Pay attention

TAFKAS appreciates that it is difficult, but it is important to see what is going on beyond our shores.  To wit, the Financial Times is reporting:

HSBC profits plunge 96% as loan-loss provisions jump on coronavirus

For those unawares, HSBC is Europe’s largest lender and provisions are essentially management’s estimates for loans going bad.

What does this mean:

HSBC’s second-quarter net income was almost wiped out, plunging 96 per cent to $192m, far below the $1.3bn expected by analysts. Revenue fell 4 per cent to $13bn largely due to a decline in retail banking income, which was partially offset by a surge in trading at the investment bank.

Look also at this chart:

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20 Responses to Pay attention

  1. bollux

    Who is surprised. This current Socialist scam is designed to bring down Western economies, and so far is succeeding brilliantly. Dan is following his masters instruction book to the letter. Are those semaphore people gesticulating in Chinese? Who would know.

  2. The Victorian Premier now knows most of the people who voted for him did it for the money.

    This morning’s crowds on St Kilda beach demonstrates support for his policy announcements

  3. mundi

    I’m sceptical.

    Yes people deciding to save instead of consume is a problem for some production, but generally only the production that is a surrogate activity (fancy dinning, holidays, tourism etc).

    Technically GDP will decrease, but people still have the credit and excess saved for their production to go back to consuming.

    I will worry when there is a real decline in actual production of primary industries.

    AUD will probably devalue just from lack of tourism and chinese students.

  4. H B Bear

    This is a problem – unless you are a public servant.

  5. BoyfromTottenham

    mundi – people have to eat, either at home or in a restaurant. And they probably eat about the same amount per day, so would aggregate food consumption change? But GDP would fall, because restaurants serve ‘value-added’ ingredients (and charge maybe 10 times more than the cost of the ingredients). As I understand it, farmers and their distributors are adjusting their business model to sell direct to the public instead of to restaurants.

  6. John Bayley

    HSBC’s second-quarter net income was almost wiped out, plunging 96 per cent to $192m, far below the $1.3bn expected by analysts.

    Going by stock market action over the past few years, this is absolutely bullish!
    Because it means there will be still moar stimulus & oodles of fresh confetti money from the central banks.
    Good news is good news and bad news is great news!
    Comrades.

  7. BoyfromTottenham

    JB – I like your logic!

  8. BoyfromTottenham

    BTW – I have just finished reading ‘Lords of Finance – the Bankers who Broke the World’ by Liaquat Ahamed. A great but depressing read describing how little the heads of the 4 major central banks (US, UK, France, Germany) understood about what needed to be done to stabilise the western economies via monetary policy between 1914 and 1933. But I guess they were no worse than their political leaders at the time.

  9. Rusty of Qld

    Is there a shit paper sales index to show consumer confidence?

  10. Pyrmonter

    A reminder of why we should have fixed the ‘Too big to fail’ problem while the sun was shining. But instead, we fought:

    – the toilet wars
    – the ‘national brand with a contested, racially-tainted name’ wars
    – the ‘queers getting married will lead to pederasty and bestiality’ wars
    – the ‘Carbon Tax will kill us (but the Renewable Energy Target can’t be made into a three-word slogan, so it won’t)’ wars
    – the ‘there are people who lose out from free competition, especially across borders; we must institute socialism to Make [insert name of country] Great Again’ wars (upon misreading Autor, et al)

    Douthat has termed the times leading up to 2019 as decadent, not in the way the TradCatholic Right like to think, but in terms of unseriousness. Looking back on the politics of the right here, in the UK and in the US since c 2005, it’s hard to see how he’s wrong.

    https://www.econtalk.org/gary-stern-on-too-big-to-fail/

    https://www.nytimes.com/2020/02/07/opinion/sunday/western-society-decadence.html

    (TAFKAS might also have mentioned that not only is HSBC Europe’s largest lender; it’s also an entity publicly adjusting its behaviour to the presumed desires of Beijing. If you want to boycott something, it would be a good start: https://www.ft.com/content/e57c4990-2256-11ea-b8a1-584213ee7b2b)

  11. MatrixTransform

    gonna need toilet paper for the y-axis on that chart

  12. RobK

    It will be a Bunnings lead recovery.

  13. John Bayley

    @BoyfromTottenham:

    If you have not already, have a read of Adam Fergusson’s book ‘When Money Dies’.
    With a bit of searching, you’ll find a free PDF or EPUB online.
    It’s about Weimar Germany, but many of the parallels with the present day are eerie.
    As the old saying goes, they (WG) went broke in two stages: Slowly and then all of a sudden.
    I suspect we are living through a replay.

  14. Bronson

    Maybe Greg Sheridan should look at this before he shows everybody he is a complete idiot as in today’s Australian. In his confused state he has managed to separate people from the economy and reckons that by locking people up and flat lining their sources of employment they will be safe. I guess he still gets paid to write this tripe unlike the great unwashed.

  15. Megan

    Maybe Greg Sheridan should look at this before he shows everybody he is a complete idiot as in today’s Australian. In his confused state he has managed to separate people from the economy and reckons that by locking people up and flat lining their sources of employment they will be safe. I guess he still gets paid to write this tripe unlike the great unwashed.

    How anyone with a remaining functioning brain cell could believe that, let alone write it down in a national newspaper is utterly unfathomable. He has a lot of companionship on his journey to dumb. And they are about to reap the whirlwind as a consequence.

  16. Joanna Smythe

    The Banks, in recent times, have been sending out messages that they are totally on board with Socialism. Now that reality is setting in and they realise a free market economy is the only one that works in their favour, maybe they will have a rethink.

  17. Tator

    Would have to wonder how much of that 32% is COVID19 and how much is the BLM/ ANTIFA insurgency running rampant leaving many businesses closed in major metropolitan areas leaving economic activity at a standstill in large Democrat run population centres.

  18. Catcalling Inebriate

    MS found that 55% of Australian mortgages were paid with Govt money or bank deferment last quarter.

  19. The Beer Whisperer

    Would have to wonder how much of that 32% is COVID19 and how much is the BLM/ ANTIFA insurgency running rampant leaving many businesses closed in major metropolitan areas leaving economic activity at a standstill in large Democrat run population centres.

    And that is quite okay. Democrats can see their shitholes in economic ruin, while Republicans can see their economies going fine, and vote accordingly. Dumocrats can’t increase votes by triggering their own base.

  20. Squirrel

    “HSBC profits plunge 96% as loan-loss provisions jump on coronavirus”

    Probably just cooking the books to get Jobkeeper for their Strayan operations.

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