(Pimco) W.H.Gross : Time (and Money) in a Cellphone (june Outlook)

Our modern age is becoming more virtual than physical, which I find increasingly depressing if only because I’ve failed to keep pace. I don’t even own a cellphone. Still, it doesn’t take a Boomer to observe that the reality outside as opposed to inside a computer or a cellphone should be the preferred experience. Scientists claim we are all just bits of information with billions of 1’s and 0’s, glued together to form a beating heart. Even so, I’m sticking with live chirping as opposed to Angry Birds for now. Virtual reality seems just a tadUNreal to me.

Aside from a computer or cellphone’s obvious utility though, I think many of those in younger generations that use them are hoping to capture time in a figurative bottle, using a Samsung or Apple handheld as opposed to the proverbial wine-shaped container of another era as they take pictures. YouTube and Facebook apps, for example, record and memorialize events, creating a virtual history that can be preserved, with the most treasured experiences being measured in the millions of future hits as opposed to the euphoria or sometimes depressing succession of individual moments in the here and now. Watching a sporting event or concert, I can’t help but be struck by the thousands of cellphones attempting to capture, in near unison, a moment in time that can be texted to hungry audiences. Recipients seem eager for a seemingly unlimited number of experiences in their or someone’s immediate past, as opposed to the present moment. My view is that there is time stored in that cellphone but its vintage may be somewhat sour, as compared to the sweetness of the here and now. The most unfortunate aspect of this new virtual reality stored deep within “inner space” is that more and more people, especially young people, are evolving to believe that these experiences are “natural.” A Pew survey in 2011 found that the average American teenager sends or receives between 100 and 200 text messages a day. At some point they may get so caught up in their frantic “busyness” that they fail to capture their present.

Still, my plea for “living in the moment” is a most difficult one, is it not? The present comes and then it goes, and staying in the moment is sort of like chasing fireflies on a hot summer evening in the Midwest. The light goes on and off, and then it’s on to the next firefly. It’s hard to capture a firefly unless your focus is laser-like, and the cellphone with its camera may help us to do that in a virtual, but not a real way. All of us, though, may need a bottle of sorts to store time’s mercurial moments. As John Denver once sang, “What a friend we have in time, gives us children, makes us wine.” I like that. But it’s the wine drinking and the children makingthat should be the highlights. The cellphones? Well in my world they exist just for your calling – not mine. They may be virtual, but they’re not reality.

PIMCO’s reality in recent months has been captured by the phrase “The New Neutral.” Having introduced the “New Normal” in 2009 with much success but unfortunately no trademark protection, we now venture forward in time, hoping to store this new metaphor in a proverbial bottle, cellphone, or better yet – portfolio – to much fanfare and ultimately alpha generating success. But a firefly it is not. To PIMCO “The New Neutral” has a more permanent status, a secular lifespan, that suggests things are just gonna be this way for at least the next 3–5 years, and likely much more.
What is “The New Neutral” and why is it important to the pricing of all financial assets? Well “The New Neutral” refers to the Federal Reserve’s (and other central banks’) policy rate, the fed funds rate, which serves as a foundation for the cost of credit and the ultimate pricing of bonds, stocks and a host of alternative assets. If the FF rate changes, other asset prices move as well, not necessarily in tandem but sooner or later. The Fed’s policy rate is, by its character, the lowest yielding and highest quality investment that can be found over most investment cycles, but it guides all other assets and ultimately sets their prices.

Back in the 1930s a famous economist by the name of Irving Fisher theorized that while the short term FF rate could change, it only moved with inflation, and therefore ultimately the “real” FF rate was constant. Time and historical experience has proved otherwise, suggesting that GDP growth, productivity and now a number of other factors might change the rate aside from inflationary influences; in other words the “real” rate was subject to ups and downs much like everything else. It was as “virtually” impossible to capture at any point in time as that Midwestern firefly. Take a look at Chart 1, displaying perhaps the most frequently cited research on the real FF rate, a study done by Laubach/Williams cited in my last month’sInvestment Outlook. It shows not only significant cyclical changes in the real rate but also a significant long term “trend” change that has witnessed a decline in the real yield from over 4% in early 1970 to below 2% (and heading lower) today. Their most recent calculation of the current “cyclical” rate is actually -0.25%.

