(The Economist) That sinking feeling (again)

That sinking feeling (again)

If Germany, France and Italy cannot find a way to refloat Europe’s economy, the euro may yet be doomed

JUST a few months ago the euro zone’s leaders believed that, having weathered the storm, they were set fair at last. Buoyed by the promise of Mario Draghi, the president of the European Central Bank, to do “whatever it takes” to support the currency, confidence had seeped back into the continent. Growth seemed to be returning, albeit at a slow pace. Troubled peripheral countries were recovering, after bail-outs and painful measures to cut budget deficits and improve competitiveness. Unemployment, especially among the young, was still desperately high, but at least in most countries it was falling. And bond spreads had narrowed sharply, as financial markets stopped betting that the euro would fall apart.

It was an illusion. In recent weeks the countries of the euro zone have begun to take in water once again. Their collective GDP stagnated in the second quarter: Italy fell back into outright recession, French GDP was flat and even mighty Germany saw an unexpectedly large fall in output (see article). The third quarter looks pretty unhealthy, partly because the euro zone will suffer an extra drag from Western sanctions on Russia. Meanwhile, inflation has fallen perilously low, to around 0.4%, far below the near-2% target of the European Central Bank, raising fears that the zone as a whole could fall prey to entrenched deflation. German bond yields are hovering below 1%, another harbinger of falling prices. The euro zone stands (or wobbles) in stark contrast with America and Britain, whose economies are enjoying sustained growth.

What started more than four years ago as a banking and sovereign-debt crisis has decayed into a growth crisis that is now enveloping the three biggest economies. Germany is teetering on the edge of recession. France is mired in stagnation. Italy’s GDP is barely above its level when the single currency came in 15 years ago. Since these three countries account for two-thirds of euro-zone GDP, growth in places like Spain and the Netherlands cannot make up for their torpor.

The underlying causes of Europe’s new ills are three very familiar and interrelated problems. First, there is a shortage of political leaders with the courage and conviction to push through structural reforms to improve competitiveness and, eventually, reignite growth: the big countries have wasted the two years bought by Mr Draghi’s “whatever it takes” commitment. Second, public opinion is not convinced of the urgent need for deep and radical changes. And third, despite Mr Draghi’s efforts, the monetary and fiscal framework is too tight, throttling growth—which makes structural reforms harder.

Clouseaunomics
Different manifestations of these problems can be seen across the euro zone. But the country that most dramatically epitomises all three is France. This week its embattled Socialist president, François Hollande, was forced to reshuffle his government to eject Arnaud Montebourg who, despite being economy minister, was his own side’s most persistent critic from the left (see article). Mr Hollande, who came to office in 2012 promising a painless future, is hardly a Thatcherite reformer. But since he appointed Manuel Valls as prime minister in March, he has at least embraced the principle of public-spending cuts, lower taxes and structural reforms.

In theory a new and more cohesive reforming government could make progress, but public opinion is not remotely prepared for that. Mr Hollande is not just deeply unpopular; unlike Italy’s Matteo Renzi, who has bravely made the case for (as yet undelivered) tough reforms, the French president has failed to convince voters that painful change, including a reduction in the size of the state, is inevitable. Instead, Mr Montebourg and his chums offer the beguiling notion that, if only the euro zone scraps its rules and allows bigger budget deficits and generous enough public spending, no more painful reforms will be needed, because the economy will miraculously lift itself out of danger by its own bootstraps.


Explore our interactive guide to Europe's troubled economies
Mr Montebourg’s argument is all the more seductive because he is right about Europe’s third problem: excessive austerity, largely forced on the continent by Germany. Mr Draghi has just implicitly conceded that fiscal and monetary policy in the euro zone is too tight at the annual economics jamboree in Jackson Hole. He hinted that he was in favour of quantitative easing, which both America and Britain have used, and he called for fiscal policy to do more to encourage growth—a message plainly aimed at Germany’s chancellor, Angela Merkel. She is the leader who insists most firmly on sticking to the euro zone’s rules on fiscal discipline, just as it is the German Bundesbank that is most strongly against quantitative easing.

