Perspective
FT – Shadow banking grows to more than $45tn assets globally – Caroline Binham 3/5
- “’Shadow banking’ grew by nearly 8% globally to more than $45tn on a conservative measure after international rule makers were able to include detailed data from China and Luxembourg for the first time.”
- “Shadow banking — the parts of the financial system that perform bank-like functions such as lending but do not have the same safeguards — accounted for 13% of total global financial assets, according to the Financial Stability Board, the international group of policymakers and regulators that makes recommendations to the G20.”
- “The report covers 2016 figures. But since then China has launched a continuing crackdown on its shadow-banking sector.”
- “China contributed $7tn, or 15.5%, of the $45tn assets comprising the FSB’s conservative definition of shadow banking, while Luxembourg contributed $3.2tn, or 7.2%.”
- “But defining shadow banking can be a slippery business. The FSB’s exercise starts with looking at the assets of anything that is not a bank, including pension funds, insurers, and ‘other financial institutions‘, or OFIs. That wider ecosystem accounts for $160tn assets worldwide, compared with $340tn total financial assets globally.”
- “Meanwhile, OFIs grew by 8% to $99tn; a faster level than banks, insurers and pension funds. OFIs now account for 30% of the entire financial system’s assets; the highest level since 2002.”
Worthy Insights / Opinion Pieces / Advice
A Wealth of Common Sense – The Winners Write the History Books – Ben Carlson 3/4
- “Coming up with explanations for past successes is easy but figuring out who the winners will be going forward never is.”
FT – Venezuela is the one to watch on oil – Nick Butler 3/4
- “This is Opec’s most unstable country and Maduro could escalate the dispute with Guyana.”
FT – Reports of oil demand’s death have been greatly exaggerated – Chris Midgley 3/2
- “The most successful people are not the most talented, just the luckiest, a new computer model of wealth creation confirms. Taking that into account can maximize return on many kinds of investment.”
Markets / Economy
WSJ – Credit-Card Losses Surge at Small Banks – AnnaMaria Andriotis 3/4
- “Concerns have been mounting in the broader credit-card industry about the recent trend of rising delinquencies. While overall card losses are still relatively low—below the historical average of the last 30 years, for instance—they’ve been slowly climbing in the last two years.”
- “But they’ve especially surged at smaller banks, those outside the 100 largest by assets that have less than around $10.4 billion in assets. There, the average charge-off rate is near an eight-year high, while the 3.5% loss rate at large banks remains well below the 10.6% seen in 2010.”
Real Estate
- “Approximately 1.4 million Americans lost the interest rate incentive to refinance their mortgages in the first six weeks of 2018, according to an analysis from real estate data provider Black Knight.”
- “The benchmark 30-year fixed-rate mortgage averaged 4.43% during the week ending March 1, according to Freddie Mac’s weekly survey. That was up three basis points from the prior week and leaves rates nearly half-a-percentage point higher than the level at which they started the year.”
Automotive
NYT – California Scraps Safety Driver Rules for Self-Driving Cars – Daisuke Wakabayashi 2/26
- “The state’s Department of Motor Vehicles said Monday that it was eliminating a requirement for autonomous vehicles to have a person in the driver’s seat to take over in the event of an emergency. The new rule goes into effect on April 2.”
China
FT – China hedge funds suffer in debt crackdown – Gabriel Wildau and Yizhen Jia 3/4
Japan
FT – Yen strengthening and trade rhetoric hit Japan exporters – Leo Lewis 3/4
- “Currency jumps after Kuroda hints BOJ may exit its massive stimulus in 2019.”
WSJ – Daily Shot: USD / JPY Inverted) 3/4
WSJ – Daily Shot: Nikkei 225 3/4
