FT : Airbus puts on brave face over cancelled $16bn contract

Airbus puts on brave face over cancelled $16bn contract

An Airbus A350 XWB flight-test aircraft is towed during a media-day at the German headquarters of aircraft company Airbus in Hamburg-Finkenwerder, April 7, 2014. European planemaker Airbus unveiled on Monday the first cabin for its new mid-sized twin-engined airliner, the A350 XWB, vowing to avoid a repeat of the delays caused by cabin design changes on its bigger A380 super jumbo. REUTERS/Fabian Bimmer (GERMANY - Tags: TRANSPORT TRAVEL)©Reuters
Fabrice Brégier, Airbus chief executive, has put a brave face on Emirates Airline’s cancellation of a $16bn order for 70 of the aircraft maker’s planned new A350 passenger jets.
It is Airbus’s largest contract cancellation, but at a dinner with journalists on Wednesday evening Mr Brégier insisted Emirates’ decision would have “zero negative impact” on the European aerospace group. “Is it a problem for us?” he said. “The answer is clearly ‘No’ … [but] I do not like it because Emirates is a top-class customer and I would prefer them to operate the A350.”

For Airbus, the loss on Wednesday of Emirates as an A350 customer throws an uncomfortable spotlight on its strategy for long-range aircraft – particularly in the lucrative market for wide-body, twin-engined jets, where it trails Boeing. The fast-growing Gulf carrier’s contract cancellation also raises broader questions about whether there are signs of a downturn in the commercial-jet industry – which could force Airbus and Boeing to stop making so many aircraft.
But for Mr Brégier, the most pressing concern is whether Airbus can hit its ambitious timetable for getting the A350 into service before the end of the year, and then ramp up production of the aircraft.
The A350 is the biggest single risk at Airbus’s commercial-jet business – the aircraft involves a step-change in technology because it is mainly made from lightweight carbon composites rather than aluminium, so as to reduce fuel burn.
The flight-test programme, which began almost a year ago, has gone relatively smoothly, and Airbus hopes to obtain certification of the A350 from regulators this autumn.
The bigger challenge could come after the first aircraft is handed over to Qatar Airways – as Airbus seeks to increase production of the A350 to 10 each month by 2018.
The company is closely monitoring the ability of suppliers to cope with the proposed production increases, and although Mr Brégier said that many were in good shape, some still have problems. “We are working hard to mitigate this risk,” he told the Financial Times at Airbus’s annual technology event for media.
Then there is the issue of whether the A350 is an adequate competitor for Boeing’s two wide-body twin-engined jets – the Dreamliner and the planned 777X. There will be three different versions of the Dreamliner and two 777X aircraft, but Airbus is planning only three A350 models.
In an apparent admission that Airbus needs to strengthen its position, it is considering making a new version of its A330 jet featuring more fuel-efficient engines. The A330 is an ageing aircraft, with a small order backlog, but Mr Brégier said that new engines could put its fuel burn on a par with the midsized Dreamliner.
A350’s round of applause

The interior of the business class of the new Airbus A350 XWB is pictured during a presentation in Hamburg, northern Germany on April 07, 2014. European aircraft manufacturing company Airbus presented the interior of its future A350 which - according to the company - will offer "more personal space, flexibility and comfort" than other aircrafts in its class. AFP PHOTO / PATRICK LUX (Photo credit should read PATRICK LUX/AFP/Getty Images)
Can the Airbus A350, the world’s newest passenger jet, live up to the hype?
On Thursday, Airbus gave journalists the opportunity to decide whether Emirates Airline had made a mistake, when it cancelled an order for 70 of these next-generation aircraft, by inviting the media to fly on a prototype A350, writes Andrew Parker.
Continue reading
Nick Cunningham, analyst at Agency Partners, said that it was strongly in Airbus’s interests to extend the life of the profitable A330 programme until the end of the decade, when the A350 is supposed to start generating earnings.
However, he questioned if there would be strong demand for a revamped A330 because its fuel consumption was likely to be worse than Boeing’s aircraft.
Meanwhile, Airbus is coming under increasing pressure from Emirates to make a new version of the A380 superjumbo with more fuel-efficient engines.
Emirates is the world’s largest operator of the four-engine A380, having ordered 140 superjumbos, and Tim Clark, the carrier’s president, said that it could be willing to buy more if Airbus made a new version.
Airbus executives sounded cautious, but Mr Cunningham said: “If Emirates wants Airbus to re-engine the A380, it probably has to.”
Since the financial crisis, and in an era of high oil prices, Airbus and Boeing have enjoyed several years of strong sales for their new, more fuel-efficient aircraft.

une 2013: Airbus is pushing Boeing for market leadership in the twin engine aircraft market. Andrew Parker reports from the Paris air show on why a price war might be in the offing – which would be bad news for the two manufacturers, but good for airlines
But Airbus has already had more order cancellations by airlines this year than in the whole of 2013. A total of 173 aircraft have been cancelled in 2014 so far, compared with 116 last year. Other airlines, such as AirAsia, have deferred delivery of aircraft for several years.
In a further sign of possible market deterioration, Airbus’s book to bill ratio – calculated by dividing annual orders for aircraft by jet deliveries – could decline this year compared with 2013.
But John Leahy, Airbus’s chief operating officer for customers, said: “Are we building too many aeroplanes? Is there a [market] bubble? I don’t think so.”
Several analysts agreed with Mr Leahy, but a minority have concerns. David Strauss, analyst at UBS, estimated in a research note before Emirates’ cancellation that 20 per cent of the combined jet orders placed with Airbus and Boeing were vulnerable to cancellation or deferral because some airlines had signed contracts based on over-optimistic growth assumptions.

