Are We Reliving The 1930s?
At the close of last week’s G20 Summit,
U.K. Prime Minister David Cameron warned that we’re on the verge of another global recession, citing problems like looming deflation, falling prices, and rising protectionist sentiment. This list evokes a sense of déjà vu: not about the Great Recession, but the Great
Depression. That was the last time we ever seriously worried about disinflation, along with every practically other aspect of economic performance raising alarm bells today: low interest rates, weak investment, slow productivity growth, and chronic labor force detachment.
To be sure, this isn’t an easy comparison to swallow. The Great Depression is the ultimate measuring rod of economic catastrophe to which every other downturn is compared. But as time goes by and forecasts of full recovery keep getting deferred like an ever-fading mirage, it’s one worth examining. How does the Great Depression of the 1930s compare with the Great Recession of the 2010s? Let’s look at the GDPs of the U.S., U.K., and continental Western Europe from 1929 on and from 2007 on, using the base year as an index.
Great Depression v. Great Recession, United States GDP
Great Depression v. Great Recession, United Kingdom GDP
Great Depression v. Great Recession, Europe GDP
A few contrasts stand out. First, the Great Depression triggered much deeper drops in GDP and employment rates in the United States than in any major European country. The peak-to-trough drop in the United States from 1929 to 1933 was a stunning 26 percentage points of GDP, versus only 11 points in Europe and 6 points in the U.K. The employment drops were similar. Second, in both Europe and especially the United States, the depth of the Great Depression was much greater than the depth of the Great Recession. Only in the U.K. was the GDP loss roughly the same.
Yet these figures don’t mean that the Depression was definitely worse. Though it was deeper, it was also shorter than the Great Recession in the U.K. and in Europe—and it likely will be shorter than the Great Recession in the United States. The recovery in the ‘30s occurred much faster than it has in recent years. In the U.K., GDP was already back above its 1929 level by 1934, five years after the recession began. Europe met that milestone by 1935, six years after their recession began. Today, Europe is going into its seventh year of recession and still has not regained its 2007 GDP level. In the United States, we remain better off today (relative to before the crash) than during the Great Depression, but that’s due to the severity of the early drop.
What’s more, from 1933 on, U.S. GDP grew at a blistering average rate of over 8% per year for the next eight years. And that includes one recession year: 1938. By 1941, 12 years after the Great Depression began, U.S. GDP was 41% higher than its pre-downturn figure. This is almost certainly a much higher level, relative to 1929, than the United States will see by 2019, relative to 2007.
My point is not to diminish the magnitude of the Great Depression. It was certainly more terrifying, especially in its early years and in the social restlessness and political radicalism it spawned. But we can no longer think of it as longer-lasting: Bad times are shaping the temperament of a new rising generation around the world today just as surely as the original Great Depression did back then.
So perhaps a new nomenclature is in order. Instead of calling this the “Great Recession,” maybe we should call it the “Long Depression.” Paul Krugman, who has often pointed how much worse Europe is doing today than it was in the 1930s, coined the term “Lesser Depression” for our post-2007 experience. Brad DeLong, Krugman’s kindred spirit at UC Berkeley, also adopted this expression—until inventing yet punchier ones, like “The Second Great Depression” and “The Greater Depression.”
For Krugman and DeLong, such dire relabeling has (at least in part) one very specific objective: to shock voters and leaders into supporting the sort of massive fiscal stimulus they have long advocated. But you don’t have to be a militant neo-Keynesian to see the numbers for what they are—and to appreciate that the world has entered an era of grinding economic crisis since 2008 whose social and political consequences have yet to fully unfold.
Seeing the two “depressions” as historically and generationally comparable, makes it easier to recognize other similarities between the 1930s and the 2010s. Many are economic, as we have seen. But others are demographic (falling fertility, migration, and mobility). Still others are social (growing localism, income inequality, and distrust of elites; stronger families; and declines in personal risk-taking). And still others, ominously, are geopolitical (rising isolationism, nationalism, and authoritarianism, and the unraveling of any “world order” consensus).
The confluence of all these trends is not accidental. In general, each trend happens because most of the others are happening at the same time. The era as a whole, therefore, has its own internal logic, which doesn’t allow the component pieces to change much until the whole system changes and transforms into a new era. In my writings on generations and history, I call these sequential eras “seasons” or “turnings.” And right now, America and most of the rest of the world is in the winter season or the “Fourth Turning.”
