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  Wednesday, 21 Jan 2015 | 2:44 PM ET

Mario Draghi may need to get a bigger (QE) boat

Posted By: Jeff Cox

If Mario Draghi wants to have a significant market impact after Thursday's European Central Bank meeting, he better not think small.

The financial world's collective gaze will be focused on the ECB president after the session, during which policymakers are expected to launch a U.S.-style quantitative easing program aimed at injecting liquidity into the sputtering euro zone economy, and goosing asset prices in the process.

History, at least that generated by the Federal Reserve's historically ambitious three rounds of QE, would suggest that the initiative would boost stocks, commodities and bond yields and, hopefully, generate some real economic growth.

However, that's likely dependent upon how aggressive Draghi wants to get with the ECB's version of QE, and specifically whether it can shock a market that already is well aware of the plan.

"Our view is that the extent to which the ECB will surprise markets depends on size (well above market expectation of 500 billion euros) and the extent to which markets will perceive QE as being open-ended," Gilles Moec, European economist at Bank of America Merrill Lynch, wrote in a report for clients. "ECB communication will be the key."

»Read more
  Wednesday, 21 Jan 2015 | 1:16 PM ET

Manager 'truly sorry' for blowing up hedge fund

Posted By: Lawrence Delevingne
Scott Mlyn | CNBC

A hedge fund manager told clients he is "truly sorry" for losing virtually all their money.

Owen Li, the founder of Canarsie Capital in New York, said Tuesday he had lost all but $200,000 of the firm's capital—down from the roughly $100 million it ran as of late March.

"I take responsibility for this terrible outcome," Li wrote in a letter to investors, which was obtained by CNBC.com.

"My only hope is that you understand that I acted in an attempt—however misguided—to generate higher returns for the fund and its investors. But even so, I acted overzealously, causing you devastating losses for which there is no excuse," he added.

»Read more
  Wednesday, 21 Jan 2015 | 12:07 PM ET

Kiss that 'shrinking' budget deficit goodbye

Posted By: Jeff Cox

Among the laundry list of achievements President Barack Obama touted in his State of the Union speech Tuesday was a "shrinking" budget deficit.

While that's true on its face, there's more to the story, and it's likely to become a significant headache for his successor.

Obama and his supporters are correct in reporting that a budget gap when he took office of some $1.4 trillion has been trimmed significantly. The 2014 projection was for a $506 billion shortfall, while the 2015 number comes down to $469 billion, according to the Congressional Budget Office.

"At every step, we were told our goals were misguided or too ambitious; that we would crush jobs and explode deficits. Instead, we've seen the fastest economic growth in over a decade, our deficits cut by two-thirds, a stock market that has doubled and health care inflation at its lowest rate in 50 years," Obama said.

"At this moment — with a growing economy, shrinking deficits, bustling industry and booming energy production — we have risen from recession freer to write our own future than any other nation on Earth," he added later in the speech.

»Read more
  Wednesday, 21 Jan 2015 | 12:20 PM ET

Hot topic for 1-percenters at Davos: Inequality

Posted By: Lawrence Delevingne
A man begs on a street in Shanghai.
Peter Parks | AFP | Getty Images
A man begs on a street in Shanghai.

Rising economic inequality is casting a shadow over the World Economic Forum, a conference dominated by the proverbial 1 percent.

Oxfam, in a report timed to the start of the Davos conference, estimated that the combined wealth of the world's richest 1 percent could overtake that of the remaining 99 percent by 2016.

"Inequality is rising, and rising fast," Winnie Byanyima, executive director of Oxfam International, told CNBC on Tuesday. "This is dangerous. It is bad for democracy and for stable societies and it is bad for (economic) growth. The poor hurt."

Read More 'The poor hurt' as inequality rises 'fast': Oxfam

»Read more
  Wednesday, 21 Jan 2015 | 1:00 AM ET

At Davos, it's not all about the money...seriously

Posted By: Lawrence Delevingne
Stephen A. Schwarzman, Chairman and CEO, The Blackstone Group, USA.
Source: Wikipedia
Stephen A. Schwarzman, Chairman and CEO, The Blackstone Group, USA.

The World Economic Forum is teeming with elite investors this week, and it's not just to talk their own book.

"Davos," said Blackstone Group spokesman Peter Rose, "offers Steve [Schwarzman] an unparalleled opportunity in a highly efficient way to meet the leading politicians, business leaders, government officials, academics, central bankers and other thought leaders so as to better understand the myriad crosscurrents in the world's economies."

Indeed, most of the more than two dozen hedge and private equity fund managers—including Ray Dalio of Bridgewater Associates, Paul Singer of Elliott Management and David Rubenstein of Carlyle Group—make the long trip to the Swiss Alps to actually think about investing in the year to come, not just to sell potential clients or show their macroeconomic smarts on stage.

»Read more
  Tuesday, 20 Jan 2015 | 12:20 PM ET

For CEOs, at least, US looking better than China

Posted By: Jeff Cox
Scott Mlyn | CNBC

For the first time in five years, corporate heads like the U.S. more than China.

CEOs responding to an annual survey from PwC said a growing American economy is providing reason to keep money there rather than ship it to more robust economies around the globe.

Results indicate that the U.S. is the first choice for 38 percent of the corporate chieftains, compared to 34 percent for China. That's a turnaround and then some from results back to 2011, when the survey showed 39 percent of investors preferring China to a meager 21 percent for the U.S.