(BofA-ML) The Flow Show : $11.4bil Equities inflows (80% in ETFs)

* Strongest weekly inflows to equities funds ($11.4bn) since Feb’14 versus weakest inflows to bond funds ($1.6bn) in 3 months. Since early February stocks are up 7.4% (total return), which when combined with this week’s inflows may argue for a temporary pause in equities’ upward move, especially as events in Iraq threaten higher oil prices

* Bull & Bear Index shows that investor risk appetite remains in a steady uptrend, rising to 7.4 from 4.1 just 3 months ago . Risk assets could have a final surge higher before a more sinister correction in the fall

* Asset class flows
- Equities: $11.4bn inflows ($9.1bn into ETF’s) (Table 1)
- Bonds: $1.6bn inflows (smallest inflows in 3 months)
- Precious metals: $0.3bn outflows (2nd straight week of outflows)

* Equity flows
- EM: $2.3bn inflows (largest in 9 weeks) (Table 2); third straight week of inflows to
- Brazil equity funds ahead of World Cup
- Europe: $2.6bn inflows (largest in 16 weeks)
- US: $5.1bn inflows (all via ETF’s)
- Japan: $0.9bn outflows (largest in 13 weeks)
- By sector, outflows from materials and utilities; inflows to energy and real estate funds

* FICC flows
- Largest weekly redemptions ($1.3bn) from floating-rate debt since Aug’11
- $0.8bn inflows to EM debt funds (11 straight weeks) (Chart 2)
- $2.1bn inflows to IG bond funds (25 straight weeks)
- $0.2bn inflows to HY bond funds (smallest in 8 weeks)
- 8 straight weeks of inflows to both MBS and Munis

