>>> What to look at this Week End - 18th & 19th of February 2017

Weekly Performance
Dow +1.75% S&P +1.51% Nasdaq +0.41% Russell +0.79% Mexico -1.32% Brazil +2.46% Nikkei -0.74% Hang Seng +1.95% CSI +0.23% Shanghai +0.17% EuroStoxx +1.16% FTSE +0.57% AC+0.81% Dax +0.77% Ibex+1.30% MIB +0.77%SI +0.59%
Fed Chair Yellen's remarks to Congress on Tuesday added extra fuel to the Trump and reflation trades, as the markets saw the likelihood of the next rate hike getting closer. The odds of a March rate move edged higher as she confirmed that all policy meetings are ‘live’, stating that waiting too long to raise rates may be detrimental to the economy and could cause the Fed to raise rates later at a hasty pace. A chorus of other Fed speakers largely echoed Yellen, with members agreeing that with the employment and inflation mandates nearing targets, three or so rate hikes this year would be appropriate.

Macro :
- RUSSIA OUTLOOK TO STABLE FROM NEGATIVE BY MOODY'S
- EU Antitrust Agencies Working on Online Hotel Booking Report
- German Green Party Adapts Election Campaign to Schulz: Spiegel
- Italy’s Renzi Quits as Party Leader, Triggers Re-Election Fight
- Stock Manager of $37 Billion Doesn’t Believe the Earnings Hype
- Trump Administration Considers Change in Calculating U.S. Trade Deficit, Tweak in counting exports could bolster president’s case for redoing Nafta, other trade deals - WSJ

Keep an eye on :
- AMZN US : Capital One Up; Amazon Said to Ponder Deal: Banking Technology
- ARAMCO IPO : JPMorgan, Morgan Stanley Said Poised for Roles in Aramco IPO: FT
- BAYN GY : Bayer to Sell Remaining Covestro Stake This Year: FAS
- BMW GY : BMW Faces Strike Threat at U.K. Mini, Rolls-Royce: Telegraph
- BOKA NA : Boskalis Reports EU840 Mln Non-Cash Impairment Charge FY 2016
- 1COV GY : Bayer to Sell Remaining Covestro Stake This Year: FAS
- CCI US : Crown Castle Falls Amid Reports of Possible T-Mobile/Sprint Deal
- ERICB SS : Ericsson Chairman to Remain on Board After AGM, SVD Reports
- G IM : Generali open to industrial collaboration with Intesa Sanpaolo
- GM US : GM Plans to Deploy Self-Driving Cars With Lyft in 2018: Reuters
- HBH GY : Hornbach Sees Room for Up to 25 Branches in Netherlands: Parool
- ISP IM : Assicurazioni Generali Buys 3.04% of Intesa Sanpaolo
- NESN VX : CEO Schneider sees excellent M&A opportunities, in the health, foods, and beverages markets, needs to restructure its underperforming segments before it starts making acquisitions - Euro am Sonntag
- PAH US : Platform Specialty Said to Eye Split of Agriculture, Industrials
- PERF US : Perfumania Said to Explore Strategic Alternatives: Reuters
- UG FP : GM, Peugeot Said to Discuss $2 Billion Valuation for Opel Unit
- UG FP : PSA CEO Seeks Meeting With U.K.’s Theresa May on GM Talks
- UG FP : PSA CEO to Meet Sapin, Sirugue Next Week on GM Talks: JDD
- PST IM : Poste CEO May Be on Shortlist to Replace Leonardo CEO: Corriere
- RBS LN : RBS Says Alternative to Williams & Glyn Sale to Be Examined
- ROG VX : Roche Says Phase II Study Supports Use of Tecentriq With Avastin
- SW FP : Sodexo to Keep Investing in Targeted Acquisitions: Investir
- TMUS US : Softbank Said to Prepare to Approach TMUS for Sprint Deal: Rtrs
- TMG NA : De Mol to Withdraw From TMG Battle If Deadlock Occurs: Telegraaf
- UNA NA : Kraft Heinz Said Unlikely to ‘Go Hostile’ for Unilever: CNBC
- UNA NA : No Dutch Clash Likely Over Kraft Bid for Unilever, Analyst Says
- VIV FP : Vivendi to Meet Italy Regulator on Mediaset Next Week: Sole
- VOW3 GY : Audi Fires Diesel Technology Engineers, Handelsblatt Says
- WBMD US : WebMD Exploring Alternatives, Analysts Mull Buyers: Street Wrap

WSJ : Trump Administration Considers Change in Calculating U.S. Trade Deficit

Trump Administration Considers Change in Calculating U.S. Trade Deficit
Tweak in counting exports could bolster president’s case for redoing Nafta, other trade deals

WASHINGTON—The Trump administration is considering changing the way it calculates U.S. trade deficits, a shift that would make the country’s trade gap appear larger than it had in past years, according to people involved in the discussions.

