Daily Agenda: Bank of England Hold Rates as Pound Spikes

PM May taps Boris Johnson as foreign secretary; Blackrock profits fall while JPMorgan beats estimates; EU regulators hit Alphabet with new allegations; Fed on Brexit risks.


Currency markets reacted strongly to today’s announcement by the Bank of England that it would hold rates steady; the pound sterling then rose sharply against the U.S. dollar, on top of earlier gains ahead of the announcement. Consensus forecasts among analysts and economists had indicated that a preemptive easing ahead of the U.K.’s departure from the European Union was likely. Separately, newly installed Prime Minister Theresa May surprised many political observers by appointing former London Mayor Boris Johnson as foreign secretary. Installing Johnson, a sharped-tongued proponent of Brexit who is prone to gaffes, potentially sets the stage for a contentious series of exit negotiations with EU leaders.

BlackRock profits fall, J.P. Morgan beats estimates. Today BlackRock, the world’s largest global money manager by assets, announced second-quarter financial results that included a 3.7 percent decline in profits versus the same period last year. The biggest bank in the U.S., JPMorgan Chase & Co., also reported a 1.4 percent contraction in profits year-over-year that beat consensus analyst estimates, as the bank’s bond-trading operations swung back to profitability.

Google faces another challenge in Europe. The European Commission alleged that Alphabet, the parent of Google, unfairly promoted proprietary products in search engine results. Specifically, the European regulator claims that the Google search engine’s promotion of its own ad placement service violates EU competition guidelines.

Robo adviser surpasses $5 billion. Bloomberg reported today that Betterment has become the first so-called robo adviser to surpass $5 billion in assets under management. The online financial planner and advisor drew criticism when it prevented clients from liquidating positions during early hours of trading following the U.K. referendum to leave the European Union.

Devon to sell Canadian pipeline interest. In an announcement today, Devon Energy Corp. revealed that it has entered into an agreement to sell its stake in Canada’s Access Pipeline to an entity related to the Canada Pension Plan Investment Board in a deal valued at more than $1 billion. The transaction is part of a larger sale of assets by the shale oil producer as Devon management seeks to shore up its balance sheet.

Fed sees U.S. Brexit risks. The monthly beige book release by the Federal Reserve yesterday included concerns over the potential regional impact of the U.K.’s departure from the EU. In particular, the report highlighted possible fallout for financial services centers because of market volatility, as well as tech hubs.