WSJ : You don’t need a fancy degree in petroleum engineering to figure out what

Oil Exporters Nearly Back to Square One on Deal
OPEC, Russia could feel pressure to cut output further now that most of the post-November gains have faded

You don’t need a fancy degree in petroleum engineering to figure out what has been weighing on oil prices—grade school math will do the trick.
U.S. benchmark prices rallied from around $47 a barrel before the late November meeting of oil exporters to more than $54 a month ago on two perceived successes: First, Saudi Arabia and Iran, rivals in the Organization of the Petroleum Exporting Countries, managed to make a compromise while others, notably Russia, pitched in. Second, compliance within OPEC is surprisingly good.
But if one subtracts the number of barrels taken off the market since the November meeting and adds back growth in output from the U.S. and elsewhere, the market is hardly being squeezed. Prices have nearly fallen back to their pre-agreement level.

Russia’s oil production is down by a little over 150,000 barrels a day since November, about half of the amount it agreed to cut by June. But it set the starting bar as high as possible, at a post-Soviet record for output. A year ago Russian output was around 150,000 barrels a day lower than today, or right around the level it has pledged to reach as part of the agreement.
Meanwhile, U.S. oil output is rising rapidly, led by shale producers that responded to last year’s price recovery. Production most recently was about 440,000 barrels a day higher than in mid-November. Meanwhile, Nigeria and Libya, OPEC members exempted from cuts, also have seen output rebound.
By the time the agreement’s renewal is debated at OPEC’s annual meeting in May, the celebratory mood may have shifted to a debate over more and deeper cuts.

>>> Pre-Market Indications

CSFB
BT -1-2% Negative Ofcom update, to pay GBP300m to comms providers
Exova R Has received a cash offer, says in talks
Faurecia M/P Agrees to buy 20% of Parrot Automotive, EV of EU100m
Generali +1 Market likely to speculate possible M&A post Zurich story
Miners -2-3% Copper -1.05%, Brent +0.20%, Iron Ore -3.45%, China UNCH
Oils UNCH US rig count +20 from 789 to 809. Brent +20bps to $50.7
South32 UNCH Announces $500m on market share buyback
Stroeer UNCH FY results in line with prelims
Teliaconera M/P May issue a hybrid bond of EU1b-2b
Thyssen M/P Steel Pioneer Thyssenkrupp Is Getting Out of Steel (DGM)
Zodiac +1% CS UPGRADE to OUTPERFORM (revised deal can be reached)
Zurich -2% Said to seek backing for up to Eur13b capital raise

Shore
BT - Openreach fined £42m by Ofcom,sets aside £300m compensation provision..-5%
EXOVA - confirms has received proposals regarding possible cash offers....+tive
YOUGOV - rev +24% £51.4m,op.profit +33% £5.7m,EPS +21%,H2 starts positively.+1%
WOOD GROUP - awarded $50m North Sea contract with Premier Oil.............+0.5%
INSPIRED ENERGY - rev +42% £21.5m,PBT +38%,procurement order book +14%.....UNCH
K3 BUSINESS TECH - H1 trading in line,profits impacted by sales slippage...UNCH
FIRSTGROUP - Welcome DFT intention to award Rail franchise to JV...........UNCH


MF
*ZURICH INS-To seek backing for up to €13b Capital raise - Sole.......-1%
*DAIMLER-Acquires 15% in Lei Shing Hong(Merc Dealer) - Press...........-0.25%
*AURUBIS-Doesn't rule out large takeovers says CEO - Sonntag...........-0.5%
*DBK-To sell ite Renewable Assets in Spain,no fins - Expansion.........-1%
*FAURECIA-May buy all of Parrot Auto by 2022,taking 20% now............-0.25%
*DANONE-Seeks to fully-own Brookside Dairy Tanzania(owns 40%)..........U/C
*BT-Openreach Unit fined £42m by the UK Regulator-high speed cable.....-2%
*RICHEMONT-Sees growth in all segments in China,HK/Macau slow..........-0.5%
*ACCOR-AccorHotels in talks to buy 40% of Potel & Chabot,sales €100m...-0.25%
*STADA-Platow-Brief says PE will bid more than €60 this week..........+2%
*LVMH-Tag Heuer CEO sees Swiss watch inds improving in 2017............+0.5%

