>>> US Close Dow -0,46% S&P-0,56% Nasdaq-0,46%

Closing Market Summary: S&P 500 Settles Below 100-Day Moving Average

The stock market ended the Thursday session on a lower note despite showing strength in the early going. The S&P 500 fell 0.6% with eight sectors registering losses.

Equities climbed out of the gate after the European Central Bank reaffirmed its commitment to the current policy course. In addition, better than expected earnings and economic data also factored into an upbeat start.

Despite the set of positive factors, the S&P 500 could not overtake its opening high at 1928.97. Instead, the index spent about an hour near that level before retreating into the red. An afternoon report from the New York Times concerning potential U.S. airstrikes on militants in Iraq contributed to keeping dip-buyers sidelined.

As a result, the S&P 500 ended the session below its 100-day moving average (1913/1914), while the Dow Jones Industrial Average (-0.5%) settled just above its 200-day moving average (16343) after crossing that level for the first time since February 6.

The health care sector (-1.2%) ended at the bottom of the leaderboard amid weakness in biotechnology. The iShares Nasdaq Biotechnology ETF (IBB 248.15, -3.67) lost 1.5% after being rejected by its 50-day moving average (251.88).

Other countercyclical sectors like consumer staples (-0.8%) and telecom services (-1.0%) also underperformed, while the utilities sector (+1.1%) displayed relative strength to narrow its week-to-date loss to 2.0%.

Meanwhile, all six cyclical groups posted losses with the materials space (-0.9%) having the worst showing. Similarly, the other commodity-related sector—energy (-0.7%)—also finished near the bottom of the leaderboard.

Elsewhere, the technology sector (-0.5%) ended just ahead of the S&P 500, but that was a bit misleading as the relative strength in two influential components—Apple (AAPL 94.48, -0.01) and Microsoft (MSFT 43.23, +0.49)—kept the sector from registering additional losses. Chipmakers, however, lagged broadly with the PHLX Semiconductor Index sliding 1.4%.

Also of note, the industrial sector ended little changed after showing relative weakness yesterday. Two heavily-weighted components, Boeing (BA 119.84, +1.50) and General Electric (GE 25.50, +0.06), contributed to the outperformance, while the broader PHLX Defense Index shed 0.1%. Transport stocks displayed strength during the session, but the Dow Jones Transportation Average (-0.2%) slipped into the red during afternoon action.

The retreat in equities boosted the Treasury market, where the 10-yr note added half a point to lower its yield six basis points to 2.41%. This represented the lowest close for the benchmark yield since June 2013. The safe-haven demand was also visible in the foreign exchange market, where the yen jumped and pressured the dollar/yen pair into the 102.00 area.

Participation was below average with fewer than 660 million shares changing hands at the NYSE.

Economic data was limited to weekly initial claims and the Consumer Credit report for June:

* Initial claims declined to 289,000 from 303,000, while the consensus expected a reading of 308,000 

* Even though claims have held below the 300,000 mark over the past four weeks that has not translated into payroll growth in the neighborhood of 300,000 jobs per month, which had been the case in the past  * Since the relationship hasn't held up, it appears the data has been skewed by seasonal adjustments or monthly volatility in the payroll data. If payroll volatility is the issue, we should see a surge in the August jobs report 

* Consumer credit increased by $17.30 billion in June, which was higher than the consensus estimate of $15.80 billion 

* The prior month's credit growth was left unrevised at $19.60 billion 

Tomorrow, productivity (consensus 1.4%) and unit labor costs (consensus 2.0%) data for the second quarter will be released at 8:30 ET, while the Wholesale Inventories report for June (consensus 0.4%) will be reported at 10:00 ET.

* S&P 500 +3.3% YTD  * Nasdaq Composite +3.8% YTD  * Dow Jones Industrial Average -1.3% YTD  * Russell 2000 -3.8% YTD

(BFW) Naguib Sawiris Cut Telecom Italia Short Position This Week

Naguib Sawiris Cut Telecom Italia Short Position This Week
2014-08-07 15:12:33.252 GMT


By Sam Chambers
Aug. 7 (Bloomberg) -- Regulatory filings show Naguib
Sawiris’s Orascom TMT Investments cut its short position in
Telecom Italia by 23% to 134m shrs this week, equivalent to 1%
of co’s shrs outstanding.
* Sawiris still holds the largest short position in TI.
Details here
* In Jan, Sawiris told Bloomberg News he was prepared to
invest in TI if Telefonica sold its stake and co. didn’t
sell its Brazilian unit
* Sawiris is chairman of Orascom TMT Investments, which is
a telco/tech investor and strategic shareholder
* Telecom Italia shrs jumped as much as 2.7% this afternoon
after Bloomberg reported TI said to have approached Vivendi
over an alliance in which VIV may acquire stake in co.
* Aug 5: Telefonica offered $9b for Vivendi’s GVT unit; said
it may offer TI shrs to Vivendi as part of the deal
* NOTE: Telecom Italia shareholders here


