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America’s biggest banks will learn the results of their latest US Federal Reserve stress tests this week, with a passing score expected to be a catalyst for billions of dollars in stock buybacks and dividends.
The expectation for banks to return more money to shareholders is a sign of how much money the U.S. banking industry has amassed during the pandemic.
Companies like Goldman Sachs and JPMorgan Chase have been bolstered by government stimulus measures and sustained revenues from trading and making deals.
The Fed capped dividends and banned share buybacks last year during the outbreak of the Covid-19 pandemic. The central bank eased some of these restrictions in early 2021, but still limited the amount of money banks could return to shareholders.
“The big banks entered the pandemic looking overcapitalized and after more than a year without a share buyback, they appear even more overcapitalized,” one analyst said.
Meanwhile, the powers of Wall Street face the challenge of Europe’s largest retail lender. Santander has set itself the goal of becoming a major player in European investment banking.
Five stories in the news
1. Global Stock Markets Extend Losses The FTSE World index of global equities, which lost 1.9% on Friday, fell another 0.3% today in response to the US central bank’s hawkish stance on interest rates and inflation . Monday’s moves followed the worst week for the Wall Street S&P 500 benchmark in nearly four months.
2. Western powers rekindle Beijing’s anger China’s show of force last week in the Taiwan Air Defense Identification Zone was the largest number of planes ever sent by the People’s Liberation Army to the region, region officials said. . It followed statements from NATO and the G7 criticizing Beijing’s activities in the Taiwan Strait and its crackdown on the pro-democracy movement in Hong Kong.
3. Richest Latin Americans should pay “a lot more” in taxes The IMF’s senior official for Latin America urged governments to charge the rich “a lot more” in taxes in an interview with the Financial Times, saying the world’s most unequal region will not grow if it does not respond to the demands of a more just economic system.
Populism and the pandemic have interrupted Latin America’s commodity-linked prosperity, said Ruchir Sharma, chief global strategist at Morgan Stanley Investment Management.
4. Clayton, Dubilier & Rice tenders for a UK supermarket group Shares of Britain’s fourth largest supermarket, Wm Morrison, jumped 30% following an approach by US private equity firm Clayton, Dubilier & Rice. Morrisons rejected the offer over the weekend, but CD&R must continue its lawsuit of the grocer despite the denial, people familiar with the deal said.
5. Raisi wins Iranian presidential election by landslide Raisi, head of the judiciary and conservative cleric, won the Iranian presidential election in a landslide victory over the weekend that gives regime extremists full control over branches of state for the first time in nearly ‘a decade. Western powers have pledged to continue their efforts to revive the Iran nuclear deal.
The FT view: Raisi’s landslide appears to be a Pyrrhic victory, garnering nothing like the popular support needed to guide Iran through one of its worst crises since the 1979 revolution.
Japan will allow spectators up to 50% of venue capacity at the Olympics, subject to a maximum of 10,000, as the government chooses to ignore its medical advisers.
the Delta variant which has swept across the UK is dominant in Portugal and has appeared in clusters in Germany, France and Spain, prompting EU health officials to warn that more measures are needed to slow its spread.
One of that of Cuba vaccines have shown 62 percent efficacy in late-stage trials, using only two of the three recommended doses.
Vaccitech, the group behind the Oxford / AstraZeneca vaccine, thinks it has a better chance of treat cancers than newer mRNA-based drugs.
The day to come
Activision faces showdown over CEO compensation Video game maker Activision Blizzard faces a controversial vote on its chief executive’s $ 155 million salary after delaying the confrontation in what critics have called an effort to avoid an embarrassing reprimand.
Ethiopia’s first “free” survey Today’s vote will be Prime Minister and Nobel Peace Prize winner Abiy Ahmed’s first electoral test since coming to power following protests in 2018 promising reform.
How should privacy considerations be handled given the emerging status of data as a tradable commodity? Industry leaders will share their perspectives at an FT virtual webinar from Wednesday. Sign up for free here.
What else do we read
New Antitrust Chief Takes on Big Tech Lina Khan, the new head of the Federal Trade Commission, was Our Person in the News this weekend. James Politi, Washington bureau chief, wrote a well-researched profile of the scholar, whose appointment sent shockwaves through Washington, Wall Street and Silicon Valley. The FT Editorial Board says Khan’s appointment is an important opportunity to properly equip antitrust policy for the Big Tech era.
Capital for the people – an idea whose time has come While no one these days has much sympathy for wealthy individuals or corporations or truly believes in the spinoff economy, the threat of tax and regulatory arbitration by other states is real. California applies typically creative thinking to this problem, writes Rana Foroohar.
Behind the scenes of China TV CGTN’s international expansion has played a big part in China’s push for soft power that began in earnest with the Beijing Olympics in 2008. For Beijing, the channel is part of a geopolitical battle for hearts and minds. spirits of the world. Will China become the center of the world economy? This new video explores the idea.
Incentives abound to attract staff to the office Editor-in-Chief Andrew Hill looks at the benefits companies offer to attract staff to the office. He reports the latest data which shows a gap has widened between what employers hope for as lockdowns loosen and what employees want.
Master in Finance The FT’s 2021 ranking of the world’s best masters in finance has been published. HEC Paris is again at the top of the ranking, dominated by French business schools. You can read the full list here and learn more about the methodology used to calculate the rankings here.
Life & Arts
Summer books 2021 The FT is launching its annual summer review of the best books of the year today, starting with the science fiction and business genres. You can share your favorite reads from the year so far here. The best answers will be posted on FT.com as part of the larger series.
Correction: In Friday’s FirstFT we wrote that pressure builds on Randall Kennedy to retire as a Supreme Court justice when in fact we meant Stephen Breyer. We apologize for the mistake.
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