(CS) Zodiac Aerospace : Upgrade to Outperform : Attractive Risk/ Reward

* Deal success not priced in: We think the current price for Zodiac is factoring in a 50/50 chance of a deal with Safran going through, while we continue to believe it is likely that a revised deal can be reached. We upgrade Zodiac to Outperform and change our target price to EUR27.5 per share to align it with our scenario analysis of a potential revised offer.

* Earnings revisions: We have tried to assess the three factors that have triggered Zodiac's 10th profit warning (on March 14). Part of it is probably non-recurring and nearly solved (A350 lavatories). The Seats UK issue is likely to be more persistent. The lack of rebound in the bizjet / helicopter markets requires a rebasing of expectations. As a result, we have cut organic growth in Aircraft Interiors and reduced the operating margin to account for the latest disappointment. We cut 2017/18E operating income by -26% (in line with new guidance) and reduce 2019/20E by -6% (still c.20% above consensus), with a 13.7% operating margin.

* A revised offer appears the most probable outcome: We believe that both companies still want a deal to happen. We think that 1/ Zodiac's controlling shareholders will lower their expectations enough to reflect the
unexpected deterioration of the business and satisfy Safran and 2/ that Safran will seek a price cut and new conditions which will meet Zodiac's shareholders expectations while securing enough guarantees to reassure some of its own shareholders.

* Valuation: Based on the issues discovered on March 14th, our scenario analysis indicates a potential revised offer price of EUR27.5 per share (vs EUR29.47 for the current offer). Our grey sky scenario would take the valuation to EUR18. At the current level, the market is effectively pricing in a 50/50 chance of a deal being found. We find this an attractive risk / reward and we upgrade the stock to Outperform (vs Neutral). We continue to rate Safran Neutral, as its shares are roughly in line with our TP of EUR70.

>>> What to look at today - 26th of March 2017

Risk-off sentiment is heating up as S&P500 emini futures fell nearly 20 handles, USD/JPY came in by over 100 pips, and Gold rallied over $15 from Friday close. Political risk is the primary culprit as investors worry that GOP failure to get the healthcare bill across the finish line will dampen other pro-business reform agenda items for the Trump White House, namely tax reform and fiscal spending measures. Pundits suggest that the rift between POTUS and GOP congressional leadership may still widen, considering that Trump promised to lower individual middle class taxes and has remained ambivalent on border adjustment tax, while House Speaker Ryan and Ways and Means chair Brady view tax reform as a catalyst for growth and could prioritize tax cuts for the top 1% as well as considering border adjustment as essential. Nikkei225 is the worst peforming index, dragged down by stronger JPY weighing on exports. Dollar decline against EUR is also noteworthy, with single currency hitting a 3-month high, helped by constructive result for the European Union in German regional elections. Chancellor Merkel's CDU party took 41% of the vote in Saarland, up from 35% in 2012 elections and above 29.5% for SPD and 6% for euro-skeptic AfD.

Nikkei -1.55% Hang Seng -0.45% CSI -0.14% Shanghai +0.02%

Eur$ 1.0847 CNH 6.8524 CNY 6.8723 JPY 110.29 GBP 1.2529 CHF 0.9878 RUB 56.98 WTI$ 47.44 -1.10%

S&P -0.80% EuroStoxx -0.72% FTSE -0.62% DAX -0.63% SMI -0.57%

Macro :
- U.K. Said to Eye Law to Block Online Extremist Videos: Telegraph
- Trump Says Tax Reform Up Next, Warns Obamacare Will ‘Explode’
- Italy in Talks With EU Over 2018 Deficit Flexibility: La Stampa
- Iran Sanctions 15 U.S. Companies Over Human Rights Abuses: Mehr
- U.K.’s May to Give Details of Law Changes for Brexit: Telegraphmut

