>>> Petrobras in negotiations with Total to sell stakes in oil fields, two power

Petrobras in negotiations with Total to sell stakes in oil fields, two power-plants - report (translated)

Brazilian state-controlled oil company Petrobras is in negotiations with French Total to sell stakes in oil fields located in the BMS-9 and BMS-11 blocks in the offshore formation known as ‘pre-sal’ in the Atlantic Ocean, Folha de Sao Paulo reported.

The oil fields in consideration are Iara, Berbigao, Sururu and Oeste de Atapu in the BMS-11 block, and the oil field Lapa in the BMS-9 block, the Portuguese-language article noted, without citing any source.

Shell will have the right of first refusal on the fields of the BMS-11 block as it is already in partnership with Petrobras in that area, the item added.

The deal may also include stakes in the infrastructure related to those oil fields used for the process and transporting of natural gas, the item added.

Petrobras is also looking to sell two power-plants to Total, and also offer a lease contract to operate a liquid natural gas regasification plant located in the Brazilian state of Bahia.

Reuters - UK's Hammond pledges to spread wealth, but debt 'eye-wateringly' high

British finance minister Philip Hammond said on Sunday he would aim to help struggling families and boost the country's long-term growth prospects when he announces Britain's first budget plans since the Brexit vote next week.

But Hammond also told BBC television that levels of public debt were "eye-wateringly" high and he would not be announcing a big increase in public spending.

"We've got to make sure that the prosperity that comes from seizing opportunities ahead is shared across the country and across the income distribution," he said, echoing promises by Prime Minister Theresa May to work for "just managing" families.

Hammond told the BBC that the government was keeping an open mind about its options for leaving the EU, downplaying suggestions from Britain's foreign minister Boris Johnson that the country should leave the EU's customs union.

Reuters - Credit Suisse moves toward Swiss bank spin-off

Credit Suisse has moved more than 1 million customers into a new Swiss bank which goes live on Sunday, a step toward what could be Switzerland's biggest stock market listing in more than a decade.
The creation of the new subsidiary that caters for Swiss retail, corporate, private and investment banking clients, is part of a broader shake-up of Credit Suisse under Chief Executive Tidjane Thiam to focus more on wealth management and less on volatile investment banking.
"Setting up the legal entity is a pre-condition on the way to the IPO," Frank Schubert, project leader for the Swiss legal entity, said, referring to the initial public offering (IPO) plans.

Considered one of the group's crown jewels for its profitability, its executives hope the new bank - Credit Suisse (Schweiz) AG - could command a valuation of around 20 billion Swiss francs ($19.8 billion), according to one source familiar with the bank's thinking.
Credit Suisse Group has a market capitalization of about 30 billion francs, according to Thomson Reuters data.
Credit Suisse said it was too early to give any guidance on the valuation.
The bank hopes the listing will highlight a part of Credit Suisse the bank believes is undervalued while also paving the way for acquisitions of smaller Swiss banks.
The plan is for the IPO to raise 2 billion to 4 billion francs by selling 20-30 percent of Credit Suisse (Schweiz) AG, which is run by Credit Suisse veteran Thomas Gottstein.
A valuation at the top end of that range would make it bigger than any Swiss initial public offering since 2001.
Investment banks are already jostling for a role on the IPO.
"Everyone is pitching hard on this one," one investment banker said.
But Credit Suisse will need to show it can come close to delivering on an adjusted 2018 pre-profit target for the Swiss business of 2.3 billion francs from 1.6 billion in 2015 if it is to list at the top end of the price range, a goal some analysts consider overly ambitious.
Expected next year, the listing will help to fund Thiam's broader overhaul and will also raise cash to bolster the group's balance sheet. Thiam aims to bring the bank's main capital ratio to 13 percent by the end of 2018. It was 12 percent at the end of the third quarter.
GAM fund manager and Credit Suisse investor Daniel Haeuselmann believes the need for cash is a key reason for the listing, saying, "I think it's more a way to raise capital without significantly diluting shareholders' investments".
Credit Suisse has said market conditions will decide the timing of the IPO but it is currently pencilled in for the second half of 2017.
The creation of Credit Suisse (Schweiz) AG is also part of Swiss efforts to safeguard the country's economy from another banking crisis by getting major banks to ring-fence parts of their business.