The leading idea under consideration would exclude from U.S. exports any goods first imported into the country, such as cars, and then transferred to a third country like Canada or Mexico unchanged, these people told The Wall Street Journal.

Economists say that approach would inflate trade deficit numbers because it would typically count goods as imports when they come into the country but not count the same goods when they go back out, known as re-exports.

Data on trade balances and surpluses, widely followed by Congress, are at the center of a political battle over whether existing trade agreements should be retained, renegotiated or tossed out altogether.

A larger trade deficit would give the Trump administration ammunition in arguing that trade deals need to be renegotiated, and might help boost political support for imposing tariffs.

Career government employees objected last week when they were asked to prepare data using the new methodology, according to the people familiar with the discussions. These employees at the U.S. Trade Representative’s office complied with the instructions, but included their views as to why they believe the new calculation wasn’t accurate.

One person familiar with the discussions said the employees were told the new calculations were to be presented to members of Congress.

The effect of such a change would be particularly stark on data involving countries that have free trade deals with the U.S., this person said—and in some cases the new methodology could even change a trade surplus into a trade deficit.

Trump trade officials said the idea is part of an early discussion and that they are examining various options. It is unclear whether the administration would adopt any new approach for measuring trade as part of official government data, or just use the higher deficit calculation to make the case for new trade deals.


“We’re not even close to a decision on that yet,” said Payne Griffin, the deputy chief of staff at the office of the U.S. Trade Representative. “We had a meeting with the Commerce Department, and we said, ‘Would it be possible to collect those other statistics?’”

The Commerce Department’s Bureau of Economic Affairs on Friday said “any internal discussions about data collection methods are no more than the continuation of a longstanding debate and are part of the bureau’s normal process as we strive to provide the most precise statistics possible.”

Edward Gresser, the assistant U.S. trade representative for policy and economics, declined to comment. Robert Ligthhizer, Mr. Trump’s pick for trade representative, hasn’t yet received a hearing in the Senate.

A spokeswoman for the Census Bureau, which calculates the trade deficit numbers, said she wasn’t aware of discussions about changing the data.

Economists are watching the Trump administration’s use of government data as he seeks to promote his economic policies. Last week, the Journal reported that the administration has drafted preliminary economic-growth forecasts for federal budgeting that rely on far-rosier assumptions than most projections.

On the trade deficit, those who support considering a new approach say they are seeking a more accurate picture of the value of products produced in one country and consumed in another. With their focus on domestic manufacturing, Trump administration officials want to measure exports of American-made products, not items shipped from abroad and re-exported.

Several economists interviewed by the Journal were uneasy with fully excluding re-exports from exports but not imports.

“As a statistician, you generally want symmetry,” said Steve Landefeld, former BEA director. “If you’re going to begin to exclude re-exports from the U.S. export figures, you probably for reasons of symmetry” would want to adjust import figures as well.

President Donald Trump has criticized the trade policy of previous presidents and blamed prior trade deals, including the North American Free Trade Agreement, for job losses.

Many economists say trade agreements don’t play a major role in shaping a country’s overall trade balance, which they say are more linked to national investment and savings rates. Others point to the surplus the U.S. has in services trade as a growing competitive advantage, even as merchandise exports lag imports. But Mr. Trump and his advisers see the U.S. goods trade deficit as an indicator of U.S. economic weakness.

He has repeatedly cited the $63.1 billion U.S. trade deficit with Mexico last year. Under the new approach the trade deficit with Mexico would be nearly twice as high, at $115.4 billion. The difference is mostly due to the treatment of re-exports.

Re-exports are currently included in “total exports” figures most frequently cited and used by the Census Bureau to calculate the trade balance.

On the imports side, officials are also exploring switching to “imports for consumption,” a slightly narrower way of measuring imports that would make less of a difference in the overall balance.

The Obama administration, which resisted calls from critics of its trade policy to change the figures, argued that excluding items re-exported from the U.S. export column but including them in U.S. imports could inflate the trade deficit or trim surpluses.