>>> US Early pre-market gappers

Early pre-market gappers
Gapping up: CIEN +12.4%, HALO +11.4%, VRNT +7.1%, AXAS +6.9%, XNY +4.2%, MIXT +4.1%, CLVS +3.3%, FIVE +3.1%, BV +2.9%, RLD +2.6%, STO +1.8%, NQ +1.5%, TWTR +1.5%, ORAN +1.2%, TMUS +1.2%, SSLT +1.1%, ALLT +1%

Gapping down: NVAX -11.4%, RCAP -8.6%, PVH -6.1%, SPEX -3.8%, SNN -3.5%, TSL -3.1%, TRLA -1.7%, DB -1.2%, YHOO -1.1%, ILMN -0.9%

FT : Rémy Cointreau predicts growth revival next year

Rémy Cointreau, the French spirits group, said it would return to growth during the next business year even as plummeting sales in China produced a brutal drop in operating profit last year.
The Paris-based maker of ultra-premium cognacs such as Louis XIII said that operating profit fell 38.8 per cent in the year to the end of March compared with the previous 12 months.

The group also said that it would cut its dividend 9.3 per cent from last year to €1.27 per share.
The fall in operating profit, which was expected after the group published weak sales figures in April, was nonetheless at the bottom of the range of its own forecasts. Rémy shares on the Paris stock market fell 3 per cent in early-morning trading before climbing 1.2 per cent to €68.42 by mid morning.
Like its competitors, Rémy Cointreau has suffered a marked change of fortune in China as the government continues to crack down on so-called “conspicuous spending” on luxury products by its officials.
But the policy U-turn has affected Rémy more than most both because of the group’s greater exposure to China as well as to the fact that its sales have been more concentrated in the premium segment of the Chinese spirits market that was in such demand until 2012.
Until the crackdown, the ultra-premium cognac category, which starts at $500 a bottle, accounted for 13 per cent of the Chinese market compared with less than 1 per cent for the UK or the US, according to Bernstein Research.
Cognac makes up about 80 per cent of Rémy’s total operating profit, with China accounting for half of that. Operating profit at Rémy Martin, the cognac division, was €125.4m to the end of March, a fall of 43.9 per cent compared with the 2012-13 business year.
But on Thursday, Luca Marotta, Rémy’s chief financial officer, expressed optimism about a turnround. “2014-15 will be a growth year [on an organic basis],” he told analysts on a conference call.
The company said that while spirits sales motivated by the deeply rooted culture of gift-giving in China had suffered under the policy change, consumption in bars and restaurants had held up and consumption at home had increased.
“I am optimistic about the medium term,” Mr Marotta said about the Chinese market.
The group said that operating profit fell to €150.2m over the 12 months to the end of March compared with €245.4m during the preceding business year. The figure was 14.6 per cent of sales compared with 20.6 per cent previously.
It also said that net debt at the end of the financial year was €413.5m, an increase of €148m compared with 12 months before.

FT Lex : Asos: grin and wear it

Asos: grin and wear it
What if the winner does not take all?
An unpleasant question for internet investors: What if the winner does not take all? Paying up for leaders – in search engines, chat apps, or whatever – makes sense only if leadership confers lasting advantages. On Thursday, a leading web fashion retailer, Asos, gave a doozy of a profit warning. It pointed to “zonal” pricing problems. Asos is not, it seems, set up to charge different prices in different regions. This sounds fixable. The bigger problem is competition. Operating margins were expected to be above 6 per cent this year. They will come in a third lower than that. The shares fell 30 per cent.

Over five years, Asos sales have expanded at an average rate of more than 50 per cent, to £1bn annually. The shares, even after falling by a quarter since late February, traded at 78 times earnings before the warning, reflecting confidence that the company would not have to make hard choices between margins and growth. But management’s contention that a bit of discounting will not harm the business model does not ring true. Pricing tends to be slippery on the way down and sticky on the way up. Ask any UK food retailer.
The company’s valuation has not mattered to acolyte investors – Asonistas? – who believe it will be as dominant in its fashion niche as Amazon is elsewhere. But fashion is not electronics or toys. It has its own dynamics and how those will play out on the internet remains uncertain.
The share price drop appears to reflect a cut in operating earnings expectations from roughly £64m to £45m; the impact on the multiple could be negligible. But talk of “increased promotional activity” suggests more than a step down in margins. Growth is becoming harder to find. The multiple will compress. This happens to all growth stocks, and the internet cannot stop it.

