Good morning and welcome back. In today’s newsletter:
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Fed prepares to relax bank rules to boost mortgage lending
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Big Oil executives under pressure to spell out growth plans
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Civil rights leader Jesse Jackson dies
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And do you have a TV in your bedroom?
The Federal Reserve is preparing to ease US bank capital requirements in a drive to encourage lenders to provide more mortgages for American homebuyers.
Here’s what we know: Fed vice-chair for supervision Michelle Bowman announced the move in a speech yesterday. She said the Fed planned two changes to its rules that would “increase bank incentives to engage in mortgage origination and servicing”.
The reforms would “potentially reverse the trend of migration of mortgage activity to non-banks over the past 15 years”, she added.
Why it matters: Banks’ share of the US mortgage market has fallen from 60 per cent of home loan origination in 2008 to 35 per cent in 2023, Bowman said.
A growing share of the originating and servicing of US mortgages is now being conducted by specialist financial service companies, such as Rocket Mortgage and CrossCountry Mortgage.
Banks selling mortgages had been subjected to “stringent capital treatment” since 2013, Bowman said. But some of these rules would now be relaxed, she said. Read more on the changes.
Here’s what else we’re keeping tabs on today:
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Fed speakers: Federal Reserve Board governor Michael Barr and Federal Reserve Bank of San Francisco president Mary Daly speak on artificial intelligence at separate events.
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Economic data: Canada’s national statistics agency publishes January consumer price index inflation rate data.
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Results: Tylenol-maker Kenvue, Labcorp and Cadence Design Systems report fourth-quarter results. Medtronic is scheduled to report third-quarter earnings.
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US diplomacy: The US and Iran hold their second round of talks in Geneva, while representatives of Ukraine and Russia and the US will meet in the Swiss city today and tomorrow.
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Jesse Jackson: The veteran civil rights leader and two-time presidential candidate has died at the age of 84, his family announced earlier today.
Five more top stories
1. Big Oil executives are under pressure to spell out their plans for growth after years of cost-cutting and heightened shareholder returns as investors fret about peak oil demand. Companies including Shell, BP and TotalEnergies are being asked to prove the strength of their project pipelines.
2. France’s President Emmanuel Macron has arrived in India as the two countries close in on a $35bn fighter-jet deal. Macron will meet Indian Prime Minister Narendra Modi and attend a global AI summit in New Delhi.
3. Hotel magnate Thomas Pritzker has stepped down as executive chair at Hyatt, after documents released by the US Department of Justice revealed the extent of his ties with sex offender Jeffrey Epstein. Read the full story.
4. The world’s leading artificial intelligence companies are turning to advanced mathematical problems as a measure of progress, using unsolved questions to test their systems in the competitive race to build more capable AI models.
5. Fund managers are taking the most bearish stance on the dollar in more than a decade, as the currency bears the brunt of the damage from unpredictable US policymaking. Bets against the currency have outstripped positive wagers on the dollar so far this year.
The Big Read
China’s railways have in recent days been ferrying about 20mn passengers a day, with half a billion train trips expected over the 40-day lunar new year period. Increasingly, what demographers refer to as the world’s largest annual human migration is happening faster than ever. Yet the high-speed rail network that has expanded rapidly over the past two decades and cut journey times highlights the tensions in China’s investment-led growth model.
We’re also reading . . .
Graphic of the day
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Bright orange water is flowing through the rivers of Alaska in quantities visible from outer space. As with wastewater from mines, the rust-orange colour comes from iron that dissolves after exposure to acidic water. But in this case, mining isn’t the culprit, it’s global warming. Beyond the local impact of metal-laden rivers, the phenomenon is a harbinger of a much larger and more troubling problem.
Take a break from the news . . .
Should you have a television in your bedroom? Before Louis Wise reorganised his apartment he was of the view that the bedroom was for calm, adult, contemplative, grown-up activities such as folding clothes or sex — not any more. What do you think?
