Russia could lose RUB500B of oil revenues over the next three years after Belarus demanded larger share of export duties
NUMERICABLE : ANNOUNCES HIGHLY DILUTIVE CAPITAL INCREASE OF €4.7B... as strike will be Eu17.82 with 15 New shares for 7 held. Cap increase will be held from October 31st to November 12.
-> Massive discount 35% - way more than we had expected (20%). there will be
263m shares created vs. our 172m expectation. Clearly positive for ALTICE that will subscribe to 75% of the capital increase... Stock should suffer. We should some TP adjustement by around 20%.
-> Massive discount 35% - way more than we had expected (20%). there will be
263m shares created vs. our 172m expectation. Clearly positive for ALTICE that will subscribe to 75% of the capital increase... Stock should suffer. We should some TP adjustement by around 20%.
BN 10/29 08:28 *ALTICE HIRED LAZARD TO SELL OUTREMER TELECOM: DENOYER
BN 10/29 08:28 *ALTICE WANTS TO SELL OUTREMER TELECOM 'VERY FAST': DENOYER
BN 10/29 08:28 *NUMERICABLE CEO SAYS FRENCH PRICES STABILIZING
BN 10/29 08:27 *NUMERICABLE CEO SAYS FRENCH PRICE WARS ARE ENDING
BN 10/29 08:28 *ALTICE WANTS TO SELL OUTREMER TELECOM 'VERY FAST': DENOYER
BN 10/29 08:28 *NUMERICABLE CEO SAYS FRENCH PRICES STABILIZING
BN 10/29 08:27 *NUMERICABLE CEO SAYS FRENCH PRICE WARS ARE ENDING
*ALTICE HIRED LAZARD TO SELL OUTREMER TELECOM: DENOYER
2014-10-29 08:28:48.362 GMT
--GAURAV PANCHAL
-0- Oct/29/2014 08:28 GMT
2014-10-29 08:28:48.362 GMT
--GAURAV PANCHAL
-0- Oct/29/2014 08:28 GMT
One doubts whether the capital in eurozone institutions is enough to drive the economy forward
Will the asset quality review and stress tests conducted by the European Central Bank and the European Banking Authority mark a turning point in the eurozone’s crisis? Up to a point. They are an improvement on what has gone before. But they are not a complete fix for the banking sector, still less for the economy’s wider problems.
The optimistic assessment is that the ECB has at least done enough to mend the banking system. There are two things to be said for this judgment: first, the ECB has taken a close look at the quality of assets in the system; and, second, the “stresses” imposed in the tests are tough. They seem comparable to those imposed by the Federal Reserve on US banks. The ECB concluded that 25 institutions, nine of them Italian, would need to add a total of €25bn in capital. This number has already fallen to €13bn because of capital-raising undertaken this year.
Perhaps the most important possibility omitted by this assessment is that of sovereign default. This bears on a fundamental concern: risk-weighted capital requirements, on which the analysis is based, involve making judgments about the safety of different types of assets. This is especially problematic in the eurozone, where the lack of a unified fiscal backstop for banks means that national governments are responsible for rescuing troubled institutions. Moreover, the solvency of the eurozone’s highly indebted members is more doubtful than that of countries with their own currencies. Since a banking crisis would be even harder to deal with in the eurozone than elsewhere, it would be wise for its banks to have bigger capital buffers that stand a better chance of preventing one. This is particularly important when actual leverage is so much higher than the risk-weighted capital ratios suggest.
Fortunately, banks with the smallest amount of equity relative to actual assets are located in relatively solvent countries, such as the Netherlands, France and Germany. Nonetheless, leverage is 20 to 1 in Spain and Italy; 25 to 1 in Germany and France; and 30 to 1 in the Netherlands. It is questionable whether this is enough loss-absorbing capital.
High leverage also impairs the ability of banks to finance growth. A responsibly managed yet highly leveraged institution would seek to make heavily collateralised loans, against property, for example; or to hold highly rated assets. This is likely to militate against the productive investment the eurozone needs.
For these reasons, one must doubt whether the capital in eurozone banks is enough to drive the economy forward. But this is just one part of a still bigger problem: the dramatic weakness of aggregate demand and the slow slide into ultra-low inflation and, quite possibly, deflation. Sounder banks do not necessarily generate faster growth in demand. Indeed, causality goes far more in the opposite direction.