FT : EU negotiators push back on Brexit trade talks until next year

EU negotiators push back on Brexit trade talks until next year
Divorce-first approach will hurt UK’s plans for a fast-track deal

The EU’s Brexit negotiators expect to spend until Christmas solely discussing Britain’s divorce from the bloc, denying London any trade talks until progress is made on a €60bn exit bill and the rights of expatriate citizens.

A narrow divorce-first approach favoured by Michel Barnier, the EU’s chief negotiator, would represent a big setback for Britain’s aim for a fast-track EU trade deal, completed by the end of 2018.

A move to delay trade talks sets the stage for a high-stakes stand-off once formal Brexit negotiations begin. David Davis, the UK’s Brexit secretary, wants all elements of Brexit to be handled “in parallel”, saying he has told Mr Barnier that his “sequential” plan for talks “does not seem practical”.

In recent weeks Mr Barnier has outlined to the EU’s remaining 27 members his views on the timing and order of talks, which moves from basic terms for the disentanglement, to scoping future trade relations and finally to preparations for a transition.

“He thinks we will be discussing money and acquired rights [of expatriate citizens] until December,” said one senior eurozone official in contact with Mr Barnier. “No trade, nothing about the future, just the past.”

Five other national diplomats involved in Brexit talks confirmed Mr Barnier’s rough year-end timetable. Many noted Theresa May, Britain’s prime minister, had so far avoided acknowledging the break-up challenges and outstanding budget liabilities.

“If we don’t get them down to earth early in the game then we never will,” said one EU-27 diplomat involved in talks. Another senior adviser to a northern European leader said: “At this stage only the Brits are saying they want it all solved in parallel.”

However, the EU-27 have different views on the details of exactly how talks are staggered. If as expected Britain invokes Article 50 next month, it will be the most sensitive unresolved question facing union leaders when they draw up “guidelines” for Mr Barnier. A special summit is expected in early April.

At one extreme some of the EU-27 — including some French officials — want Britain to honour its financial commitments as a first step. Others are concerned a hardline money-first approach will fail unless the “sweetener” of trade discussions is offered to keep the UK engaged. Spain, for instance, opposes “strict procedural requirements” and has backed early discussions about the future relationship.

Britain is banking on more trade-minded EU-27 leaders keeping Mr Barnier in check. Most EU-27 countries, however, do back the idea of some conditionality, which ties progress on trade talks to British co-operation on the divorce and Britain’s exit bill.

“You need some parallelism,” said one diplomat closely involved in Brexit preparations. “But the leaders won’t be fooled by vague promises [on the divorce]. In the end you need to tackle the bill.”

Mr Barnier’s plan would expect Britain to agree a basic methodology for the exit bill, while leaving the precise figure until the final Brexit package is agreed. A deal on principles around money and citizen rights is hoped for by December, allowing EU-27 to give a green light to trade talks at their summit that month. It could move faster if Britain gave clear early assurances on money and rights so it could quickly move to trade talks.

FT : Italy’s Renzi resigns as Democratic party leader

Italy’s Renzi resigns as Democratic party leader
Former prime minister triggers leadership contest in bid to sweep out party rebels

Matteo Renzi, Italy’s former prime minister, resigned as head of Italy’s ruling Democratic party on Sunday, triggering a leadership contest aimed at neutralising a rebellion of leftwing dissidents angry at his reformist agenda.

The tensions within the PD come at a delicate time in Italian politics, with general elections to be held within a year at the latest, and the anti-euro, anti-establishment Five Star Movement making a bid to emerge as the leading party. In addition, Italy’s economic performance has been lagging behind the rest of the eurozone, its banking system is vulnerable, and there are rising concerns about its inability to bring down its debt. 

“We have a responsibility towards our country,” Mr Renzi said at an assembly of PD delegates in Rome on Sunday. “We cannot be engaged in internal discussions at this time. After today, let’s get back on track,” he said. 

Mr Renzi, an energetic 42-year-old Florentine, led the Italian government for nearly three years until he was forced to step down last December in the wake of the heavy defeat of his flagship constitutional overhaul in a referendum. Since then, he has been trying to lay the ground work for an ambitious political comeback, but his efforts are being threatened by a group of internal critics who say his policies are too centrist and his style is too abrasive.

“The PD needs to get back to being the party of coherence, which says that it wants to defend the weakest and then actually does it,” Michele Emiliano, the governor of the Puglia region in southern Italy and one of Mr Renzi’s most high-profile intraparty challengers, said at an event in Rome on Saturday. 

