lunes, mayo 09, 2016

VACACIONES MAYO 2016

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VACACIONES MAYO 2016

Jueves 28 de Abril del 2016

Queridos amigos,



Les escribo estas líneas con motivo de mi próximo viaje, el que me tendrá ausente de la oficina y de nuestras lecturas cotidianas, desde el lunes 2 hasta el lunes 23 de Mayo próximo, que me reintegro a mis labores.


Durante estos días no tendré acceso regular al Internet ni a mis correos.
  
  
En los últimos meses la situación económica y financiera internacional se ha seguido deteriorando aun mas, con el consiguiente aumento creciente de la volatilidad de los mercados financieros, según lo ya previsto en mi carta de Octubre pasado, replicada en algunos párrafos líneas más abajo para mayor abundancia, impactando duramente a los países emergentes, las monedas, el petróleo y los precios de los "commodities", el fortalecimiento notable del dólar norteamericano, típico de las épocas de crisis, y una retracción cada vez más marcada del crecimiento del producto mundial, ahora ya reconocido por todos los bancos centrales, lo que nos coloca claramente bajo la sombra del temor de una potencial deflación y de la recesión global, cada vez más inevitable.  
 
En los últimos dos meses el anuncio de una política de aumento de intereses menos agresiva que la anunciada previamente, por parte de la FED, ha debilitado ligera
y temporalmente al dólar, e impactado transitoriamente de manera positiva a los precios de las materias primas y los mercados de acciones.
 
La pregunta es cuanto tiempo puede durar esta situación en una economía global manipulada descaradamente por los bancos centrales y en franco camino de deterioro, con el continuo crecimiento de la desigualdad de los ingresos y una clase media cada vez mas disconforme, como lo reflejan las coyunturas políticas preocupantes de los últimos tiempos, tanto en los Estados Unidos de Norteamérica, como en Europa y el resto del mundo. La enorme volatilidad de los mercados financieros, que pensamos será cada vez mayor, es un síntoma de esta situación insostenible a mediano y largo plazo. 
El artículo de hace unos meses de Doug Nolan, "The Unwind", al que pueden acceder mediante el "link" anterior, describe claramente la situación precaria de la economía global, los mercados financieros, las deudas y el crecimiento económico mundial, por lo que me abstendré de mayores comentarios.  También pueden acceder al  articulo de Doug Nolan, "New World Disorder".  
 
La reciente creciente y notable volatilidad de los mercados financieros, las dudas hamletianas de la Reserva Federal sobre las tasas de interés y la reciente volatilidad de las bolsas, son solo una pequeña muestra de la descomposición de las economías y los mercados globales.

En realidad no podía ser de otra manera, si tenemos en cuenta que no se ha hecho nada en los últimos años para reparar los profundos desequilibrios estructurales en los fundamentos de la economía global, sino que más bien, por el contrario, se ha seguido "maquillando" por parte de los bancos centrales la insostenible situación económica y financiera global, profundizando los desequilibrios y la inestabilidad vía el constante crecimiento de las deudas, aumentando las ineficiencias y dilatando el necesario ajuste. El crecimiento estructural de la economía global es cada vez más frágil, dudoso e insostenible.


Hasta la crisis del 2000 y luego de la del 2008, ahora así llamada la Gran Recesión, la demanda global había sido “subvencionada” por un sistema financiero manipulado e intervenido, creando una demanda y una economía global ficticia, una recuperación así llamada "subprime", liderada por la FED mediante un crecimiento desproporcionado de las deudas, imposible de auto-sustentarse en un crecimiento de la economía real en el largo plazo. 


Deuda, deuda y más deuda, parece ser el mantra de la FED.

Desde entonces, la FED y el resto los bancos centrales de todos los países más importantes del mundo se han negado y se siguen negando a reconocer esta realidad, aceptando el inicio de un ajuste inevitable y estructural, regresando a un nivel real de la economía global de alguna manera manejable. Aún siguen abocados al esfuerzo de una gran represión financiera, manipulando e inflando irresponsablemente los mercados financieros vía una política monetaria de emisiones inorgánicas de papel moneda sin respaldo y muy bajas tasas de interés, o hasta tasas de interés negativas en muchos países del primer mundo. Actualmente se estima que existen aproximadamente 7 trillones de dólares de inversiones en tasas de interés negativas.

