Month: January 2015

Police launch assault on suspected Paris killers

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Police have launched an assault on a factory in northern France where the two suspects believed to have been involved in the shooting of 12 people in Paris were holding a hostage.

In the hunt for the two brothers, security forces and helicopters have been focusing their efforts on the town of Dammartin-en-Goele, a 12 kilometer (seven mile) drive from Charles De Gaulle Airport. Police cordoned off an industrial estate, and French news channel France 24 reported that 1,000 officers were involved.

The two brothers have been cornered by police inside a printing house in Dammartin-en-Goele. One police officer told The Associated Press that the suspects told negotiators they “want to die as martyrs.”

Separately, there has been a shootout at a kosher supermarket on Friday in eastern Paris, with reports of casualties and several people taken hostage, French prosecutors told reporters.

A police official has told reporters that the gunman held up inside the kosher store is believed responsible for the roadside killing of a Paris policewoman on Thursday. Authorities released a photo of him and a female accomplice but were unclear about her whereabouts.

The gunman has apparently threatened to kill his hostages if police launch an assault on the cornered brothers suspected in the newspaper massacre, an un-named police official police has told The Associated Press.

Police have closed down a ring road that circles Paris near the kosher supermarket, which would have busy ah

To stop the suspected killers from finding out where the search is being focused, the French police force has asked journalists via Facebook to stop filming in the area.

Hours earlier, the Associated Press reported quoting a security official, the brothers stole a Peugeot amid gunfire.

Aéroports de Paris confirmed Friday that that some flights heading into Charles De Gaulle Airport had been diverted.

French President Francois Hollande said the attack on satirical magazine Charlie Hebdo was the worst in France for 50 years. A meeting of interior ministers of European states would be held on Sunday, he added. A meeting scheduled for Sunday between the leaders of France and Germany has been postponed, French President Francois Hollande’s office said on Friday in light of the current security operations.

The fugitive suspects are French-born sons of Algerian-born parents, both in their early 30s, and already under police surveillance. One was jailed for 18 months for trying to travel to Iraq a decade ago to fight as part of an Islamist cell. Police said they were “armed and dangerous”.

US and European sources close to the investigation said on Thursday that one of the brothers, Said Kouachi, was in Yemen in 2011 for a number of months training with Al Qaeda in the Arabian Peninsula (AQAP), one of the group’s most active affiliates.

US government sources said Said Kouachi and his brother Cherif Kouachi were listed in two US security databases, a highly classified database containing information on 1.2 million possible counter-terrorism suspects, called TIDE, and the much smaller “no fly” list maintained by the Terrorist Screening Center, an interagency unit.

Read More: Terror shooting suspects spotted in east France: Reports

On Thursday, US President Barack Obama made an unannounced visit to the French Embassy in Washington to pay his respects.

He wrote in a condolence book, “As allies across the centuries, we stand united with our French brothers to ensure that justice is done and our way of life is defended. We go forward together knowing that terror is no match for freedom and ideals we stand for – ideals that light the world.”

(This is a developing story, this story was filed at around 9.50 pm IST)

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Are bond yields flashing a panic signal?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Government bond yields in the U.S., Europe and Japan are plumbing lows, suggesting a flight to safety, but analysts aren`t ready to hit the panic button.

“This is the first time ever that rates are this low, as even during the 1930s rates were well above current levels,” Steven Englander, head of G-10 foreign-exchange strategy at Citigroup, said in a note this week, noting the average G-3 10-year government bond yield is below 1 percent.

The 10-year U.S. Treasury yield was trading around 1.98 percent late Tuesday in the U.S. after starting the year around 2.17 percent. Germany`s 10-year bund was around 0.47 percent, around all-time lows, after ending 2014 around 0.54 percent, while the Japanese government bond was around 0.30 percent, a tad up from the record low 0.265 percent touched earlier this week. Bond prices move inversely to yields.