Keep an eye on :
- AIR FP : China’s C919 Passes Aviation Tests; Nears First Flight: Xinhua
- AKZA NA : PPG Fails to Get Meeting With Target Akzo During Dutch Trip
- AKZA NA : Akzo Nobel investor Elliott Advisors discloses 3.25% stake
- NDA GY : Aurubis Doesn’t Rule Out Large Takeovers, Euro am Sonntag Says
- BKIA SM : Bankia Wins Iberdrola Claim Relating to 2011 IPO: Expansion
- BMED IM : Market Concern on Banca Mediolanum Exaggerated, Citi Says
- BAYN GY : Monsanto India Says Unaware of Rejection of Bayer Deal by CCI
- BLVN LN : BowLeven Holder Crown Ocean Opposes ‘Fire-Sale’ of Company
- BT/A LN : BT’s Openreach Unit Fined GBP42m by U.K. Regulator
- CO FP : Casino intends to continue process to sell CBD's 43.3% stake in Via Varejo
- MPIO PL : Caixa Montepio’s Full-Year Loss Narrowed to EU80m, Expresso Says
- DAI GY : Daimler to Acquire 15% of Lei Shing Hong: Automobilwoche
- DBK GY : BOE Asks Deutsche Bank to Draw Up Plans for Co-Op Bank: S. Times
- DBK GY : Deutsche Bank to Sell Its Renewable Assets in Spain: Expansion
- EEFT US : MoneyGram Enters Confidentiality Pact With Euronet Worldwide
- EXO LN : Exova Confirms It Has Received a Cash Offer, Says in Talks
- FB US : U.K. Tells WhatsApp to Open Up to Intelligence Services
- GLPG NA : Galapagos wants to remain as stand-alone business
- GOOG US : Google Faces Demands for Ad Discounts After YouTube: FT
- HUR LN : Hurricane Energy makes oil discovery west of Shetland Islands, Find adds to series of wells that may be biggest beneath UK waters this century - FT
- ISP IM : Intesa Board to Weigh Plan to Divest EU15b of NPLs: Sole
- IG IM : Italgas CEO says interested in Gas Natural Italian assets
- LSCC US : Lattice Semi, Canyon Refile to Allow More Discussion With Cfius
- LIN GY : Praxair Named New Best Idea Long at Hedgeye on Linde Merger View
- LSE LN : LSE Investors Seek to Keep Xavier Rolet as CEO: Sunday Telegraph
- MC FP : TAG Heuer CEO Sees Swiss Watch Industry Improving in 2017: T-A
- MGI US : MoneyGram Enters Confidentiality Pact With Euronet Worldwide
- NYR BB : Och-Ziff Mgmt Europe Expands Nyrstar Short Position to 1.24%
- OCI NA : OCI Reports 2016 Profit; Year Revenue, Adj. Ebitda Fall
- OML LN : HNA Capital to Buy 25% Stake in Old Mutual’s OMAM for $446m
- PLT IM : Lactalis Owned 89.6% of Parmalat Shares After Buy-Out Offer
- CFR VX : Richemont’s Rupert Says China Situation Has Normalized: FuW
- SIE GY : Dong, Siemens May Sell Offshore Installer A2Sea, Berlingske Says
- SKY LN : Fox-Sky Deal Said to Stay With EU After U.K. Skips Deadline
- SN/ LN : Smiths Group may consider selling uncompetitive businesses
- SNAP US : Snap Shares Slip Ahead of Analyst Quiet Period Expiration
- TSCO LN : Tesco Said to Face ‘Large’ Fine as U.K. Probe Nears End: Sky
- TSLA US : Tesla to Start Taking Solar Roof Orders in April, Musk Says
- HO FP : Thales Canada In: Thales to sell identity management business to Imprimerie Nationale Group - 24.03.2017
- TCG LN : Thomas Cook Won’t Separate Condor, CEO Says: FAZ
- TOM2 NA : TomTom Options Volume at 2015 High With Stock at 10-Week Peak
- FP FP : Total Emerges From Oil Slump in Growth Mode, company has been restructuring and cutting costs. Now it’s cherry-picking productive projects from still-struggling rivals. - Barron's
- VOW3 GY : Volkswagen’s Internal Probe by Jones Day Has Ended, Bild Reports
- VOW3 GY : Volkswagen Diesel Probe by Jones Day Continues, Company Says
- WFT US : Weatherford Venture is ‘Innovative’ Move by Schlumberger: Piper
- ZURN VX :Zurich Sets Stage for $8.6 Billion Capital Increase, Sole Says