Two former ECB officials have expressed sharply different views about how policy makers should respond. Otmar Issing, the bank’s former chief economist, argues that monetary policy is already too loose from a German point of view and that it would be a mistake for Berlin to loosen fiscal policy, too. Lorenzo Bini Smaghi, a former member of the executive board, argues that stronger demand is needed in Germany to prevent the European economy from falling into deflation. The vital point is that the eurozone has a single monetary authority, which should take a view of the entire eurozone economy.
Between the first quarter of 2008 and the second quarter of this year, eurozone nominal demand rose by a mere 2.5 per cent (see chart). Nominal gross domestic product grew by 5 per cent over that period. Now assume trend real growth was a mere 1 per cent and inflation 2 per cent (in line with ECB targets). In that case, nominal GDP should have been growing at 3 per cent a year. By the second quarter of 2014, nominal GDP was 13 per cent below this objective. Under Mr Issing, the ECB looked at monetary aggregates as well. In the six years to September 30 2014, broad money (M3) increased by 9.6 per cent, a compound annual rate of 1.5 per cent. On both measures, the ECB has failed.
The same goes for inflation. Suppose the ECB intends to hit its inflation target of close to, but below, 2 per cent. When a number of important member countries need to improve their competitiveness, their inflation should be well below German levels. If that is to happen while the average remains close to 2 per cent, core inflation needs to exceed 3 per cent in Germany (and other surplus countries). In fact, it is just 1.2 per cent in Germany. This suggests domestic demand is far too weak in the eurozone as a whole, including in the surplus countries, the most important of which is of course Germany.
The question, however, is how to achieve higher demand growth in the eurozone and creditor countries. Experience in the US and UK suggests that unconventional monetary policy might work. But the ECB is hampered by the constraints (perceived and actual) on purchases of government debt. If Germany is opposed to such purchases, then its opposition to active fiscal policy as well, even when it is able to borrow at close to zero real interest rates over 30 years, ensures continued eurozone stagnation. That just cannot make sense.
It is essential not to make too much of these stress tests and asset quality review. Yes, they are real improvements. But they do not mean that eurozone banks will now drive growth. They still have too little capital for that. More important, the eurozone lacks a credible strategy for reigniting demand. If much of the German policy elite continues to deny this is even a problem, the crisis of the eurozone must remain unresolved. That is a disaster.
SANOFI SAYS VIEHBACHER REMOVED AS CEO
US Closed higher with S&P climbing 1,2% and Russell 2,9%,US Indexes are niw uo on the year, FOMCtomorrow and the belief that the Federal Reserve will not rush to hike the fed funds rate after asset purchases under the Quantitative Easing program end, most sectors are up but we sw some weakness in apparel with COH -5,95% & KSS -6,6%...TWTR -9,8%, FB was flat ahead of earnings, volume were in line with average @ 779mil shares....VIX @ 14,39 -10,3%...US After Hours : X +10.4%, MAR +4.1%, INVN -24.5%, FB -9.3%, GILD -3.6%, PNRA -2.8% following earnings/guidance...Japan Cabinet Office raises its assessment of Industrial Production for the first time after Sept sequential growth rose at the highest rate since January...S&P warned the plan to raise its sales tax next year may not be positive for the nation's credit rating if it snuffs out any chance of economic recovery. This could potentially disarm the argument that global investors' trust would be hurt if consumption tax is not lifted again as expressed by Fin Min Aso last week...World Bank warned that China growth slowdown could be structural rather than cyclical, but that there is room for stimulus if growth slows sharply. World Bank estimated reform to increase growth by as much as 3.5% over a five year
period...Nikkei +1.46%...Hang Seng +1.22%...Shanghai +1.5%
Eur$1.2741 S&P -0.08% EuroStoxx+0.33% FTSE +0.43% DAX +0.35% SMI +0.27%
Macro
- Zambia President Is Dead, Family Sources Confirm, BBC Reports
- FLMC today
Keep an eye on :
- AF FP : Air France 3Q Operating Profit EU247m vs Est. EU330.5m
- ATL IM : Atlantia hires Goldman Sachs to handle AdR 40% stake sale - Il Sole 24 Ore
- BBVA SM : BBVA 3Q Net EU601M, Misses EU715.8M Analyst Estimate