Read More: Chicago trader: Profit from lower bond yields

“This is not happening during the panic phase of a crisis, but after the panic is over and we have had significant recoveries in asset prices globally,” he said. But rather than a panic signal, he calls it “more a sign that investors think we are going nowhere for a long time.”

No warning

Others are also disregarding the idea that declines in already low bond yields may be a warning signal.

“The markets seem to be suggesting that you have perhaps even a recessionary environment, not dissimilar to an emerging market crisis, an Asian crisis or even the GFC (global financial crisis),” Piyush Gupta, CEO of DBS, said at a presentation for the bank`s private banking clients.

He cited the 30-year U.S. Treasury’s around 40 basis point drop in yield in the first three trading days of this year, saying it may be the biggest drop in the 30-year`s yield since records began.

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“While the markets are choppy and while there has been some slowdown, the reality is the fundamentals are not that bleak, not anywhere near as bleak as the markets are suggesting,” Gupta said, citing expectations global economic growth will come in around 3.8 percent this year, up from 3.4 percent last year.

An overreaction?

Even those who have expected yields to remain lower for longer believe the decline may be an overreaction.

“We, too, think the markets are a bit more fearful than they should be,” said Daniel Ivascyn, global chief investment officer at bond giant Pimco , which since last year has held a “new neutral” call for interest rates to reach equilibrium at lower levels than previously.

“We may have overshot even our view,” he said at the same DBS client event. “That doesn`t mean we can`t go lower,” he added, noting Pimco has turned more neutral on higher quality government bond markets.

“We`re not extremely negative, but some of the recent price action is probably an overreaction,” Ivascyn said.

But Ivascyn didn`t entirely dismiss concerns over looming risks to the market, such as Russia`s tanking economy or concerns Greece may exit the euro zone.

“Russia in isolation is a risk we can manage. Greece, or Grexit, in isolation is a risk we can manage. The challenge for financial markets is that one risk in isolation may not be the story,” he said.

No fear

To be sure, some don`t think the decline in yields is a fear play at all.

“The steady decline in the yield of 10-year U.S. Treasurys has been entirely due to a decline in inflation expectations, brought about by the collapse in the price of oil,” John Higgins, an economist at Capital Economics, said in a note Thursday.

He expects the 10-year yield will rise sharply this year, as lower oil prices help spur the U.S. economy to absorb any slack and quash deflation fears and as oil prices will likely recover over the next year or so.

Indeed, Capital Economics isn`t even overly concerned about another fear that has been weighing on global bond yields: deflation. European data Wednesday confirmed that consumer prices fell 0.2 percent on-year in December.

“In general, deflation in consumer prices should be positive for economic growth,” Capital Economics said in a separate note, adding that it should only be a problem if nominal incomes and asset prices also fall or if expectations for falling prices become ingrained.

With the decline in consumer prices largely related to declines in oil prices, or “good” deflation, it may just increase the amount of money consumers spend on other items, it said.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Ex-Goldman exec Jim O’Neill: Oil prices to end 2015 higher

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Oil has been dealt a massive blow in recent months, but Jim O`Neill, former chairman of Goldman Sachs Asset Management, predicts prices will end higher this year.

Brent oil , which started the year at $58 per barrel, fell below $50 on Wednesday for the first time since May 2009. The international benchmark traded around the $51.40 level on Thursday. Meanwhile, the U.S. benchmark, West Texas Intermediate (WTI), began the year at $55 per barrel and last traded around $49.20.

O`Neill`s projection of higher oil prices by year-end is based on the five-year forward price of oil, or the amount paid for guaranteed delivery of oil five years from now.

“In my ongoing quest to become better at forecasting, I began, a few years ago, to pay attention to the five-year forward oil price as it compares to the Brent crude oil spot price, the price of a barrel of oil today,” O`Neill, famous for coining the acronym BRIC (Brazil, Russia, India, and China), wrote in a post on Project Syndicate`s website on Wednesday. He is currently a visiting research fellow at Brussels-based economic think tank Bruegel.