Angie, we can say you never tried
Despite the gloom, there should be scope here for a bargain. If Mr Hollande and Mr Renzi can show they are sincere about structural reforms, Mrs Merkel should be willing to tolerate an easier fiscal stance (including higher public investment in Germany) and a looser monetary policy. Close your eyes, and you can imagine the three leaders working with the European Commission to complete the single market and pushing through a trade deal with the United States. Sadly, in the real world, Mrs Merkel has little reason to trust either France or Italy: whenever external pressure on them has eased, they have promptly backtracked on promises of reform. And she has just installed Jean-Claude Juncker, the do-nothing candidate, as president of the European Commission.

So it will be hard. But without a new push from the continent’s leaders, growth will not revive and deflation could take hold. Japan suffered a decade of lost growth in the 1990s, and is still struggling. But, unlike Japan, Europe is not a single cohesive country. If the currency union brings nothing but stagnation, joblessness and deflation, then some people will eventually vote to leave the euro. Thanks to Mr Draghi’s promise to put a floor under government debt, the market risk that financial pressures could trigger a break-up has receded. But the political risk that one or more countries decide to storm out of the single currency is rising all the time. The euro crisis has not gone away; it is just waiting over the horizon.

FT : Putin call for ‘statehood’ talks on southeast Ukraine raises fears

Putin call for ‘statehood’ talks on southeast Ukraine raises fears

Vladimir Putin has called for talks on the “statehood” of southeast Ukraine, in a provocative comment that will heighten fears Moscow is seeking the partition of the country.
The comments by the Russian president are the latest escalation in rhetoric from the Kremlin and come as Europe prepares to impose tougher sanctions against Moscow. They follow an intensification of fighting in eastern Ukraine that Kiev and western governments say is being fuelled by an inflow of Russian soldiers and equipment.

“We must immediately begin substantive, meaningful negotiations, not on technical questions but on questions of the political structure of society and of the statehood of southeast Ukraine in order to guarantee the legal interests of people who live there,” Mr Putin said in a television interview.
The use of the word “statehood”, while imprecise, is likely to antagonise Kiev. Dmitry Peskov, the president’s spokesman, sought to play down the remarks. He said Mr Putin had been calling for inclusive talks with the separatists to start as soon as possible, but that it was “absolutely wrong” to interpret his words as calling for independence for eastern Ukraine.
However, the escalation in the Ukraine conflict is likely to draw a western response this week. General Philip Breedlove, Nato’s supreme allied commander in Europe, said the alliance would “take head on” the engagement of Russian troops in Ukraine at a summit in Wales starting on Thursday. European leaders agreed on Saturday to prepare new sanctions against Moscow within a week.
In his TV interview, Mr Putin indirectly addressed allegations that Russian troops were fighting in Ukraine. “It must be taken into account that Russia cannot remain indifferent to the fact that people are being shot almost point-blank,” he said, before clarifying that he was referring to the Russian people, not the government.
Russia, which annexed Crimea following a disputed referendum in March, has been calling for the federalisation of Ukraine since the pro-Moscow president Viktor Yanukovich was ousted in February. However, Moscow has stopped short of calling for the independence or annexation of eastern Ukraine.
Mr Peskov said Mr Putin’s words were a call for “negotiations within Ukraine, addressing the internal, Ukrainian structures which would take into account the interests of the eastern regions of the country”.
Late last week, Mr Putin made an address to “the militia of Novorossiya” – a politically loaded term that rebels and Russian nationalists use for areas of south and eastern Ukraine for which they seek independence. Mr Putin has only used the term publicly once before.
The EU will this week begin drawing up a comprehensive blacklist of people and companies involved in the conflict in eastern Ukraine.
However, there is still disagreement over the extent to which sanctions should be strengthened. Although Britain, France and Germany want harder measures against the Russian financial and energy sectors by the end of the week, many eastern European countries fear that a trade war with Moscow could cripple their economies.
The EU summit came after Kiev and the west accused Russia of direct military incursions to help pro-Russian separatists launch a new front with Ukraine’s army. Separatists seized the town of Novoazovsk which borders Russia in the country’s far south-eastern corner. Russia has repeatedly denied any involvement in the conflict.
On a recent visit to Novoazovsk, the FT saw a handful of better-equipped soldiers, standing out from average rebel forces. They resembled the so-called “green men”, Russian soldiers without identifying insignias who appeared throughout Crimea earlier this year. However, none admitted to be being from Russia. Nato’s Gen Breedlove said “it’s clear Russian troops are engaged in eastern Ukraine”.
The capture of Novoazovsk threatens to reverse gains made by Ukraine’s army in past weeks towards encircling separatists in Donetsk and Lugansk, their stronghold cities further north.