Mr Emiliano — along with Enrico Rossi, the governor of Tuscany, and Roberto Speranza, a PD lawmaker — are the main faces of the anti-Renzi revolt. But they are also being supported by several influential party leaders, including Massimo D’Alema, the former prime minister, and Pier Luigi Bersani, the former party secretary. Beyond disagreements on policy, the dissidents are challenging a push by Mr Renzi to hold early elections this year and threatening to leave the PD should he follow through with that plan. 

Mr Renzi hopes that once he has emerged as the winner of a new leadership contest, any internal critics will either have left the party or be in a weaker position to undermine him.

At the PD gathering with Mr Renzi on Sunday, a succession of lawmakers pleaded for party unity, saying infighting could only benefit the Five Star Movement or rightwing opposition parties including the anti-euro Northern League and Forza Italia, led by former prime minister Silvio Berlusconi. 

“When the left has split it has hurt itself and the country. This has been our demon,” said Walter Veltroni, who engineered the creation of the PD a decade ago by merging the reformist descendants of the Italian Communist party with left-of-centre former Christian Democrats. 

But Mr Rossi lamented that the PD was building a “wall” to defend Mr Renzi. “The time is ripe to build a new political force with those citizens who do not believe the PD is leftwing any more,” he said. 

According to a poll by Ipsos published in Corriere della Sera, the Italian daily, on Sunday, if the group of dissidents were to break away, this would trim between 4 per cent and 6 per cent from the PD’s support. At the moment, the PD and the Five Star Movement are polling roughly neck-and-neck at around 30 per cent.

(SkyNews) City broking giant TP ICAP mulls changes to £85m ‎share plan

City broking giant TP ICAP mulls changes to £85m ‎share plan
Shareholders in TP ICAP have rebuffed an executive share plan that could have paid out up to £85m, Sky News learns.

A City broking firm created by the merger of two of the industry's biggest players has approached investors ‎about revisions to an incentive plan that could hand tens of millions of pounds to senior executives.
Sky News has learnt that directors of TP ICAP‎, which is the world's largest interdealer broker, proposed establishing a scheme that would have paid out up to £85m in shares over a three-year period.
John Phizackerley, the company's chief executive‎, stood to make a maximum of £25m under the Value Creation Plan discussed with leading TP ICAP shareholders.
Under the proposals, which have been drawn up by Stephen Pull, the director who chairs the broker's remuneration committee, the plan would only begin paying out after almost £400m in shareholder value had been created.
A number of investors have nevertheless rebuffed the original framework, reflecting growing City sensitivity about executive pay at a time when ministers are digesting responses to a green paper on the issue.
"This was always presented as a consultation exercise, and the company has listened carefully to what investors have had to say," said one source familiar with the plan.
"The opposition to it was far from unanimous."
The scale of the potential maximum payout under the scheme was, at £85m, a significant sum, even in the lucrative arena of interdealer broking.
The precise number of executives who would participate in the Value Creation Plan is unclear, although it is understood that TP ICAP's chief financial officer, Andrew Baddeley, could have received up to around £15m under the plan.
Institutional investors are keen to restrict pay rises for public company bosses, and have already expressed anger in recent weeks at companies including the tobacco manufacturer Imperial Brands and Thomas Cook, the tour operator.
City shareholders such as Fidelity have published a series of proposals for generating greater accountability over pay, calling on the chairs of remuneration committees to stand down if they fail to command support from at least 75% of investors at annual meetings.
TP ICAP was created by Tullett Prebon's £1.3bn takeover of the voice-broking business of ICAP, the company run by former Conservative Party treasurer Michael Spencer and now renamed NEX Group.
The three-year Value Creation Plan proposed by the company would be tied to the success of the integration of the two businesses, and is partly designed to ensure the retention of key executives.
TP ICAP is performing strongly, with greater volatility in financial markets in the wake ‎of Donald Trump's election benefiting revenues.
One source said that revisions to the plan‎ had not yet been decided upon but pointed out that consultation over any new proposals would need to be conducted with a smaller group of investors because TP ICAP's annual report is due to be published in the next few weeks.
A TP ICAP spokeswoman declined to comment.

