Iran-Related Shocks to 'Hollow Out' US Long-Term Growth, Says Gary Gensler

Описание: Former SEC Chair Gary Gensler discusses his outlook for the US economy amid ongoing shocks from the conflict in Iran. He also touches on private credit jitters and AI adoption.

Wall Street lending giants would get relaxed capital requirements under proposals unveiled by the Federal Reserve on Thursday, in a move that could potentially unleash billions of dollars for lending, share buybacks and dividends.
“These changes would strengthen our overall capital framework, which would remain robust under the new regime,” Fed Vice Chair for Supervision Michelle Bowman said in a statement. 
The package of proposals, which are subject to a 90-day public consultation before they can be finalized, were crafted by officials at the Fed, in addition to the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency.
The Fed’s Board of Governors will vote to formally propose the plan Thursday. The FDIC board is holding a concurrent meeting.
Officials are pitching the landmark package as part of a harmonization of capital. If finalized, these plans — along with moves to ease the enhanced supplementary leverage ratio and overhaul stress tests — would amount to some of the biggest bank-capital rule changes since those enacted following the 2008 global financial crisis.
The proposals, when combined, are expected to result in a “moderate decrease” in capital requirements for some banks, the Fed said in a memo. For the biggest banks, common equity tier 1 capital — the highest quality of regulatory capital — are projected to decrease by 4.8% in aggregate, while midsize banks would see an aggregate reduction of 5.2%. Consumers are set to start feeling the impact of the Iran war beyond filling up their cars, with price jumps on ingredients for everyday cleaning products, tires and animal feed. 
Europe’s chemical makers BASF SE and Lanxess AG are among companies raising prices significantly due to shortages and higher expenses for chemical feedstocks. The ingredients go into a broad range of home and industrial detergents, coatings as well as car tires. 
Bottles of Domestos bleach in a supermarket in Chelmsford, UK.
BASF, which counts Domestos and Persil makers Unilever Plc and Henkel AG among its customers, on Wednesday said its suite of products for detergents and industrial products will rise by some 30% or more. 
The company later announced two more price increases in Europe for chemicals needed by sectors such as agriculture to keep animal feed from rotting and in coatings for cars. The company later announced two more price increases in Europe for chemicals needed by sectors such as agriculture to keep animal feed from rotting and in coatings for cars.
Read More: From Food to Petrol, Europe Seeks to Tame Iran Price Shock
Lanxess said it’ll hike prices on inputs for tires by 50% and more, to account for higher energy and raw material costs as well as logistics.
The Middle East conflict has driven up oil and gas prices — key feedstocks for the chemical industry as well as major energy sources. Combined with disruptions to global shipping routes, the war is set to deepen challenges for an already struggling sector, Germany’s chemical industry association VCI and union IGBCE warned last week. Evonik Industries AG, a chemical company making more than 9,000 products, said it’s seeking to pass on price increases. For methionine, used in animal nutrition, the firm raised prices by 10% this month, before declaring force majeure on one of its plants in Singapore.
The increases are likely to find their way to breeders of chickens and cows globally.
“Other chemical companies in Europe will also increase their prices,” said Philip Geurts, chemicals associate at BloombergNEF. “Asia is on the verge of a severe supply shortage that hasn’t fully materialized yet, as earlier shipments are only now running out about 18 days into the war.”

The impact has been more immediate in Asia, where chemical plants depend heavily on base ingredients from the Middle East. Disruptions are now starting to reach Europe as well.

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