"As the U.S. recovery gains traction, it is gaining more adherents. Challenges remain, yet key measures of U.S. economic health are improving," a narrative accompanying the study said. "Business hopes are building that the American consumer market will start firing on more than one piston in 2015."

»Read more
  Tuesday, 20 Jan 2015 | 11:28 AM ET

Davos '15: Gates, Soros, Pharrell to tackle crises

Posted By: Lawrence Delevingne

As it gets started this week, the World Economic Forum is as big as ever.

The juggernaut of a conference in Davos, Switzerland, is projected to include more than 2,500 participants from 140 countries who will meet to "address key issues of global importance," according to organizers, in a small skiing village full of snow, armed guards and international press.

The attendee list for the 45th edition of the event is, as usual, star-studded.

Read MoreDavos: More women in 2015-but don't get excited

French President François Hollande, Chinese Premier Li Keqiang, German Chancellor Angela Merkel and Italian Prime Minister Matteo Renzi are some of the 40 heads of state and government coming.

Jack Ma of Alibaba, Mary Barra of General Motors, Satya Nadella of Microsoft and Eric Schmidt of Google are among the more than 1,500 business leaders attending.

»Read more
  Thursday, 15 Jan 2015 | 10:58 AM ET

RayJay's Saut: 'It is too late to panic'

Posted By: Jeff Cox
Trader on the floor of the New York Stock Exchange.
Jin Lee | Bloomberg | Getty Images
Trader on the floor of the New York Stock Exchange.

Now is not the time to panic. The time for that, in fact, was about a month ago.

That's the view from Jeffrey Saut, the widely followed chief investment strategist at Raymond James, who believes investors missed a selling opportunity in December and now need to ride out the current volatile wave.

Saut warned clients in late December that his timing models suggested a tumultuous period ahead for markets. He repeated that call during 2015's first week of trading when he noted that he was looking for "increased volatility in the first couple months of the year" after a 15 percent rally from the October lows.

During that period, he said, investors should have been raising cash as they waited for signs that a bout of selling was over.

"It is too late to panic," Saut wrote in a note to clients Thursday morning. "The time to raise cash was a month ago, not now. Now it is time to make your 'shopping list,' looking for the opportunity to selectively redeploy that cash into preferred equities."

»Read more
  Thursday, 15 Jan 2015 | 1:17 PM ET

Oil is not well for this energy-dependent country

Posted By: Kate Kelly
Pedestrians walk in the old town district of Stavanger, Norway.
Kristian Helgesen | Bloomberg | Getty Images
Pedestrians walk in the old town district of Stavanger, Norway.

The rout in crude oil prices isn't hurting just the U.S. shale drillers that have ramped up production in recent years. It's also punishing one of the world's wealthiest nations: Norway.

The small Scandinavian country, known for its picturesque fjords and family-friendly social policies, is also a major petro-nation, accounting for more oil exports than any other country in Europe. That means that $45-per-barrel crude has been punishing for Norway, whose central bank said in a recent report that oil at levels below $70 "will have relatively substantial consequences" for its economy.

And that's certainly what the market seems to think.

Since oil's plunge began last fall, the Norwegian krone has seen a 12-year low; the country's national oil company, Statoil, has canceled projects and reported its first loss since going public in 2001; and the government has cut interest rates in order to stimulate the economy, signaling that further monetary easing could also be in the offing. Late Thursday in Europe, senior Norwegian officials were preparing for an emerging meeting on Friday to discuss plans for a potential stimulus package, according to multiple reports.

The anxiety over Norway is such that the noted hedge-fund manager Kyle Bass said at a recent investment conference in Oslo that the nation "trades like an emerging market because of its dependence on crude," sparking additional debate about the impact of cheap oil on both Norway and other crude export-driven economies, including Russia, Iran and Venezuela.

»Read more
  Wednesday, 14 Jan 2015 | 2:44 PM ET

Dimon: JPMorgan would be better if kept together

Posted By: Kayla Tausche

JPMorgan Chase CEO Jamie Dimon doesn't want a breakup.

Dimon expressed that sentiment in response to a bevy of analyst questions about the future of the big bank's business model amid onerous new regulations highlighting the government's perceived views that JPMorgan is still too big to fail.

"The views and the facts are completely different, OK?" Dimon said, after being asked whether the bank's efforts to build its capital base will still fail if the government's ultimate intent is to break up the bank.

Dimon recounted again that JP Morgan was able to absorb failing banks Bear Stearns and Washington Mutual during the financial crisis, and that its balance sheet is even stronger now: It has more capital and less credit exposure and risk as a percentage of the balance sheet, more long-term debt and more liquid assets.

"When [regulators] talk about risk, they're mostly talking about size," Dimon continued. "They look at size, and it scares them."

Read MoreJPMorgan misses; Dimon says banks 'under assault'

In December, Federal Reserve officials suggested JP Morgan was the only bank that would need additional capital—some $20 billion, they estimated—to meet strict new rules. That claim further fueled the debate over whether the firm would benefit from splitting into multiple banks, rather than one large institution that requires a massive capital cushion that may divert funds from shareholder returns.

»Read more

About NetNet

  • NetNet is where you'll find the low-down and the high jinks of Wall Street. It's the place for insider stories, trader gossip, and tales of the foibles of the moneyed crowd and the culture of finance.Wall Street news and commentary served fresh all day long.

 

  • Jeff Cox is finance editor for CNBC.com.

  • Lawrence Develingne

    Lawrence Delevingne is the ‘Big Money’ enterprise reporter for CNBC.com and NetNet.

  • Stephanie Landsman is one of the producers of "Fast Money."

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