(ZH) Concerns Grow About A Nuclear "Incident" In Europe After Spike In Radioacti

Concerns Grow About A Nuclear "Incident" In Europe After Spike In Radioactive Iodine Levels


Concerns about a potential, and so far unsubstantiated, nuclear "incident", reportedly in the vicinity of the Arctic circle, spread in the past week after trace amounts of radioactive Iodine-131 of unknown origin were detected in January over large areas in Europe according to a report by the Institute for Radiological Protection and Nuclear Safety, the French national public expert in nuclear and radiological risks. Since the isotope has a half-life of only eight days, the detection is an indication of a rather recent release. As the Barents Observer adds, "where the radioactivity is coming from is still a mystery."
The air filter station at Svanhovd - located a few hundred meters from Norway’s border to Russia’s Kola Peninsula in the north - was the first to measure small amounts of the radioactive Ionide-131 in the second week of January. Shortly thereafter, the same Iodine-131 isotope was measured in Rovaniemi in Finnish Lapland. Within the next two weeks, traces of radioactivity, although in tiny amounts, were measured in Poland, Czech Republic, Germany, France and Spain.
Norway was the first to measure the radioactivity, but France was the first to officially inform the public about it.
"Iodine-131 a radionuclide of anthropogenic origin, has recently been detected in tiny amounts in the ground-level atmosphere in Europe. The preliminary report states it was first found during week 2 of January 2017 in northern Norway. Iodine-131 was also detected in Finland, Poland, Czech Republic, Germany, France and Spain, until the end of January", the official French Institute de Radioprotection et de Süreté Nucléaire (IRSN) wrote in a press release.
No Health Concerns For Now
Mitigating some of the concerns, however, was the head of section for emergency preparedness at the Norwegian Radiation Protection Autority, Astrid Liland, who spoke to the Barents Observer and said the levels measured raise no health concerns. “We do measure small amounts of radioactivity in air from time to time because we have very sensitive measuring equipment. The measurements at Svanhovd in January were very, very low. So were the measurements made in neighbouring countries, like Finland. The levels raise no concern for humans or the environment. Therefore, we believe this had no news value,” Astrid Liland answers when asked why the public was not informed.
She points to Norway’s nation-wide online network of 33 stations were people can check real-time measurements.
At Svanhovd, measurements in the period January 9-16 show levels of 0,5 micro Becquerel per cubic meter air (µBq/m3). In France, where authorities decided to publish the information, measured radioactivity were much lower, from 0,1 to 0,31 µBq/m3. Levels measured in Finland were also lower than in northern Norway with 0,27 µBq/m3 measured in Rovaniemi and 0,3 µBq/m3 in Kotka. Finland’s Radiation and Nuclear Safety Authority (STUK) decided to follow the French example and posted a press release about the increased levels of radioactivity.
But No Explanation Where The Radiation Came From
Finnish authorities also underscores that the levels measured are far from concentrations that could have any effect on human health. Neither STUK, nor IRSN speculate in the origin of the released Iodine-131.
Astrid Liland can’t either explain the origin of the radioactivity. “It was rough weather in the period when the measurements were made, so we can’t trace the release back to a particular location. Measurements from several places in Europe might indicate it comes from Eastern Europe,” Liland explains. “Increased levels of radioactive iodine in air were made in northern-Norway, northern-Finland and Poland in week two, and in other European countries the following two weeks, Astrid Liland says.
As the Barents Observers adds, Iodine-131 in the air could come from an incident with a nuclear reactor. The isotope is also widely used in medicine and for that purpose; many countries around the globe produce it.
All operators of nuclear reactors or institutions using Iodine-131 for medical purposes have detectors for external releases of radioactivity. In other words, as the Observer concludes, "Someone out there knows why the radioactivity was spread over larger areas of Europe."
Nuclear installations in northwastern Europe, were the radioactivity was first discovered, includes nuclear power plants in Finland, Sweden and Russia, in addition to nuclear powered vessels on Russia’s Kola Peninsula and White Sea area. The source could as well come from even further away installations.
Constant Phoenix Deployed
Finally, adding an air of mystery to this alleged "incident" was the spotting of the "Constant Phoenix", which on Friday arrived in the UK's Mildenhall airbase after departing from Florida.
U.S. Aircraft Spots @usaircraftspots
WC-135C "Constant Phoenix" used for detecting and identifying nuclear explosions is Airborne over Florida tracking North pic.twitter.com/QGoWmVjUO1
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U.S. Aircraft Spots @usaircraftspots
"Constant Phoenix" now on final for RAF Mildenhall, UK pic.twitter.com/9MAoZ6Kl1z
11:57 PM - 17 Feb 2017