The futures market is pricing Brent oil for delivery in January 2020 at $73.81, according to CME Group (NASDAQ: CME), around $20 above the spot price.

“I suspect that the five-year forward price is much less influenced by speculation in the oil market than the spot price, and more representative of true commercial needs,” he said. “So when the five-year price starts moving in a different direction than the spot price, I take notice.”

Read More: Why oil will go even lower

Oil prices collapsed over 50 percent in the past six months amid feeble global demand compounded by strong supply growth. Analysts expect prices will fall further from current levels due to a variety of supply factors including increased oil exports out of the U.S. and record production levels from Iraq and Russia.

Lessons from history

Comparing the five-year forward price of oil to spot prices has proved an accurate forecasting tool for O`Neill in the past.

O`Neill cites the period following the global financial crisis as an example. In 2011, when oil prices recovered from a crash induced by the 2008 credit crisis, the five-year price started to fall, while the spot price continued to surge for a while.

“This jibed with what I had identified as two big factors fundamentally driving the price of oil: the early days of the exploitation of shale oil and gas in the United States, and the shift in China`s economic focus from quantity to quality, which implied that the Chinese economy would no longer be consuming energy at the frenetic rate it had been,” he said.

“I concluded that there was a fair chance that oil prices were peaking and that before too long spot prices would reverse and start to decline. I thought it was probably the beginning of a move back down to $80 per barrel – precisely where the price has landed at the end of 2014. It was one of my better forecasts.”

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Asian stocks higher on steady oil; China inflation in focus

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Asian stock markets advanced early Friday, taking cues from a surge on Wall Street amid hopes for continued improvement in the USeconomy, while steady oil prices also provided support.

Overnight, US stocks surged for a second day, led by expectations for more aggressive action from the European Central Bank to buttress the economy. Markets were also buoyant after a better-than-expected number for jobless claims last week, indicating continued acceleration in the U.S. economy.

The Dow Jones Industrial Average finished up 1.8 percent, while the S&P 500 added 1.8 percent and the tech-heavy Nasdaq gained 1.8 percent. Thursday’s robust gains lifted all three indexes into positive territory for 2015.

Global oil prices were little changed on Thursday, with better-than-expected U.S. data helping the market hold steady after recovering from a four-day losing streak a day earlier. US crude closed 14 cents higher, at USD 48.79 per barrel, while Brent crude slipped by 26 cents to USD 51 a barrel.

Meanwhile, market players will be looking ahead to the US nonfarm payrolls for the month of December, due late Friday.

Mainland indices mixed

China’s benchmark Shanghai Composite index opened down 0.5 percent after data showed the mainland’s consumer price index (CPI) hovered near a five-year of 1.5 percent in December, in line with expectations, offering signs of persisting weakness in the economy.

The producer price index (PPI) fell 3.3 percent on-year in December, worse than the 2.7 percent decrease in the preceding month, chalking up its 34th consecutive decline. Analysts polled by Reuters had expected a 3.1 percent decline in producer prices.

Meanwhile in Hong Kong, the Hang Seng index added 0.6 percent in early trade.

Top on trader’s watch list is Standard Chartered, which opened down 0.6 percent following the lender’s decision to dismantle its stock broking, equity research, and equity listing desks worldwide, which will result in more than 200 job cuts. Shares of the bank was unaffected on Thursday, closing up 2.7 percent.

Chinese sportswear giant Li Ning traded 0.6 percent higher, despite issuing a profit warning. Chow Tai Fook tanked 6 percent; the jeweller’s fiscal third quarter revenue fell 10 percent after pro-democracy protests last year hurt store traffic.

Nikkei rises 0.3 percent

Aided by a weak yen and strong gains on Wall Street overnight, Japan’s benchmark Nikkei 225 index rallied early Friday, set for a third straight winning session.

Fast Retailing, owner of clothes brand Uniqlo, jumped nearly 3 percent higher after reporting a 40 percent on-year jump in first quarter operating profit, helped by overseas sales.