These parallels between eras are so numerous and striking that they are hard to miss once we look broadly at the direction of events. That’s why connecting the economic challenges of the 1930s with those of the 2010s, and seeing them as comparable in some respects, makes a difference. When we are connected to history, we can comprehend better what else is happening in the 2010s, predict better what is likely to happen next, and to figure out, if necessary, how we can avoid an outcome that we regard as especially dangerous.
Macro :
- Gabon’s Outlook to Negative From Stable by Fitch
- Saudi Arabia Outlook to Stable From Postive by S&P
- Oman Outlook to Negative From Stable by S&P
- Ireland Raised to A From A- by S&P
Keep an eye on :
- ABO BB : AB InBev Legal Chief Chalmers Sells EU6.38m of Brewer’s Stock
- ACT US : Actavis Antibiotic Gets Partial FDA Panel Backing, Tweets Show
- BAYN GY : Bayer-Amgen’s Nexavar Didn’t Prolong Overall Survival in AML
- BBY LN : Balfour Beatty unlikely to allow JLIF due diligence on PPP portfolio, talk of full takeover bid from JLIF
- BP/ LN : Iraq Informs BP About Plans to Boost Crude Oil Production
- CPG LN : Compass Group Registers Up to 8.95m Shrs for Selling Holders
- ECONB BB : Econocom Chairman Bouchard Sells EU2.21m of Stock at EU5.52 Each
- FCA IM : U.S. Will ‘Take Appropriate Action’ on Chrysler, NHTSA Says
- FCA IM : Chrysler Recalls 149,150 Dodge Ram Trucks on Airbag Fault: NHTSA
- HAW GY : Hawesko talking to potential white knights
- HOLN VX : Cementos Argos Not Interested in Lafarge, Holcim Brazil Assets
- JAZ SM : Jazztel shareholder Alken cuts stake to 4.55%; Credit Suisse ups stake to 5.77%
- LBTYA US : Liberty Global May Sell Unitymedia KabelBW: Reuters
- LEO GY : Leoni appoints Dieter Bellé as CEO
- LHA GY : Lufthansa Board Members Reject Budget Plan, Der Spiegel Reports
- MRK US : Merck in Talks to Acquire Drug Maker Cubist for More Than $7 Billion - NYT {http://nyti.ms/129ylll}
- NOVN VX : Novartis’s Tasigna Boosted Remission in Older Leukemia Patients
- NUO NA : SHV will go through with Nutreco deal regardless of shareholder opposition
- PTC PL : Oi Board Is Said to Approve Altice Offer for Portugal Assets
- SAF FP : Petitcolin Nominated to Replace Herteman as Safran CEO
- SAP GY : SAP CEO Says More Share Buybacks Not Ruled Out: Euro Am Sonntag
- SBRY LN : J Sainsbury in sights of activist investor Crystal Amber, share raid planned
- SBD LN : QIA and Brookfield looking to persuade Songbird Estates shareholders CIC or Morgan Stanley to support takeover offer
- SSA LI : Sistema investors fear Bashneft dividend seizure - FT {http://on.ft.com/1FYD8D5}
- FP FP : Total to Review Brazil Investments With Crude at $70-$80: Folha
A quick glance at the November employment report will give you the impression that the job market had suddenly taken flight. But look at the report more closely — as you should always do with all government statistics — and you’ll see a problem.
And it’s a problem that even the Labor Department was having trouble figuring out on Friday.
Wall Street, of course, loved the 321,000 new jobs that Labor said were created in November. And I’m sure people looking for a job were equally thrilled. Hell, I was giddy until I dug deeper into the figures.
As it turns out, last month’s job growth was much more ordinary than the headline figure would have you believe — and it all lies with the seasonal adjustments Uncle Sam sprinkles onto all its data.
Government computer programs take into account seasonal abnormalities — like teaching jobs that stop in the summer and students who find jobs in the summer — so that the numbers don’t jump all over the place.
Nothing wrong there.
The “not seasonally adjusted” data are the raw, unadulterated numbers.
But take a look at November 2013 jobs data and last month’s data.
The raw, unadjusted data from Labor showed that 523,000 new jobs were created in November 2013. After that figure was seasonally adjusted, the growth was reduced to 203,000.
The raw, unadjusted numbers reported Friday showed 497,000 new jobs — or 26,000 less than last year’s 523,000 raw number. Yet, this November’s adjustment resulted in a headline figure of 321,000 — or a whopping 118,000 more than last year.