As the Aviationist explains, the WC-135 Constant Phoenix has been used in the past to determine whether nuclear tests or detonations have taken place in any given region. The WC-135 is a derivative of the Boeing C-135 transport and support plane. Two of these aircraft are in service today out of the ten examples operated since 1963. The aircraft are flown by flight crews from the 45th Reconnaissance Squadron from Offutt Air Force Base while mission crews are staffed by Detachment 1 from the Air Force Technical Applications Center.
The WC-135, known as the “sniffer” or “weather bird” by its crews, can carry up to 33 personnel. However, crew compliments are kept to a minimum during mission flights in order to lessen levels of radioactive exposure.
Effluent gasses are gathered by two scoops on the sides of the fuselage, which in turn trap fallout particles on filters. The mission crews have the ability to analyze the fallout residue in real-time, helping to confirm the presence of nuclear fallout and possibly determine the characteristics of the warhead involved: that’s why the aircraft is important to confirm the type of explosion of today’s test.


As Darin R. Pfaff, a former WC-135 aircrew member explained to us in a comment to a previous article on this aircraft: “airframes have two large supplemental charcoal filter packs, as well as HEPA/ULPA filters (we called them “lungs”) for their cabin air. When the instruments indicate contact with radioactive debris, the crew will also reduce cabin airflow to just maintain pressurization, and all personnel on board will go to 100% oxygen through their masks. They will stay on 100% O2 until activity readings drop back down into the safe levels. Everybody wears a dosimeter, and those records are monitored to prevent unsafe exposure.”

Along with monitoring nuke testing, the WC-135 is used to track radioactive activity as happened after the Chernobyl nuclear plant disaster in the Soviet Union in 1986 and Fukushima incident back in 2011.
So far there has been no official statement by any entity providing further details on the spike in Iodine levels, nor an explanation from the US military why the "Constant Phoenix" was deployed to Europe.

WSJ : Unilever Bid Follows Familiar Playbook for Warren Buffett and 3G

Unilever Bid Follows Familiar Playbook for Warren Buffett and 3G
Warren Buffett’s Berkshire Hathaway has teamed up with 3G in efforts to consolidate food and consumer-goods industries and expand products’ reach

Brazilian private-equity firm 3G Capital Partners L.P. and billionaire investor Warren Buffett are creating a global food and consumer-goods empire by following a simple formula: buy a company that is concentrated in one market, combine it with another somewhere else and then spread the products across the world.

On Friday they took their biggest swing yet when Kraft Heinz Co., which is partly owned by 3G and Mr. Buffett’s Berkshire Hathaway Inc., said it made a $143 billion approach to take over U.K. consumer products giant Unilever PLC. Kraft Heinz later said Unilever has declined the offer, but that “we look forward to working to reach agreement on the terms of a transaction.”

If the deal happens, it would cement 3G and Mr. Buffett as the largest global players in food and consumer packaged goods by bringing together household brands such as Kraft Heinz’s Oscar Mayer hot dogs and Maxwell House coffee and Unilever’s Dove soaps and Surf laundry detergent.


The strategy behind the deal follows a familiar playbook for 3G and Berkshire.

The firms first teamed up in 2013 when they bought ketchup giant H.J. Heinz Co. in a $23 billion deal. At the time, the Pittsburgh-based company generated two-thirds of its sales outside the U.S., with more than 20% in emerging markets. Two years later, in a deal orchestrated by 3G and Mr. Buffett again, Heinz bought U.S.-centric food maker Kraft Foods Group Inc. to create one of the world’s largest food and beverage companies.

It isn’t clear what role Mr. Buffett might play if Kraft Heinz and Unilever reach a deal. Berkshire could split the cost of the acquisition with 3G and it could also help 3G fund its part of the deal.

As 3G’s global ambitions have grown, the Brazilian firm has given Mr. Buffett access to new markets and deals he normally wouldn’t do on his own. Unlike Berkshire, which is molded in the image of its folksy chief executive and has a reputation for hands-off ownership, 3G is known for aggressively cutting costs and jobs.

“On the surface, it’s inconsistent,” said David Kass, a professor at the University of Maryland’s Robert H. Smith School of Business and a Berkshire shareholder. “But I think from Buffett’s point of view…it’s not Berkshire making these operating decisions.”

The motivation for Berkshire is that as the firm has grown, Mr. Buffett has struggled to find deals big enough to move the needle on the firm’s earnings. Berkshire’s subsidiaries, which include insurers, a railroad, utilities and retailers, rapidly pile up cash for their parent company to spend. Mr. Buffett has compared his search for ever-larger deals to elephant hunting.

