32 while South Korea’s Kospi sank 3.4 percent to 1,918.70. Hong Kong’s Hang Seng index tumbled 4.8 percent to 19,866.20 and Australia’s S&P/ASX 200 fell 3.4 percent to 5,012.20. Stocks in Shanghai, Taiwan, Sydney and Southeast Asian countries were sharply lower.

US futures took a dive. Dow futures fell 3.4 percent and S&P futures nosedived 5 percent.

“Financial markets throughout the night have been chaotic to say the least and this may continue as the day progresses,” said Craig Erlam, senior market analyst at Oanda in London. “All eyes will now be on central banks around the world to see how they respond to these market developments, particularly the Bank of England and the Bank of Japan.”

On Thursday, Wall Street finished with rallies as pre-poll forecasts showed that Britain would keep the EU membership. Asian stock markets opened the day higher but the mood turned sour as results started to show that the “leave” vote would win. As the results increasingly pointed to the EU exit, investors dumped stocks and other risky assets.

The results sent the pound on a wild ride. It rose to its highest point for the year of $1.50 before tumbling more than 10 percent to a low of $1.3303, its lowest level since 1985.

In other currencies, the dollar fell to 101.51 yen from 104.80 yen while the euro weakened to $1.097 from $1.132.

Benchmark US crude plummeted 6.4 percent, or $3.17, to $46.94 per barrel in New York. Brent Crude, the benchmark for international oil price, fell 6.1 percent, or $3.11, to $47.80 per barrel in London.

source: newsinfo.inquirer.net

Pound, Asia markets collapse as Britain quits EU

HONG KONG—The pound collapsed to a 31-year low and currency, equity and oil markets went into freefall Friday as projections showed Britain has voted to leave the European Union.

Sterling crashed more than nine percent to $1.3305, its weakest level since 1985, while the greenback itself slumped below 100 yen for the first time in two-and-a-half years as traders fled to safety.

In the weeks leading up to Thursday’s historic vote, there had been widespread warnings that a vote to leave would cause another rout across global markets that would wipe trillions off valuations, just months after a painful China-fuelled sell-off.

And as results came in, the doomsday scenario began to unfold as the BBC and other broadcasters called a win for “leave”.

The pound had earlier topped $1.50 following predictions the “remain” group would win but as the Brexit camp posted victories around the country, traders stampeded to put in sell orders.

The dollar slumped briefly to 99.02 yen, the first time it has gone below 100 yen since November 2013, before edging back up slightly. The Japanese unit is considered a safe bet in times of uncertainty and turmoil.

Japan’s Finance Minister Taro Aso will hold an emergency news briefing Friday. He has previously said Japan would closely watch the dollar-yen rate and act accordingly if the yen became too strong, indicating the government could intervene in currency markets.

A flight to safety also saw higher-yielding and emerging market currencies slump, with the Australian dollar down 3.2 percent, South Korea’s won diving 2.4 percent, Malaysia’s ringgit down 2.3 percent and the Indonesian rupiah shedding 1.7 percent.

There were also heavy losses for India’s rupee, the Canadian dollar and the Singapore dollar.

‘Independence day’

The outcome has upturned expectations, which had been for a tight race narrowly won by the “remain”, while bookmakers had said there was a 90 percent chance of staying in.

But as the shock results rolled in, equity markets went into meltdown.

Tokyo plunged more than eight percent in the afternoon, Sydney shed 3.7 percent and Seoul was 3.5 percent off. Mumbai lost three percent and Shanghai sank 1.4 percent by lunch, while Taipei, Wellington, Manila and Jakarta all saw sharp losses.

Hong Kong tumbled 4.7 percent by the break with British banking giants HSBC and Standard Chartered both plunging more than 10 percent.

In the early hours in Britain, Nigel Farage, leader of the anti-Europe UK Independence Party, declared victory, saying it was the country’s “independence day”.

The prospect of a severe hit to the global economy also hammered oil prices, with both main contracts slumping more than six percent.

“We are seeing oil swept up in the general market nervousness to the vote,” Ric Spooner, a chief analyst at CMC Markets in Sydney, told Bloomberg News.