>>> Europe : Brokers Upgrades & Downgrades - 26th of March 2017

>>> Up
*Lamprell Raised to Buy at Canaccord
*SGL Raised to Buy at Bankhaus Lampe, PT EU13
*Tryg Raised to Hold at HSBC, PT DKK121
*Tullow Raised to Neutral at Goldman, PT 200.60p
*Zodiac Aerospace Raised to Outperform at Credit Suisse

>>> Down
*Berendsen Cut to Underperform at RBC, PT 660p
*EON Cut to Hold at SocGen, PT EU7.80
*Lloyds Cut to Sell at Berenberg
*RWE Cut to Neutral at JPMorgan, PT EU13.30

>>> Initiation
*Pearson Assumed Underperform at Jefferies, PT 540p
*Snap Rated New Buy at Goldman, PT $27
*Snap Rated New Overweight at Morgan Stanley, PT $28
*Snap Rated New Outperform at RBC, PT $31
*Snap Rated New Hold at Stifel, PT $24
*Unilever Reinstated Hold at Liberum, PT 3870p

>>> Call

>>> Asian Update

Asia Mid-Session Market Update: Stocks and Dollar fall, Gold rises as investors question reflation Trump trade after healthcare reform bill failed

***Friday US markets on close: Dow -0.3%, S&P500 -0.1%, Nasdaq +0.2%***
- Best Sector in S&P500: Utilities
- Worst Sector in S&P500: Materials
- Biggest gainers: FTR +7.7%; MU +7.4%; CNC +5.2%
- Biggest losers: MLM -2.9%; FLR -2.5%; NUE -2.5%
- At the close: VIX 12.9 (-0.2pts); Treasuries: 2-yr 1.24% (-4bps), 10-yr 2.40% (-2bps), 30-yr 3.00% (-3bps)

***Politics***
- (US) On Saturday, President Trump tweeted to "Watch @JudgeJeanine on @FoxNews tonight", whose opening segment called for House Speaker Ryan to step down because of failed healthcare bill vote
- (US) Rep Ted Poe (R-TX) resigns from House Freedom Caucus because of its opposition to healthcare legislation - CNN
- (HK) Hong Kong electoral committee picked pro-China candidate Carrie Lam over John Tsang to be the next leader - financial press
- (DE) Chancellor Merkel's CDU party was victorious in Saarland state regional election with 41% of the vote vs 29.5% for SPD; Far-right AfD party received 6% - press

***Weekend US/EU Corporate Headlines***
- MGI: Enters into confidentiality agreement with Euronet Worldwide to further consider Euronet's unsolicited proposal

***Key economic data:***
- (CN) CHINA JAN-FEB INDUSTRIAL PROFITS Y/Y: 31.5% V 2.3% PRIOR
- (JP) JAPAN FEB PPI SERVICES Y/Y: 0.8% V 0.5%E (2-year high)