Mr. Buffett declined to comment Friday through an assistant. A spokesman for 3G didn’t return a call seeking comment.

In his 2015 annual letter, Mr. Buffett wrote that Berkshire and 3G both “crave efficiency and detest bureaucracy,” but Berkshire seeks those qualities before buying companies and 3G buys companies with the goal of cutting costs. 3G’s executives “could not be better partners,” he wrote.


Meanwhile, 3G and Mr. Buffett are also becoming a global force in the restaurant industry. When 3G bought Burger King in 2010, the majority of the restaurants were located in the U.S. Since then, 3G has pushed Burger King into Latin America, Europe and the Middle East, making it one of the fastest-growing fast-food chains in the world with a total of more than 15,000 restaurants.

3G teamed up with Mr. Buffett in 2014 when Burger King took over Canadian coffee-and-doughnut chain Tim Hortons Inc. for $11 billion. The company has since brought more Tim Hortons to the U.S. and to new overseas markets such as the Philippines.

At the time of that merger, people familiar with the matter said Burger King wanted to fashion itself after Yum Brands Inc., the owner of Pizza Hut, Taco Bell and KFC, by becoming a holding company with unrelated, separately managed restaurant brands. The tie-up between Burger King and Tim Hortons resulted in a new company called Restaurant Brands International Inc.

FT : Iberdrola chairman denounces EU energy rules as ‘Kafkaesque’

Iberdrola chairman denounces EU energy rules as ‘Kafkaesque’
Group says government incentives encourage the retention of polluting coal plants

The chairman of Iberdrola has denounced Europe’s energy regulations as “Kafkaesque”, and warned the current regime encourages utilities to keep polluting coal plants running rather than invest in green power generation for the long term.

“There is not enough capacity to satisfy expected demand,” Ignacio Galán told the Financial Times. “What is happening now is that we are artificially preserving power plants that are obsolete and that would be closed if it were not for [government] incentives [to maintain capacity]. At the same time, we are not building new gas-fired power plants.”

Iberdrola is one of Europe’s biggest utilities, with a large presence spread across the US, Brazil, Mexico, Spain and the UK, where it owns Scottish Power. The Madrid-based group, which claims to be to the largest generator of wind power in the world, is due to publish full-year results on February 22.

Mr Galán’s comments highlight frustration in the industry as power groups struggle to balance competing demands from politicians to combat climate change and keep the lights on without raising consumers’ energy bills.

“The European system is pretty Kafkaesque,” said Mr Galán. “On the one hand the system tells you that prices must not rise, and on the other side regulators place more and more burdens on you that you have to include in the tariffs.”


He also pointed to growing concerns about power shortfalls at moments of peak demand, or at times when there is little sun or wind. To cover that risk, governments have provided subsidies to keep old power stations running, including heavily-polluting coal and diesel plants.

Mr Galán singled out the UK as a country where the need for more generation capacity was especially acute.

“The country in Europe that has the most problems with reserve capacity is the UK,” he said. “They have not built new power stations for many years. They haven’t got the incentives. If you don’t offer long-term incentives to build new plants you won’t get new plants. You are putting at risk the system. That is the reality.”

Scottish Power on Friday became the latest UK energy company to increase electricity prices, raising its standard tariff by almost 11 per cent.

According to Mr Galán, British consumers “should not be surprised” by rising energy bills, pointing to the effects of higher oil and gas prices, the slide in sterling’s value after the UK’s vote to leave the EU, and the steady increase in regulatory costs.

“If we want to lower energy costs we have to remove all the non-energy related costs from the bills, as is the case in the US,” he said. “The energy bills we pay in Europe — almost half the total comes from items that have nothing to do with energy or energy transportation, such as taxes, regulations and subsidies.”


Coal-fired power stations operated by Vattenfall at Jaenschwalde in Germany © EPA
Iberdrola’s share price suffered a hit in the immediate aftermath of the Brexit vote, but the group has since managed to calm investor concerns. Mr Galán said Iberdrola was fully hedged against any impact from the fall of sterling both in 2016 and 2017. In spite of the political turbulence, “our theme is business as usual”, he added.

Iberdrola’s investment plans for the UK — which amount to £2bn a year from 2016 to 2020 — are unchanged. “We don’t see that Brexit will have a negative effect on our business,” Mr Galán said.

He sought to project the same equanimity with regard to political changes in the US, where Iberdrola has expanded rapidly in recent years and now ranks as the second-largest producer of wind energy. President Donald Trump and some of his closest advisers have repeatedly questioned whether climate change is happening, while promising to revive the US coal industry.