“Corrections are likely to be fairly shallow in oil because prices will be supported by the fact a balanced market is firmly on the horizon.”

source: business.inquirer.net

Mortgage Broker Vs Bank To Get a Mortgage

When purchasing a home, have you debated if you should use a Mortgage Broker or the bank? Today, we have Sheriza Shamshudin from Northwood Mortgage discussing this topic.  You will learn the key difference between the two to make a better decision.



Subscribe to our Youtube Channel for more tips on mortgages!

https://www.youtube.com/c/NorthwoodMortgageLtdToronto

source: northwoodmortgage.com

Bangladesh heist exposes Philippine dirty money secrets

When mystery hackers launched a stunning raid on Bangladesh’s foreign reserves, a plot worthy of a John le Carre spy novel was sparked in the Philippines, exposing the Southeast Asian nation as a dirty money haven.

The $81 million stolen from the Bangladesh central bank’s American accounts last month was immediately sent via electronic transfer to the Philippines, with the thieves deliberately targeting their laundering location.

The Philippines has some of the world’s strictest bank secrecy laws to protect account holders, while its casinos are exempt from rules altogether aimed at preventing money laundering.

“The Philippines is very attractive (for dirty money) because our laws have gaping holes. It’s easy to launder money here,” Senator Sergio Osmeña, who is pushing for stronger anti-money laundering laws, told AFP.

Still, if the thieves were to get away with their audacious heist, the money had to be moved quickly through the banking system and into the casinos.

And it did.

Authorities took four days to order a recall of the money.

But by then it had vanished — leaving in its place a tale of death threats, bribes, shady business figures and a bank manager who could be the villain or a victim.

“I did not do anything wrong. If this is a nightmare, I want to wake up now,” the manager, Maia Deguito, told ABS-CBN television this week after authorities stopped her at Manila airport from trying to leave the country.

“I live everyday in fear.”

With authorities in Bangladesh and elsewhere bamboozled over who masterminded the cyber-heist, Deguito’s role as manager of the bank that accepted and shifted the money has come under intense scrutiny.

She has accused the bank’s president, Lorenzo Tan, of ordering her to move the money. He has fiercely denied the accusations.

Philippine senators who launched an inquiry this week into the affair are yet to determine whether she was a scapegoat or not, but are convinced she was not the mastermind.

“It’s a big operation. This could not have been done out of the Philippines alone,” Senator Ralph Recto said.

The Senate inquiry and another probe by the Philippines’ Anti-Money Laundering Council have hit several major hurdles, including a security camera at the bank not working when the money was shifted.

Accusations and counter-accusations between Deguito and RCBC management have further confused investigators.

‘Money trail’

A final roadblock has emerged at the casinos, with the money apparently vanishing in mountains of gambling chips and mysterious middlemen.

“Our money trail ended at the casinos,” Julia Abad, deputy director of the anti-money laundering council, told senators Tuesday.

On February 5, the same day Bangladesh Bank was hacked, the money was sent electronically to four accounts in Deguito’s RCBC branch in the financial capital of Makati, according to testimony to the Senate inquiry.

Those accounts appeared to have been set up solely for that purpose because they were done using aliases, the Senate inquiry heard.

After that, the bulk of the money was transferred into accounts of a local ethnic Chinese businessmen, William Go, who has since protested his innocence. He said his signature was forged to set up the accounts.

From there, the money was briefly held by Philrem, a foreign exchange brokerage.

Philrem President Salud Bautista told the Senate inquiry $30 million went to a man named Weikang Xu.

He was described as a casino junket operator but senators have said they know little more about him other than he is of Chinese origin.

The anti-money laundering council said another $29 million ended up in Solaire, a casino on a glittering Manila bayside strip that the Philippines hopes will become one of the world’s biggest gambling destinations.

That money was exchanged into chips but could only be turned back into cash after being played in the casino, its management told the Senate inquiry.

Another $21 million was sent to Eastern Hawaii Leisure, which runs a sparsely furnished casino with Chinese-only television in Santa Ana, a sleepy town in the far northern Philippines, according to the council.

Senator Osmeña said the case was likely just the tip of the iceberg.

“This could have happened hundreds of times already,” he said.

“We discovered this one only because someone complained. But normally, if a drug dealer from Burma (Myanmar) or China would send money here, no one would complain.”

source: globalnation.inquirer.net

BDO signs biggest syndicated term loan of $500 million

BDO Unibank Inc. has closed a $500-million, three-year syndicated term loan with international banks, marking its largest syndicated loan transaction to-date.

