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FTC looks to CFPB collaboration; AI-powered hedge fund to close

Banking Essentials Newsletter - November Edition

Online Brokerage Space Should Remain Rich Source Of M&A

University Essentials | COVID-19 Economic Outlook in Banking: Rates and Long-Term Expectations: Q&A with the Experts

Estimating Credit Losses Under COVID-19 and the Post-Crisis Recovery


FTC looks to CFPB collaboration; AI-powered hedge fund to close

Amid inflation pressures resulting from a tight labor market, the Federal Reserve may raise interest rates to a level where the central bank takes a restrictive stance, according to Federal Reserve Bank of Chicago President Charles Evans. The Fed should keep raising rates to move its policy "toward a neutral setting and then likely a bit beyond neutral to help transition the economy onto a long-run sustainable growth path," with inflation at the targeted 2%, he said.

The National Association of Federally-Insured Credit Unions is calling on members of Congress to consider creating a modern Glass-Steagall Act that would separate commercial and investment banking activities. In a new white paper, the NAFCU said the "lack of appropriate separation" of both these activities causes nonbank financial firms to depend on deposit accepting banks to secure liquidity in times of financial stress or crisis, which in turn threatens financial stability in the long term.

Andrew Smith, director of consumer protection at the Federal Trade Commission, said the FTC and the Consumer Financial Protection Bureau should work together to protect consumers and police markets. Although he is unsure if the agencies can make the collaborative process work, Smith does not believe "it's for lack of trying on either side."

In deal news, Nebraska-based First York Ban Corp. is looking to acquire in-state peer Franklin State Bancshares Inc.

New York-based GNI LLC seeks to acquire Hamilton, N.D.-based Wall Street Holding Co., including unit Bank of Hamilton.

Chesterfield, Mo.-based Summit Bancshares Inc. seeks to acquire Bank of Houston.

Amid the increased usage of phone apps by customers, banks across the U.S. are using various ways — including free Wi-Fi, discounted cappuccinos, artwork and a dancing robot — to drum up business at their physical branches, Reuters reports.

Sentient Investment Management, a San Francisco-based hedge fund that used artificial intelligence for its trading and investment strategies, is shutting down after less than two years, Bloomberg News reported, citing "people with knowledge of the situation." The fund reportedly oversaw less than $100 million in assets and had not been able to make profits in 2018 after gaining 4% in 2017.

Kraken CEO Jesse Powell refuted rumors that security at the cryptocurrency exchange was breached, which stemmed from a post on social media platform Reddit saying that Kraken was closing its Halifax, Canada, operations and had laid off hundreds of people following a security breach, Bloomberg News reported. Powell said that it was indeed laying off 57 client services group members in San Francisco, but as part of a cost-saving measure and not due to any security breach, according to the report. "We can confirm that we are not shutting down any operations in any specific place, and there has been no security breach. Everything is fine & secure," Kraken's support team said on Twitter.

During the latest rate decision discussions, Bank of Canada's policymakers debated whether its gradual approach to raising interest rates remains appropriate or the pace of rate hikes be increased as the Canadian economy seems ready for higher rates, central bank Senior Deputy Governor Carolyn Wilkins said. On Sept. 5, Bank of Canada maintained its target for the overnight rate at 1.5%.

In other parts of the world

Asia-Pacific: Tokio Marine in South African deal; Chinese i-bank moves closer to Hong Kong IPO

Europe: UK's Just Group warns on capital; ex-QBE head in line for Lloyd's of London role

Middle East & Africa: FirstRand, Sanlam post results; Japan's Tokio Marine sets eyes on South Africa

Now featured on S&P Global Market Intelligence

CFPB has fined Wells Fargo more than all other companies, combined: The pace of Consumer Financial Protection Bureau enforcement actions has slowed markedly under interim Director Mick Mulvaney, with the exception of a record penalty for Wells Fargo.

Some CUs see opportunity in marijuana industry; others still wary of the sector: While some credit unions have entered the cannabis-banking space, most remain hesitant about banking the space due to stigmas and confusing federal guidance.

The day ahead

Early morning futures indicators pointed to a lower opening for the U.S. market.

In Asia, the Hang Seng decreased 0.01% to 26,973.47, and the Nikkei 225 declined 0.80% to 22,307.06.

In Europe, around midday, the FTSE 100 was was down 0.85% to 7,256.55, and the Euronext 100 was down 0.20% to 1,025.18.

On the macro front

The employment situation report, the quarterly services survey, the Treasury STRIPS report and the Baker-Hughes rig count are due out today.

Click here to read about today's financial markets, setting out the factors driving stocks, bonds and currencies around the world ahead of the New York open.

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