“President Trump has been in his job only for a few weeks,” Mr Galán said. “Let’s see how things turn out. We have to give him time. I see no concrete sign that suggests the US will not lower its emissions.”

FT : Former star looks to kick-start football finance deals for masses

Former star looks to kick-start football finance deals for masses
London Sporting Exchange to focus on offering royalties, receivables and rent

Manchester City are now “richer than God”, in the memorable title of Guardian journalist David Conn’s account of its takeover by Abu Dhabi’s ruling family.

But it was not always thus. In 2002, having plumbed the depths of English football’s third tier, they suffered one of their perennial cash crises as they battled to remain in the Premier League. 

Chairman David Bernstein, later to head the Football Association, had business experience with French Connection and came up with a corporate finance deal more familiar on Lombard Street than Maine Road. He enlisted Bear Stearns, the investment bank, to raise £30m by pledging future gate income so he could pay the wage bill. 

Such securitisation is more common now. And it is soon to come to the masses (or at least sophisticated retail investors). Ray Ranson, who himself played for City and ended his career at Newcastle United in 1995, is the man behind the plan. 

Mr Ranson sensibly turned down a coaching offer at St James’s Park to develop his sports finance and insurance broking company. It would arrange for sponsors to be protected if a Formula 1 driver was injured, and help clubs raise money against future revenues. 

He merged it with the Benfield Group, founded by Matthew Harding, the then Chelsea director who later died in a helicopter crash. At Benfield, Mr Ranson facilitated more than €250m of transactions for professional clubs across Europe. Benfield, best known for reinsurance products, floated for £645m in 2003. 

Mr Ranson founded sports data provider Prozone in 2004 before selling out in 2011 to concentrate on his finance business. The London Sport Exchange was established as a wholesale platform last year and has raised several hundred million pounds by matching investors and sports clubs, Mr Ranson said. This week he is opening the site to sophisticated retail investors. 

“The business of sport globally is worth $150bn annually. I want to democratise it,” he says. “Sports clubs are asset rich but cash poor. They have lots of guaranteed income streams such as media rights and ticket sales.” 

Sports bring in about $50bn from media rights, $50bn from ticketing, $30bn from sponsorship and $20bn from merchandise, according to PwC, the consultancy. 

Some clubs are even relegation proof, he argues. “Leeds United are going to sell 10,000 season tickets a year even on a cold day in hell.” 

Mr Ranson points out that the assets are uncorrelated to the global economy. “You could have Trump declare war on Iran, oil going through the roof and a run on stocks but it is not going to affect the value of Paul Pogba [the world’s most expensive player at £89m].” 

Mr Ranson says he will stick to the three Rs — royalties, receivables and rent. One growth area is players’ image rights. Clubs pay up to a fifth of wages this way as it attracts lower tax. They could borrow it from investors who then collect from sponsors. “Your creditors are Nike and Samsung. They are going to pay up,” says Mr Ranson. There are 600,000 self-certified sophisticated investors who invest via their personal pension (Sipp) or Isa to trade on the platform. 

The minimum investment is £1,000 and returns are likely to be 5 per cent annually. But there is a reason that sports finance is a niche product. Teams are tempted to chase glory by spending money they do not have. 

James Dow, a football finance expert who also runs investment funds, said the history of the sport was littered with financial failures. “It worked for Chelsea and Manchester City but they were bailed out when rich owners arrived. It comes down to good stewardship.” 

Mr Dow, a partner at Dow Schofield Watts, says he would not be recommending it to any of his clients. “There are plenty of other yield opportunities. You can invest in a bridging loan company at 8 per cent return and that is secured on property — as safe as houses. 

“I would be surprised if investors thought the quality of the assets was high enough to justify the risk.” 

Rangers went bust in 2012 after overborrowing against future ticket sales and failing to pay taxes. Leeds United entered administration in the early 2000s despite a fire sale of assets including its stadium and most of its squad. 

But outside football the market is growing. Wasps, the rugby union club, issued a £35m bond last year. It pays 6.5 per cent and matures in 2022. It is secured on its Coventry stadium and is tradeable on the London Stock Exchange. 

Lancashire county cricket club in 2014 raised £3m to build a hotel through a mini-bond paying 7 per cent. 

And Mr Ranson is talking of expanding into pop groups and films. The fate of his business may depend as much on them as the beautiful, often financially ugly, game.