“BDO intends to utilize the facility for refinancing of an existing term loan and for general banking and corporate purposes,” the bank said in a disclosure to the Philippine Stock Exchange Thursday.

It signed the three-year agreement with various lenders across the Americas, Europe, Asia, and the Middle East.

The deal is considered the largest syndicated loan transaction by a Philippine financial institution to-date.

“The facility generated strong interest and was oversubscribed, prompting BDO to upsize it to $500 million from the initial tranche of $350 million,” the Sy-led lender said.

Lead arrangers and bookrunners for the deal were Bank of America N.A., Deutsche Bank AG-Singapore Branch, The Hong Kong and Shanghai Banking Corporation (HSBC) Limited, Mizuho Bank Ltd., Standard Chartered Bank, and United Overseas Bank Limited. – Jon Viktor Cabuenas/VS, GMA News

source: gmanetwork.com

What Options do Brokers Offer that Banks Don’t?

Brokers versus Lenders

A broker’s job is not just to provide a mortgage; it is to find the best possible mortgage for a client’s situation among multiple lenders.

A good broker will shop around between many different banks and credit unions to find the best mortgage product for the client. This is a fundamentally different service from banks or other lenders.

While a broker’s purpose is to find the best mortgage for a client, a bank’s purpose is to sell the client on the bank’s products.

Advantages of Going through a Broker

Mortgages are complicated affairs with many hidden costs. Many first-time home buyers choose mortgages strictly based on rates. However, they end up getting fleeced by fees, pay restrictions, and refinance policies.

This is especially true for people with variable income or bad credit, who need more flexible mortgage options. A broker can help find a mortgage product specifically designed for any needs.

Best of all, a mortgage broker has a good understanding of value, and can find the best new offers from a variety of lenders. Every time a new mortgage product is rolled out by a lender, brokers across the country analyze and evaluate its value for their clients.

Additional Options through a Broker

Specifically, the options provided by a broker, as opposed to a bank, include:

    Choice between different lenders
    Negotiation of rates with lenders
    Neutral consultations and assessments

Rising Popularity of Brokers

The recession may be over, but capital is still tight. Bank rates have continued to increase for the past few years. CRBC and TD in particular have both hiked their rates across the board. This has made homeownership very difficult for many Canadians.

The good news is that many brokers can still find the deals among the rising rates.

Lesser-known monolines, or dedicated mortgage lenders, have tried to gain an advantage over the big banks by providing lower rates. It’s difficult for laypeople to find the right monoline for them, but brokers have the skills to find monoclines with both lower rates and appropriate terms.

The public is noticing the better mortgages obtained by brokers. Brokers now account for about one third of new mortgages. Among people who have already gone through the mortgage process with a bank, most choose to refinance using a mortgage broker.

source: northwoodmortgage.com

Hackers who hit JPMorgan attacked some 9 other firms – report

About nine other banks and brokerages were infiltrated by the same group of hackers who recently attacked computer systems at JPMorgan Chase & Co, the New York Times reported late on Friday, citing unnamed people briefed on the matter.

The report, which could not be independently verified and did not identify any of the victims beyond JPMorgan, said it was not clear how serious the attacks had been.

JPMorgan said on Thursday that names and contact information for some 83 million household and small business customers were stolen, making it one of the biggest data breaches in history.

The New York Times said the breadth of the attacks and uncertainty about the motives of the hackers are troubling US policymakers and intelligence officials.

Representatives with the US Secret Service could not be reached for comment on Saturday morning. The Secret Service is investigating the attack on JPMorgan. — Reuters

Android trojan steals banking data, targets Korean users

A new Android Trojan that steals banking data is making the rounds online and is presently targeting Korean users, a security vendor reported this week.

MalwareBytes said the Trojan disguises itself as the Google Play Store app, then replace legitimate banking apps and capture user data.

"This particular one disguises itself as the Google Play Store app and will run as a service in the background to monitor events. This enables it to capture incoming SMS, monitor installed apps and communicate with a remote server," it said in a blog post.

It added this appears to be the latest variant of Android banking Trojans that previously targeted European and Brazilian banks.

MalwareBytes said malware authors appear to be expanding into other markets, "since Android is very popular worldwide."