***Asia Session Notable Observations, Speakers and Press***
- Risk-off sentiment is heating up as S&P500 emini futures fell nearly 20 handles, USD/JPY came in by over 100 pips, and Gold rallied over $15 from Friday close. Political risk is the primary culprit as investors worry that GOP failure to get the healthcare bill across the finish line will dampen other pro-business reform agenda items for the Trump White House, namely tax reform and fiscal spending measures. Pundits suggest that the rift between POTUS and GOP congressional leadership may still widen, considering that Trump promised to lower individual middle class taxes and has remained ambivalent on border adjustment tax, while House Speaker Ryan and Ways and Means chair Brady view tax reform as a catalyst for growth and could prioritize tax cuts for the top 1% as well as considering border adjustment as essential.
- Nikkei225 is the worst peforming index, dragged down by stronger JPY weighing on exports. Dollar decline against EUR is also noteworthy, with single currency hitting a 3-month high, helped by constructive result for the European Union in German regional elections. Chancellor Merkel's CDU party took 41% of the vote in Saarland, up from 35% in 2012 elections and above 29.5% for SPD and 6% for euro-skeptic AfD.
- BOJ Summary of Opinion from the most recent meeting underscored entrenched policy stance for the central bank. Despite progress on growth and inflation, BOJ said there is still a long way to go to achieve the price stability target of 2%. Separately, PM Abe also remarked that it was too early to consider monetary stimulus exit strategy.
- In notable economic data, China Jan-Feb industrial profits rose a healthy 31.% v just 2.3% in Dec. Stats Bureau said the growth in profits was mostly due to faster growth in prices of coal, steel, and crude oil, though the overall trend is still one of recovery in the industry. Among top corporates, China's property developer Vanke posted strong profit and sales growth, but also noted some housing price cooling due to govt curbs.

China
- (CN) China State Information Center research fellow Fan Jianping: Chinese govt must target badly run financial institutions, or will only make things go from bad to worse
- (CN) PBoC Gov Zhou: monetary policy may have reached an end to the quantitative easing path - Boao Forum panel discussion
- (CN) China may start carbon trading in July - Chinese press
- (CN) China approved 10 IPOs on Friday worth CNY6.1B - Chinese press

Japan
- (JP) Japan PM Abe: Too early to consider monetary stimulus exit strategy

Australia
- (AU) According to Australia Bureau of Stats, underemployment in 15-24 year old range is at 31.5%, highest in 40 years - Australian press
- (NZ) New Zealand PM English: Signed agreement on the Belt and Road Initiative with China; FTA to start in April

Korea
- (KR) Bank of Korea (BOK) Q4 regional survey shows South Korean manufacturers are expected to spend more on capital investment this year than they did last year, although those expenditures will be conservative and mostly geared towards maintaining facilities than expansion

***Asian Equity Indices/Futures (00:00ET)***
- Nikkei -1.3%, Hang Seng -0.3%, Shanghai Composite +0.1%, ASX200 -0.2%, Kospi -0.5%
- Equity Futures: S&P500 -0.7%; Nasdaq -0.7%, Dax -0.5%, FTSE100 -0.6%

***FX ranges/Commodities/Fixed Income (00:00ET)***
- EUR 1.0825-1.0850 (3-month high); JPY 110.25 (4-month low) -111.05; AUD 0.7615-0.7635; NZD 0.7025-0.7050; GBP 1.2490-1.2530
- Apr Gold +0.6% at 1,256/oz; May Crude Oil -0.3% at $47.85/brl; May Copper -1.6% at $2.60/lb
- OPEC and non-OPEC producers agree to review whether oil output cuts should be extended by 6 months - press
- SPDR Gold Trust ETF daily holdings fall 1.8 tonnes to 832.6 tonnes
- (CN) PBoC skips open market operations for 2nd straight session; Bank liquidity is high
- (CN) PBOC SETS YUAN MID POINT AT 6.8701 V 6.8845 PRIOR; strongest Yuan setting since Feb 24th
- (AU) Ausatralia MoF sells A$500M in 3.0% 2047 bonds; bid-to-cover 2.65x
- (KR) South Korea sells KRW0.84T v KRW0.84T offered in 20-yr govt bonds; avg yield 2.3% v 2.215% prior

***Asia equities / Notables / movers***
Australia
- FXJ.AU Fairfax Media +2.5%; TPG Capital could make a bid for Fairfax Media's Domain business as early as this week - AFR
- SGP.AU Stockland Corp +1.9; Affirms FY17 FFO +6-7% y/y
- BHP.au -2.8%, RIO.au -2.0%, FMG.AU -2.6%; Iron ore falls over 4%

