Monthly Archives: April 2015

US and Japan Forge Historic Defense Cooperation Agreement

Japanese Foreign Minister Fumio Kishida

Japanese Foreign Minister Fumio Kishida

Emerging from talks in a New York hotel, US Secretary of State John Kerry, Defense Secretary Ashton Carter, Japanese Foreign Minister Fumio Kishida, and Defense Minister Gen Nakatani announced revised guidelines for Japanese-US military cooperation, bringing the two countries closer together than ever before as defense partners.

The new rules agreed upon call for the possibility of Japan helping US forces who may be threatened by a third party. Japan could also be called upon to send minesweeper ships in the Middle East. The agreement comes at a time when Japan and the US are anxious over actions taken by China to move on to some disputed regions of the South China and East China Seas, although officials deny this is what is motivating them.

The statesmen did however mention North Koreas as a potential source of instability in the region.

Secretary Kerry emphasized that the US takes the Japanese position on the disputed Senkaku Islands, which China refers to as the Diaoyus, stating that the islands are completely under Japanese control.

The US “commitment to Japan’s security remains ironclad and covers all territories under Japan’s administration, including the Senkaku Islands,” Kerry said.

“Today we mark the establishment of Japan’s capacity to defend not just its own territory, but also the United States and other partners as needed,” Kerry told a joint press conference. “This is a historic meeting. It’s a historic transition in the defense relationship between our two countries.”

UBS Ending Automated Options Trading Business

Photo Credig: Allie Caulfield

Photo Credit: Allie Caulfield

The Swiss bank UBS has decided the place that needs trimming to bring profits up is their automated options market-making division. Other parts of their options trading arm will remain unchanged. Staff who was engaged in the auto options section will be re-assigned to other parts of the bank which have been more profitable to the company as a whole.

The move comes at a time when other banks are cutting back on costs and risk. The general reassessment is a reaction to the financial crisis which has led several of the world’s largest banks to leave areas of trading that were simply too expensive to make them worthwhile, or simply were not market leaders in those areas.

“Being a liquidity provider in the options market has become more difficult as market makers are stressed with greater regulatory responsibilities and a fragmented exchange structure,” said Ed Boyle, CEO of BOX Options Market.

Oil Prices Rise after Shale Production Dives

Shale oil "Joints 1" Photo by Michael C. Rygel

Shale oil “Joints 1” Photo by Michael C. Rygel

Brent crude oil prices rose by 50 cents a barrel to $58.43 and US crude climbed by 60 cents to attain $52.52 per barrel on Tuesday. The climb in prices is surmised to be due to two main factors: a US forecast of output of lowered US shale oil production, the first decline in over four years; and increasing hostilities in Yemen where Saudi Arabia, a major oil producer, is involved in a civil war.

According to the US energy Information Administration US shale production will decrease by 45,000 per day in May, to a total of 4.98 million bpd.
Since 2010 shale has helped to increase the amount of barrels of oil produced in the US by about 4 million each day. This increase in oil production has played a key role in the dramatic decline in oil prices around the world over the past year. The rock bottom price of oil, which was as high as $115 per barrel last June, has begun to interfere with the exploration for new oil sources.

“It’s a small change, just a drop in the ocean, but an excuse to buy,” said Carsten Fritsch, analyst at Commerzbank. “A lot of speculative financial investors think oil is cheap and are looking for a reason to get into the market.”

Although Yemen itself is considered a minor oil producer, the fact that Saudi Arabia is embroiled in the current war with its southern neighbor has kindled fears that the Saudis could fall back in production.

“Geopolitical risk in oil markets remains elevated,” JP Morgan analysts said in a note. “From a fundamental perspective however, supply from the Middle East is expected to remain high, with Saudi Arabia and Iraqi production on the rise.”

Bruce Shalett: Investment Banker

financeFor investment bankers such as Bruce Shalett, Simon Smith and James Amine, the news that trading revenues look likely to reverse their downturn of this year’s first quarter, will be most welcome.

It looks like volatility in international fiscal markets is about to return, which, simultaneously will contribute to a hike in investment banking trading revenues. This follows many years of it being in a state of significant stupor.

Indeed, according to experts working in the field at JPMorgan, revenues for the top three firms in the first quarter will probably be 7 percent higher than last year’s year-on-year. In addition, FICC businesses (that comprise around 50 percent of revenues from investment banks) could escalate by as much as 9 percent. These have also encountered a malaise in the last few years.

To engineer a recovery, banks have actually been attempting to make adjustments that will ultimately result in an upsurge of profits, via stuff cuts and shortening business lines following regulations as the financial crisis limits the amount of capital banks can put to work.

Business Travelers Choosing Uber in Droves

Certify, an expense management system provider, reports that use of Uber by business travelers using its service has reached an astounding 46 percent of all ground transportation during the first quarter of 2015. Compared to the figure of 15 percent during 2014’s first quarter, that is a remarkable surge in growth.

“While we often see noteworthy market shifts — leading restaurant chains and hotels exchanging leadership positions, for example — it is unprecedented to see one vendor grow to take such a commanding market share within one year’s time,” said Certify CEO Bob Neveu, who reported to Scott Mayerowitz of the AP.

In some US cities the use of Uber has gone past the 50 percent mark for business travelers using in-city transportation. In San Francisco, as an example, 71 percent of rides reported to Certify were done using Uber during Q1, with only 29 percent using all other methods of travel, such as taxis or busses. In Dallas that number is 56 percent.

There are still cities wherer use of Uber is lagging behind, including New York, Chicago and Miami. In those cities limos, taxis and shuttles still take from 75 to 79 percent of ground travel expensed through Certify.

Some companies are hesitating to make the switch due to concerns about safety and liability.

“Big limousine or airport shuttle companies carry insurance; individuals moonlighting as drivers don’t always,” writes Mayerowitz.

These concerns seem to be of little concern to the companies flocking to Uber in droves.

“The business community is looking for value and convenience, and at the same time this is a group that is interested in innovation,” said Neveu. “Ridesharing services are making inroads into corporate budgets because they combine all of those things.”