An investigation showed the Trojan will contain the exact Package Name and look very similar to the legitimate app, "but contains malicious code with no banking functionality."

It will "capture the infected users banking information and other useful data that will generate revenue for them," it added.

MalwareBytes advised users to "stick to reputable markets for your apps and be wary of downloading apps from file shares, especially if one is available in the Play Store." — KDM, GMA News

source: gmanetwork.com

Eurozone economy trapped in recession

Brussels — The dogged recession across the eurozone is deepening with the latest EU figures released Wednesday showing a full year-and-a-half of contraction as tens of millions languish in unemployment.

With governments trapped in austerity, banks refusing to lend and leaders resorting to urgent bids to unlock tax hidden in offshore bank vaults, the eurozone is now firmly entrenched as the global economy's "weakest link," according to Dutch-based ING analysts.

One week from another tense summit of EU leaders, official figures showed a 0.2 percent contraction between January and March, in the longest recession since the single currency bloc was established in 1999.

On a year-by-year comparison, data agency Eurostat said this translated into a 1.0 percent drop in output across the 17 states that share the euro—which are home to 340 million people.

While core economy Germany clambered out of negative territory with 0.1-percent growth after a 0.7-percent slide at the end of 2012, France sank into recession with a 0.2-percent reduction and both Italy and Spain posted 0.5-percent drops, the figures showed.

"We doubt that the region is about to embark on a sustained recovery any time soon," said Ben May of London-based Capital Economics, citing disappointing survey results in recent weeks.

The latest official European Commission forecast for 2013 published earlier this month tipped a 0.4-percent contraction, but the analyst said that was way off course with "something closer to a two-percent decline" likely.

His firm's pessimism was backed by Howard Archer of fellow London-based specialist analysts, IHS Global Insight.

"We expect the eurozone to suffer gross domestic product (GDP) contraction of 0.7 percent in 2013 with very gradual recovery only starting in the latter months of the year," said Archer.

"Today's GDP figures once again show that the eurozone remains the weakest link in the world economy," said the ING analyst, Peter Vanden Houte, though "a subdued recovery in the second half of the year is still possible."

But for that to happen, it would be "imperative that eurozone leaders maintain the momentum in the strengthening of the monetary union, with the banking union as a first important hurdle to be taken."

He tipped action by the European Central Bank to boost lending to small businesses.

No figures were given for growth in Ireland which, among the bailout economies, appeared to have turned the corner in the previous quarter with flat instead of negative growth.

However, Cyprus, at negative 1.3 percent, can expect a sharp deterioration later, given that the figure was for the period prior to bailout negotiations that saw banks in lockdown for a fortnight. — Agence France-Presse

source: gmanetwork.com

For banks in cyber heist, how to get their money back?

New York — Because the sums were large and such attacks are relatively new, the two Middle East banks hit in a $45 million ATM heist face an uncertain path in trying to recover their losses, financial, insurance and legal experts say.

Oman-based Bank of Muscat lost $40 million and United Arab Emirates-based National Bank of Ras Al Khaimah PSC (RAKBANK) lost $5 million in the global heist, according to US prosecutors.

Computer hackers broke into third-party companies that processed transactions for prepaid debit cards issued by the banks, the prosecutors said. Then, gangs in 27 countries withdrew the money from cash machines in two coordinated hits, one on December 21 last year and the other on February 19 this year.

While details of what happened are still sketchy, experts said the banks could bring claims against the processing companies in court, or they could file claims with their insurers and those of the processing companies.

"There's no hard and fast rule," said Dan Karson, the Americas chairman of Kroll Advisory Solutions. "We're in very much a new cybersphere of finance, and allocating liability is still very much evolving."

Any claims by banks against the processing companies would depend on the contracts between the two parties, Karson and other experts said. Those contracts include industry security standards, which are required by the major credit card payment networks, in this case MasterCard.

In most security breach cases, the processing company in question did not fully comply with the standards, said Doug Johnson, vice president for risk management policy at the American Bankers Association.

However, even if the processor failed to comply with security standards, banks may still be unable to get back their money. That is because the contracts between processors and banks, under terms set by credit card companies like MasterCard or Visa, typically limit the processor's liability.

"They can't make everybody whole, or they'll be out of business," said Michael Klaschka of Integro Insurance Brokers, which has many financial institutions as clients. "The bank may have very little recourse against the credit card processor."