NY Post : Silicon Valley continues to blindly funnel money into Snapchat

Has the smart money in Silicon Valley lost its mind?
Last week, the highly regarded venture-capital firm Kleiner Perkins invested an additional $20 million into Snapchat, which raised its valuation to a lofty $10 billion.
The 2-year-old startup is now one of the most highly valued members of Silicon Valley’s mega-bucks club.
But get this: The disappearing messaging company hasn’t even produced revenue yet.
Which, as novel as the company is, makes you wonder if the Menlo Park guys have short-circuited their investment process.
Success has a funny way of going to your head, but one of these days a large deal could just blow a transistor, leaving geniuses looking like irresponsible egotists.
OK, let’s start with the premise that figuring out what hip new thing will instantly attract the wandering minds of millions of tweens-to-twentysomethings is a difficult feat in itself.
And giving credit where credit is due, Snapchat has indeed already accomplished that.
But since kids are notoriously fickle, who’s to say the next big thing has to be a social-media app?
Remember, these guys weren’t even around when Facebook purchased Instagram.
That said, a captured audience of millions in the social-media space is often worth billions if it can be converted into big advertising dollars, or perhaps a paid usage service.
Other startup companies, including Uber, Airbnb and Dropbox, have all also raised money at very lofty valuations: Uber at $18 billion, Airbnb and Dropbox at $10 billion, like Snapchat.
But the difference is that these other mega-valued startups already have real revenues and, in some cases, meaningful profits.
Kleiner Perkins has made riches beyond probably even its own wildest dreams in this digitally inflating bubble.
But at a $10 billion valuation for this albeit nifty neophyte of a company with no revenues to speak of, it does indeed have to make one wonder: Has Silicon Valley gotten stupid from all of its success?

>>> "Dawn Of Libya" Islamist Militia Group Seizes US Embassy In Tripoli, Hol

{http://bit.ly/1tmeqeg}

"Dawn Of Libya" Islamist Militia Group Seizes US Embassy In Tripoli, Holds Pool Party


Probably the 'oddest' headline of the day but in yet another show of disdain towards US military might, the Islamist militia group known as "Dawn Of Libya" has 'secured' an annex of the U.S. embassy in Tripoli. As Reuters reports, the United States evacuated its embassy in Tripoli on July 26, driving diplomats across the border into Tunisia; but a YouTube video showed the breach of the vacated diplomatic facility by an armed group, with fighters seen milling around a swimming pool. A rebel takeover of the compound would now deliver another symbolic blow to U.S. policy toward Libya, which Western governments fear is teetering toward becoming a failed state.

 

 

Members of a Libyan rebel militia have entered an annex of the U.S. embassy in Tripoli but have not broken into the main compound where the United States evacuated all of its staff last month, a U.S. official said on Sunday.

 

It was not immediately known how close the annex, apparently made up of diplomatic residences, is to the embassy itself. Libya has been rocked by the worst factional violence since the 2011 fall of Muammar Gaddafi.

 

The United States evacuated its embassy in Tripoli on July 26, driving diplomats across the border into Tunisia. A rebel takeover of the compound would now deliver another symbolic blow to U.S. policy toward Libya, which Western governments fear is teetering toward becoming a failed state.

 

The U.S. government believes the main embassy compound is still intact and has not been taken over,the U.S. official in Washington told Reuters, speaking on condition of anonymity.
An Associated Press journalist walked through the compound Sunday after the Dawn of Libya, an umbrella group for Islamist militias, invited onlookers inside.
Windows at the compound had been broken, but it appeared most of the equipment there remained untouched.
A commander for the Dawn of Libya group said his forces had entered and been in control of the compound since last week.
*  *  *
US Embassy compound seized... time for a pool party!!!??
*  *  *
It appears we are gonna need a bigger strategy...