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To contact the reporter on this story:
Sam Chambers in London at +44-20-7673-2021 or
schambers7@bloomberg.net
To contact the editor responsible for this story:
James Ludden at +44-20-7673-2645 or
jludden@bloomberg.net

RTR - VW axes McKinsey cuts blueprint as union balks– sources


(Reuters) - Volkswagen's (VOWG_p.DE) 5 billion euro ($6.68 billion) cost-cutting plan has suffered a major setback after labor leaders forced management to axe detailed proposals drawn up by consultants at McKinsey, sources told Reuters on Thursday.

The cost-cutting target itself still stands, though, the sources said.

Volkswagen and McKinsey declined to comment.

The move underlines how much relations between management and workers have soured at Europe's biggest carmaker, which is struggling to raise profits amid stagnating emerging markets and low growth at home.

Late last month, Chief Executive Martin Winterkorn told employees he sought 5 billion euros worth of efficiency gains at its core passenger-car brand by 2017.

The sources said managers had commissioned McKinsey to help streamline production and cut costs at VW, a company at which employees enjoy multi-year job guarantees.

Last week, Volkswagen said it had replaced its production chief Michael Macht after a new modular vehicle design failed to translate into higher profits at its main factory in Wolfsburg, Germany.

Rather than greater efficiencies in production, the new vehicle assembly components used on Volkswagen's flagship Golf model caused costly overtime work and delays, leading the company to report a drop in operating profit.

WSJ : Regulators Cite Risk-Control Deficiencies at Deutsche Bank

Regulators Cite Risk-Control Deficiencies at Deutsche Bank
Confidential Memorandum of Understanding Formally Ordered Bank to Make Far-Reaching Improvements

Deutsche Bank AG DBK.XE +1.34% is facing a barrage of criticism from U.S. regulators over what they say are weak reporting systems and risk controls, including under a confidential pact that formally orders the bank to make far-reaching improvements, according to people familiar with the agreement.

Through a corrective action called a "memorandum of understanding," the Federal Reserve Bank of New York and New York's Department of Financial Services are demanding that Deutsche Bank overhaul its technology and compliance procedures, and fix what the regulators describe as serious risk-management deficiencies, according to people familiar with the accord.

Separately, the U.S. Commodity Futures Trading Commission has repeatedly pressed Deutsche Bank to make changes to its systems, including fixing what the CTFC says are transaction-reporting problems which are seen as magnifying risks to the bank and potentially its trading partners, according to people familiar with communications between the CFTC and the bank.

The combination of the so-called MOU and the CFTC grievances poses stiff challenges to Deutsche Bank's management team, which is straining to address the regulators' concerns.

The MOU, which hasn't been previously reported, took effect in 2012 and is still in place, according to the people familiar with the agreement. It has required additional regulatory reviews and ongoing reporting requirements for the bank, the people say.

A primary focus of the regulators' attention is whether trading or reporting errors could lead to large, unexpected losses for the bank or its counterparties or rattle the market, the people familiar with the MOU said.

The New York Fed has set a mid-2015 deadline to correct a list of high-priority issues, people familiar with the matter said. The consequences of missing the deadline aren't known.

Deutsche Bank officials last month said the bank is "working diligently" to address technology and compliance issues, spending €1 billion ($1.34 billion) on "systems and controls" and assigning 1,300 people to the effort, including 500 new employees in the U.S. alone.

The German bank has already taken steps to improve systems that send real-time trade confirmations to counterparties and process end-of-day transaction reports, among other areas, people familiar with bank operations say. In June, the bank raised €8.5 billion by selling shares to investors, in part to contend with tougher U.S. capital requirements.

Privately, Deutsche Bank executives say tough talk from regulators is to be expected, and that other big banks face similar pressures behind the scenes in their nonpublic communications with government overseers.

Other bank executives and lawyers say U.S. regulators are more focused than ever on risk controls industrywide, and foreign banks are bearing a lot of the attention.

Still, the existence of the MOU with the New York Federal Reserve and New York state banking regulator suggests that Deutsche Bank's U.S. operations face a deeper level of formalized scrutiny than was previously known.

Last month, The Wall Street Journal reported that the New York Fed blasted Deutsche Bank in late 2013 over a litany of serious financial-reporting problems the regulator said have gone uncorrected for years.