Las deudas de consumidores, empresas y gobiernos, eran y son insostenibles.

Por ello creemos que los bancos centrales no aumentarán de "motu propio" las tasas de interés de manera importante a corto plazo, salvo que este aumento provenga final y sorpresivamente de una crisis generada por la desaparición de la confianza de los inversionistas globales en los mercados financieros. Mas bien los bancos centrales seguirán, en la medida de lo necesario, con su política de seguir emitiendo e inyectando moneda sin respaldo a los mercados, bajando las tasas de interés a niveles aun mas negativos e interviniendo los mercados de capitales mediante compras de bonos y de acciones, distorsionando cada vez mas los precios de los activos financieros en todo el mundo.

Inmediatamente sus deudas se volverían obviamente impagables y la crisis que tanto han tratado de evitar reconocer, sobrevendría inevitable.

Solo para mencionar al país con la economía más importante, la deuda de los Estados Unidos de Norteamérica ha crecido por encima de los 18 trillones de dólares, a más del 100% de su PBI. Y si incluimos las deudas contingentes internas, como el Seguro Social y los Fondos de Pensiones, algunos analistas calculan que la deuda norteamericana podría llegar a sumar entre los 80 a 120 trillones de dólares, es decir, entre 5 a 7 veces el producto bruto anual. Y en aumento.

Para un análisis detallado del desarrollo de esta problemática y la verdadera situación actual, ver los artículos del blog, aquí, aquí y aquí.

Esta situación se ha seguido agravando en los últimos años y es insostenible en el mediano y largo plazo.  (ver articulo)

Para evitarlo, es que los bancos centrales han tenido que esforzarse en mantener ficticiamente una apariencia de normalidad en el "statu quo", inyectando cantidades innombrables de papel moneda sin respaldo a los mercados financieros y reducido las tasas de interés a niveles nunca vistos por largo tiempo, desde que la historia económica recuerda. (QE1, QE2, QE3, Q4, Abenomics, China, etc….)

Todo ello nos hace presumir que todo ello se lleva a cabo por el fundamentado temor a perder el control del esquema Ponzi mundial, que es lo que son ahora la economía global y los mercados financieros, y por ende se derrumbe el castillo de naipes enfrentando de golpe un ajuste económico enorme y hasta la posibilidad de una revolución social incontenible, guerras, etc.

El hecho es que el esfuerzo de política monetaria intervencionista llevada a cabo por la mayoría de los bancos centrales del mundo, en los últimos 15 años, más intensa y desproporcionadamente desde los últimos siete años, además, ha producido la transferencia más importante de riqueza que se recuerda en la historia, de manos de los pensionistas y los ahorristas, hacia las clases privilegiadas y los bancos. 

Mas importante todavía, se ha distorsionado y manipulado fundamentalmente las reglas de la economía del libre mercado con consecuencias funestas y aun impredecibles en el mediano y largo plazo para los consumidores e inversionistas del mundo, incrementando la locación  ineficiente de los recursos de inversión, además de multiplicar el costo de la inevitable implosión de los mercados financieros, tanto de las acciones, como de los bonos y otros instrumentos de inversión financiera.

Todo esto para no mencionar a los derivados financieros, estimados por algunos analistas en más de 1 cuatrillón de dólares (1000 trillones de dólares),  que se ciernen como una espada de Damocles, sobre todo el sistema financiero y económico internacional.

El mismo FMI ha advertido hace ya unos meses de la posibilidad que la economía global está entrando a un periodo de "stagnación" y a una probable nueva recesión, con las consecuencias que ello implicaría. (ver articulo) Y recientemente ha vuelto a reducir su estimado de crecimiento para la economía global de 3.6% a 3.2%. No nos extrañaría que estos estimados se sigan reduciendo en el futuro cercano, especialmente si tenemos noticias negativas del desarrollo de la economía China, en la que algunos analistas esta comenzando a prever un "hard landing" y de la enorme deuda interna de la economía China, influenciando negativamente de manera importante  a los mercados financieros globales.

Obviamente estos organismos no pueden decirnos toda la verdad. Ello sería propiciar ellos mismos el adelanto inevitable del descalabro global, el caos y el ajuste sin anestesia, con resultados imprevisibles. 