FT : Private equity groups make $500m UK North Sea oil investment

Private equity groups make $500m UK North Sea oil investment

Buyout groups Blackstone and Blue Water Energy are providing $500m to Siccar Point Energy, a new UK-focused oil company, in one of the largest ever private equity investments in North Sea oil.
The move highlights the continuing international appeal of Britain’s offshore oilfields, in spite of increasing competition from newer and more prolific basins in Africa and the US and uncertainty over the upcoming referendum on Scottish independence.

Investment in the UK North Sea reached a record level of £14.4bn last year, raising hopes that oil and gas production could start to pick up again after years of decline.
“This is one of the most opportune times to buy assets in the North Sea,” said Jonathan Roger, chief executive of Siccar Point. “The market is very buoyant.”
He said the company would look to acquire properties from the international majors, which are divesting some of their older UK fields, as well as from US independents moving back to North America to exploit the shale boom.
Private equity is no stranger to the North Sea. Warburg Pincus and Riverstone have backed Fairfield Energy, a UK-focused independent, while Barclays Natural Resource Investments has a stake in Chrysaor, a private company focused on commercialising dormant discoveries in the North Sea and Ireland. Meanwhile, Bridge Energy UK, which has assets in both the UK and Norwegian sectors of the North Sea, was taken private by Norway’s HitecVision last year.
But analysts say Siccar Point’s cash infusion represents one of the biggest private equity investments in a UK oil company in recent years.
The company’s management team consists of seasoned veterans of North Sea oil exploration. Mr Roger worked at leading independent Venture Production, which was acquired by Centrica in 2009, and went on to head Centrica’s upstream oil and gas arm.
He said Siccar Point would aim to buy marginal or mature oilfields that don’t meet the majors’ stringent requirements for returns, and gradually build two-to-three core production hubs in the North Sea. The company would also have an exploration arm.
“We will acquire assets that will . . .  get 100 per cent of our focus, whereas for others they are the tail-end of their business, so they struggle to compete for resources and manpower,” he said.
Siccar Point is backed by Blue Water Energy, a London-based private equity firm founded in 2011 that last year closed an $861m fund for investments in oil and gas. It has already put cash into a refined product storage company and two oilfield services groups.
Graeme Sword, a partner, said the plan was to build Siccar Point up into a 20-30,000 barrels of oil a day company which could then be floated or sold to a national oil company or big utility.
The growth of PE-backed private companies in the North Sea comes at a time when publicly listed exploration and production (E&P) companies have fallen out of favour with investors. Many have discovered oil but have struggled to raise the cash needed to extract it.
“The independent sector is underfunded,” said Nick Cooper, chief executive of London-listed African explorer Ophir Energy. “A lot of E&Ps are unfortunately at death’s door, or hibernating.”
Mr Sword said Siccar Point would not be under the same kind of pressure as quoted E&P companies to meet annual financial or production targets. “The PE-backed model has a longer-term horizon,” he said.

FT : Private equity seizes chance to expand oil interests

Private equity seizes chance to expand oil interests

Mustafa Siddiqui is enjoying a change of scene. He’s just arrived in the UK to head up Blackstone’s energy investments in Europe – the first time they’ve been run out of London, instead of New York.
That highlights a phenomenon that is changing the shape of the oil industry: private equity’s interest in oil, once largely focused on North America, is going global.