(Les Echos) Alstom, the last crusade Cromme

Alstom, the last crusade Cromme

Pillar of the Franco-German relationship, the Chairman of the Supervisory Board of Siemens, Gerhard Cromme confirms imminent bid for Alstom. And claims to have the full support of Berlin.
Prim, tanned complexion and verb courteous Cromme seat in his chair like a monarch on his throne. He handles the verb in French and German, with the ease of an aristocrat and displays an unshakable serenity. And yet, this godfather of Deutschland AG, a pillar of the Franco-German relationship, prepares to deliver one of his most personal battles. A seventy-one years, this could be his last, which engrave his name in the history books. Monday, Siemens, where he chairs the supervisory board, file an offer on Alstom, probably with Japan's Mitsubishi Heavy Industries (MHI) industrial. Gerhard Cromme refuses to talk about in detail, but leaves no doubt about his determination. Even though some continue to doubt the real motivation of Siemens in this case ...
The German giant does not start in the lead. After months of discreet discussions with Alstom, its rival General Electric announced an offer in late April. "Given our business plan, prepared a long time, it was important for us to respond, should Cromme. We consulted with governments in Paris and we decided to get our turn. "Without any guarantee of success. For Patrick Kron, the CEO of Alstom, the American giant is the only one able to save his group affected by a drop in orders and hemorrhaging cash. Siemens is instead his worst enemy, he accuses backstage shots Filthy against his company.
It must be said that the two groups have a history loaded. When Alstom was on the verge of bankruptcy in 2003, Siemens has tried to hand him over. In vain. The CEO at the time, Heinrich von Pierer was then struck voluntarism of Nicolas Sarkozy, then Interior Minister of Finance, who made him his private visit but defended the independence of unambiguously Alstom against German appetites. Each side of the Rhine, the gaping wound remains. The German group, which sold its shares in the nuclear supplier Areva NP in 2011, feels like a jilted lover in France. For its part, Alstom suspect he wanted to torpedo his rescue.
Gerhard Cromme does not want to return to this time, which precedes his arrival at Siemens. But he believes today clearly have better cards. "Our project is based on an alliance, not a simple purchase against cash, he said. We feel that the government [in Paris, Ed] y are sensitive. "Berlin also follows the case favorably:" Naturally, the German government supports us. They are informed, they say "go!" "If successful, Alstom recover a large part of Siemens rail operations, which would remain a minority shareholder of the "European champion". For its part, the German giant would hand over power equipment of the French group, he valued in May from 10.5 to 11 billion euros. MHI and the Japanese would have to resume some activities.
Francophile German boss
In the current state, the farm offers GE may seem clear: the American mastodon offers to buy Alstom energy activities 12,350,000,000 euros "It will take a lot of effort and professionalism. Alstom's share of council to make a comparison of the two offers, "admits close to Siemens. But one thing is certain: "Between the two solutions, the fact you can do a Franco-German construction is more and Gerhard Cromme, which is the Apostle of the Franco-German relationship, it would definitely win "says Gérard Mestrallet, the boss of GDF Suez, who sits on the supervisory board of Siemens.
To the applicant, an alliance between Siemens and Alstom would indeed Europe's response to industrial challenges of the twenty-first century. "There are almost no energy resources in Europe, he said. If we release further not under European control product manufacturing and technology used in energy, we will be tomorrow as dependent in this area that we already are today in the face of U.S. Internet giants like Google, Amazon or Apple. This can not be in our interest, we, Europeans, have industrial champions who hold their own in global competition. "
This philosophy, he explained the end of April at the Elysee Palace the President of the Republic, accompanied by Joe Kaeser, chief executive of Siemens, and Christophe de Maistre, who heads the French subsidiary. A familiar place for Cromme, who was made a Commander of the Legion of Honor in 2002 by Jacques Chirac. Immediately after his election in May 2012, François Hollande invited several French and German bosses. Right in his boots, the Chairman of Siemens then recommended to do as Gerhard Schröder, the chancellor who led the reforms of Agenda 2010 for Germany out of the rut.
This amazing for a foreign boss influence, he must first his intimate understanding of France, where he studied (he was studying economics at the Sorbonne during May 1968). But also his friendship with Jean-Louis Beffa, he knew at Saint-Gobain at the beginning of his career. At Pont-à-Mousson, the children of both families circulated between their neighboring houses. At a time when the chair boss was coveted by both men Cromme withdrew to avoid a conflict. "Friendship stops when it leaves personal competing interests," he says. The German was then called Krupp, the French become boss of Saint-Gobain.
"In addition to making a successful career, this is the most Francophile German boss, much more than the average German employers," said him Jean-Louis Beffa, Honorary President of Saint-Gobain. Together, the two men embody the Franco-German couple, animating the Rencontres d'Evian, who meet annually economic and political gratin of both countries, and multiplying their advice to those in power - whatever the political color. They thus produce two reports, one for Jacques Chirac and Gerhard Schröder in 2003, and one for Francois Hollande and Angela Merkel last year. The latter offers just creating European industrial champions ...
Krupp, Gerhard Cromme will be distinguished by its radical methods: closing the largest blast furnace in Europe at Reinhausen, winning an arm of the trade union and political iron; forced recovery neighbor Dortmund, Hoesch and that of Düsseldorf, Thyssen, whose resistance will fizzle. This OPA hostile, unprecedented in the hushed world of Rhine capitalism, the fact that "he is considered one that completely disrupted the ways of being of German capitalism," says Gérard Mestrallet. The person does not hide his pride today. "If I had not restructured its time, the German steel industry no longer exists. "
End of chapter ThyssenKrupp
Eye Wink history, the Alstom file returns Cromme saddle while his star had faded across the Rhine. It has been criticized in the past to knock heads to save his. At ThyssenKrupp, he chaired the supervisory board of an iron hand, half of the Executive Board was fired amid stories of corruption and abysmal losses related to investments in the United States and Brazil. But a few months later, "Mr. Corporate Governance" in which the government has given a mission on corporate governance is, in turn, pushed out at ThyssenKrupp. Supreme humiliation Bertold Beitz, the patriarch of the Krupp foundation, while steelmaker shareholder at 25%, then relinquish entrust the reins of his empire Cromme, he considered far as his spiritual heir.
"I have not lived my departure from ThyssenKrupp as a personal tragedy," one that puts many believed destroyed after such disappointment. The passage in the Essen group has many reported him, but "what matters is not to look back, but always moving forward." The death of Bertold Beitz last July to ninety-nine years, will finally close the chapter ThyssenKrupp without resolving problems steelmaker.
Some will then take advantage of the supposed weakness of Cromme to try to oust him from his chair at Siemens. Leader of the rebellion: Josef Ackermann, the former boss of Deutsche Bank, who sits also on the board of conglomerate Munich and dream to take the presidency. Delivered through the media, and coupled with an open between the CEO, Peter Löscher and CFO Joe Kaeser rivalry, fighting threatens to destabilize the company. To the point that Chancellor Angela Merkel whistle the end of the party requesting a return "in the calm waters." The outcome of the battle is a masterstroke of Cromme, forcing Peter Löscher to the exit by accusing him of not having achieved its financial objectives, Joe Kaeser installed in its place with the blessing of the powerful IG Metall union, which gets back the head of the personnel director. Josef Ackermann will resign from the board a few weeks later.
With hindsight, Gerhard Cromme says without bitterness. "In my life, I have conducted hundreds of battles, I won almost all, he said. You can not win every time. "The question is how the battle will end Alstom ..