In the hit against Bank of Muscat, the processor is enStage Inc., based in Cupertino, California, a source close to the Bank of Muscat said.

In a statement on Sunday, Bank of Muscat said it was examining its options to recover the money. "We reiterate that we are exploring all avenues of recovery so as to protect shareholder interests and will advise the markets accordingly if there are any material developments in this regard," the statement said.

Officials at enStage did not respond to requests for comment on Saturday. EnStage CEO Govind Setlur said in a statement in the Times of India his company had implemented security enhancements since the attack.

In the RAKBANK case, the processor is India's ElectraCard Services, according to people familiar with the situation. ElectraCard Services said in a statement on Sunday that data appeared to have been compromised outside its "processing environment.

MasterCard has said it cooperated with law enforcement in the investigation and said its systems were not compromised in the attacks.

The banks can still try to sue the processors for negligence or other claims, but their success may be limited by their contracts, which include regulations that lay out specific fines and dispute resolution procedures mandated by the credit card companies.

Such lawsuits have proven difficult to win, according to Joseph Burton of law firm Duane Morris in San Francisco, an expert in financial litigation. US federal courts have generally, but not unanimously, found that banks are restricted to contractual remedies.

In one major case, card-issuing banks filed a class action against Heartland Payment Systems after the processor announced in 2009 that hackers had compromised the data for more than 100 million credit cards.

A federal judge in Houston, Texas, dismissed almost all of the claims in 2011, finding that the banks were bound by their contracts, which included regulations set by Visa and MasterCard that govern how banks can seek relief after a breach. The banks' appeal is pending.

Bank of Muscat and RAKBANK could also seek payment from their insurers under their general policies.

Some banks also have additional security coverage for cyber crime, although experts said the market for such policies is still relatively immature. It is not known if Bank of Muscat or RAKBANK carried cyber insurance.

The insurers, in turn, could also press claims against the processors, or the processors' own insurers.

"It's certainly possible that the bank could be left holding the bag," said Frederick Rivera of law firm Perkins Coie, an expert in financial services litigation in the United States.

A complicating factor is that the banks are located in the Middle East, while one of the processors is based in India, making it unclear which courts would have jurisdiction over any litigation. But experts said the requirements that credit card companies impose on banks and processors are global in nature.

Federal prosecutors will also seek restitution for the banks from the defendants arrested in the case, though the amount of funds available likely won't approach the total amount of stolen money.

The US Justice Department indicted eight people it said had withdrawn cash in New York, and prosecutors seized hundreds of thousands of dollars in cash and bank accounts, along with luxury watches and a Mercedes sport utility vehicle.

But the New York cell was just one part of a coordinated global heist. US prosecutors have not said where the ringleaders of the gang were based.

The prosecutors said the gang targeted prepaid debit cards issued by the two banks, using hackers who broke into the payment processing companies to raise account balances and withdrawal limits for the cards.


The heist did not compromise the accounts of any individual customers, unlike in cases of identity theft. In those cases, customers are typically made whole by their financial institution or credit card companies, which in turn seek to be made whole by the company that was breached. — Reuters

source: gmanetwork.com

Design: Lose the Combined "Investments & Insurance" Navigation Category

I spent many hours in November looking at how banks and credit unions position insurance offerings online (our report here). Many banks don't even mention insurance. And those that do often bury it under an "investments & insurance" tab. Wells Fargo is the most notable example.
While I understand the need to keep navigation choices to a manageable number, these two really shouldn't be lumped together. It's like Amazon having one tab for "Shoes and Goats." It's confusing for both the shoe buyer and goat shopper.

Although a number of investments contain an insurance component (e.g., annuities), for most shoppers, this is unclear. Usually investing comes first, so it's unlikely the auto insurance shopper is going to pay much attention to a navigation item beginning with "investments." That's the furthest thing from the mind of someone trying to save a few bucks to keep the family fleet running.

imageBottom line: If you are serious about selling insurance, it needs proper attention in website layout and navigation. Notice how Wescom Credit Union (Pasadena, CA) splits investments and insurance into two categories, with appropriate calls to action at the bottom of each column . The CU has some work to do on the landing page (it's cluttered and hard to find the quote I was promised), but it's still better than most.

source: netbanker.com

Debt Levels, Big Monetary Stimulus on Tap at G20

Finance leaders of the G20 economies on Friday were set to debate specific targets for reigning in debt levels and the potential dangers from the latest round of aggressive easing of monetary policy from the world's biggest central banks.