If the seasonal adjustments stayed consistent Friday’s growth should have been less than last year’s 203,000!
I called Labor and checked my figures. An economist there said they were still working on an explanation and that I wasn’t the only one who asked. She said the problem might be because there wasn’t a consistent number of weeks for the survey between this year and 2013.
“This was a big question last month too,” she said, before referring me to Labor’s PR people.
The storm troopers have arrived.
The Street’s high-speed stock traders are being dumped overboard as more layoffs and closures rock the thinning ranks of demoralized equity desks.
Slammed by stricter regulatory enforcement and mediocre volume, the US electronic stock-trading business continues to retrench — and it’s taking down some high-profile stars.
Citigroup is one of the latest victims. Last week, the bank confirmed its plan to shut down its private electronic stock-trading network, LavaFlow ECN, early next year.
LavaFlow agreed to pay the Securities and Exchange Commission $5 million, including a $2.85 million penalty, on charges it failed to protect sensitive information. And this past October, Wells Fargo said it was shuttering its “dark pool” alternative trading system (ATS).
Both Citi and Wells cited practical business realities for their exit. But people familiar with the markets said they aren’t fooled — the intense US regulatory focus on high-frequency trading played into the Citi and Wells decisions, they said.
“What do you expect them to say?” one well-connected trading exec, who does not work for either Citi or Wells, told The Post. “My experience is that a regulatory action does cause Citi to look at a business line and ask, is it really important enough to take the extra scrutiny from regulators and the media?”
There’s another open wound. Even as the Dow hits record highs, stock-trading volume has contracted sharply since peaking in 2009.
High-frequency traders then accounted for 61 percent of overall trading activity, compared with under 50 percent today, according to the Tabb Group.
Hundreds of once-highly paid stock traders have been made redundant as margins, subdued volatility and lower volume crimp profitability. “Unless a big uptick in volume comes along, I could see where certain ATSs may find themselves squeezed further — and having to scale back their operations and headcount,” said George Hessler, CEO of the Deep Liquidity ATS, which is bravely expecting to launch next year.
The two high-speed ATS operators are small fry compared to the largest, Credit Suisse’s dark pool, which can bang out well over 300 million shares in a good week.
Wells was happy to eke out 7 million to 8 million shares weekly. But the slaughter is across the board. The giant BATS Global Markets, reportedly facing a record $12 million to $13 million fine over how it handled customer orders, is planning to fire 56 workers in the New Year.
BATS’ former president, William O’Brien, left under a cloud last summer as the SEC investigated potentially lethal “orders types” offered by Direct Edge and others, including the New York Stock Exchange. (Direct Edge merged with BATS last year.)
Street execs say law enforcement is sapping morale — and resources. High-speed traders are accused of ripping off ordinary investors with complex business practices and dodgy arrangements. “The regulatory efforts on market fairness and best trade execution are only now beginning to catch up as a result of being back-burned due to significant work with Dodd-Frank and other congressionally mandated initiatives,” said industry consultant Chris Nagy.
Investigations have cut a broad swath. Credit Suisse has come under the microscope. The Financial Industry Regulatory Authority fined Goldman Sachs $800,000 for failure to prevent so-called trade-throughs on its SIGMA X alternative trading system. Goldman returned $1.67 million to customers. New York Attorney General Eric Schneiderman has sued Barclays on allegations of questionable favoritism toward high-speed traders in its dark pool. And SEC Chairwoman Mary Jo White entered the fray last summer, targeting these gunslingers for stepped-up enforcement.
Some firms have reshuffled management in light of the tougher environment. Last week saw the departure of Jose Marques, global head of electronic equity execution at Deutsche Bank in New York. The bank declined comment. UBS, seeking to bolster its global equities business, is transferring Mike Stewart, its current head, to a new role in wealth management in January.
“As the number of broker dealers and trading volume have declined over the past several years, regulation continues to be a growth area — it’s a curious thing,” said the New York-based Hessler. “Maybe eventually we will need to take a look at the proper amount of regulation given the current market maturity and volumes.”
The storm troopers have arrived.
The Street’s high-speed stock traders are being dumped overboard as more layoffs and closures rock the thinning ranks of demoralized equity desks.
Slammed by stricter regulatory enforcement and mediocre volume, the US electronic stock-trading business continues to retrench — and it’s taking down some high-profile stars.
Citigroup is one of the latest victims. Last week, the bank confirmed its plan to shut down its private electronic stock-trading network, LavaFlow ECN, early next year.
LavaFlow agreed to pay the Securities and Exchange Commission $5 million, including a $2.85 million penalty, on charges it failed to protect sensitive information. And this past October, Wells Fargo said it was shuttering its “dark pool” alternative trading system (ATS).
Both Citi and Wells cited practical business realities for their exit. But people familiar with the markets said they aren’t fooled — the intense US regulatory focus on high-frequency trading played into the Citi and Wells decisions, they said.
“What do you expect them to say?” one well-connected trading exec, who does not work for either Citi or Wells, told The Post. “My experience is that a regulatory action does cause Citi to look at a business line and ask, is it really important enough to take the extra scrutiny from regulators and the media?”
There’s another open wound. Even as the Dow hits record highs, stock-trading volume has contracted sharply since peaking in 2009.
High-frequency traders then accounted for 61 percent of overall trading activity, compared with under 50 percent today, according to the Tabb Group.
Hundreds of once-highly paid stock traders have been made redundant as margins, subdued volatility and lower volume crimp profitability. “Unless a big uptick in volume comes along, I could see where certain ATSs may find themselves squeezed further — and having to scale back their operations and headcount,” said George Hessler, CEO of the Deep Liquidity ATS, which is bravely expecting to launch next year.
The two high-speed ATS operators are small fry compared to the largest, Credit Suisse’s dark pool, which can bang out well over 300 million shares in a good week.
Wells was happy to eke out 7 million to 8 million shares weekly. But the slaughter is across the board. The giant BATS Global Markets, reportedly facing a record $12 million to $13 million fine over how it handled customer orders, is planning to fire 56 workers in the New Year.
BATS’ former president, William O’Brien, left under a cloud last summer as the SEC investigated potentially lethal “orders types” offered by Direct Edge and others, including the New York Stock Exchange. (Direct Edge merged with BATS last year.)
Street execs say law enforcement is sapping morale — and resources. High-speed traders are accused of ripping off ordinary investors with complex business practices and dodgy arrangements. “The regulatory efforts on market fairness and best trade execution are only now beginning to catch up as a result of being back-burned due to significant work with Dodd-Frank and other congressionally mandated initiatives,” said industry consultant Chris Nagy.
Investigations have cut a broad swath. Credit Suisse has come under the microscope. The Financial Industry Regulatory Authority fined Goldman Sachs $800,000 for failure to prevent so-called trade-throughs on its SIGMA X alternative trading system. Goldman returned $1.67 million to customers. New York Attorney General Eric Schneiderman has sued Barclays on allegations of questionable favoritism toward high-speed traders in its dark pool. And SEC Chairwoman Mary Jo White entered the fray last summer, targeting these gunslingers for stepped-up enforcement.
Some firms have reshuffled management in light of the tougher environment. Last week saw the departure of Jose Marques, global head of electronic equity execution at Deutsche Bank in New York. The bank declined comment. UBS, seeking to bolster its global equities business, is transferring Mike Stewart, its current head, to a new role in wealth management in January.
“As the number of broker dealers and trading volume have declined over the past several years, regulation continues to be a growth area — it’s a curious thing,” said the New York-based Hessler. “Maybe eventually we will need to take a look at the proper amount of regulation given the current market maturity and volumes.”
Instacart, the home grocery delivery service that launched back in 2012, is close to raising a massive Series C round of funding north of $100 million, according to sources. The raise will value the startup at $2 billion, or more than quadruple the $400 million valuation of its Series B financing from June.
Including this round, Instacart has raised a total of $154.8 million with other investors that include Andreessen Horowitz, Sequoia, Khosla Ventures, Canaan Partners, Y Combinator boss Sam Altman and Box founder Aaron Levie.
We’re still working on verifying the lead investor, but at this time, sources indicate that Kleiner Perkins is in the driver’s seat. We heard rumors that KPCB took a look at Instacart during its last fund raise, which was led by Andreessen Horowitz instead.
Instacart launched two years ago to become the Uber of grocery delivery. Users choose a grocery store, shop for items, and get on-demand delivery of those items within an hour, either from their phones or the company’s website.
It’s an idea that has caught on with consumers, and Instacart has been growing rapidly over the last year. As of June 2014, Instacart was operational in 10 cities across the United States, showing 15x revenue growth. Given two huge cash infusions and the spiked valuation, it’s fair to imagine it will continue to grow aggressively.
But so does the competitive landscape.
A number of services offer an alternative to Instacart, though the SF-based startup does seem to have the lead with regards to newer companies.
FreshDirect has been around for quite some time, though doesn’t offer the same immediacy as Instacart. Meanwhile, everything-on-demand services like WunWun function rather well as an instant grocery delivery service. Plus, Amazon is throwing its hat into the ring with AmazonFresh, which has already launched in a few big markets.
That said, investors have been pouring a huge amount of funding into startups showing high growth. The biggest is Uber, which just announced it closed an additional $1.2 billion in funding at a $40 billion valuation. Stripe also raised $70 million in a recent deal that values it at $3.5 billion.
We reached out to Instacart and Kleiner Perkins, but haven’t heard anything back at the time of publishing. We’ll update you if we do.
Marsh & McLennan working on GBP 800m takeover bid for Towergate, Goldman Sachs advising
Marsh & McLennan, a listed New York City-based insurance group, is working on a takeover offer for the UK-based insurance broker Towergate, The Sunday Times reported. The newspaper cited sources close to the situation who said March is thought to be thinking about offering up to GBP 800m (EUR 1.01bn) for Towergate, which put itself on the market in November.
The investment bank Goldman Sachs is advising Marsh, the article said. An offer at GBP 800m would wipe out the equity shareholdings of the company’s owners as well as the debt held by the company’s lenders, the item added.
Advent, a private equity group, acquired Towergate in 2011, the report noted.
A group of Towergate’s creditors that hold GBP 715m of the company’s secured bonds has hired the investment bank Moelis as an adviser, the newspaper said. Lloyds Banking Group is one of those creditors, the article added.
A group of Towergate’s lower ranking creditors, led by Highbridge and Kohlberg Kravis Roberts (KKR), has hired Houlihan Lokey as an adviser, according to the newspaper.
Towergate’s bondholders are believed to be preparing a debt for equity exchange under which they would take control of the insurer, the item said.
As previously reported, Towergate founder and chairman Peter Cullum is thinking about launching an MBO bid for the company, and has appointed Fenchurch Advisory Partners and Blackstone as advisers.
Source Sunday Times
J Sainsbury in sights of activist investor Crystal Amber, share raid planned
The activist investment fund Crystal Amber is planning to take a shareholding in the listed UK-based supermarket group J Sainsbury, The Sunday Telegraph reported. The newspaper said Crystal Amber is in discussions with several overseas investors regarding a plan to acquire a substantial shareholding in J Sainsbury, but did not cite a source for the claim.
Crystal Amber is understood to believe that a group of activist investors could either force J Sainsbury to make substantial property disposals or prompt a takeover bid for the supermarket operator, the item said. Crystal Amber’s main objective is to engineer a takeover bid for J Sainsbury, but as it lacks the financial resources to push for change, the activist fund is looking to persuade other similar investors to acquire stakes, the report added.
It is believed that a US investor approached Crystal Amber this year with a view to buying a shareholding in J Sainsbury, the article said. Following those discussions, Crystal Amber is thinking about buying a stake worth an eight-figure sum, the item continued, adding that the investment firm could make its move early next year.
Crystal Amber has put together an extensive dossier on strategic options to that J Sainsbury could consider. Sources cited by the newspaper said the dossier argues that, absent a takeover offer, the best option for J Sainsbury would be a sale and leaseback deal.
It is understood that Crystal Amber thinks J Sainsbury could return up to GBP 2.25bn (EUR 2.85bn) to shareholders if it was to cut its ownership of its close to GBP 12bn property estate from 61% to 51% and increase its net debt to GBP 2.7bn, the item said.
Crystal Amber confirmed that it had put together a dossier on J Sainsbury but refused to comment about whether it has bought or is thinking about buying shares in the supermarket group, according to the report.
As previously reported, the government of Qatar failed in a 600p per share bid approach for J Sainsbury in 2007 that valued the target at GBP 10.6bn. The Qatar government still holds a stake just short of 26% in J Sainsbury, the item said.
J Sainsbury’s share price closed 4.9p at 238.3p in London on Friday, 5 December, giving the company a market capitalisation of GBP 4.56bn.
Sunday Telegraph
Balfour Beatty unlikely to allow JLIF due diligence on PPP portfolio, talk of full takeover bid from JLIF
Balfour Beatty is unlikely to allow John Laing Infrastructure Fund (JLIF) to conduct due diligence on its public-private partnership (PPP) portfolio, The Daily Telegraph reported. The newspaper said JLIF is believed to be keen to access Balfour’s data, but went on to quote sources close to Balfour Beatty who said the FTSE-100 construction and services group’s board would be very unlikely to allow JLIF the opportunity to conduct due diligence with an offer deemed to be substantially too low.
Balfour Beatty yesterday, 5 December rejected JLIF’s GBP 1bn (EUR 1.27bn) offer for the PPP Portfolio. JLIF said in response that it continues to thinks that Balfour Beatty could maximize value for its shareholders by selling the portfolio and that it would continue to evaluate other options with regard to “unlocking” the portfolio, the item noted.
A report in The Times mentioned City speculation as to whether JLIF might partner with a trade bidder to make an outright takeover bid for Balfour Beatty. The newspaper also mentioned talk that JLIF might return for discussions about buying some of Balfour’s PPP assets and the construction group’s UK and US construction businesses. Balfour Beatty’s listed UK-based competitor Carillion as an obvious choice to partner with JLIF on such a bid.
Separately, Balfour Beatty admitted that an internal review led by KPMG will not meet its target date of Christmas to complete the investigation. The investigation follows a succession of profit warnings, the Times report said.
Daily Telegraph, The Times
Dow Jones Global Indexes | Global Stock Markets
Pressure on European equities from more dismal economic data is shaping up to be a cloud with a silver lining for investors. In a week when euro-zone inflation slipped further below the European Central Bank’s target, oil fell under $70 a barrel, and manufacturing prices slid again, the Stoxx Europe 600 flirted with its highest level since the financial crisis.
The reason? Investors were betting that the euro zone’s mounting pain would stir the ECB to find ways to ease monetary conditions. Those hopes took a knock after the ECB governing council meeting Thursday. The ECB left rates unchanged and President Mario Draghi said it wouldn’t know until early 2015 if more effort was needed to combat ultra-low inflation.
Few expected immediate action. At least one ECB member had already signaled that time was needed to test the current policy. What investors really wanted was evidence that they and Draghi were on the same page and that the ECB would go further than its September plan to boost inflation by buying asset-backed securities and covered bonds. Draghi said the council had considered quantitative easing, but that wasn’t as positive as some investors had hoped and the Stoxx Europe 600 fell Thursday, ending down 1.3%. Over the week, the index was up 1%. More significantly, the euro rose against the dollar after Draghi’s comments, having touched a two-year low beforehand.
Graham Secker, Morgan Stanley’s head of pan-European equity strategy, says investors have reasons to be optimistic going into 2015, despite his forecast of a modest economic rebound. “From our perspective, we feel there is a materially higher probability of the macro news flow getting moderately better rather than worse, certainly over the next couple of quarters,” he says. This would favor cyclical stocks over defensive plays, which have been in favor in the last six months. Falling oil and metals prices—though bad for the ECB’s inflation target—will cut input costs, helping offset margin pressure.
ECB MONETARY POLICY WILL LIKELY keep the euro low for some time, which Morgan Stanley says will be good for euro-zone businesses with a high proportion of revenue from outside the currency bloc. Among those are two French companies: optical lens maker Essilor International (ticker: EI.France) and electrical business Schneider Electric (SU.France).
HSBC analyst Antoine Belge has Essilor at Overweight with a target price of 104 euros ($129.04). He estimates its price/earnings ratio at 29.7 this year, 24.2 in 2015, and 21.7 in 2016 and puts the stock’s potential return at 19.5%. In 2013 Essilor acquired the 51% in Transitions Optical it didn’t own and 100% of sun-lenses maker Intercast for $1.86 billion. By pumping some savings from Transitions into marketing, says Belge, Essilor should achieve organic sales growth of 5% next year. Essilor’s stock closed at €92.56 on Friday.
Exane BNP Paribas analyst Olivier Esnou has Schneider at Neutral with a €62 target price. He sees the P/E at 17.2 this year, falling to 15 in 2015, and 14.7 the year after. “We like Schneider for its high cash generation profile and safer business model relative to other large electricals,” he says. While concerned about pricing power, he likes its disciplined cost controls and focus on improving returns. Schneider’s stock closed at €63.54 on Friday.