(Les Echos) Alstom, la dernière croisade de Gerhard Cromme

Alstom, la dernière croisade de Gerhard Cromme

Pilier de la relation franco-allemande, le président du conseil de surveillance de Siemens, Gerhard Cromme, confirme l'imminence d'une offre sur Alstom. Et assure avoir le soutien complet de Berlin.
Tiré à quatre épingles, le teint bronzé et le verbe courtois, Gerhard Cromme siège dans son fauteuil comme un monarque sur son trône. Il manie le verbe, en français comme en allemand, avec l'aisance d'un aristocrate et affiche une sérénité inébranlable. Et pourtant, ce parrain de la Deutschland AG, pilier de la relation franco-allemande, se prépare à livrer l'une de ses batailles les plus personnelles. A soixante et onze ans, ce pourrait être sa dernière, celle qui graverait son nom dans les livres d'histoire. Ce lundi, Siemens, dont il préside le conseil de surveillance, déposera une offre sur Alstom, vraisemblablement avec l'industriel japonais Mitsubishi Heavy Industries (MHI). Gerhard Cromme refuse d'en parler dans le détail mais ne laisse pas de doute sur sa détermination. Alors même que certains continuent de douter de la réelle motivation de Siemens dans cette affaire...
Le géant allemand ne démarre pas la course en tête. Après des mois de discussions discrètes avec Alstom, son rival General Electric a annoncé une offre fin avril. « Compte tenu de notre projet industriel, préparé de longue date, il était important pour nous de réagir, convient Gerhard Cromme. Nous nous sommes concertés avec les pouvoirs publics à Paris et nous avons décidé de nous lancer à notre tour. » Sans aucune garantie de succès. Car, pour Patrick Kron, le PDG d'Alstom, le géant américain est le seul capable de sauver son groupe, affecté par une chute de commandes et une hémorragie de cash. Siemens est au contraire son pire ennemi, qu'il accuse en coulisses de coups pendables contre son entreprise.
Il faut dire que les deux groupes ont un passé chargé. Lorsque Alstom était au bord de la faillite, en 2003, Siemens a tenté de lui mettre la main dessus. En vain. Le président du directoire de l'époque, Heinrich von Pierer, s'est alors heurté au volontarisme de Nicolas Sarkozy, ministre de l'Intérieur puis des Finances, qui lui a fait visiter ses appartements privés mais a défendu sans ambiguïté l'indépendance d'Alstom contre les appétits allemands. De chaque côté du Rhin, la blessure reste béante. Le groupe allemand, qui a revendu ses parts dans le fournisseur nucléaire Areva NP en 2011, se sent comme un amant éconduit en France. De son côté, Alstom le soupçonne d'avoir voulu torpiller son sauvetage.
Gerhard Cromme ne veut pas revenir sur cette époque, qui précède son arrivée chez Siemens. Mais il estime manifestement avoir aujourd'hui de meilleures cartes en main. « Notre projet repose sur une alliance, pas sur une simple acquisition contre du cash, dit-il. Nous avons le sentiment que les pouvoirs publics [à Paris, NDLR] y sont sensibles. » Berlin aussi suit le dossier d'un oeil favorable : « Naturellement, le gouvernement allemand nous soutient. On les informe, ils nous disent "allez-y !" » En cas de succès, Alstom récupérerait une large partie des activités ferroviaires de Siemens, qui resterait actionnaire minoritaire de ce « champion européen ». De son côté, le géant allemand mettrait la main sur les équipements énergétiques du groupe français, qu'il valorisait en mai entre 10,5 et 11 milliards d'euros. Et le japonais MHI serait amené à reprendre certaines activités.
Un patron allemand francophile
En l'état actuel, l'offre ferme de GE peut paraître plus claire : le mastodonte américain propose d'acheter les activités énergétiques d'Alstom pour 12,35 milliards d'euros. « Il faudra beaucoup d'efforts et de professionnalisme de la part du conseil d'Alstom pour faire une comparaison des deux offres », reconnaît un proche de Siemens. Mais une chose est sûre : « Entre les deux solutions, le fait qu'on puisse faire une construction franco-allemande est un plus et, pour Gerhard Cromme, qui est l'apôtre de la relation franco-allemande, ce serait incontestablement une victoire », estime Gérard Mestrallet, le patron de GDF Suez, qui siège au conseil de surveillance de Siemens.
Pour l'intéressé, une alliance entre Siemens et Alstom serait en effet la réponse européenne aux enjeux industriels du XXIe siècle. « Il n'y a déjà pratiquement pas de ressources énergétiques en Europe, dit-il. Si nous laissons échapper en outre sous contrôle non européen la fabrication des produits et de technologies utilisables dans l'énergie, nous serons demain autant dépendants dans ce domaine que nous le sommes déjà aujourd'hui dans l'Internet face aux géants américains comme Google, Amazon ou Apple. Cela ne peut donc être que dans notre intérêt, nous autres, Européens, d'avoir des champions industriels qui tiennent leur rang dans la compétition mondiale. »
Cette philosophie, il l'a expliquée fin avril à l'Elysée au président de la République, accompagné de Joe Kaeser, le président du directoire de Siemens, et de Christophe de Maistre, qui dirige la filiale française. Un lieu familier pour Gerhard Cromme, qui a été fait commandeur de la Légion d'honneur en 2002 par Jacques Chirac. Aussitôt après son élection, en mai 2012, François Hollande l'a invité avec plusieurs patrons français et allemands. Droit dans ses bottes, le président du conseil de Siemens lui recommande alors de faire comme Gerhard Schröder, le chancelier qui avait mené les réformes de l'Agenda 2010 pour sortir l'Allemagne de l'ornière.
Cette influence étonnante pour un patron étranger, il la doit d'abord à sa compréhension intime de la France, où il a étudié (il était étudiant en économie à la Sorbonne pendant mai 1968). Mais aussi à son amitié avec Jean-Louis Beffa, qu'il a connu chez Saint-Gobain au début de sa carrière. A Pont-à-Mousson, les enfants des deux familles circulaient entre leurs maisons voisines. A un moment où le fauteuil de patron était convoité par les deux hommes, Gerhard Cromme s'est retiré pour éviter un conflit. « L'amitié s'arrête si on laisse subsister des intérêts personnels concurrents », explique-t-il. L'Allemand est alors appelé chez Krupp, le Français deviendra patron de Saint-Gobain.
« En plus d'avoir fait une carrière exemplaire, c'est le patron allemand le plus francophile, beaucoup plus que la moyenne du patronat allemand », dit de lui Jean-Louis Beffa, président d'honneur de Saint-Gobain. Ensemble, les deux hommes incarnent le couple franco-allemand, animant les Rencontres d'Evian, qui réunissent chaque année le gratin économique et politique des deux pays, et multipliant leurs conseils au pouvoir en place - quelle que soit la couleur politique. Ils produisent ainsi deux rapports, l'un pour Jacques Chirac et Gerhard Schröder, en 2003, et l'autre pour François Hollande et Angela Merkel, l'année passée. Le dernier propose justement de créer des champions industriels européens…
Chez Krupp, Gerhard Cromme se sera distingué par ses méthodes radicales : fermeture du plus grand haut-fourneau d'Europe, à Reinhausen, remportant un bras de fer syndical et politique ; reprise forcée du voisin de Dortmund, Hoesch, puis de celui de Düsseldorf, Thyssen, dont la résistance fera long feu. Cette OPA hostile, inédite dans le monde feutré du capitalisme rhénan, fait qu' « il est considéré comme celui qui a bousculé complètement les façons d'être du capitalisme allemand », témoigne Gérard Mestrallet. L'intéressé ne cache pas aujourd'hui sa fierté. « Si je ne l'avais pas restructurée en son temps, l'industrie sidérurgique allemande n'existerait plus. »
Fin du chapitre ThyssenKrupp
Clin d'oeil de l'histoire, le dossier Alstom remet Gerhard Cromme en selle alors que son étoile avait pâli outre-Rhin. On lui a reproché par le passé de faire tomber des têtes pour sauver la sienne. Chez ThyssenKrupp, dont il présidait le conseil de surveillance d'une main de fer, la moitié du directoire a été congédiée sur fond d'histoires de corruption et de pertes abyssales liées à des investissements aux Etats-Unis et au Brésil. Mais, quelques mois plus tard, « monsieur Corporate Governance », à qui le gouvernement a confié une mission sur la gouvernance d'entreprise, est, à son tour, poussé vers la sortie chez ThyssenKrupp. Humiliation suprême : Bertold Beitz, le patriarche de la fondation Krupp, alors actionnaire du sidérurgiste à hauteur de 25 %, renoncera ensuite à confier les rênes de son empire à Gerhard Cromme, qu'il considérait jusque-là comme son héritier spirituel.
« Je n'ai pas vécu mon départ de chez ThyssenKrupp comme une tragédie personnelle », relativise celui que d'aucuns croyaient anéanti après pareille déconvenue. Le passage au sein du groupe d'Essen lui a beaucoup rapporté, mais « ce qui compte n'est pas de regarder le passé, mais de toujours aller de l'avant ». La mort de Bertold Beitz en juillet dernier, à quatre-vingt dix-neuf ans, va clore définitivement le chapitre ThyssenKrupp, sans pour autant régler les problèmes du sidérurgiste.
Certains vont alors profiter de la faiblesse supposée de Gerhard Cromme pour essayer de l'évincer de son fauteuil chez Siemens. Leader de la rébellion : Josef Ackermann, l'ancien patron de Deutsche Bank, qui siège lui aussi au conseil du conglomérat munichois et rêve d'en prendre la présidence. Livrée par médias interposés, et doublée d'une rivalité ouverte entre le président du directoire, Peter Löscher, et le directeur financier, Joe Kaeser, la lutte menace de déstabiliser l'entreprise. Au point que la chancelière Angela Merkel sifflera la fin de la partie en demandant un retour « dans les eaux calmes ». L'issue de la bataille est un coup de maître de Gerhard Cromme, qui force Peter Löscher vers la sortie en lui reprochant de ne pas avoir atteint ses objectifs financiers, installe Joe Kaeser à sa place avec la bénédiction du puissant syndicat IG Metall, lequel obtient en retour la tête du directeur du personnel. Josef Ackermann démissionnera du conseil quelques semaines plus tard.
Avec le recul, Gerhard Cromme se dit sans amertume. « Dans ma vie, j'ai mené des centaines de batailles, je les ai presque toutes gagnées, dit-il. Vous ne pouvez pas gagner à chaque fois. » Reste à savoir comment se terminera la bataille d'Alstom…