Sony is in focus after announcing a delay in the launch of its Playstation 4 game consoles in China, initially slated for this Sunday. Shares of the consumer electronics giant leapt 1.4 percent.

Daiichi Sankyo traded 4.1 percent lower early Friday, despite receiving an approval for an anti-clotting drug by the US food and drug administration.
ASX up 1.2 percent

Australia’s key S&P ASX 200 surged in early trade, while the Australian dollar erased losses to inch up 0.1 percent, fetching USD 0.8129 against a stronger dollar, despite a set of weaker-than-expected retail data.

Retail sales for November rose 0.1 percent month-on-month, below expectations for a 0.2 percent increase. After the data, Myer and Harvey Norman rose 4.2 and 1.8 percent each, but JB Hi-Fi reversed gains to trade flat.

A pause in the slump in oil prices lifted the beaten-down oil and gas sector. Santos and Oil Search climbed more than 3 percent, while Woodside Petroleum gained 2.6 percent. Big miners were also upbeat, thereby providing further upward momentum for the resource-heavy bourse; Fortescue Metals and BHP Billiton increased 3.8 and 2.2 percent, respectively.

Kospi gains 1 percent

South Korean shares extended Thursday’s gains as index heavyweights rallied, while the junior Kosdaq index advanced 1 percent.

Samsung Electronics, the heaviest weighted stock on the Kospi index, rose 0.3 percent on the back of an above-view earnings guidance it released on Thursday. Hyundai Motor and steelmaker Posco gained nearly 2 percent in the morning session.

LG Display, South Korea’s largest display maker, was up 1.7 percent as market watchers tipped a positive outlook for the sector in the first quarter.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Euro tests low last seen at its birth in 1999

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The euro hit a fresh nine-year low against the US dollar on Thursday, taking it close to its starting point in 1999 when the single currency was launched in 11 European countries.

The single currency fell as low as USD 1.17625 on Thursday, its lowest since December 2005 and dangerously close to the USD 1.1747 level at which it traded at its launch in January 16 years ago.

Read More: Euro slide could take it to parity with dollar

The decline came as more weak economic data from the euro zone piqued hopes the European Central Bank (ECB) will implement further aggressive stimulus measures after it meets this month.

German factory orders data on Thursday morning showed a sharp monthly fall in November, with new orders down 2.4 percent. This, coupled with the consistent rise in the dollar, pushed the bloc’s currency lower.

Meanwhile, data from the euro zone on Wednesday showed the currency union’s inflation rate fell into negative territory in December for the first time since 2009, adding to pressure on the ECB to launch a US Federal-Reserve-style bond-buying program.

“Market participants seem to believe yesterday’s ‘flash’ estimate, that euro zone consumer prices had fallen 0.2 percent in the year to December, raises the chances that the ECB will resort to full-blown QE at its meeting on 22 January,” said chief economist at ADM ISI, Stephen Lewis.

“In truth, the figures were probably no surprise to members of the ECB’s Policy Council, who have been talking for several weeks past about the pending impact on consumer prices of the sliding oil market.”

When the euro was launched it became the currency of 11 euro zone member states, replacing old national currencies including the German Deutschmark and the French franc. It is now used by 19 countries.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

India’s deficit test: Doable, after all

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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India faces a tough feat of achieving its fiscal deficit target this year, but major banks have voiced their confidence in the government.

Asia’s third-biggest economy recorded a USD 83 billion fiscal deficit, or 99 percent of its full-year target, during the first eight months of financial year 2014-2015 that began in April, data showed last week.

This would mark the worst performance since financial year 2008-2009 when India embarked on a path of stimulating its economy during the financial crisis. It also raises concerns that the government would miss its target to reduce fiscal deficit to 4.1 percent of gross domestic product (GDP) by March 2015, down from 4.5 percent in the previous year.

Read More India: fairest emerging market of them all?

