CAC40, DAX30, STOXX sound very sweet to the ears of optimistic investors. After an excellent year 2013 and a mixed year 2014, 2015 took off with a supersonic bang. Star among the stars, the DAX30skyrocketed nearly 18 percent in 2 months instead of a mere 2.3 percent in 2014 after a jump of 23 percent in 2013. The massive quantitative easing (QE)started by the ECB 2 days ago has been the main engine behind the brake-less European financial markets.
It’s so wonderful that it blinded the price each European taxpayer will have to pay for it without any guarantee that the QE will bring the desired outcome. In addition here is the comeback of economic growth, long-awaited since 2008 and the sovereign debt crisis in 2011. A mere 2 percent is enough to delight both politicians and the financial markets. Yet it is barely enough to sustain the ailing and sluggish European economy at its current level. This suggests that the market has yielded again to one of its bad habits: celebrating the positives and ignoring the negatives.
Indeed what can be negative when the majority agreed, contrary to what it said when a quasi-correction occurred in October 2014, that Europe is “the market to be” in 2015. The euro crisis is not over. The showdown between the Eurogroup and Greece, even though the latter will likely be defeated, is the visible tip of a very deep political crisis at the core of which, ignored by politicians, has been melting a huge magma of popular anger whose explosion could happen anytime. In that case, the euro would likely be swept out and the European economy would plunge into the unknown.
Add the crisis in Ukraine, the acrimonious relations between the European Union and Russia, the Islamic terrorist threat, and the cocktail served to investors will ultimately taste very bitter. Icing on the glass, latest economic data has revealed a more serious than expected slowdown of China’s economy. The markets took it as a temporary episode although the fundamentals should encourage them to more caution.
A respiration on European markets would be sane whereas an ongoing bullish trend at the pace recorded since the beginning of the year would be a catalyst for a correction as hard as sudden.
Annualized return on Goldman Sachs (GS) average common shareholders’ equity (ROE) was 14.7% for the Q1 of 2015. “Given more normalized markets and higher levels of client activity, we remain encouraged about the prospects for continued growth,” saidLloyd C. Blankfein, GS’ Chairman and CEO.
“By the end of 2014, Russia’s GDP has grown by 0.6 percent – a small growth, but it is growth nevertheless. Despite the significant fluctuations on the financial market, Russia’s banking sector has demonstrated good dynamics. Overall, we concluded 2014 with a slight deficit of 0.5 percent and managed to prevent a spiraling into a major deficit,” Russian President Vladimir Putinsaid in his annual TV Q&A session.
In January 2015, Cyceonwrote that Marine Le Pen’s editorials and interviews in the NYT and WSJ, two of the most respected newspapers, were very significant developments. Now, Le Pen is amongTime’s 100 most Most Influential People in the world in 2014. French President François Hollande is not, contrary to his counterparts Obama, Xi, Putin and Merkel.
Chinese sources said Pakistani Prime Minister Nawaz Sharifapproved the purchase of 8 Chinese submarines – probably diesel-poweredYuan class, known as Type 039A or 041 – in what will likely be one of China’s most important arms deals ever, worth between $4 and $5 billion. China accounted for more than half of Pakistan’s arms purchases in recent years.
The ECBdecided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.05 percent, 0.30 percent and -0.20 percent respectively. A press conference with President Mario Draghifollowed.
Financial results aren’t as good as some hoped they’d be but here is some good news about Netflix whose membershipsurged past 60 million. Netflix, which wouldn’t seeHBO as a threat, is therefore strengthening its status of world’s leading Internet TV network available in over 50 countries.
Foreign direct investment (FDI) into Chinacontrasted much with weak March 2015 trade data as it increased 2.2 percent YOY while inbound FDI was up 11,3 percent to $34.88 billion for Q1 2015.
Nokia and Alcatel-Lucentannounced their intention to combine to create an innovation leader in next generation technology and services for an IP connected world. Nokia will make an offer for all of the equity securities issued by Alcatel-Lucent, through a public exchange offer in France and in the United States.
As a result of the government policy of “moving forward while maintaining stability”, the National Bureau of Statisticssaid, Chinaeconomy had a smooth development with restructuring advancing steadily and new impetus showing momentum. According to the preliminary estimation, the GDP of China in the Q1 of 2015 showed a YOY increase of 7.0 percent.