Local rival UBS established a new Swiss subsidiary in 2015.
The new legal entity going live has involved the transfer of around 1.4 million clients into the new bank and the creation of a board of directors. Credit Suisse will reveal at a later stage the amount of assets transferred.
Credit Suisse (Schweiz) AG has been created mainly from the group's Swiss universal banking business, one of three regional divisions set up in Thiam's restructure alongside Asia Pacific and International Wealth Management.
The bank has not yet published financial results for Credit Suisse (Schweiz) AG, although it is expected to give more details at an investor day on Dec. 7.
Based on numbers for the Swiss universal bank, it contributed more than a fifth of group net revenues between 2013 and 2015.

(ZH) Italy's Government On Verge Of Collapse: Next Trumpian Domino To Fall?

Italy's Government On Verge Of Collapse: Next Trumpian Domino To Fall?

Italy’s government is on the verge of collapse. Prime minister Matteo Renzi reiterated his position just yesterday, he will not hang on if a referendum he seeks does not pass.
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Polls show the referendum will fail. Then again, polls have not been remarkably accurate recently, to say the least. On the other hand, this poll shows a strong preference to what is labeled “populism”.
Finally, there is always a chance Renzi will not resign and he is only attempting to manipulate the vote. Let’s sort this all out.


Let It All Hang Out

Renzi Rules Out Leading Technocratic Government After Referendum


Italian prime minister Matteo Renzi has ruled out leading a caretaker government if he is defeated in a key constitutional referendum next month, removing some of the uncertainty surrounding his political future after the vote.

Mr Renzi had said early in the campaign that he would resign if he lost but has faced pressure from some lawmakers in his Democratic Party to stay on regardless of the outcome on December 4.

In a radio interview with Rtl 102.5 on Thursday, he decisively rejected the notion.

“If the citizens vote no and want a decrepit system that does not work, I will not be the one to deal with other parties for a caretaker government – a little government, ” Mr Renzi said.

Italy Polls Get Worse for Renzi as Referendum Nears


Opinion polls are making increasingly grim reading for Italian Prime Minister Matteo Renzi less than three weeks ahead of a referendum on constitutional reform on which he has staked his political future.

Of 32 polls published by 11 different pollsters since Oct. 21, every one has the ‘No’ camp ahead, and generally by a widening margin.

In three polls published on Monday the lead for ‘No’ ranged from five points, according to IPR Marketing, to seven points, according to Tecne, with EMG Acqua in the middle at 6 points.

These results exclude undecided voters, which are estimated at 25.9 percent by EMG Acqua and 16.5 percent by Tecne. The most worrying aspect for Renzi is that as the number of undecided voters declines, the lead for ‘No’ appears to be rising.

Bookmakers also hold out little hope for the 41-year-old premier, with Ladbrokes estimating a roughly 75 percent probability of a win for ‘No.’

However, most pollsters continue to say the outcome of the Dec. 4. ballot remains uncertain.

They point out that opinion polls already proved notoriously wrong in the June referendum in which Britons chose to leave the European Union and most recently when Americans elected republican Donald Trump to the presidency on Nov. 8.

Blowout Against Renzi?


All polls by some of Italy’s biggest media outlets, held just before the pre-vote ban on publishing voter’s intentions, suggest that Italians are likely to reject Prime Minister Matteo Renzi’s plan to limit powers of the Senate.

According to a poll conducted by Corriere della Sera newspaper, 55 percent of the people plan to vote ‘No’ and 45 percent ‘Yes’ to changes. The survey also suggested that around a third of the population is familiar with the content of the reform.

What’s It All About?
After all this time and electioneering by Matteo Renzi in Italy, and only a third of voters know what the referendum is about?!

Political populism: Is Italy next?
A rejection of Renzi’s reform plans in a referendum risks toppling the government says the Financial Times in Political populism: Is Italy next?


If the Italian prime minister loses a high-stakes referendum on his flagship constitutional reform set for December 4, it could bring his tenure in office — and his entire political project — to an abrupt and premature end.

“Renzi went for broke, and if he wins, the coast will be clear. But if he loses, it will be devastating,” said Paolo Donzelli, a 53-year-old Florentine car salesman seated at one of the large round tables set up at the conference. “This is the showdown, the big political battle.

And then, as they say in Florence, they will count the dead.”

“It could be another watershed moment for Europe so there is huge interest and attention,” says Andrea Montanino, director of the global business and economics programme at the Atlantic Council. “Renzi is considered an anchor in a very complex picture.”

Mr Renzi is now scrambling to save his political skin. His first mistake, which the prime minister has acknowledged, was excessively personalising the referendum by vowing to resign and leave politics if he lost.

“The electorate is scared and doesn’t see solutions. They will use the vote to hit those who are in power and the paradox here is that Renzi is now seen as the quintessence of the establishment,” says Giovanni Orsina, a professor of politics at Luiss University in Rome.