“There’s a lot of virgin ground outside the US and the competition is thinner,” Mr Siddiqui, a managing director at Blackstone, told the Financial Times.
Private equity has long been a big investor in energy, especially in the US. Buyout groups have piled into oil and gasfields, oilfield service companies, power plants, utilities and wind farms.
Some of the most successful oil companies of recent years were backed by private equity. The standout example is Kosmos Energy, the small explorer initially funded by Warburg Pincus and Blackstone, which discovered the massive Jubilee oilfield off the coast of Ghana in 2007.
Kosmos is no longer an outlier. More and more buyout groups are investing in the high-stakes business of finding and producing crude. Global private equity-backed oil and gas M&A has totalled $5.9bn so far this year, according to Thomson Reuters – up 48 per cent on the same period in 2013.
“Private equity and the national oil companies are the only pots of money chasing exploration right now,” says Nick Cooper, chief executive of Ophir Energy, the Africa-focused junior. “And when it comes to start-ups, PE is virtually the only source of funding.”
That’s a big change from the situation just a few years ago. The exploration scene was dominated by western majors like BP and publicly listed independents such as Tullow Oil and Ophir, a group that was behind a string of spectacular discoveries in Africa.
But the landscape is shifting. Quoted explorers are finding it hard to raise funds, as capital markets sour on oil exploration. The majors, under pressure from shareholders to improve returns, are curbing spending and shedding assets. And US-headquartered independents have gone back home to ride the shale boom.
“That’s opening up a lot of investment opportunities elsewhere in the world, and private equity is stepping in,” says Will Honeybourne, a managing director at First Reserve.
First Reserve, along with Riverstone and Warburg Pincus, were pioneers of oil investment. Now others, such as Carlyle, Apollo Global Management and KKR, have got in on the act, raising dedicated energy-focused funds or building up their own specialist teams to invest in the oil and gas space.
Last year, Carlyle committed up to $200m in Discover Exploration, a start-up that has been drilling for oil off the coast of New Zealand. Blackstone, which raised its first, $2.5bn energy fund in 2012, has just announced a $250m investment in Siccar Point Energy, a new UK-based oil company focused on the North Sea. The New York-based group is now seeking $4bn for a new energy-dedicated pool, according to people with knowledge of the matter.
The groups’ recent forays into oil differ markedly from standard private equity investments. Buyout funds typically own their holdings for about three to five years before selling them on. But investment horizons for the oil industry, where an exploration well can have a two-thirds chance of failure, tend to be much longer.
“One of the things that’s changed about private equity investors in oil is that they seem to be willing to hold things for longer – say for seven to eight years rather than two to three,” says Andy Brogan, head of global oil and gas transaction advisory services at EY. “Specialist PE investors seem to be more willing to take on exploration risk.”
As a result, PE-backed companies are often under less pressure to hit production milestones than their quoted counterparts. “We are patient,” says Mr Siddiqui. “We are not focused on quarterly metrics.”
At the same time, buyout groups also tend to target higher returns than with more conventional investments. “We’d like to think that over the next five years we can make three times our money,” says Graeme Sword, a partner in Blue Water Energy, which is also investing in Siccar Point. That compares with about two times the initial investment typical for plain leveraged buyouts.
What is clear is that the asset market for PE-backed companies has rarely looked so buoyant. The majors are expected to try to divest more than $300bn of oil and gas properties in the coming years – rich pickings for private equity.
“Look at the inventory of what’s for sale in the North Sea,” says First Reserve’s Will Honeybourne. “It’s massive.”

FT : Yannick Bolloré: a buccaneer’s son at the helm of Havas

Yannick Bolloré: a buccaneer’s son at the helm of Havas

Havas SA The Creators Of Evian Babies...Yannick Bollore, director general and vice president of Havas SA, poses for a photograph at the company's headquarters in Paris, France, on Friday, Dec. 14, 2012. Havas SA, the French advertising company which is known for memorable advertising campaigns, including the 2009 commercials for Evian water that featured babies on roller skates. Photographer: Balint Porneczi/Bloomberg *** Local Caption *** Yannick Bollore©Bloomberg
Inheritance: Yannick Bolloré says his father taught him the value of hard work and the culture of entrepreneurship
The world according to Yannick Bolloré consists of two types of people: those who, faced with change, hunker down and try to protect what they have; and those who welcome disruption and use it to spot new opportunities.
As chairman and chief executive of Havas, one of the world’s largest advertising groups, Mr Bolloré should know. The digital age has shaken the industry in ways that few could have imagined just a decade ago. Along the way, it has presented opportunities but also huge challenges to agencies unwilling or unable to adapt.