>>> What to look at today - Friday 13/06/2014

US Market Closed lower on disap. eco data & iraq developments, oil higher (+2.1% @$106.54) and weakness on consumers, weakness in Bioctech & chips pushed NAsdaq lower, Energy & utilities traded higher...Volume were still light @ 610mil shares...VIX @ 12.56 +8.28%...After Hours, Intel raised its outlook for Q2, INTC +5.5% after hours...BOJ policy statement raised its economic assessment on overseas economies to "recovering" from "started to recover", but also maintained its take on domestic economy at "recover moderately as a trend" for the 11th consecutive meeting...BOE Gov Carney made a big splash in the currency markets just after the US close, hinting that the first rate increase could come sooner than the markets are expecting. Carney also noted BOE will take proportionate measures on housing market at next week's meeting amid growing discomfort with inflation in the property sector. Cable spiked some 70pips to $1.69 on those comments and extended those gains toward $1.6960 later in Asian hours - a 1-month high...oil continue to trade higher overnight @ $107.60 on the highs and back below the $107 levels...Nikkei +0.96% HS +0.66% Shanghai +0.79%


Eur$ 1.3559 S&P Fut +0.17% EuroStoxx Fut : -0.10% FTSE Fut -0.32% Dax Fut -0.04% Ibex Fut +0.2% Mib -0.4%

Macro
- Carney Says BOE Could Raise Rates Sooner Than Markets Expect {NSN N72O736K50YZ <go>}
- United Kingdom Affirmed by Fitch; Outlook Remains Stable
- Lebanon Affirmed by Fitch Ratings at B; Outlook Negative
- BOJ Retains Plan for 60t-70t Yen Annual Rise in Monetary Base
- Equities Attract More Funds Than Bonds, Citigroup Says
- EU’s Barnier Seeks Further Study of Big-Bank Capital Standards