- BNP FP : BNP Paribas Fortis to Review Remuneration Policy, L'Echo Reports
- COK GY : released numbers, see significant rise in sales, big beat stock indicated 8% higher pre market
- DLG GY : Dialog Semi Sees 4Q Sales Above Ests. as 3Q Profit Beats
- DSV DC : DSV 3Q Net Beats Ests.; Raises Lower End of Outlook Range
- GSZ FP : GDF Suez Says Madrid Office of Cofely Searched by Police
- MB IM : Mediobanca to sell stakes in Telecom Italia and RCS by June 2015 - Il Sole 24 Ore
- NUM FP : Numericable to Begin EU4.7b Rights Issue on Oct. 31,ALtice to fully subscribe (74.59%), Right issue guaranteed by Bamnk syndicate
- REE SM : Red Electrica 9m Net Income EU414.8m; EU389.4m 9m 2013
- RXL FP : Rexel Says 3Q Sales Growth Solid, Confirms FY 2014 Targets
- RB/ LN : Unilever, P&G, Reckitt Checking U.K. Accounting: Telegraph
- REP SM : Santander Wants Sacyr to Sell 3% of Repsol, Confidencial Says
- SAN FP : Sanofi Board Said to Meet Today Amid Speculation Over CEO
- SAN FP : Sanofi's Viehbacher Likely to Be Ousted Today, Le Monde Says
- SPM IM : Saipem CFO Says Not Changing Medium-Term Guidance
- STB NO : Storebrand 3Q Pretax Profit Beats Est., Builds Reserves
- STL NO : Statoil's Saetre Says Dividend Policy `Is Very Firm'
- SU FP : Schneider Electric 3Q Sales EU6.285b, Est. EU6.23b
- SEV FP : Suez Environnement Will Challenge Lille Contract Decision: CEO
- STM FP : STMicro Forecasts 4Q Revenue Decline Amid Soft Demand
- TOM2 NA : TomTom 3Q Net Falls 49%; Beats Ests; Revenue Forecast Raised
- FP FP : Total 3Q Adj. Net $3.6b vs Est. $3.3b; Div. EU0.61/Share
- UNA NA : Unilever, P&G, Reckitt Checking U.K. Accounting: Telegraph
- UNIB SS : Unibet 3Q Ebitda Beats Est.
- VONN SW : Vontobel AUM Rises 6% in 3Q; Net New Money Exceeds CHF2b
- ZAL GY : Zalando Declined to Exercise ’Green Shoe’ Over Allotment
>>> Up
*KUONI RAISED TO OUTPERFORM VS NEUTRAL AT CREDIT SUISSE
*ROLLS-ROYCE RAISED TO MARKETPERFORM VS UNDERPERFORM: BERNSTEIN
>>> Down
*SAIPEM CUT TO SELL VS HOLD AT SOCGEN
*SANOFI CUT TO HOLD VS BUY AT DEUTSCHE BANK
*SANOFI CUT TO HOLD VS BUY AT JEFFRIES
*STANDARD CHARTERED CUT TO NEUTRAL VS BUY AT NOMURA
>>> PT Changes
>>> Initiation
>>> Call
Sweat Equity: Benchmark Takes Stake in Tinder in Exchange for Matt Cohler Joining Board
In an unusual investment configuration, Silicon Valley venture firm Benchmark has taken an equity stake in popular mobile dating app Tinder, in exchange for one of its partners, Matt Cohler, joining the board.The Los Angeles-based Tinder is controlled by the Match Group, which in turn is a subsidiary of online conglomerate IAC (which is, of course, run by uber-mogul Barry Diller). Interestingly, sources said that no actual money was invested by Benchmark and IAC continues to hold a massive and controlling stake in Tinder via Match.
Instead, the small stake — the companies declined to give an exact amount — will be traded for the time and expertise of the high-profile VC Cohler. The former LinkedIn and Facebook exec has made investments in a range of successful online companies such as Uber and Twitter.
Cohler has been on the hunt to be involved in Tinder for some time now, he said, fascinated by its viral growth and user engagement. “This has been an app that has taken off in the way a lot of the really successful ones that I have seen in the past have,” he said in an interview. “What’s happening at Tinder is something that is very special.”
Cohler would not give details, but said the structure created for its Tinder involvement lined up incentives for the firm to help grow the startup.
Sean Rad, co-founder and CEO of Tinder, called Cohler a “mentor” and noted that more than cash, Tinder needed experienced advisers to take it to the next level. While he did not want to talk in detail about recent controversies around a now settled sexual harassment lawsuit aimed at Tinder’s now departed marketing head and also his own leadership, Rad did note that the company needed a deeper level of attention to building out the business.
“More than money, we need people who have been there to help us as we grow,” he said. “The end result is that Matt will be helping us grow as big as possible … it’s all about the support.”
In a statement, Sam Yagan, a director of Tinder and the CEO of the Match Group, said: “Matt will complement Sean’s proven product leadership and the expertise in the social and dating categories we already have on the board. I’m confident Benchmark’s involvement will help Tinder achieve its huge growth potential and am excited about continuing to build out the Tinder team.”