La pregunta de fondo es ¿hasta cuándo se podrá o podrán mantener esta realidad bizarra?
Y eso nadie lo puede responder con seguridad. La confianza de los inversionistas en los mercados financieros es la verdadera incógnita.

Por ello ahora tenemos que seguir preguntándonos seriamente, ¿Cuál de todos los potenciales "cisnes negros", conocidos o no, que hoy se ciernen sobre la economía global ,y que son muchos, económicos, sociales y geopolíticos, podrían ser el detonante de la nueva catástrofe?

Solo la historia nos responderá a esta crucial pregunta.


Por ahora, podemos especular que las próximas elecciones norteamericanas en Noviembre próximo son y serán un factor de gran importancia para el comportamiento de la FED, manipulando los mercados lo mejor posible, para influenciar de manera  positiva a la administración saliente, o dicho de otra manera, para evitar perjudicarla lo mayor posible, con un ajuste enorme y anticipado de las grandes incoherencias en la que se encuentra la economía norteamericana y la global como consecuencia de dichas intervenciones de los bancos centrales, en especial de la FED. 

Mientras tanto, en medio de este mundo bizarro, tenemos que insistir nuevamente y más que nunca, que la experiencia y la prudencia, el análisis y la inteligencia, la vigilancia y la paciencia, son los socios más importantes en las decisiones de políticas y estrategias de inversión a corto y mediano plazo.

En un cambio importante de ciclos como en el que pensamos que estamos envueltos hoy día, y en el que más allá de lo circunstancial, el pasado y el futuro se bifurcan y se oponen, los riesgos para los inversionistas son profundos. (ver articulo)

Con estas  anotaciones y advertencias que espero les sean de utilidad, me despido de Uds. con un cordial abrazo hasta el regreso a mis actividades, Dios mediante, a inicios de la tercera semana de Mayo próximo, cuando estaré nuevamente a su gentil disposición.

Gonzalo

PD. Para leer los artículos pueden subscribirse directamente entrando al blog:  www.gonzaloraffoinfonews.com



WALL STREET'S BEST MINDS

The Many Reasons to Be Bullish About Risk Assets

Northern Trust’s Katie Nixon says investors must look beyond the noise of a Brexit vote and U.S. election. 



The first four months of 2016 were for the record books — and may portend what’s ahead for the rest of the year. 
A historic downdraft in prices of risk assets was followed by a sharp rally that took most risk asset markets back into the black. One broad global index tells the tale. The MSCI All World Index slid 11.4% through mid-February, yet it ended the quarter in positive territory. Investors can be forgiven for feeling disoriented at this “tale of two markets.” 
The near future easily could replicate such volatility. Investor sentiment remains fragile, and it’s reasonable to expect that some of the first-quarter concerns will resurface. We require a sustainable decrease in world oil supplies to justify the rebound in energy. 
We also must watch carefully and closely the progress that China makes to gain more control over capital flows and currency fluctuations. Its transition will be fraught with bumps. 
Add some emerging risks to these concerns: The U.S. presidential election, an earnings outlook that is murky at best, and the risk that Great Britain will exit the European Union and what that may mean to the Eurozone politically and economically. 
Let’s examine more closely the early market decline to help determine if the subsequent rally has legs, while also remembering our premise that the markets are risky and uncertainty always reigns.
Most markets started the year with much to worry about: 
• The U.S. Federal Reserve’s plans to raise interest rates significantly, and the effect that might have on emerging markets.
• Fears that a hard economic landing in China might throw the world into a recession.
• Anxieties that collapsing energy prices signaled a slowdown in economic growth.
• Concerns that the growing migration crisis in Europe could exacerbate political fissures.
Not surprising, investors were concerned about how quickly the Fed would normalize interest rates, given the fragility of the global growth outlook and a further decline in inflation expectations. Federal Reserve Chairman Janet Yellen has since allayed those worries, signaling that future rate hikes will be gradual and data-dependent. 
At the same time, the European Central Bank took additional easing measures and Japan began its negative interest-rate policy experiment. It’s clear that global monetary policy will remain accommodative for the foreseeable future.
Meanwhile, the global economic wheels keep spinning and key data from the U.S., China and the Eurozone indicate that rumors of a global recession were greatly exaggerated. As for risk control assets as well as high-quality fixed income and inflation-protected Treasury securities, their positive returns in 2016 have provided investors with consistent and robust diversification benefits. We expect interest rates to continues to be low(er) for long(er), so we anticipate relatively low but positive returns from high quality fixed income and a continued and important benefit to portfolios through the diversification contribution.
We remain positive about on risk assets, reflecting the continued tailwind of accommodative central banks, a renewed confidence in the ability of the global economy to avoid recession, a People’s Bank of China in more control over capital flows and currency fluctuations and a recovery in commodities. 
We are confident that investors will look through some of the near-term noise of the pending U.K. vote on exiting the European Common Market and recognize they will be compensated over the long term for taking risk. 
We also forecast a volatile period when markets will continue to exhibit wide daily swings to reflect near-term risks. This can be a particularly dangerous environment for many individual investors who tend to lose their resolve in the midst of the downtrend. 
Investment success will hinge on the ability to withstand the inevitable volatility and “stay the course” with their investment strategies.

Nixon is chief investment officer for Northern Trust Wealth Management.


America’s Trade Deficit Begins at Home

Stephen S. Roach

American Migrant Workers


NEW HAVEN – Thanks to fear mongering on the US presidential campaign trail, the trade debate and its impact on American workers is being distorted at both ends of the political spectrum. From China-bashing on the right to the backlash against the Trans-Pacific Partnership (TPP) on the left, politicians of both parties have mischaracterized foreign trade as America’s greatest economic threat.
 
In 2015, the United States had trade deficits with 101 countries – a multilateral trade deficit in the jargon of economics. But this cannot be pinned on one or two “bad actors,” as politicians invariably put it. Yes, China – everyone’s favorite scapegoat – accounts for the biggest portion of this imbalance. But the combined deficits of the other 100 countries are even larger.
 
What the candidates won’t tell the American people is that the trade deficit and the pressures it places on hard-pressed middle-class workers stem from problems made at home. In fact, the real reason the US has such a massive multilateral trade deficit is that Americans don’t save.
 
Total US saving – the sum total of the saving of families, businesses, and the government sector – amounted to just 2.6% of national income in the fourth quarter of 2015. That is a 0.6-percentage-point drop from a year earlier and less than half the 6.3% average that prevailed during the final three decades of the twentieth century.
 
Any basic economics course stresses the ironclad accounting identity that saving must equal investment at each and every point in time. Without saving, investing in the future is all but impossible.
 
And yet that’s the position in which the US currently finds itself. Indeed, the saving numbers cited above are “net” of depreciation – meaning that they measure the saving available to fund new capacity rather than the replacement of worn-out facilities. Unfortunately, that is precisely what America is lacking.
 
So why is this relevant for the trade debate? In order to keep growing, the US must import surplus saving from abroad. As the world’s greatest economic power and issuer of what is essentially the global reserve currency, America has had no trouble – at least not yet – attracting the foreign capital it needs to compensate for a shortfall of domestic saving.
 
But there is a critical twist: To import foreign saving, the US must run a massive international balance-of-payments deficit. The mirror image of America’s saving shortfall is its current-account deficit, which has averaged 2.6% of GDP since 1980.
 
It is this chronic current-account gap that drives the multilateral trade deficit with 101 countries. To borrow from abroad, America must give its trading partners something in return for their capital: US demand for products made overseas.
 
Therein lies the catch to the politicization of America’s trade problems. Closing down trade with China, as Donald Trump would effectively do with his proposed 45% tariff on Chinese products sold in the US, would backfire. Without fixing the saving problem, the Chinese share of America’s multilateral trade imbalance would simply be redistributed to other countries – most likely to higher-cost producers.
 
I have estimated that Chinese labor compensation rates remain far less than half of those prevailing in America’s other top-ten foreign suppliers. If those countries were to fill the void left by a penalty on China, like the one that Trump has proposed, higher-cost producers would undoubtedly charge more than China for products sold in the US. The resulting increase in import prices would be an effective tax hike on the American middle class. That underscores the futility of attempting to find a bilateral solution for a multilateral problem.
 
The same perverse outcome could be expected from the reckless fiscal policies proposed by other politicians. Take, for example, the ten-year $14.5 trillion federal government spending binge proposed by Democratic presidential candidate Bernie Sanders – a program judged to be without any semblance of fiscal integrity by leading economic advisers within the very party whose nomination he seeks.
 
Government budget deficits have long accounted for the largest share of America’s seemingly chronic saving shortfall. The added deficits of Sandersnomics, or for that matter those of any other politician, would further depress America’s national saving – thereby exacerbating the multilateral trade imbalance that puts such acute pressure on middle-class families.
 
Seen through the same lens, mega trade deals, such as the TPP, would also have an important bearing on pressures that squeeze American workers. The TPP would effectively divert trade flows from those countries that are not a part of the agreement to those that are. With China excluded from the TPP, the same phenomenon noted above would result: American middle-class families would be taxed by the diversion of trade away from low-cost non-TPP producers such as China toward higher-cost TPP signatories such as Japan, Canada, and Australia.
 
In short, trade bashing is a foil for the vacuous promises that politicians of both parties have long made to American voters. Saving is the seed corn of economic growth – the means to boost American competitiveness by investing in people, infrastructure, technology, and new manufacturing capacity.
 
The US government, through decades of deficit spending and advocacy of policies that encourage households to consume rather than save, has forced America to rely on foreign saving for far too long. This has undermined US competitiveness, punishing workers with the job losses and wage compression that trade deficits invariably spawn.
 
America’s 101 trade deficits don’t exist in a vacuum. They are a symptom of a deeper problem: a US economy that has lived beyond its means for decades. Saving is but a means to an end – in this case the sustenance of a thriving and secure middle class. Without saving, the American Dream is in danger of becoming a nightmare. The trade debate of the current presidential campaign heightens that risk.
 
 


Dangerous Divergence

By: The Burning Platform


The chart below would appear to be in conflict with the results of a recent Gallup poll regarding stock ownership by Americans. The ratio of household equities to money market fund assets is near a record high, 60% above the 2007 high and 30% above the 1999 internet bubble high. The chart would appear to prove irrational exuberance among the general populace.


Ratio of Household Equities to MMF Assets


In reality, the lowest percentage of Americans currently own stock over the last two decades.

With the stock market within spitting distance of all-time highs, only 52% of Americans own stock, down from 65% in 2007. As the stock market has gone up, average Americans have left the market. They realize it is a rigged game and they are nothing but muppets to the Wall Street shysters.


Percentage of US Adults Invested in the Stock Market


The reason the ratio of household equities to money market funds is so high is due to the Federal Reserve's "Save a Wall Street Banker" policies implemented over the last seven years. When you purposely destroy the lives of senior citizens by reducing interest rates to "emergency" levels of 0% and keep them there six years after the great recession is over, it tends to reduce the amount of savings in money market funds. The divergence created by the Fed's insane policies is borne out by the data.

The average middle class American has experienced two Fed induced financial collapses since 2000, with another coming down the tracks in the very near future. They have been impoverished by the Fed's ZIRP and QE policies, sold to the masses as saving Main Street, but really designed to save and further enrich Wall Street. The entire engineered stock market rally has been designed by the Fed, Wall Street bankers, and the CEO's of corporate America who have bought back hundreds of billions of their stock, in order to enrich the .1% and their lackeys.

The average middle class American has rationally exited the rigged stock market and refuse to be lured back in. Back in 2007, nearly three in four middle-class Americans, with annual household incomes ranging from $30,000 to $74,999, said they invested money in the stock market according to Gallup polling.

Today, only 50% report having stock investments. This 22% drop is more than double the changes seen in stock investing among higher and lower income groups. Millions of middle class families have had to liquidate stock holdings just to survive in this ongoing Main Street recession.


Americans Invested in the Stock Market -- Selected Trend By age and income
 April 2007%April 2016%Change(pct. pts.)
National adults6552-13
Less than $30,0002823-5
$30,000 to $74,9997250-22
$75,000 or more9079-11
18 to 345238-14
35 to 547362-11
55+6556-9
Gallup Poll Social Series


The data indicates an extremely dangerous coming scenario. The middle class is already angry, disillusioned, suspicious of the establishment, and impoverished by Fed induced inflation, Fed induced lack of interest income and Obama induced Obamacare disaster. Those making less than $75,000 are invested in the stock market at an all-time low level, and what they do have invested is a pittance compared to what the ultra-rich have in the market.

The millennial generation also has a record low level of stock ownership, as they carry massive levels of student loan debt, have less job opportunities as Boomers can't afford to leave the job market, pay skyrocketing rents, and deal with a Fed induced over-priced housing market. They don't trust the establishment, government, or Wall Street. The angry older middle class are venting their anger by supporting Trump for president. The pissed off younger generations are throwing a monkey wrench into the coronation of Queen Hillary by supporting Sanders in droves.

The dangerous divergence begins to come into focus. Every credible stock market valuation used over the last 100 years is now at extreme levels only seen in 1929, 2000, and 2007. The Shiller P/E ratio now stands at 26.4, putting valuations in the highest decile throughout history, indicating likely real returns of 0.5% over the next 10 years. As stock prices push towards all time highs, corporate profits continue to plunge. A 40% to 60% decline in stocks is essentially baked into the cake.

Results for S&P500 From Different Starting Shille PEs 1926-2012


Millions of upper middle class professionals have bought into the establishment propaganda. They actually believe the Federal Reserve is infallible and can keep stock prices elevated for eternity.

Despite conclusive evidence the Fed failed in 2000/2001 and again in 2008/2009, the willfully ignorant stock market participants are putting their faith in highly educated academics whose insane monetary machinations have led to a global recession and global debt levels imperiling the worldwide global economy.

The last remaining threads keeping the country from imploding have been the rising stock market and the home price recovery. Both recoveries have been engineered through Fed easy money, Wall Street fraud, and mainstream media propaganda. Neither is based on a solid foundation of free market true demand. When the bottom gives out, it will drastically impact the upper middle class and people who pass for rich in this day and age. When the tide goes out for the third time in the last sixteen years, millions will be revealed to be swimming naked and in debt up to their eyeballs.

The dangerous divergence will then take a nasty turn. The bottom half of the 1% will now be as angry as the 99%. Any attempt by the establishment to further screw the nation by bailing themselves out will be met with violent disapproval. The country is a powder keg. The upcoming election is guaranteed to inflame opposing factions. A stock market crash in the next six months would sow the seeds of financial, political, and social upheaval not seen in this country since the 1960s. The established social order will be swept away in a swirl of chaos and retribution. The dangerous divergence will be resolved.


Goldman Sachs Drops the Velvet Rope for Savers

Wall Street firm is offering savings accounts and certificates of deposit from the website of its banking arm

By Justin Baer

         Joe Raedle/Getty Images


Goldman Sachs Group Inc., GS -1.00 % adviser to billionaires and the world’s largest companies, will now accept your couch-cushion money.

The financial firm most synonymous with Wall Street started offering savings accounts and certificates of deposit this month from the website of its banking arm, GS Bank. The firm will accept new customers with as little to save as $1, though they will need $500 to open a certificate of deposit.

The move was set in motion last August, when Goldman signed a deal to buy the online-deposit platform of GE Capital Bank. The transaction’s closing this month started the new era for the nearly 150-year-old firm run by Chairman and Chief Executive Lloyd Blankfein.

Goldman Sachs’s sudden fondness of small accounts is mainly driven by recent bank regulations that look more kindly on retail deposits. The bank also is looking to make more loans. Its core investment-banking and trading businesses suffered a tough first quarter, reviving some concerns about its strategy.

With the move, the New York company isn’t offering full-service retail banking. For example, its savings accounts don’t come with checking features, ATMs or Goldman branches to accept cash.

The main selling point, in addition to Goldman’s cachet: high rates.​The bank is touting a 1.05% yield on savings accounts, 1% on one-year certificates of deposits and 2% on five-year CDs.

Those rates are low historically, but much higher than what most large banks are offering these days. Goldman’s five-year CD provides a yield of between four times and 13 times the amount offered by the four largest U.S. banks— J.P. Morgan Chase JPM -0.58 % & Co., Bank of America Corp. BAC -0.99 % , Wells Fargo WFC -0.22 % & Co. and Citigroup Inc. C -0.60 %  BAC -0.99 % The yield on Goldman savings accounts exceeds the ones offered by its peers by a factor of about 100.

Still, Goldman is moving into a sector with experienced rivals. Goldman’s rates are competitive with other nationally available offerings, including those of Discover Financial Services, DFS 0.65 % Ally Financial Inc. ALLY -0.16 % and Synchrony Financial, SYF -0.20 % said Greg McBride, chief financial analyst at Bankrate.com. Like many banks that don’t have to maintain branch networks and the costs they entail, Goldman is able to offer higher yields than the biggest banks do, Mr. McBride said.

GE Capital, a unit of General Electric Co. GE -0.26 % , pitched identical rates on the savings accounts and CDs for its roughly $16 billion in deposits. Goldman chose to keep offering the same rates and used a similar look and feel for its website to help ease the transition for those existing depositors. The firm also inherited a call center in Cedar Rapids, Iowa, with about 100 employees to field requests and questions about the savings products.

The GE deal was part of a broader strategy by Goldman to collect more low-cost deposits it can then lend out to clients across each of its businesses, from investment banking to wealth management. Goldman’s GS Bank held about $88 billion in deposits as of Dec. 31, according to a regulatory filing. Much of that came from well-heeled clients in the firm’s wealth-management division, in which the average account has about $50 million.

The firm has pushed to increase deposits because of the strategy’s regulatory advantages.

Regulators have urged banks to become less dependent on short-term loans from other financial firms. Typically, big banks have used these funds to back bets, but the money quickly dried up during the 2008 financial crisis, exacerbating the market turmoil at the time. Deposits from consumers offer a steady and low-cost source of funding.

In 2009, GS Bank had just $32.9 billion in deposits. In February, Mr. Blankfein said the firm has looked to build its deposit base as it spots places to put that money to work in profitable loans. “We don’t go out and max out on deposits,” Mr. Blankfein said. “We source good investment or good lending opportunities and then get the funding.”

At its current size, Goldman’s deposit base is much smaller than those at Bank of America, J.P. Morgan and Wells Fargo. Those banks each had more than $1 trillion in deposits at the end of the first quarter. Morgan Stanley, MS -0.61 % Goldman’s closest rival, also has increased deposits to $157.6 billion as of March 31, up 16% from March 2015.

Goldman’s deposit efforts are overseen by Esta Stecher, a Goldman veteran who once helped oversee the firm’s legal team and who has run GS Bank since 2011. The firm also is pushing an online-lending project, dubbed “Mosaic” internally, to launch in the third quarter, people familiar with the matter said.

The lending unit, led by former Discover Financial Services executive Harit Talwar, plans to offer unsecured loans to individuals and small businesses, eschewing mortgages, auto loans and student loans, the people said. The business has hired about 90 people since Mr. Talwar came to the firm last year, they said.

While launching consumer businesses could bring new challenges and scrutiny to Goldman, regulators of late prefer consumer-finance activities to those tied to the capital markets, said Brian Kleinhanzl, an analyst with Keefe, Bruyette & Woods. “What these actions are showing you,” he said, “is that the regulatory environment is very tough right now for a traditional investment bank.”


America and Brexit

More special in Europe

As Britain’s EU referendum nears, Barack Obama joins the Remain campaign
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WHEN people wheel out the old quotation by Dean Acheson to the effect that Britain had lost an empire and not yet found a role, the rest of his speech is often forgotten. Acheson, who was President Truman’s secretary of state, went on to say that Britain’s attempt to play the part of a world power aloof from Europe by leveraging its “special relationship” with America was almost “played out”.

That was in 1962. More than 50 years later, those pushing for Britain to vote on June 23rd to leave the European Union are still in denial.

On April 22nd Barack Obama will be in London to tell people arguing for Brexit, as politely as he can, that they are mad, and that if Britain wants to retain much influence in the world, let alone a special relationship with America, it must stay in the EU. Jeremy Shapiro of the European Council on Foreign Relations, a think-tank, puts it starkly: “Britain can be a geopolitical actor within the EU or it can be a geopolitical irrelevance outside it.”

Mr Obama will not go that far, but last year he told the BBC that Britain’s place in the EU was a cornerstone of post-war peace and prosperity. He added: “We want to make sure that the United Kingdom continues to have that influence.” There is much at stake for America too if the British people choose not to listen.

For Mr Obama this is a farewell visit to an old ally and a chance to have lunch with the queen, who will just have celebrated her 90th birthday (see article). But he might have skipped it were it not for the looming referendum. Shocked by the near break-up of Britain in 2014 when the Scots came closer than expected to voting for independence—a triumphant Scottish Nationalist Party would have closed the nuclear-submarine base at Faslane, with worrying implications for NATO—Mr Obama has decided to speak his mind.

NATO and the EU (and its previous incarnations) have been the basis of America’s post-war engagement in Europe. The EU may be unexciting, with confusing institutions and rules, but seen from Washington, it has been a huge success.

In the first place it has helped to stop Europeans killing each other and thus reduced the need to send American armies across the Atlantic to fight. More recently, it provided both an example and magnet for the countries of the former Soviet empire. The EU’s important part in ending the cold war on Western terms, and its setting of democratic norms and values for aspirant members from the east, has been of incalculable benefit to America.

It is to Europe that America turns when something needs doing in the world that it either cannot or does not want to undertake alone. Its first port of call is still likely to be NATO. But it was the EU’s embargo on Iranian oil exports rather than American sanctions that brought Iran to the negotiating table and paved the way for the recent nuclear deal. It is EU sanctions on Russia that have substantially raised the costs of Moscow’s aggression in Ukraine. It is to the EU that America looks as a main partner in the fight against jihadist terrorism.

If the EU is a critical part of the West’s security architecture, it is even more fundamental for world trade. Should the negotiations between America and the EU to establish the Transatlantic Trade and Investment Partnership (TTIP) succeed, it will be the biggest bilateral trade deal in history. The TTIP has its opponents on both sides of the Atlantic, but the gains are worth having. A study by the Centre for Economic Policy Research estimated possible benefits at up to €119bn ($134bn) a year for the EU and €95bn for America. A British government report suggested a gain for Britain of £100 billion ($144 billion) over ten years.

From the outside in
 
Without Britain’s free-trading tradition and voice in the EU it is unlikely that the TTIP would have got this far. Were Britain to leave, it could deal a mortal blow to the treaty. If it still went ahead, Britain would find itself looking forlornly in from the outside. “I imagine the White House is absolutely bewildered by the proposal to leave,” says Dana Allin of the International Institute for Strategic Studies, a think-tank.

All Britain’s allies and friends outside Europe are at least as flummoxed. The other Anglosphere countries (Canada, Australia and New Zealand) are horrified. It matters less to them, but the Indians and the Japanese, who are big investors in Britain, are quietly dismayed.

India’s prime minister, Narendra Modi, says he sees Britain as “our entry point into the EU”.

Even China hopes Britain will stay in. Only Russia’s Vladimir Putin is cheering the Brexiteers.

Mr Obama’s concerns go beyond a Britain intent on self-harming. He fears the smouldering forces of nativism, populism and isolationism could be ignited across Europe by Brexit. The long euro-zone crisis has left raw scars, while the massive inflow of migrants from the war-torn Middle East is creating new divisions and anxieties.


In Washington’s view, the last thing Europe needs is for Britain to give its foundations a further hefty kick. As David Miliband, a former British foreign secretary, put it: “Brexit would be an act of arson on the international order.” Brexit on its own might not be a catastrophe for America, says Mr Allin, “but it could be a stage in the unravelling of the Western liberal order.” No wonder Mr Obama is worried.

Leaders of the Leave campaign—including the mayor of London, Boris Johnson—have got their retaliation in first, calling Mr Obama’s anticipated pro-EU message “hypocritical” because America would never consent to pool its sovereignty as Britain must do in the EU. Mr Johnson, who hopes to become prime minister should Brexit win and David Cameron fall, appears not to have heard of NATO, which obliges America to go to war should any other member be attacked. On April 20th, when eight former American treasury secretaries described Britain’s departure from the EU as a “risky bet” that would jeopardise the City’s role as a global financial centre, their advice was derided as an attempt to belittle Britain’s place in the world.

How much a warning from Mr Obama will pierce voters’ consciousness is hard to gauge. He is more popular in Britain than he is at home, especially with the young. If Mr Obama talks frankly about the perilous future of Britain’s trading relationships, and the weakness of its negotiating hand should it stand alone, he may hit home.

As for the special relationship, Britain will continue to be an important security partner for America because it has the biggest defence budget in Europe and the most deployable armed forces. The unique intelligence relationship will also endure, although it will have less value to America if Britain is excluded from EU information-sharing arrangements.

But so much of the case for Brexit is built on the idea that a buccaneering Britain would forge wonderful new partnerships with powerful and dynamic countries outside Europe. When Britain’s oldest and closest partner says, sorry, you won’t be nearly so interesting to us in the future if you take this step, that idea crumbles.