(BN) Prada First-Quarter Profit Trails Estimates on Currencies, Asia

Prada First-Quarter Profit Trails Estimates on Currencies, Asia
2014-06-05 11:14:22.341 GMT


By Andrew Roberts
     June 5 (Bloomberg) -- Prada SpA, the Italian maker of
$2,950 leather handbags, reported first-quarter profit that
missed analysts’ estimates, weighed down by the strength of the
euro and falling sales in Europe and Asia.
     Net income in the three months through April fell 24
percent to 105.3 million euros ($143 million), Milan-based Prada
said today in a statement. Analysts predicted 129.7 million
euros, according to the average of seven estimates.
     The euro’s strength against other currencies led revenue to
fall 0.6 percent to 777.7 million euros, Prada said. That
trailed the 812.1 million-euro average of analysts’ estimates.
Sales in Asia Pacific fell 2.6 percent, which Prada attributed
to a slowdown in South Korea, Hong Kong and Singapore. Revenue
in Europe declined 4.1 percent.
     “Management is closely monitoring the development of the
markets, as far as geographies and products are concerned, in
order to update, if appropriate, the guidance on the 2014
results,” Prada said in the statement.
     The company in April said same-store sales will rise at a
low single-digit pace this year, in line with trade group
Altagamma’s 3 percent to 5 percent estimate for annual luxury-
market growth.
     The stock fell 1 percent to HK$57.40 in Hong Kong today,
extending this year’s decline to almost 17 percent. The earnings
were released after the close of trading.

For Related News and Information:
Prada Tumbles After Forecasting Slowing Luxury Sales Growth
NSN N3G5F46TTDST <GO>
Prada Falls Most in 17 Months as Revenue Growth Slows in Asia
NSN N0X2HQ6S972F <GO>
Prada Financial Analysis: 1913 HK <Equity> FA <GO>
Top Consumer Stories: RTOP <GO>
Top Stories: TOP <GO>

To contact the reporter on this story:
Andrew Roberts in Paris at +33-1-5365-5015 or
aroberts36@bloomberg.net
To contact the editors responsible for this story:
Celeste Perri at +31-20-589-8505 or
cperri@bloomberg.net
Paul Jarvis

>>> Navistar misses by $2.38, beats on revs --> Watch Volvo, Svania, F.I.

Navistar misses by $2.38, beats on revs
Reports Q2 (Apr) loss of $3.65 per share, $2.38 worse than the Capital IQ Consensus Estimate of ($1.27); revenues rose 8.7% year/year to $2.75 bln vs the $2.66 bln consensus.

  • Second quarter highlights include sequential and year-over-year improvements both in orders and retail market share for medium- and heavy-duty trucks. The company's medium-duty Class 6/7 retail market share was 26.4 percent for the quarter, up from 17.3 percent in the first quarter of 2014 and 25.8 percent in the second quarter of 2013.
  • Combined Class 8 retail market share was 14.9 percent for the quarter, up from 13.9 percent in the first quarter of 2014 and 14.5 percent in the second quarter of 2013. Navistar's combined Class 6-8 truck and bus retail market share for the second quarter was 18.5 percent, and the company ended the period with an order backlog 82 percent higher than this time one year ago.
  • Second quarter 2014 EBITDA was a loss of $119 million, which included the $151 million intangible asset impairment charge, $42 million in pre-existing warranty adjustments and $8 million in restructuring charges. As a result, adjusted EBITDA was $82 million, which exceeded the company's second quarter guidance of between $25 million to $75 million, excluding pre-existing warranty and one-time items. Navistar finished the second quarter 2014 with $1.06 billion in manufacturing cash, cash equivalents and marketable securities, in line with its cash guidance range of $1.0 billion to $1.1 billion.

Guidance: The company provided the following guidance updates:
  • Raised Class 8 industry forecast for FY2014 (U.S./Canada) to 225,000-235,000.
  • Increased FY2014 structural cost savings goal to $250 million, versus its previous goal of $175 million. Projects Q3 EBITDA between $75 million - $125 million, excluding pre-existing warranty and one-time items. Projects between $950 million and $1.05 billion in manufacturing cash, cash equivalents and marketable securities at the end of Q3.
  • "We also expect our financial performance will continue to build quarter-over-quarter, with third quarter results better than second quarter, and our fourth quarter performance better than the third quarter. We are progressing and building momentum."