Japan
- 6502.JP Toshiba -3.5%; Largest creditors are torn over its future strategy as pressure builds for a swift Chapter 11 bankruptcy protection filing by Westinghouse - FT
- 9602.JP Toho Gas -1.1%; May report FY net profit ¥50B, +23% y/y (prior guidance ¥47B) - Nikkei
- 1801.JP Taisei +1.0%; Expected to report FY16/17 net profit of ¥100B, +30% y/y and above ¥76B prior forecast; May boost dividend or share buyback program - Nikkei

Hong Kong
- 1638.HK Kaisa Group Holdings; +62.8%; Resumes trading; Reports FY16 net loss CNY1.29B v profit CNY2.17B y/y; Rev CNY19.6B v CNY19.5B y/y
- 0842.HK Leoch International Technology +7.0%; Reports FY16 Net CNY232M v CNY106M y/y; Rev CNY6.26B v CNY4.33B y/y
- 0551.HK Yue Yuen Industrial +5.6%; Reports FY16 Net $534.6M v $390.2M y/y, Rev $8.48B v $8.43B y/y
- 1114.HK Brilliance China Automotive Holding +4.9%; Reports FY16 Net CNY3.39B v CNY3.28B y/y, Rev CNY5.13B v CNY4.86B y/y
- 3866.HK Bank of Qingdao Co Ltd +2.5%; Reports FY16 Net CNY2.09B v CNY1.81B y/y; Rev CNY6.0B v CNY5.0B y/y
- 2202.HK China Vanke -3.3%; Reports FY16 Net CNY21.0B v CNY18.1B y/y, Rev CNY228.9B v CNY184.3B y/y
- 1072.HK Dongfang Electric Corp -2.4%; Reports FY16 net loss CNY1.8B v profit CNY439M y/y; Rev CNY33.3B v CNY36.0B y/y
- 0816.HK Huadian Fuxin Energy Corp -4.8%; Reports FY16 Net CNY2.0B v CNY1.9B y/y, Rev CNY15.9B v CNY15.4B y/y
- 819.HK Tianneng Power International Limited -9.0%; Reports FY16 Net CNY905.5M v CNY627.8M y/y; Rev CNY21.5B v CNY17.8B y/y
- 951.HK Chaowei Power Holdings Limited -9.1%; Reports FY16 Net CNY619M v CNY488M y/y; Rev CNY21.5B v CNY18.9B y/y
- 3900.HK Greentown China Holdings -9.9%; Reports FY16 Net CNY1.92B v CNY0.81B y/y; Rev CNY28.9B v CNY26.0B y/y

>>> Casino intends to continue process to sell CBD's 43.3% stake in Via Varejo -

Casino intends to continue process to sell CBD's 43.3% stake in Via Varejo

French company Casino will continue the sale process of CBD’s 43.3% stake in Via Varejo, the blog from Brazilian journalist Lauro Jardim reported without citing any source. The blog is published in O Globo. The process is said to have been suspended on 24 March, after no offers were presented, as reported.
Casino is the controlling shareholder of CBD, as reported. Via Varejo and CBD are two Brazil-based retailers.
Last week, the Klein family informed Casino that it will participate in the sale process in partnership with two undisclosed funds, the brief Portuguese-language blogpost noted.
The Klein family is a shareholder of Via Varejo with 27.3% stake, as reported.
Brazilian daily O Estado de Sao Paulo has also reported that Casino and CBD still have the intention to sell the stake. However, there is no timeframe of when the new period to present offers will be opened, the item added without citing any source. The last period to present offers expired on 24 March, the item added.
Advent, Alibaba, Carlyle, Steinhoff, Lojas Americanas in partnership with 3G Capital, and Best Buy have been mentioned as potential interested bidders for the stake, as reported.
Via Varejo has a market value of nearly BRL 4bn (USD 1.3bn), as reported.