What to look at today :
- ALO FP : Montebourg Wants to Keep Alstom Intact, Le Parisien Says
- ALO FP : Alstom Deal Mixed for Mitsubishi Heavy, Good for Hitachi: BofAML
- ALU FP : Alcatel CEO Combes Says He’ll Stay ‘Agile’ on Alliances: Echos
- ACA FP : Credit Agricole’s LCL to Cut 1,000 Jobs, Les Echos Says
- EN FP : Bouygues Telecom CEO Roussat Confirms Some People Will Be Fired
- BC IM : Cucinelli EPS Growth Uninspiring vs Peers, Credit Suisse Says
- DAI GY : Daimler to Boost Asia Commercial Car Sales 80% by 2020: Nikkei
- DSY FP : Dassault Systemes Targets 2019 Non-IFRS EPS of EU7.00
- EOAN GY : EON, GDF Still Face Risk From Oil-Linked Gas Supplies, UBS Says
- FCC SM : Koplowitz Seeks Partner to Keep Control of FCC, Expansion Says
- GWI1 GY : Gerry Weber 2Q Ebit Beats Ests., Confirms FY Forecast
- MS IM : Mediaset moves toward selling Digital Plus stake (€350mil quoted)
- MERL LN : Blackstone, CVC Offering 100m Merlin Entertainments Shrs
- RHK GY : Rhoen-Klinikum Dividend of EU0.25/Share Adopted
- RWE GY : RWE Says 30%-40% Offshore Wind Cost Cuts Possible: Handelsblatt
- SHP LN : Shire CEO Waiting Until Price Is Right for Deals
- UCG IM : UniCredit Said to Seek Up to EU800m for 30% of FinecoBank

>>> Brokers Upgrades & Downgrades - Friday 13/06/2014

>>> Up
*ADIDAS AG RAISED TO BUY VS HOLD AT BANKHAUS LAMPE
*AMPLIFON RAISED TO OUTPERFORM VS UNDERPERFORM AT MEDIOBANCA
*DUFRY RAISED TO NEUTRAL VS UNDERWEIGHT AT JPMORGAN
*FLSMIDTH RAISED TO NEUTRAL VS SELL AT GOLDMAN
*GAS NATURAL RAISED TO BUY VS ADD AT INVESTEC
*GEBERIT RAISED TO BUY VS SELL AT GOLDMAN
*IBERDROLA RAISED TO BUY VS ADD AT INVESTEC
*LEGRAND REMOVED FROM CONVICTION BUY LIST AT GOLDMAN; STILL BUY
*NEXANS RAISED TO NEUTRAL VS SELL AT GOLDMAN
*PUMA SE RAISED TO BUY VS HOLD AT BANKHAUS LAMPE
*SSE RAISED TO BUY VS REDUCE AT INVESTEC
*SCHNEIDER ELECTRIC ADDED TO CONVICTION BUY LIST AT GOLDMAN
*VESUVIUS RAISED TO ADD VS HOLD AT NUMIS

>>> Down
*ASOS CUT TO UNDERWEIGHT VS EQUALWEIGHT AT MORGAN STANLEY
*CENTRICA CUT TO SELL VS REDUCE AT INVESTEC
*EDP-ENERGIAS DE PORTUGAL CUT TO ADD VS BUY AT INVESTEC
*IPSEN CUT TO NEUTRAL VS OVERWEIGHT AT JPMORGAN
*KONE REMOVED FROM CONVICTION SELL LIST AT GOLDMAN; STILL SELL
*LOOMIS CUT TO SELL VS BUY AT UBS
*RWE CUT TO SELL VS HOLD AT INVESTEC
*SCHNEIDER CUT TO EQUAL-WEIGHT VS OVERWEIGHT AT MORGAN STANLEY
*WARTSILA EXITS CONVICTION SELL LIST AT GOLDMAN; STILL SELL
*WEATHERFORD CUT TO HOLD VS BUY AT SOCIETE GENERALE

>>> PT Change
*MEDIASET PT CUT 3% TO EU3.4 AT BARCLAYS; KEPT AT UNDERWEIGHT
*UniCredit PT Raised 11% to EU5.8 at Exane; Kept at Underperform

>>> Initiation
*ADOCIA RATED NEW BUY AT KEPLER CHEUVREUX; PT EU25
*BALOISE RATED NEW HOLD AT KEPLER CHEUVREUX; PT CHF115
*CUCINELLI RATED NEW UNDERPERFORM AT CREDIT SUISSE; PT EU15
*SPECTRIS RATED NEW OVERWEIGHT AT MORGAN STANLEY; PT 2,680P

>>> Call
>> Stock
*KONE REMOVED FROM CONVICTION SELL LIST AT GOLDMAN; STILL SELL
*LEGRAND REMOVED FROM CONVICTION BUY LIST AT GOLDMAN; STILL BUY
*SCHNEIDER ELECTRIC ADDED TO CONVICTION BUY LIST AT GOLDMAN
*WARTSILA EXITS CONVICTION SELL LIST AT GOLDMAN; STILL SELL
>> Sector
* Oil Services Risk/Reward ‘Skewed Slightly’ to Downside: SocGen {NSN N72E6S6TTDTK <go>}
* U.K. Housebuilders Too Cheap, Offer Strong Upside, Numis Says {NSN N73F9K6JIJUX <go>}

>>> US After Hours

After Hours Summary: INTC +5.7%, FNSR -21.8%, OCLS -2.7%, CPST -1.9% following earnings/guidance

After Hours Gainers: Companies trading higher in after hours in reaction to earnings: INTC +5.7%