But a deeper dive into the figures revealed that rather than runaway expenditure that generally leads to the over-shooting of fiscal deficit, it`s the dramatic slowdown in revenue collection that`s taken a toll.

“We understand that the target is ambitious mainly due to lower tax revenue on account of the gradual recovery in economic activity and the slowdown in nominal growth with deceleration in inflation,” Morgan Stanley stated in a note on Tuesday.

Tax collections were up 6.5 percent on a cumulative basis in the first seven months of the financial year, much lower than budgeted growth of 17.7 percent, according to data from Citi. Meanwhile, nominal growth is widely expected to miss government forecasts of 13.5 percent.

With tax revenue expected to improve in the coming months and no unfettered rise in expenditure, Morgan Stanley is confident India`s fiscal targets will be met.

“Tax collection picks up seasonally toward the end of the fiscal year, with direct tax collection between December and March at 51.4 percent of total (five-year average),” the bank said.

Even if the fiscal picture continues to worsen, analysts say the government has available tools at its disposal to defend the budget targets.

Read More India: Watch out for these external shocks

Societe Generale economist Kunal Kumar Kundu says current Finance Minister Arun Jaitley, like his predecessor P. Chidambaram, would likely resort to non-conventional measures like postponing subsidies or forcing public sector companies to pay more dividends in order to “stick to the stiff target.”

Other possible strategies include leaning on state-owned financial institutions to bail out the government, or even curtailment of state expenditure.

“Clearly none of these are desirable measures, but then desperate times call for desperate measures,” Kundu added.

Citi concedes that while news on the fiscal front is “not so good” as tax collections remain “in the slow lane,” it expects the government to enact expenditure cuts to rein in the deficit.

“While the drop in crude prices will help contain the subsidy bill, similar to last year, a sharp cut in plan expenditure in the current fiscal to the tune of Rs 60,000 crore – 80,000 crore (USD 9.3 billion – USD 12.6 billion) will be necessary for the government to meet its 4.1 percent fiscal target,” the bank said in a note this week.

 Copyright 2011 cnbc.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Asian stocks broadly firmer as oil, Greece fears ease

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Asian equity markets were off to a positive start on Thursday as the fall in oil prices and concerns over Greece’s potential departure the euro zone abated, while a positive finish on Wall Street overnight lifted trading sentiment.

US stocks jumped overnight, with the S&P 500 rebounding from a five-session dive, as US crude stopped a four-day skid and Germany left the door open to discussing options with Greece’s next government on its debt.

After four sessions of losses, US oil futures managed to close higher on Wednesday. US crude settled 72 cents higher at USD 48.65 per barrel, while Benchmark Brent fell to below USD 50 a barrel, after euro zone inflation data showed its first negative reading in five years. Support for the market came later in the session when inventory data issued by the US Energy Information Administration showed a surprising drop last week.

The release of the Federal Reserve’s December meeting minutes, which indicated the Fed wasn’t ready to hike for at least the next couple of meetings, also lifted sentiment.

As a result, the Dow Jones Industrial Average rose 1.2 percent while the S&P 500 added 1.2 percent. The tech-heavy Nasdaq gained 1.3 percent.

“[Fed minutes] was a very level read, which will help maintain market and currency stability. The overall conclusion is rate increases in the first quarter will not happen and the possibility of an April rise looks almost as unlikely,” Evan Lucas, IG market strategist, wrote in a note. “We remain of the view [that] June or July is the most likely time, and the more global instability we see, the further out this date will get.” 

Nikkei surges 1.7%

Japan’s benchmark Nikkei 225 index saw a robust start to Thursday, helped by a weaker yen which traded at 119.21 against the greenback, compared to 118.9 in the previous session.

Fast Retailing, owner of clothes brand Uniqlo, is due to release its first quarter results today; its shares widened gains to 1.9 percent late in the morning session.