WSJ : Republicans’ Tax Overhaul Could Face Its Own Slings and Arrows

Republicans’ Tax Overhaul Could Face Its Own Slings and Arrows
Rewriting the U.S. tax code may appear easier than tackling health care, but there may be other squabbles, hurdles and difficult trade-offs

Bruised and beaten by an intraparty fight over health care, Republicans are heading for what they see as safer political ground: A major tax bill. But they might be heading right into another minefield.

In theory, rewriting the tax code could be easier than revamping the whole health-care industry. Republicans pride themselves on ideological unity in favor of lower tax rates. And the stakes appear lower for Americans—paperwork and money are far different than matters of life and death.

“Tax reform is less visceral,” said Rep. David Schweikert (R., Ariz.) “I can pull up a calculator and say ‘it’s this or this’…it’s hard legislating to anecdotes and stories.”


Treasury Secretary Steven Mnuchin said Friday that a tax bill would be “a lot simpler” than a health-care overhaul. “There is very, very strong support.”
But scratch deeper, and the GOP quest for a full overhaul of the tax code is fraught with squabbles, procedural hurdles and difficult trade-offs. The party’s failure on health care—after having seven years to prepare—shows how hard it is for Republicans to write complex legislation that attracts support from their moderate and conservative wings.

“It’s just a reminder of how incredibly hard transformational legislation is,” said John Gimigliano, a former GOP congressional tax aide now at KPMG LLP.

To succeed, Republicans need to bridge at least three big gaps.

First, they need to balance competing desires to cut tax rates sharply and to slow the rise of national debt. Republican leaders in Congress say they want a revenue-neutral plan—one that brings in about as much money as today’s tax system. Faster economic growth might help, but it doesn’t fully bridge the divide. To accomplish revenue neutrality while sharply lowering rates, they will attempt to whack popular tax breaks, such as business deductions of interest on debt and individual state and local tax deductions. They will meet resistance from groups that want to protect those breaks.

Second, they have to reconcile alternate visions of what they are setting out to accomplish and who will benefit. Mr. Trump has said his priority is middle-class tax cuts for individuals. “Not the top 1%,” said Mr. Mnuchin. House Speaker Paul Ryan (R., Wis.) and Ways and Means Chairman Kevin Brady (R., Texas) want an overhaul primarily focused on promoting economic growth, even if that means tax cuts that favor the very top of the income scale. The plans they all campaigned on are tilted to the top, according to independent analyses.


Third, the party is at odds over the Ryan-Brady plan for border adjustment—taxing imports and exempting exports. The Trump administration has been ambivalent and sometimes critical of the idea. Senate Republicans are outright cold to it. Messrs. Ryan and Brady say it’s crucial because it provides about $1 trillion to offset corporate-tax-rate cuts and it discourages companies from shifting profits abroad.

None of those divisions inside the GOP have been resolved yet, and dozens more are lurking, including debates over tax breaks for renewable energy, credits that aid low-income households, and the treatment of carried interest income for private-equity managers.

“The notion that tax is easier than health is not borne out by the facts,” said a Senate GOP aide. “Having discussed health care for seven years, Republicans were 75% in agreement on the policy. On tax, none of the foundational questions have been answered.”

The big-picture tax debate—higher taxes vs. lower—breaks down along party lines, but little issues can quickly turn parochial. For example, Republicans from high tax states such as New York and New Jersey may be less willing to kill the state and local tax deduction than their counterparts from Texas and Florida, which lack income taxes.

“A million details come out of the woodwork that you never thought of,” Mr. Gimigliano said.

Procedural challenges also loom. Democrats are unlikely to go along with deep tax cuts, so Republicans are likely to use rules that allow a party-line vote in the Senate. That means they can’t increase deficits outside of the budget window, typically 10 years.
That constraint is why the 2001 and 2003 tax cuts under President George W. Bush were set to expire at the end of 2010. Eventually, many of the tax cuts were extended permanently, but not all of them. Democrats restored the estate tax and raised the Bush-era rates on high-income households.

