The world this week

Business this week

The Bank of Japan announced a further easing of monetary policy. It said it would cap the yield on ten-year government bonds at about 0% and also committed itself to buying assets until inflation exceeds its target of 2%. The BoJ has been one of the more interventionist central banks over the past few years, but its radical policies have done little to bring an end to Japan’s low inflation.

The Federal Reserve took few by surprise when it left interest rates unchanged at its latest policy meeting. In recent weeks some of the central bank’s more hawkish officials have been pushing the case for lifting ultra-low rates, but their doveish colleagues were ultimately persuaded by a run of weaker economic data. The Fed did, however, drop a strong hint that it would raise rates by the end of the year.

Stumpfed for words

John Stumpf, the chief executive of Wells Fargo, was hauled in front of a Senate committee to explain the bank’s conduct in a scandal where fake accounts were created for customers in order to meet branch targets. Mr Stumpf admitted that he knew about the practice in 2013 and that the board was informed in 2014. The senators were in an unforgiving mood, and wanted to know why no senior executives had been sacked.

Deutsche Bank’s share price plunged after it confirmed that America’s Department of Justice wants it to pay $14 billion to settle claims related to mortgage-backed securities that the German bank underwrote and sold between 2005 and 2007. Deutsche said it would not resolve the claims for “anywhere near” what the government is seeking. In a bad week for the bank, Deutsche’s ratio of capital to assets, a measure of its ability to weather a financial storm, came last in a ranking compiled by Thomas Hoenig, the vice-chairman of America’s Federal Deposit Insurance Corporation. See article.

The Securities and Exchange Commission charged Leon Cooperman, one of America’s most successful hedge-fund managers, and his firm, Omega Advisors, with insider trading. The indictments relate to knowledge that Mr Cooperman allegedly obtained about the sale of a natural-gas plant in Oklahoma. He denies any wrongdoing.

Countries must reduce their reliance on central banks as “monetary policy has become overburdened”, the OECD has warned. Its latest economic outlook, which slightly lowered world-growth forecasts for this year and next, also said that exceptionally low and negative interest rates “are distorting financial markets and raising risks”.

Airbus and Boeing were given permission by the American government to sell commercial aircraft to Iran. It is the most significant business development yet since last year’s agreement with Iran on its nuclear programme led to a reduction of sanctions.

Sailing into the sun

A.P. Moller-Maersk announced that it would split up its transport and energy businesses. Its major focus will be the shipping industry, which has been hit by a slowdown in global trade and a glut in capacity. Meanwhile Hanjin, a South Korean shipping line, was ordered by a bankruptcy court to return vessels it had chartered to their owners, indicating that the company might be wound down.

America released its first official guidelines for autonomous cars. The federal government usually regulates vehicles, leaving each state to set rules for drivers, but it is steering states towards adopting seamless laws for driverless cars. Carmakers may bristle at some of the proposed requirements, such as putting software updates through the same safety process that new vehicles must undergo and making data public. See article.

In China, meanwhile, Tesla Motors defended its Autopilot system, as the father of a driver who was killed while allegedly using the feature took his lawsuit to court. Tesla has reiterated that its Autopilot is not intended as a fully automated system; drivers must keep their hands on the wheel while using it.

In only the fourth time in its history, the United Nations met specifically to discuss a health issue: the rise of superbugs that are resistant to antibiotics. Described by some medical professionals as the most acute problem facing mankind, the World Bank has estimated that by 2050 the issue could cost up to 3.8% of world GDP. See article.

A study by John Coates, a neuroscientist and former trader at Goldman Sachs, suggested that traders who are more in tune with their bodies’ “interoception” (inner sense) and follow their gut feelings can outperform algorithms in high-frequency trading. In order to cope with the pressures of modern finance a trader must be able to stomach the job.

This article appeared in the The world this week section of the print edition under the headline "Business this week"

Living in a low-rate world

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