Companies trading higher in after hours in reaction to news: EXPR +20.3% (Sycamore Partners discloses 9.9% active stake in 13D filing; Sycamore expresses interest in submitting a proposal to acquire all remaining shares of Express), NKTR +10.8% (higher following resumption of trade after favorable FDA Advisory Committee vote), ARO +6.6% (higher following Sycamore Partners expressing interest in acquire Express), BOTA +3.6% (CEO & President Russel Plumb purchases approx 32K shares at an avg price of $2.99; EVP, Corporate Dev & Strategies Jopseph Patti purchases approx 14K shares- Form 4 Filings), ARRS +2.3% (to replace BCO in the S&P MidCap 400), CHSP +1.7% (to replace JOSB in the S&P SmallCap 600), XEC +1.5% (to replace IGT in the S&P 500), DLNG +1.4% (priced public offering of 4.8 mln common units at $22.79 per unit)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings: FNSR -21.8%, OCLS -2.7%, CPST -1.9%

Companies trading lower in after hours in reaction to news: AXAS -1.4% (launched 10 mln share common stock offering), APAM -1.2% (announced secondary offering of ~1.84 mln shares of common stock by selling shareholders), VVUS -0.8% (filed a lawsuit against Actavis (ACT) for infringement of Qsymia patents)

>>> Asian Update

Asian Market Update: BOJ on hold again as expected, maintaining assessment for 11th time; Sterling spikes on bullish BOE Gov comments

***Economic Data*** - (NZ) NEW ZEALAND MAY BUSINESS MANUFACTURING PMI: 52.7 (lowest reading since Dec 2012) V 54.4 PRIOR - (NZ) NEW ZEALAND MAY FOOD PRICES M/M: 0.6% V 0.6% PRIOR - (SG) SINGAPORE Q1 FINAL UNEMPLOYMENT RATE: 2.0% V 2.1%E - (PE) PERU CENTRAL BANK LEAVES REFERENCE RATE UNCHANGED AT 4.00%, AS EXPECTED - (CL) CHILE CENTRAL BANK LEAVES OVERNIGHT RATE TARGET UNCHANGED AT 4.00%, AS EXPECTED

Market Snapshot (as of 03:30 GMT): - Nikkei225 -0.6%, S&P/ASX -0.8%, Kospi -1.2%, Shanghai Composite +0.4%, Hang Seng +0.1%, Sept S&P500 -0.1% at 1,921, Aug gold flat at $1,273, Jul crude oil 0.7% at $107.32/brl

***Highlights/Observations/Insights*** - As speculated earlier this week in local press, BOJ policy statement raised its economic assessment on overseas economies to "recovering" from "started to recover", but also maintained its take on domestic economy at "recover moderately as a trend" for the 11th consecutive meeting. Outside of that minor change, BOJ policy statement was identical to that of May, targeting annual increase in monetary base at annual pace of ¥60-70T and projecting y/y increase in CPI ex impact of consumption tax hike around 1.25% for some time. BOJ also reiterated it expects domestic economy to continue moderate recovery despite the short term impact of "decline in demand following front-loaded increase prior to consumption tax hike." USD/JPY pair was unmoved even marginally on the release just below ¥101.80.

- BOE Gov Carney made a big splash in the currency markets just after the US close, hinting that the first rate increase could come sooner than the markets are expecting. Carney also noted BOE will take proportionate measures on housing market at next week's meeting amid growing discomfort with inflation in the property sector. Cable spiked some 70pips to $1.69 on those comments and extended those gains toward $1.6960 later in Asian hours - a 1-month high.

- Also just after the US close, Intel raised its revenue outlook for Q2 and FY14 as a result of "higher PC unit volume" as well as gross margin projections amid "improvements in unit cost and volume." Shares of INTC were up over 5.5% at the close of afterhours extended session, above $29.50.

- Electronic trade in the energy markets saw July WTI contract rise as high as $107.60 in the early going before retreating below $107. Crude oil traders remain on edge about Iraq turmoil even though daily production is down less than 10%, as ISIS Jihadis are threatening to continue their sweeping advance toward the capital of Baghdad. Pres Obama said US was exploring all options to save Iraq's security forces from collapse, including the possibility of air strikes.

***Speakers/Political/In the Papers*** - (KR) South Korea Fin Min Hyun: Economic sentiment has been dampened - financial press - (KR) South Korea Pres Park to nominate Choi Kyung-Hwan as the next finance minister and dep PM - financial press - (JP) GPIF investment committee head Yonezawa: Sees cut in JGB allocation to 30-50% - Mainichi News interview

***Fixed Income/Commodities/Currencies*** - (AU) Australia MoF (AOFM) sells A$700M in 3.25% bonds due 2018; Avg yield: 3.1114%; Bid-to-cover: 4.26x - (US) Weekly Fed Balance Sheet Total Assets Week ending June 11th: $4.34T v $4.33T prior; Reserve Bank Credit: $4.30T v $4.29T prior; M1: +$59.1B (biggest increase in 3 months) v -$1.7B prior; M2: +$10.9B (6th consecutive rise) v +$36.1B prior; M1 y/y change: 10.4% (6-week low) v 10.6% w/w; M2 y/y change: 6.3% (5-month high) v 6.2% w/w

***Equities*** US markets: - EXPR: Sycamore Partners discloses 9.9% stake; sent letter to board about submitting proposal to acquire remaining shares; +22.1% afterhours - INTC: Raises Q2 and FY14 Rev and gross margin expectations; Sees Q2 R$13.4-14.0B v $13Be (prior $12.5-13.5B); +5.6% afterhours - XEC: To be added to S&P500 replacing IGT which moves down to the S&P400 index; LYV and MASI promoted to S&P400 index; +0.9% afterhours - CPST: Reports Q4 -$0.01 v -$0.01e, R$36.4M v $38.5Me; -3.9% afterhours - FNSR: Reports Q4 $0.36 v $0.40e, R$306M v $314Me; -22.5% afterhours