“Renzi is like the poker player who keeps upping the ante even if his cards are bad. He’s a prisoner of his own bluff.”
Students against Renzi
In the quite laughable column, “Renzi hired Jim Messina, President Barack Obama’s former campaign manager, to help with strategy and the get-out-the-vote operation, despite his inability to clinch a victory for Britain’s David Cameron in the EU referendum.”
Italian Debt Sinks 14% Since October


Prices for Italy’s longest-dated government debt have fallen 14 per cent since its sale in early October, inflicting a paper loss of €140,000 for every €1m bought by investors.

The shunning of the bond comes as polls point to a potential defeat in the December 4 vote for Matteo Renzi, the centre left prime minister, who has staked his political future on Italian voters approving the reforms.

At the time of its sale, Italy’s 50-year bond was seen as an extraordinary success — drawing €18bn of investor bids for a €5bn issue.
Waiting in the Wings
Beppe Grillo’s Five Star Movement (M5S), is waiting in the wings.
That Wikipedia chart is stale, dating from August. I like it because it shows the trend clearly. More recent polls show M5S slightly in the lead.
Given all the political uncertainties, it is difficult to say. Italy has a poll cutoff on the referendum so what we have now is about all we are going to see until December 4.
Coast Clear on Win?
Finally, and very importantly, I take exception to this comment from above: “Renzi went for broke, and if he wins, the coast will be clear”.
That is not true at all. The worst possible setup would be for Renzi to win the reform, but lose the next election.
The reform weakens the Senate and gives an absolute majority of lower Parliament to whoever wins the election.
As it stands right now, I would bet on the Five Star Movement. And M5S is anti-euro and anti-EU.
Those hoping for a win on the referendum now, may be extremely grateful it failed after the next election.
For now, the most likely setup is a collapse of the Italian government following a defeat of the referendum.
It’s time for a musical tribute...

WSJ : Tesla Investors Still Need to Watch Their Wallets

Tesla Investors Still Need to Watch Their Wallets
To make CEO Musk’s ambitions a reality, more capital will soon be needed
Tesla Motors has no immediate need to raise equity in the wake of the merger withSolarCity, according to Chief Executive Elon Musk. Investors should still be on watch for dilution.
As expected, Tesla and SolarCity shareholders both voted to approve their planned merger on Thursday. As a result, Tesla will be issuing about 11 million shares to complete the transaction.
That should be the end of dilution for a while, according to Mr. Musk. The Tesla CEO said in October that an equity raise for the combined company won’t be necessary before the year is out.

That statement is reasonable, as far as it goes. The two companies combined had about $3.5 billion in cash on the books as of Sept. 30. Tesla generated a surprise $176 million in free cash in the third quarter.
But if Mr. Musk wants to make his ambitions a reality, more capital will soon be needed.

Tesla forecast that it will spend more than $1 billion on capital expenditures in the fourth quarter. That likely isn’t the full extent of the funding need. Expanding vehicle deliveries to 500,000 by 2018 from about 80,000 cars this year will require significant further investment.
There may be other demands on cash too. Mr. Musk said Thursday that the new solar roof product, set to be available next year, will probably cost less than a traditional roof, even before electricity savings. That certainly sounds appealing, but achieving that lofty goal and bringing the product to market will likely require still more expenditures.
Meanwhile, Tesla’s free cash flow generation isn’t likely to continue in the fourth quarter. Tesla achieved positive operating cash flow of $424 million in the third quarter, but accounts payable and accrued liabilities increased by more than $600 million. Increasing payables by that extent is a direct source of cash, but an unsustainable one.

Adding the consistently unprofitable SolarCity to the mix won’t help. An inability to consistently generate cash from its current business means outside funding will be needed.
Meanwhile, the current cash balance looks a lot smaller when viewed in the context of liabilities. The combined company had total debt of about $6 billion on its balance sheet as of Sept. 30.
Tesla could always change its plans. None of these projects necessarily have to happen, and Tesla has changed its outlook on capital spending and funding needs on multiple occasions this year.

But shareholders enjoy its lofty valuation based on what Tesla could become, rather than what the business does today. That would likely change if Tesla became less ambitious.
The company’s serial equity issuance and stock option granting has pushed diluted shares outstanding above 157 million, up from 92 million in 2010, according to FactSet. Look for that number to increase further in the new year.

>>> Barron's Week End Summary

Barron's weekend update: positive on KMX 

- Cover story: To help support his administration's ambitious spending and tax-cut plans at a time when the nation faces massive debt, Donald Trump may want to consider issuing Treasury bonds for the longest possible term, perhaps 100 years, as some other countries have done. 