A repeat of temporary cuts is possible, but potentially counterproductive, particularly if Republicans want to achieve a corporate-tax overhaul. Business owners want permanent policy so they can plan for the long-run. Without permanence, an overhaul might damp the boost to spending and investment that Republicans want.

Mr. Mnuchin said the administration will soon release its plan. Mr. Brady is aiming to push a bill out of his panel by the end of the spring.

So far, said Rep. Kenny Marchant (R., Texas), Ways and Means members have been reviewing concepts. He said he doesn’t expect text of a tax bill for weeks and said he learned from the health-care bill’s collapse about the dangers of an accelerated legislative process.

“Deadlines,” he said, “are not helpful.”

FT : Brussels close to approving $140bn Dow-Dupont tie-up

Brussels close to approving $140bn Dow-Dupont tie-up
Busy week for antitrust authorities as Deutsche Börse-LSE deal expected to be blocked

Brussels is set to deliver its verdicts on two big corporate deals this week with authorities expected to bless the $140bn union of US agrichemical giants Dupont and Dow Chemical while formally vetoing the €29bn merger of the London Stock Exchange Group and Deutsche Börse.

In a busy week for competition authorities in Brussels, the move to merge Dow Chemical with Dupont to create one of the world’s largest integrated crop protection and seeds companies is expected to win approval, according to people close to the process.

Both sides regarded European antitrust clearance as a significant hurdle to their deal, one of three planned megamergers set to reshape the global agribusiness industry.

An agreement by Dupont and Dow Chemical to sell assets including research and development capabilities have mitigated the primary concern of Margrethe Vestager, the EU antitrust commissioner, that the deal would cut innovation in crop protection products — the chemicals farmers use to kill pests, said the people close to the process.

However, Brussels will formally block the €29bn planned merger of the LSE and its German counterpart, ending a third attempt in 17 years to unite the financial hubs of London and Frankfurt, two people briefed on the cases said.

Several deadlines have converged to create the busy week. Brussels must rule on the exchanges merger by April 3 and the Dow-Dupont deal a day later, and has historically avoided leaving formal announcements until the last day.

Antitrust authorities also are expected to approve the second agrichemical megamerger — ChemChina’s purchase of Swiss-seed company Syngenta — in the following week, before its April 12 deadline, as it did not even issue formal objections to the deal during its in-depth investigation.

A third big agricultural deal, Bayer’s $66bn purchase of Monsanto, is also being scrutinised. It will start its European approval process before the summer.

The timings of the announcements by Brussels were complicated by the UK’s decision to formally trigger Article 50 to leave the European Union on Wednesday, the people added. Officials are keen to avoid a direct clash. Furthermore, Mrs Vestager is due at a public conference in the US on Friday.

The LSE and Deutsche Börse have expected a formal veto to their deal since the end of February when the UK group said it would not commit to Mrs Vestager’s demand that it sell MTS, an Italian bond trading venue, to assuage concerns about competition in fixed income markets.

Mrs Vestager had rejected an LSE proposal to insert non-compete clauses into the final package, according to three people involved in the discussions. Last week, the LSE restated that the commission was unlikely to clear the merger “based on its current position”.

Both exchanges have publicly committed to securing regulatory approval, but executives privately acknowledge the momentum behind the deal has all but died. The two are preparing for life as independent companies, amid tensions between senior executives on both sides over the breakdown of the deal.

For Dow-Dupont, approval is still needed from Chinese and US regulators if the companies are to close the transaction before July, as expected. The merger will combine Dow and Dupont and then spinout three new, more sector-specific companies: one focused on materials, the second on chemicals and speciality products and a third company concentrating on seeds and crop protection.

ChemChina’s $43bn purchase of Swiss-listed seed company Syngenta — China’s largest cross-border transaction — also has raised concerns in Brussels about competition in the crop protection chemicals markets. Those worries were allayed by an indepth investigation by antitrust authorities and approval is expected after Syngenta offered to sell business assets in Europe and the US.

Antitrust reviews are ongoing in China, the US, India and Mexico. However, the companies expect to close the deal by the end of June.