(BFW) Dijsselbloem Sees Too Much Pressure on ECB to Solve Problems

 BN 06/05 10:17 *FINANCIAL SERVICES SHOULD BE INCLUDED IN TTIP: DIJSSELBLOEM
BFW 06/05 10:11 *DIJSSELBLOEM SEES TOO MUCH PRESSURE ON ECB TO SOLVE PROBLEMS
 BN 06/05 10:11 *DIJSSELBLOEM SEES TOO MUCH PRESSURE ON ECB TO SOLVE PROBLEMS
 BN 06/05 10:09 *DIJSSELBLOEM SAYS SHADOW BANKING TO BE AN ISSUE IN COMING YEARS
BFW 06/05 10:08 *DIJSSELBLOEM SAYS BANKING UNION IMPLEMENTATION MAY BE TOUGH
 BN 06/05 10:08 *DIJSSELBLOEM SAYS BANKING UNION IMPLEMENTATION MAY BE TOUGH
BFW 06/05 10:07 *EUROPE NEEDS TO WORK ON DEPOSIT-GUARANTEE SYSTEM: DIJSSELBLOEM
 BN 06/05 10:07 *EUROPE NEEDS TO WORK ON DEPOSIT-GUARANTEE SYSTEM: DIJSSELBLOEM
Dijsselbloem Sees Too Much Pressure on ECB to Solve Problems
2014-06-05 10:47:18.705 GMT


By Corina Ruhe
     June 5 (Bloomberg) -- Dutch Finance Minister Jeroen
Dijsselbloem says he sees excessive expectations of the European
Central Bank before today’s rate announcement.
  * “If you read some of the comments in today’s newspapers, or
    the last couple of days, yes the expectations have risen
    very high, and I don’t think that is a healthy thing to
    expect so much from central bankers, and to expect so much
    from monetary policy,” Dijsselbloem says at an event in
    London
  * “Some of the measures they can take will help, but let’s
    not get the expectations up too high”: Dijsselbloem
  * Dijsselbloem: “And certainly it cannot take away the
    responsiblity that we politicians at national and European
    level have to do what we should do: deal with the right
    policies, deal with the reforms that are necessary. A lot of
    work still has to be done, and I’m always a little nervous
    when politicians start looking at the central bankers too
    much thinking, ‘you can solve my problems.’”
  * Asked if the ECB is under too much pressure to solve
    problems that are structural in nature, Dijsselbloem says:
    “Exactly. I think that the ECB has played an important
    role, and will continue to do so, and Mario Draghi is doing
    a fantastic job. But it cannot take away the responsibility
    that we the politicians, the ministers of finance in Europe
    have to get our economies back on the road.”

Link to Company News:{2539Z GR <Equity> CN <GO>}

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

To contact the reporter on this story:
Corina Ruhe in London at +31-20-589-8526 or
cruhe@bloomberg.net

To contact the editor responsible for this story:
Patrick Henry at +32-2-237-4328 or
phenry8@bloomberg.net

>>> Buy BNP - All bad news have already hit the tapes

It looks like that there is a "union" around BNP and taht everybody stating that the fine is excessive...Obama in Europe will meet Hollande tonight, for sure they will talk of that and Obama will say soemthing even if justice is independant in the US...I strongly believe that downside look limtied here...and any news that will hit the tape in the next few days will give some relief to the stock - 53.15 is my short term target to play a quick rebound.

Laurent

NY Post : Citigroup doesn’t have to admit wrongdoing

Guilty, not guilty — who cares?
Citigroup doesn’t have to worry about being forced to admit wrongdoing in a three-year-old regulatory settlement after a federal appeals court on Wednesday ruled it didn’t matter.
The Securities and Exchange Commission has wide latitude to settle cases and allow defendants to sidestep the issue of guilt, the appeals court ruled.
“Trials are primarily about the truth,” the court ruled in a much-anticipated 28-page ruling. “Consent decrees are primarily about pragmatism.”
The appeals court ruling overturns a decision by trial court judge Jed Rakoff — who refused to rubber-stamp Citi’s $285 million settlement with the SEC because, without addressing guilt, he couldn’t know if the penalty fit the crime.
The appeal court ordered the case back to Rakoff — who is now expected to approve the settlement.
The case, brought by former SEC boss Mary Schapiro, involved accusations that Citi misled investors into buying securities that contributed to the 2008 housing crisis.
“We are pleased with today’s ruling by the Second Circuit Court of Appeals reaffirming the significant deference accorded to the SEC in determining whether to settle with parties and on what terms,” Andrew Cereseny, director of the SEC’s enforcement decision, said in a statement.
“While the SEC has and will continue to seek admissions in appropriate cases, settlements without admissions also enable regulatory agencies to serve the public interest by returning money to harmed investors more quickly, without the uncertainty and delay from litigation and without the need to expend additional agency resources.”
Rakoff declined to comment through a spokesman.
“The decision is clearly a win for the SEC,” said Thomas Gorman, a former lawyer at the SEC’s enforcement division who now practices at Dorsey Whitney.
“The Circuit Court said, look, the SEC can make the choice of how it wants to bring the case,” he added.
While the Rakoff decision was overturned, new SEC boss Mary Jo White, vowing a stronger stance on such cases, has won guilty pleas from defendants.