So which of the two is the 34-year-old Mr Bolloré? He has only been CEO since the start of 2014 but the French group’s recent performance suggests he has a chance to prove himself as the latter. Second-quarter organic growth was 7.9 per cent higher than a year before, almost double consensus expectations. New clients this year include Disney and Barclays.
Sitting in his office, a glass-walled box with a Castiglioni “Arco” lamp, a square rather than a traditional rectangular-shaped desk and no obvious boss’s chair, the tanned Mr Bolloré says that he is “thrilled” with the results.
A year ago, things did not look nearly so good. Publicis and Omnicom had just announced their ultimately ill-fated “merger of equals” to create what would have become the industry’s largest player.
In a world where competitors had identified size as a necessary condition to fund technology investments and gain access to the technology of other companies at competitive prices, sixth-placed Havas seemed too small to succeed alone.
“It was keeping me up at night,” admits Mr Bolloré about his rivals’ plans. “It made me think a lot about scale and it forced us to accelerate the pace of change.”
Mr Bolloré puts Havas’s recent success down to two things. The first is that the group has not only grasped digital but has started to run with it. One consequence is that he is now hiring more mathematicians than creatives or media people.
“The type of person we are now hiring has changed so much that it has affected the dress code here,” he says. “They dress more casually but also much more geeky.”

Havas’s mathematicians create algorithms to turn big data into smart data. “There has never been so much data out there,” says Mr Bolloré, whose fitted black suit, crisp white shirt and black Hermès tie suggest that he has yet to join the geeks himself. “But what is the point if you cannot use it to give business insight to your clients?”
He says that the maths whizzes at Havas have developed algorithms that not only enable clients to adapt the way they advertise their products online but are also producing much higher conversion rates of online advertising into sales.
The second strategy has been to instil collaboration among the creatives and media teams, but also between agencies – something that he says was absent before. “It was like Game of Thrones,” says Mr Bolloré, tall, engaging and with a thick, slightly wild head of hair. “You would have to get people to leave their weapons at the door.”
“Together”, the name of his strategy to foster teamwork within the organisation, may fall short of Havas’s external standards for catchy and clever branding. Internally, though, it seems to have worked. “The atmosphere is now great here at Havas,” says Mr Bolloré. “If you are a family, you need to be able to sit around the same table and have lunch together.”
What about size in advertising’s brave new world? After all, there is still a consensus that you need to be big regardless of how happy your staff are. Mr Bolloré agrees. “A group needs to have scale because if you don’t you cannot manage a global client,” he says. “But Havas has scale,” pointing to its 16,000 employees and presence in more than 100 countries.
The proposed Publicis-Omnicom transatlantic merger plans finally sank in May this year amid delays in regulatory approval and insurmountable differences over key executive appointments. Strangely, perhaps, Mr Bolloré says that the news did not please him. “I was not happy to see the Publicis-Omnicom merger fail because they would have created an unmanageable monster.”
He says it is hard to quantify how much Havas benefited from the wasted effort both of its rivals put into the proposed tie-up. But he adds: “For sure, it disrupted their day-to-day business.”
Mr Bolloré, who has three daughters and a stepdaughter, always knew that he would end up in business. That may have had something to do with his own father – Vincent Bolloré, industrialist and occasional corporate raider, whose Bolloré Group owns 36 per cent of Havas and is also the largest shareholder of French media and entertainment group Vivendi .
Since Mr Bolloré senior became Vivendi chairman this summer, speculation has grown about a possible tie-up between the media and entertainment group and Havas. Mr Bolloré senior and, most recently Arnaud de Puyfontaine, Vivendi’s new chief executive, have dismissed any such ideas.
The family legacy is strong. Mr Bolloré lives in the same house in which he grew up with his two brothers and one sister in Paris’s 16th arrondissement. His office, though remodelled, is the same one that belonged to his great grandfather and to Vincent Bolloré. Located in Puteaux on the western fringe of Paris, it offers an expansive view of the River Seine, the Bois de Boulogne and the Eiffel Tower.
He dedicates the little free time he has to playing sport. His talent for tennis has twice won him an annual celebrity competition at Roland Garros, an event that he helped to set up. Last year, he ran the Paris marathon, in four hours and 14 minutes.
Mr Bolloré, whose short career has centred on media, says he loves advertising. But for all the seeming inevitability of his passage into the corporate world, he says his father never forced him into it.
Instead, Vincent, who in the early 1980s stepped in to save the dying family business of manufacturing paper for cigarettes and bibles, taught more fundamental lessons. “He taught me the value of hard work and the culture of entrepreneurship,” he says.
They appear to be lessons well learnt: in spite of coming from one of the richest families in France, Mr Bolloré has been clocking up the office hours. He described a short break over the summer as “the chance finally to meet my 11-month-old daughter”.