- TWC: Univision said to have had prelim discussions with CBS, Time Warner - financial press

Notable movers by sector: - Financials: Industrial Bank 601166.CN +0.7% (strategic alliance with Baidu) - Materials: Perseus Mining PRU.AU +7.3% (production update); BHP Billiton BHP -1.3% (analyst action); Rio Tinto RIO.AU -2.5% (analyst action) - Industrials: Wanxiang Qianchao 000559.CN +6.5%, BYD Co 002594.CN +2.8%, Bejing Dynamic Power 600405.CN +1.9%, Shenzhen Auto Electric Power 002227.CN +1.5% (Tesla confirms to open patent) - Technology: Catcher Technology 2474.TW +0.8% (receives order for iPhone 6 component); Advantest Corp 6857.JP +3.2% (raises guidance); PCI-Suntek Technology 600728.CN +0.7% (announces strategic alliance)

Fwd: Carney Says BOE Could Raise Rates Sooner Than Markets Expect (1)

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

Carney Says BOE Could Raise Rates Sooner Than Markets Expect (1) 2014-06-12 20:13:51.730 GMT

(Updates with pound starting in second paragraph.)

By Scott Hamilton and Jennifer Ryan June 12 (Bloomberg) -- Mark Carney said the Bank of England could raise interest rates from a record low earlier than investors expect as he expressed concern that mounting debt related to the housing market could undermine stability. “There’s already great speculation about the exact timing of the first rate hike and this decision is becoming more balanced,” the BOE governor said in a speech at the Mansion House in London today. “It could happen sooner than markets currently expect.” The pound strengthened after the remarks. While Britain’s strengthening economy is raising the prospect of rate increases, Carney says higher borrowing costs might stretch over-leveraged homeowners and derail the recovery. To head off that risk, the governor said today he’s prepared to act as Chancellor of the Exchequer George Osborne gave the BOE greater powers to curb mortgage lending. The BOE this month kept its key interest rate at a record- low 0.5 percent, where it’s been for more than five years. Investors are betting the rate will rise 25 basis points by next April, according to forward contracts based on the sterling overnight interbank average. The pound rose against the dollar and was trading at $1.6891 as of 9:12 p.m. London time, up 0.6 percent on the day. In his address to the gathering in the City of London financial district, Carney said there are still risks to the recovery, including the strength of the pound, and any policy tightening will be “gradual and limited.”

New Powers

With property demand increasing, U.K. house prices have risen about 10 percent in the past year and loan-to-income ratios are at a record. “This is concerning,” Carney said, who will lead a meeting of the FPC on June 17. “Over-extended borrowers could threaten the resilience of the core of the financial system.” Speaking alongside Carney, Osborne said the BOE “should not hesitate” to act if needed. The central bank’s new powers will allow it to cap the size of mortgages as a proportion of income or property value. “The FPC is considering using macroprudential tools to insure against potential vulnerabilities associated with the housing market,” Carney said. “The value of acting early is reinforced by uncertainty around the precise impact of macroprudential tools.” While mortgage approvals have fallen in recent months, that may be a temporary response to tighter lending rules introduced in April. Carney expressed concern that the cooling may also reflect potential sellers holding back properties in anticipation of higher future prices. That’s “an early sign of extrapolative price expectations,” he said.

‘Wrong Response’

Carney said using targeted macroprudential tools to cool housing may mean policy makers can avoid trying to steer the market with interest rates. He said there is scope for more spare capacity to be used up before U.K. policy is tightened. “Monetary policy is the last line of defense against financial instability,” he said. “Raising interest rates today would be the wrong response.” Carney addressed recent benchmark-rigging scandals, saying measures are needed to ensure “fairness” in markets, and welcomed Osborne’s planned review of conduct. “Confidence in some core financial markets has been buffeted by revelations of manipulation,” he said. “There have been too many such episodes to think each is an aberration.” Carney also announced that the BOE will widen access to its liquidity facilities to include the U.K.’s largest regulated broker-dealers and some central counterparties. He added that the central bank will look into whether it should extend its capacity to lend in currencies other than sterling.

For Related News and Information: Most read Bank of England stories: MNI BOE <GO> U.K. economic statistics: ECST 23 <GO> Top economic stories: TECO <GO>

--With assistance from Svenja O’Donnell in London.

To contact the reporters on this story: Scott Hamilton in London at +44-20-7673-2976 or shamilton8@bloomberg.net; Jennifer Ryan in London at +44-20-7073-3492 or jryan13@bloomberg.net To contact the editors responsible for this story: Craig Stirling at +44-20-7673-2841 or cstirling1@bloomberg.net Fergal O’Brien

(BFW) Shire CEO Waiting Until Price Is Right for Deals


Shire CEO Waiting Until Price Is Right for Deals
2014-06-12 17:25:35.541 GMT


By Catherine Larkin
     June 12 (Bloomberg) -- Shire has patience, will use cash
appropriately, CEO Flemming Ornskov says at Goldman Sachs conf.
  * Declines to comment on any specific deals
  * NOTE: May 30, NPS Pharma Said Not to Have Been Contacted by
    Shire on Offer NSN N6ELPL6TTDS6<GO>


Link to Company News:SHP LN <Equity> CN <GO>
Link to Company News:NPSP US <Equity> CN <GO>

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

To contact the editor responsible for this story:
Catherine Larkin at +1-312-443-5968 or
clarkin4@bloomberg.net