Their operating income is down, but net profits are up 1.9% over the previous year. The stock moved lower on the earnings release, perhaps focusing on the fact that HSBC has set aside more money to cover loan loses.
All of this, as reported in the N.Y. Times (among other places), leads us to several points.
First, we make note of HSBC's expanded focus on Asia, going as far as to move its chief executive there to better focus on the fast growing region. This is a sign, and an obvious one. We can repeat it and see it, but often not internalize it. Growth is afoot in the world, as is change, and one has to see the region for what it is and not sit around ranting about communism or Asian's poisoning our children with lead. (And we know people whose fundamental view of the region is negative bias). It's the big picture, and one's money should invariably feel the gravitational pull.
Second, we see HSBC setting aside an additional $26.5 billion aside for bad loans and credit risks. If the "American people" (a term much loved by Republican politicians, who seem to channel the supposed will of the people at every opportunity), and especially the conspiratorially minded American people, look closely, they might realize that banks are refraining from making new loans not merely to maximize profits, but also, to cover for current and future theoretical fast looming risks, like the commercial real estate market, which is forever on the verge of doing something horrid, or so analysts suggest. If I am a true capitalist, I will use my return to profitability to A) avoid further losses on bad credit risks, B) hold cash in reserve to cover existing and potential credit risks and C) reward myself the same old high salary that I've always had during flush times. Be clear that "C" will tend to be the fixed variable no matter the economic climate, human nature being what it is.
It's kind of like when someone asks you for money, or to do something, and you say, "I don't have money for that, I am stretched tight" or "I don't have the time to do that, it's at a premium, I am busy and stretched tight". But unbeknownst to the other party, you have slotted out $12 for Chinese food, or set aside 2 hours to decompress or hit the gym. Your priorities are entirely centered around the "C" variable, which translates to self.
Finally we read that HSBC's impairment charges are expected to fall going forward, and in unison with the trend at some other banks. The Times reports this positive expectation, which gives us another piece of color to see a slowly correcting economic picture. We can see this despite the jobs news which tends to dominate the minds of people and news organizations fixated on the last archaic and least important fact.
Other News:
In his first official press conference since moving to Hong Kong in January, HBSC’s chief executive, Michael Geoghegan, reaffirmed the bank’s belief that Asian growth would outpace that in the rest of the world.(N.Y. Times)
Second, we see HSBC setting aside an additional $26.5 billion aside for bad loans and credit risks. If the "American people" (a term much loved by Republican politicians, who seem to channel the supposed will of the people at every opportunity), and especially the conspiratorially minded American people, look closely, they might realize that banks are refraining from making new loans not merely to maximize profits, but also, to cover for current and future theoretical fast looming risks, like the commercial real estate market, which is forever on the verge of doing something horrid, or so analysts suggest. If I am a true capitalist, I will use my return to profitability to A) avoid further losses on bad credit risks, B) hold cash in reserve to cover existing and potential credit risks and C) reward myself the same old high salary that I've always had during flush times. Be clear that "C" will tend to be the fixed variable no matter the economic climate, human nature being what it is.
It's kind of like when someone asks you for money, or to do something, and you say, "I don't have money for that, I am stretched tight" or "I don't have the time to do that, it's at a premium, I am busy and stretched tight". But unbeknownst to the other party, you have slotted out $12 for Chinese food, or set aside 2 hours to decompress or hit the gym. Your priorities are entirely centered around the "C" variable, which translates to self.
Finally we read that HSBC's impairment charges are expected to fall going forward, and in unison with the trend at some other banks. The Times reports this positive expectation, which gives us another piece of color to see a slowly correcting economic picture. We can see this despite the jobs news which tends to dominate the minds of people and news organizations fixated on the last archaic and least important fact.
Other News:
- In a prime example of the benefits of not selling into panicked markets, the struggling A.I.G. managed to offload a fast growing Asian unit at twice the price it might have gotten at the height of "the troubles" in 2008. But in selling the unit that's doing business in the fastest growing area of the world, they are basically cutting off their head to blow their nose.
- Was that you? Personally spending in January? Because the numbers have improved and the economy thanks you. Spending rose .5 percent, which means it was probably not enough to do anything, given other contrasting factors, like consumer confidence being down, and wages flat. You have to take this news in a basket with other news and form your own conclusions.
- Democrats are getting their health care process in order, which will likely lead to the House accepting the Senates version of things, then amending through the reconciliation process. Accept that Slate tells us that it's not a done deal to even get enough of a vote in favor in the House. Oy vey.
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