They were also poised to demand swifter resolution to setting guidelines for financial benchmarks like the Libor interest rate in the wake of a global rate-rigging scandal.

But a rethinking of the austerity push among the world's biggest economies loomed as the biggest talking point. Advanced economies, particularly in Europe, have undertaken sharp austerity drives in recent years to curb growing debt, but those efforts have at times damaged economies already suffering from capital flight and under-investment from the private sector.

EU Economic and Monetary Affairs Commissioner Olli Rehn told Reuters in an interview on Thursday that a period of reduced spending and borrowing was necessary to calm markets concerned about out-of-control debt levels, particularly in peripheral European countries. That time has passed, he said.

"Decisive action was taken. Now as we have restored the credibility in the short-term, that gives us the possibility of having a smoother path of fiscal adjustment in the medium-term," he said.

The United States has opposed committing to any targeted level of public debt as a percentage of GDP, a common way to measure a nation's debt burden.

"I think an issue that will come up ... is the issue of hard targets, or not, for debt-to-GDP," Canadian Finance Minister Jim Flaherty told reporters on Thursday.

In a 2010 study frequently cited by policymakers, Harvard professors Kenneth Rogoff and Carmen Reinhart found that on average, economies contract when the debt-to-GDP ratio surpasses 90 percent - a level G20 officials were set to debate.

However, the study's results were disputed by researchers at the University of Massachusetts at Amherst, who said growth for countries with those ratios was actually 2.2 percent.

Weakness in economies that undertook the most severe measures to cut deficits undercut the austerity argument. The United Kingdom, in particular, is suffering its third recession in the last five years.

Still, Flaherty urged the G20 to set hard targets on debt and deficit, though he added that troubled economies should move more slowly towards balanced budgets than others.

"It's important for confidence by investors, which leads to more investment, economic growth and jobs," Flaherty said.

SPILLOVER CONCERNS

The unprecedented level of monetary stimulus designed to reinvigorate struggling large economies, including the United States, the euro zone and Japan, has raised concerns about excessive capital flight to developing nations.

In a communique on Thursday, the Group of 24 developing nations, whose ranks include Brazil, India, South Africa and Mexico, called on the advanced economies to "take into account the negative spillover effects ... of prolonged unconventional monetary policies including on inflation and the volatility of capital flows and commodity prices."

The Bank of Japan is attempting to end decades of stagnation by pumping $1.4 trillion into its economy, some of which is expected to find its way into emerging markets. Local currency funds have pulled in $16.7 billion in the first quarter of 2013 worldwide, the most in more than two years, according to Lipper, a unit of Thomson Reuters.

"There is a call from the G24 members to have clear coordination and better communication between advanced economies and emerging markets ... towards using coordination as a way to mitigate these potential asset appreciation bubbles. The consensus is that this is something that has to be closely monitored," said Mexican Finance Minister Luis Videgaray.

Videgaray has cause for concern.

In the days following the Bank of Japan's announcement, for example, the Mexican peso jumped 2.5 percent against the dollar to its strongest in 20 months. Against the yen, the peso surged over 9 percent.

Bank of Japan Governor Haruhiko Kuroda, in response to questioning about the country's aggressive efforts, said he didn't see signs of asset price bubbles "brewing in emerging nations" as a result of monetary stimulus.

"It's true that the massive monetary stimulus of advanced economies may affect emerging economies including through capital inflows," he said. "Such spill-over effects had been discussed even before the G20 meeting, and will likely be on the agenda at (this week's) meeting too."

The G20 finance ministers are due to release their formal communique around midday on Friday. They plan to task the Financial Stability Board, a coordinating body of global financial regulators, with overseeing the reform of financial benchmarks such as Libor, two sources familiar with the situation told Reuters on Thursday.

An early draft of a communique G20 financial officials will be debating asks the FSB to take on the role after a global interest rate-rigging scandal that involved some of the world's largest banks.

The International Organization of Securities Commissions came out with a report this week saying that financial benchmarks should be based on actual transactions rather than estimates, such as is the case with Libor.

source: foxbusiness.com