McDonald’s Japan remained in focus over food safety issues, including a 3 to 4 centimeter-long piece of vinyl found in a chicken nugget sold at an outlet in northern Japan over the weekend. Among other incidents, a human tooth was found in a customer’s french fry in August, while in December a child cut his mouth on a piece of plastic that was in a chocolate sundae. The fast food chain’s stock tumbled nearly 2 percent, after a 1 percent fall on Wednesday.

Sydney gains 0.6%

Australia’s key S&P ASX 200 index appears set to snap a two-session losing streak early Thursday.

Junior miners led gains despite iron ore prices slipping overnight; Arrium and Atlas Iron rocketed 13 and 3.6 percent each, while bigger counterparts like Rio Tinto and BHP Billiton notched up 2.5 and 1 percent, respectively.

Financials also helped the support the bourse higher; Australia and New Zealand Banking rallied nearly 1 percent while Macquarie Group and Westpac Bank added 0.6 percent each.

Boral and Bluescope Steel gained 0.6 and 1.1 percent each, after data showed a surprise rise of 7.5 percent in building approvals for November. Economists polled by Reuters had expected a monthly fall of 3.5 percent. The monthly indicator also boosted the Australian dollar from multi-year lows to fetch USD 0.8089 per dollar.

Mainland indices mixed

China’s benchmark Shanghai Composite index fell 1.2 percent an hour into trade, while Hong Kong’s Hang Seng index extended Wednesday’s gains to rally 0.5 percent.

Oil-related counters were not able to get a lift from the pause in oil’s fall; PetroChina settled 3.6 percent higher while Sinopec and China Oilfield Services fell 0.3 and 1.2 percent, respectively. Sinopec receded 0.6 percent in Hong Kong.

Kospi adds 1.1%

Huge gains in index heavyweights help South Korean shares to pull away from a more than one-year low of 1,876 points attained on Wednesday.

In focus was Samsung Electronics, which said before trade opening that operating profit likely fell 37.4 percent in the October-December period to 5.2 trillion won ($4.74 billion), beating expectations. The guidance, released ahead of final fourth-quarter figures due around the end of January, was higher than a 5 trillion won estimate of 44 analysts polled by Reuters.

The above-view earnings guidance pushed shares of the electronics giant up by 1 percent.

Other blue-chips also soared; Hyundai Motor, the second heaviest weighting stock on the Kospi index, rose 3.2 percent while steelmaker Posco climbed 1.4 percent.

Asia’s calendar

Sri Lanka will kick start its presidential elections on Thursday. The country’s President Mahinda Rajapaksa, who is running for a third time, is expected to see a tight race with his main challenger, former health minister Maithripala Sirisena.

Meanwhile, focus may fall on a shooting incident that took place on Wednesday at French satirical magazine Charlie Hebdo’s headquarters. At least 12 people were killed and around 20 more were injured, according to Reuters.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Supply may not be oil’s only problem: Lloyd Blankfein

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Goldman Sachs chief Lloyd Blankfein, told CNBC on Wednesday that the drop in oil prices may indicate deflationary pressures, not just an abundance of supply.

“The market is suggesting a protracted deflationary period,” he said. “I don’t think it, but that’s the sensible way of interpreting what’s going on.”

Read More: El-Erian: Oil, currency realignments key in 2015

Falling oil prices have been a drag on stocks.

Brent crude dipped below $50 a barrel early Wednesday for the first time since May 2009. U.S. oil prices fell below $47 after a 4 percent decline in New York trading Tuesday.

The S&P 500 fell for a fifth-straight session Tuesday. That marked the third-consecutive down day in 2015 — the worst ever start to a year, a 2.7 percent decline for 2015.

Blankfein said he won’t extrapolate too much from the tough start for stocks.

The macro picture still looks favorable, he added—citing above-trend economic growth for the US and the continued expectation for very low interest rates. “That’s a very good environment for asset prices and for stocks.”

He said he if were the Fed he’d “take a lot of risk on the inflation side … and take that risk to avoid a low but very adverse consequence of [economic] backsliding.”