In a December 2013 letter to Deutsche Bank executives, the New York Fed senior vice president responsible for supervising Deutsche Bank listed concerns ranging from data-entry errors to problematic valuations of collateral used to assess the riskiness of loans. The letter said the shortcomings amount to a "systemic breakdown" and "expose the firm to significant operational risk and misstated regulatory reports."

MOUs like the one involving Deutsche Bank aren't typically made public. Lawyers who have dealt with MOUs estimate that a half-dozen of the biggest banks might be subject to them at any one time, though they differ in severity and in many cases are resolved in a year.

An MOU can immediately affect a bank through extra reporting burdens and examinations. If regulators feel problems aren't resolved quickly enough, they can turn the action into a binding public order that curtails bank activities such as acquisitions or spending on dividends.

There's no indication that regulators plan to escalate the MOU with Deutsche Bank or restrict its business activities, and it isn't known how long the agreement will remain in place.

The CFTC isn't party to the MOU, the people familiar with the agreement said. The CFTC's concerns escalated in recent years as the regulator grew exasperated with inaccuracies in Deutsche Bank's trade reports and calculations of borrowing levels relative to client collateral, a key risk measure, according to people familiar with communications between the bank and the CFTC.

In the fall of 2013, CFTC staff briefed commissioners about what they characterized as a lack of sufficient progress by Deutsche Bank, the people said. Numerous areas remain unresolved.

In a separate move, the New York banking regulator is planning to install a monitor inside Deutsche Bank, and another one inside Barclays BARC.LN -0.16% PLC, in the U.S. as part of an ongoing investigation into potential manipulation of the foreign-exchange market, The Journal reported last week.

Agreements with the banks over how and when the monitors will operate are expected to be in place by September, according to people familiar with the discussions. Deutsche Bank and Barclays declined to comment on the monitors.

(TheDiplomat) Softbank can turn to more content or European operator for M&A



From: LAURENT CHEKROUN () At: Aug 7 2014 15:37:08
Subject: Fwd:(TheDiplomat) CEO Son has identified foreign markets as the key to Softbank’s fu

Failed T-Mobile Bid May Not Deter Softbank From New Acquisitions
CEO Masayoshi Son has identified foreign markets as the key to Softbank’s future.

Sprint Corp., which is majority owned by Japan’s mobile provider Softbank, dropped its bid to acquire T-Mobile U.S. on Wednesday. The news caused shares in all three companies to drop, as Softbank had planned the tie up between America’s third and fourth largest mobile carriers in order to compete with the country’s much larger rivals Verizon Communications Inc. and AT&T Inc. While the failed merger is a setback for Softbank and its acquisition hungry founder Masayoshi Son, there is speculation that news of a new Softbank deal may be forthcoming.

Although there was skepticism that a deal between Sprint and T-Mobile would be able to surmount regulatory and antitrust obstacles, the two were intent on pursuing the deal because of the economies of scale combining their networks would entail. With investment costs for expanding wireless networks quite absorbent, all parties involved saw it as a good way to quickly reach greater parity with the number one and number two carriers in the U.S. Softbank’s purchase of a majority stake in Sprint last year for $21.6 billion made it the world’s largest mobile provider, yet the company still wanted a greater share of the American market.

While Sprint and T-Mobile finally announced that they could not agree on how to equitably share the risk of the deal falling through during the lengthy regulatory approval process, which could have taken a year or two, Softbank in all likelihood will not be deterred by the setback. Son, the company’s CEO, is not expected to wait long before announcing a new investment plan, as he personally championed the acquisition of many of the more than 1,300 companies Softbank owns a stake in.

An analyst at SMBC Nikko, Satoru Kikuchi, says that “Softbank may already have another acquisition target,” and he expects Son to announce another deal this year, or maybe as soon as the end of this month. Son may even indicate his possible strategy while briefing investors during a quarterly earnings meeting this Friday. There is speculation that instead of trying to purchase another mobile provider, Softbank may try to expand its content, for instance its large mobile game presence, or grow into other media. Macquarie Securities analyst Nathan Ramler also expects that “SoftBank/Sprint have other ideas on how to gain the scale and momentum they want in the U.S. market.” Others speculate that Son will look to Europe, where “acquiring an operator in a high-ARPU [average revenue per user] Western European market could be next on the list,” according to Counterpoint analyst Neil Shah.

In fact, there is little to keep Son from looking abroad to expand Softbank’s reach. The Japanese mobile market is already saturated, and the company will find it difficult to take market share from its much bigger domestic rival NTT Docomo. As the Japanese mobile market eventually shrinks along with the population, Softbank in all likelihood will go the way of other Japanese corporate giants (specifically the auto industry), and expand its presence abroad in order to sustain its growth. This strategy has been show to allow Japanese companies to continue to grow and remain profitable. The downside for Japan is that this new international growth does little to contribute to the country’s perennially struggling economy.