Facebook’s plan to spend next year pouring more money into its new products was greeted with caution by a wary Wall Street, uncertain just how much spending is too much.
Mark Zuckerberg, founder and chief executive, said it may sound “a little ridiculous”, but Facebook is waiting for newly acquired products such as Messenger, WhatsApp and Instagram to reach 1bn users each before beginning to try to generate revenue from them.
Investors may have agreed, wiping over $20bn off the company’s market capitalisation in after-hours trading during Facebook’s third-quarter earnings call when they heard how much that plan might cost.
Facebook forecast costs will rise by 50-70 per cent next year on a non-GAAP basis, or by 55-75 per cent on a GAAP basis. This would far outpace the average analyst forecast for revenue growth of about 35 per cent, although Facebook did not give its own revenue projections.
But Mr Zuckerberg, who has built the main Facebook site and app into a business with 1.35bn users, set out his theory of investment as one that is “to first focus on connecting 1bn people, reaching the full potential before aggressively turning them into new businesses.”
“I can’t think of that many other companies or products that have multiple lines of products that are on track to connect 1bn people,” he added.
Brian Wieser, an analyst at Pivotal Research, cites Google as one such example – another founder-led Silicon Valley company that has used the money made from its core product (in its case, search) to invest prolifically in other areas.
“The closest peer here is Google and that’s not a positive comparison in terms of rapidly increasing expense growth,” he says.
But Mr Wieser says Facebook compares favourably with Google because it is flagging the increased expenditure in advance and seems to have more of a “investment focus” than its rival.
Facebook’s multi-app strategy is centred around the idea that there are many ways to “connect the world”, whereas Google is taking money from its lucrative search advertising business for big bets that range from driverless cars to finding a “cure” for death.
Few argue that Facebook is heading in the wrong direction, but many feel it lacks the tools to assess exactly how much money it needs to invest.
The problem Wall Street generally encounters when trying to value Silicon Valley companies is low visibility about where they are spending their research and development budgets.
It is difficult to predict if Facebook could use existing money to grow, developing, for instance, WhatsApp by reallocating engineers and servers or whether that would require extra resources.
Mr Wieser says few analysts gave the company a “haircut” when it acquired WhatsApp in February in a deal now worth $22bn, in spite of its diluting the share count and Facebook’s statement now that it would be one of the factors prompting accelerated expenditure.
“No company of this size and growth rate is normal. If you are P&G, investors can quibble about the appropriate expense ratios as the business is relatively predictable and you have decades of history to inform what the company will do, and dozens of peer companies,” he says.
The extra costs announced on Tuesday include spending in an attempt to grow this year’s acquisitions of WhatsApp and Oculus VR, the $2bn virtual reality headset maker. The market has already responded favourably, sending shares in Facebook up by almost half so far this year.
WhatsApp’s financials, published for the first time on Tuesday, showed a little revenue and widening losses because of stock-based compensation for employees. But Facebook has emphasised that the app was not bought for its current business model.
Other additional costs will be for hiring more people, investment in infrastructure and the expansion of Facebook’s advertising technology business – which Jan Rezab, chief executive and founder of Socialbakers, a social media marketing company, identifies as an obvious area for development.
Sheryl Sandberg, chief operating officer, says Facebook could use the tools it has created to improve targeted marketing on its site, and the acquisition of the Atlas ad serving and management platform for ads across the web.
“It’s clear that marketers and publishers need better tools for the mobile world,” she says. “This is an industry problem that we believe we are well-placed to solve.”
Mr Rezab says the fact that Facebook now makes two-thirds of its revenue on mobile shows it could play a leading role in advertising technology.
“The industry doesn’t know what it is doing. That is a clear fact,” he says. Facebook “can lead it and own it and solve it”.
Mediobanca to sell stakes in Telecom Italia and RCS by June 2015 (translated)
Mediobanca, the listed, Italian investment bank, will sell its stakes in Telecom Italia (TI) and listed, Italian publisher RCS by June 2015, Italian-language daily Il Sole 24 Ore reported, citing Mediobanca CEO, Alberto Nagel.
As previously reported, Mediobanca also plans to sell minority stakes in the tyre manufacturer Pirelli, listed Italian holding group Italmobiliare and Gemina, the listed holding that controls the Italian airport operator Aeroporti di Roma.
A previous report noted that Mediobanca hopes to make EUR 1.5bn from its divestment programme, including the sale of a 3% stake in Generali, the listed Italian insurer.
Source Il Sole 24 Ore