“The only game in town has been monetary,” he continued. “But I would keep firing because sustaining it is a lot more sure than losing it and trying to recapture the momentum.”

Read More: Bill Ackman: Herbalife is like Bernie Madoff

Should big banks break up?

Goldman Sachs recently ramped up the drumbeat for breaking up JPMorgan Chase.

A recent research report led by Goldman analyst Richard Ramsden said the Fed’s newly increased capital proposal had the effect of “reigniting the debate about whether a [JPMorgan] breakup could unlock shareholder value given that size is now a regulatory negative.”

Read More For: JPMorgan, breaking up could be hard to do

Asked about that report, the Goldman chairman and CEO said: “I read that when you did because you know we separate research.”

He refused to say whether he personally thought JPMorgan should break up, speaking more broadly on the issue of the cost of holding more capital. “The structure of the capital rules assign a higher capital to your entire enterprise balance sheet the bigger you and the more complex your are — for JPMorgan and Goldman Sachs.”

“What’s the value of size and complexity? Well, synergies,” he continued. “But now there’s a cost to size and complexity. Extra capital you need to have. That capital has a price.”

Blankfein said he has no plans to break up Goldman, but argued that anyone running a large financial institution needs think about these kinds of tradeoffs.
Concerns about ‘fat finger’ trade costs

His major concerns? Blankfein said he worries about the downside of relying too much on technology in the financial industry.

“People are talking about cyberterrorism and bad behavior,” he said. “But what about mistakes … bad software, a wrong button.”

“In the old days, you had a ‘fat finger’ and you would have a $100,000 mistake,” he recalled. “Could you [now] have a $100 million mistake? Could you have a billion dollar mistake?”

Blankfein appeared on CNBC’s “Squawk Box” Wednesday morning, as the show debuted in its new home in New York City.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Investors pin hopes on big Nikkei rally

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Despite the lackluster performance of Japanese stocks last year, investors have high hopes for the market in 2015, forecasting gains of 17 percent by year-end, according to a new survey by Nomura.

On average, investors forecast the benchmark Nikkei 225  will hit 19,900 by end-2015, up from 16,953 currently.

The index rose just 7 percent in 2014, lagging other major markets in the region such as China and India, which rallied around 53 and 30 percent, respectively.

The market has been off to a soft start this year, with the Nikkei 225 trading down 2.6 percent on Tuesday as concerns around Greece`s future in the euro zone and plunging oil prices weighed on investor sentiment.

The survey, which was conducted between 21 December and 3 January, polled 215 domestic and overseas institutional investors.

Reasons for optimism

There are a multitude of factors behind investors` optimism around Japan stocks: the Bank of Japan`s accommodative stance, the national pension fund`s increased allocation to Japanese stocks and positive earnings momentum.

In an interview with CNBC on Tuesday, Russ Koesterich, global chief investment strategist of Blackrock said the improvement in Japanese corporate earnings is underappreciated.

“One of the things that`s happening in Japan which has gone unnoticed, is you`re seeing a very big increase in corporate earnings and a significant increase in ROE (return on equity),” Koesterich said.

Read More Nikkei tipped to top 20,000 in 2015

“As you seen ROE move higher, that raises the valuations you want to play for the stocks. At a time when Japan is one of the few arguably cheap market in the world, it makes those stocks fairly attractive,” he added.

Investors polled by Nomura expect recurring profit growth of 12-13 percent in FY2015, which begins on April 1.

Nomura believes there is scope for investors to upgrade their view on earnings given the yen`s recent depreciation and the impact of lower crude prices.

Investors everywhere agree

Comparing responses between domestic and overseas investors, there was little significant divergence between views on the outlook for share prices and earnings, the bank said.

However, there was some divergence in terms of sector preference.

“Domestic investors appear relatively bullish toward construction and basic materials while overseas investors seem relatively bullish toward banks and real estate,” the bank wrote in a note accompanying the survey.

 Copyright 2011 cnbc.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow