FT : LVMH and Hermès strike peace deal to end the handbag war

LVMH and rival Hermès have struck a deal to bring to an end one of the longest and fiercest wars in the luxury industry.
In a joint statement Wednesday, the two Paris-based groups said that they had agreed a mechanism to distribute LVMH’s 23.2 per cent share holding in Hermès to its own shareholders.
The deal will see investors in LVMH receive one Hermès share for every 21 LVMH shares they currently hold. The group’s main investors include Christian Dior, which holds 42 per cent of LVMH, and the Arnault group, which holds 5 per cent.
The operation, which the two groups said would take place before December 20, will leave Bernard Arnault’s personal holding in Hermès at around 8.5 per cent.
Shares in the family-controlled Hermès fell 9.8 per cent to €236.5 on Wednesday morning following the announcement, erasing €2.8bn off its market value.
Nevertheless, the operation will help Hermès allow one of the biggest names in the luxury industry, famed for its Birkin and Kelly leather bags, to break free from its Paris rival.
For LVMH and its shareholders, the investment reaped a share price gain of some 130 per cent. People close to the deal said that for all Hermès’ prospects in the coming years, it was unlikely that the shares would continue to gain at the same momentum.
Executives and family members of Hermès, which prides itself on its cottage-industry approach and insists that it is not a luxury group, were outraged when they discovered in October 2010 that LVMH had bought more than 17 per cent of their company.
That operation, which subsequently attracted the attention of France’s stock market regulator together with a €8m find, led to a bitter and very public stand-off between the two groups.
Tensions only increased when LVMH continued to build up its investment in Hermès in the following months to the 23.2 per cent today.
LVMH said at the time of the original investment that it had bought shares as a purely financial investment. Mr Arnault praised Hermès as a “magnificent company” for which he had only “good intentions” and no plan to take control.
But in an extraordinary public address in 2011, Patrick Thomas, then Hermès chief executive, said: “If you want to seduce a beautiful woman, you don’t start by raping her from behind.
Axel Dumas, who last year took over from Mr Thomas, vowed to take the fight against LVMH into the next generation, saying the larger group’s shareholding in Hermès was “neither desired nor desirable”. It will be “the battle of our generation”, said Mr Dumas.
Luca Solca, luxury analyst at Exane BNP Paribas, said: “The resolution of the conflict between the two parties has a direct consequence a reduction in the speculative appeal of Hermes – which goes back to being a normal publicly traded company.”
“One should expect the multiple to reduce – although more free float [shares that can be freely traded] could also mean more shareholder interest down the road.”

FT : Switzerland named as world’s ‘most competitive’ economy

Switzerland has retained its crown as the world’s most competitive economy for the sixth year in a row, according to a ranking by a leading think-tank.
Western economies continue to dominate the annual list of the most competitive economies drafted by the World Economic Forum, with six European countries ranked inside the top 10.

But rankings within the eurozone remain very uneven, with the WEF arguing that “while the divide between a highly competitive north and a lagging south and east persists, a new outlook on the European competitiveness divide between countries implementing reforms and those that are not can now also be observed.”
The WEF defines competitiveness as “the set of institutions, policies and factors that determine the level of productivity of a country” and the rankings are based on a variety of factors such as higher education, infrastructure and innovation.
Portugal jumps up 15 places in the rankings to 36th, with the WEF arguing that the “ambitious reform program the country has adopted seems to have started paying off . . . most notably in areas related to the functioning of the goods market.” By contrast, France and Italy barely move in the rankings, at 23rd and 49th respectively, and face criticism for “not having fully engaged” in reform.
The UK has moved up one place to ninth, thanks to its deficit-reduction programme and labour market improvements, but the WEF warns that access to loans – where the UK is ranked 82nd out of 144 economies – is the “most problematic factor for doing business in the country. “

Lending to non-financial businesses in the UK has decreased sharply since the financial crisis, with small- and medium-sized businesses particularly hard hit despite a succession of policies to encourage banks to lend more.
George Osborne, UK chancellor, said the WEF report was further evidence that the government’s policies were delivering a more competitive economy, adding “the direct link the WEF draw been our credible fiscal policy and our country’s ability to attract business and create jobs is compelling.”
Klaus Schwab, founder and executive chairman of the WEF, said policy makers should not take for granted the health of the global economic recovery.
“The strained global geopolitical situation, the rise of income inequality, and the potential tightening of the financial conditions could put the still-tentative recovery at risk and call for structural reforms to ensure more sustainable and inclusive growth,” he said.
Many of the world’s largest emerging market countries, including South Africa, Brazil, India and Mexico, fell in the rankings. China, despite being set to overtake the US this year as the world’s largest economy, only makes the list in 28th place. The WEF criticised its technological readiness and the relative fragility of its banking industry.

*PUTIN DIDN'T AGREE ON CEASE-FIRE, RUSSIA NOT PARTY TO CONFLICT

+------------------------------------------------------------------------------+

BN 09/03 09:02 *KREMLIN SPOKESMAN PESKOV COMMENTS ON PUTIN, POROSHENKO TALKS BN 09/03 09:01 *PUTIN, POROSHENKO LARGELY AGREED ON STEPS NEEDED FOR TRUCE BFW 09/03 08:55 *PUTIN DIDN'T AGREE ON CEASE-FIRE, RUSSIA NOT PARTY TO CONFLICT BFW 09/03 08:52 *PUTIN, POROSHENKO DISCUSSED STEPS TO CEASE-FIRE: PESKOV

+------------------------------------------------------------------------------+

Putin Didn’t Agree on Cease-Fire, Russia Not Party to Conflict 2014-09-03 08:57:52.145 GMT

By Joanna Ossinger Sept. 3 (Bloomberg) -- Putin, Poroshenko discused steps to cease-fire, Putin spokesman Dmitry Peskov says. * NOTE: Earlier, Putin, Poroshenko Agree on Permanent Cease- Fire in Ukraine, Ukraine president said {NSN NBBHIX6K50Y0<Go>}

For Related News and Information: First Word scrolling panel: {FIRST<GO>} First Word newswire: {NH BFW<GO>}

To contact the editor responsible for this story: Joanna Ossinger at +1-212-617-7789 or jossinger@bloomberg.net

(BFW) Goldman Sachs Survey Shows 9 Banks Expected to Fail ECB Tests

Goldman Sachs Survey Shows 9 Banks Expected to Fail ECB Tests
2014-09-03 08:20:22.74 GMT


By Jurjen van de Pol
Sept. 3 (Bloomberg) -- Goldman Sachs cites outcome of
survey among 125 institutional investors, according to note.
* Expects on avg 9 banks will fail tests
* Says risk perception of banks hasn’t materially changed
since Oct. 2013 survey
* Raises aggregate recapitalization est. to EU51b vs EU28b
* NOTE: ECB scheduled to release results of tests, examination
of balance sheets of 128 euro-area lenders next month


For Related News and Information:
First Word scrolling panel: FIRST<GO>
First Word newswire: NH BFW<GO>

To contact the reporter on this story:
Jurjen van de Pol in Frankfurt at +49-69-9204-1104 or
jvandepol@bloomberg.net
To contact the editor responsible for this story:
James Ludden at +44-20-7673-2645 or
jludden@bloomberg.net

(MS) 2020 Vision: Long Live the Expansion...S&P 3000 in 2020?

2020 Vision: Long Live the Expansion

The US expansion is more than five years old, but business cycles don't die of old age. Herein we discuss why this could be the longest US expansion ever, and how to gauge when it could end.

We believe a prolonged period of deleveraging in the US, coupled with an uneven global recovery, are just two of the reasons why this could prove to be the longest US expansion – ever. Supporting our theory are:

* The world economy is not in sync. Major regional economies are at different points along the growth cycle. In general, DM is leading while EM is lagging.
* Volatility in the US continues to trend lower, which can extend the life of expansions.
* Deleveraging in the US is ongoing, albeit largely complete, and balance sheet priorities have shifted.
* Interest payments on debt burdens are ultra-low, and household debt dynamics suggest there exists a sizable cushion protecting consumers in a rising interest rate environment.
* Capital spending and inventories do not look stretched.
* Corporate management hubris and other corporate metrics of overheating remain muted.
* Several broad economic indicators in the US have only just reached “normal” expansionary levels and are far from looking unsustainable.