>>> Barron’s summary: positive on TMO, USG, SYNA; cautious on Apple suppliers ah

Barron’s summary: positive on TMO, USG, SYNA; cautious on Apple suppliers ahead of iPhone 6 release 

Cover story: The unemployment rate slipped to 6.1% in June, its lowest level in six years, but the percentage of adult American workers who are actually in the workforce is at its lowest level in 36 years; story reports the government doesnt seem to recognize the severity of the problem, which increasingly appears to be structural; rebound in job market is beginning to make the decline in participation look anomalous and therefore likely to persist. 

Features: Positive on TMO: Company that provides research for hire, rents labs, and sells science gear is riding strength in its sectorwhich also includes DHR, PLL, and PKIwhile its low valuation could lead to a 20% boost in share price; Positive on USG: North Americas biggest wall board maker has re-invented some of its core products, stock could rise by 30% following boost in new-housing starts and improved investor sentiment; Positive on SYNA: Company is on the leading edge of fingerprint reading technology, or human interface solutions, and with growing use of such technology in smartphones and tablets could see 35% upside. 

Tech Trader: Cautious on RFMD, AVGO, OVTI, STM, NXPI, GTAT: Tiernan Ray looks at suppliers to AAPL, some of which will have parts in the new iPhone while others dont; the problem for all is that broad gains are in such stark contrast to the overall stock market that it seems to prep the group for some profit taking; investors may be best off dumping pricier names and holding cheaper ones, such as SK Hynix, MU, and Advanced Semiconductor Engineering. 

Trader: Current level of tension is relatively low for the market and dwarfed by the potential impact on stocks of actions by the Fed and the ECB, says Joseph Amato of Neuberger Berman; Cautious on MCD: Until food chain addresses complexities with its McCaf offerings, fixing the core business will be difficult, and the only way shares are likely to outperform is if the market falls sharply and theres a wholesale move to defensive stocks; According to Bespoke Investment Group, the best loved stocks in the S&P 500 are DAL and AMT, while DO, RIG, CLX, and DE have the most sell ratings. 

Mutual Funds: Interview with Gershon Distenfeld and Paul DeNoon, Managers, AllianceBernstein High Income (top five sectors: corporate noninvestment grade, net cash equivalents, interest rate futures, derivative offsets, collateralized mortgage obligations); Interview with Richard Pzena, CEO, Pzena Investment Management (top picks: BAC, C, GS, JPM, GP, Royal Dutch Shell, SPLS); 

Follow-Up: Positive on DFS: Company is gaining share in card balances from big banks, though theres room for improvement, there are opportunities in pre-paid and private-label cards, and management sees non-card loans growing twice as fast as card balances; stock should see a double-digit return next year; Positive on DBD: Investors still have ample time to cash in on the stock, and earnings could top $3 per share by 2016; Cautious on HTZ: Integration of Dollar Thrifty has been tough, and profits are likely to be below guidance, while an audit could delay the $2.5B spinoff of its equipment rental business. 

European Trader: As a play on Scotlands vote for independence, researchers at Nomura suggest shorting RBS and Lloyds Banking Group and going long on HSBC and BCS. 

Asian Trader: Though Hong Kong is no longer the retail powerhouse it once was, some stocks are still strong (Positive on Chow Tai Fook, Lifestlye International). 

Emerging Markets: Small-caps have outperformed large-caps in emerging markets since the financial crisis (Positive on WisdomTree Emerging Markets SmallCap Dividend). 

Commodities: David Ranson of HC Wainright & Co. Economics offers an index that invests in only four commodities, with equal weights of crude, soybeans, copper, and textiles/fibers, rebalanced each year; companies must have a long price history, economic importance, and a liquid market. 

Streetwise: The PFOPX is up 11% in 2014, with 22% of its portfolio in mid-cap stocks, while the BOGIX, which has returned 8% this year, has 34% in midsize companies, an indication that size matters.