- Features: 1) In the wake of Donald Trump's victory, bonds have sold off sharply, making prices more attractive for a variety of municipal-bond close- and open-end funds, taxable closed-ends, and preferred stocks; 2) Positive on KMX: Country's largest used-car seller is likely to benefit from dropping prices for used cars and a flood of off-lease vehicles about to hit the market; shares could see 20% upside; 3) Cautious on YERR: Company has secured $1B in financing from U.S. conglomerate Amanda Enterprises, but investors should be wary of the suspect track record of its CEO, George Wight.

- Tech Trader: Positive on Tectonic Audio Labs: Washington-based startup has developed a technology for small speakers that can produce brilliantly clear sound, which could help the streaming-music sector. 

- Trader: The combination of better jobless claims and retail sales numbers with Donald Trump's stimulus plan could drive economic growth up by 3% or more in Q4; Small-cap stocks may slow down a bit after a recent rally, but they could outperform large-caps in the next year; Positive on UAL: Shares of the airline look to be the strongest in its sector based on fundamentals, and operating profit margins should continue to rise because of reduced costs and better hub management. 

- Profile: Danton Goei, manager of the Davis Globalfund, is concentrated, with 54 holdings versus more than 2,000 for its benchmark (top 10 holdings: AMZN, GOOGL, Encana, APA, Berkshire Hathaway, WFC, Naspers, Did Chuxing Series A, JPM, JD). 

- Barron's Roundtable: Four top investors-Phil Blancato of Ladenburg Thalmann Asset Management, Bill Roach of Globalt Investments, Keith Goddard of Capital Advisors, and Ben Johnson of Morningstar-say investors will continue to face the same big issues even under a Trump administration. 

- Small Caps: Positive on ATRO: Shares of aerospace-parts maker are down because of problems at an ancillary unit, giving investors a chance to take advantage of the weakness. 

- Follow-Up: Positive on NVDA, AMD: Shares of chip makers are benefiting from the companies' growing strength in the cloud market and have more upside, while earlier optimism about MU has yet to pan out; Positive on HAR: Samsung's acquisition of the dashboard electronics company implies a 5% annualized return for Harman investors who hold on to their shares; Positive on SAVE: Shares still have 20% upside as new chief executive Robert Fornaro continues to make changes. 

- European Trader: "Technology stocks have fallen out of favor in Europe in recent weeks, but the sector still offers value for long-term investors," and shares such as Temenos, SAP, and Legrand are good long-term plays. 

- Asian Trader: CS global chief investment officer Michael Strobaek says Australian shares are reasonably priced, and that it isn't fair to call China a currency manipulator. 

- Emerging Markets: In the long term, Turkey can expand its export base, and the weak Turkish lira only helps on that score. 

- Commodities: The prolonged bear market in corn could soon end, because supply may be reaching a peak while demand is still growing. 

- Streetwise: Donald Trump's election notwithstanding, "the dynamics that keep Treasury yields low haven't gone away. Inflation can't be willed into existence."

FT : BT has second-worst funded pension scheme in the world

BT has the second-worst funded pension scheme in the world, according to a report that, for the first time, analysed the health of more than 5,000 company pension funds across the globe.

The UK telecoms group was found to have the world’s most underfunded pension plan behind DuPont, the US chemical giant. The findings come as BT continues to grapple with pension funding problems.

At the end of October, the FTSE 100 company reported that its pension deficit had grown to £9.5bn from £6.2bn just three months earlier. Agnes Grunfeld, a vice-president at MSCI, the index provider that compiled the research, called the findings “uncomfortable”.

“This is a crisis for corporations, and something investors should be paying very close attention to,” Ms Grunfeld said. The fear is that ballooning pension deficits could derail a company’s expansion plans and halt dividend payments.

According to MSCI’s research, which examined the pension funding status of 5,300 companies in North America, western Europe, the Asia-Pacific region and Japan, BT has a 36 per cent gap between its pension obligations and the resources set aside to fund them. DuPont has a 42 per cent gap.

John Ralfe, a pensions consultant, said: “BT has around £50bn of underlying pension liabilities, the largest of any UK company. However hard it tries to reinvent its business for the 21st century, it still has the burden of 20th century pensions to pay for many decades to come.”

BT declined to comment.

MSCI’s report found that the funding status of UK companies was weaker than the rest of Europe. The UK had the greatest percentage of companies with the biggest underfunded ratios, the gap between a company’s exposed pension liabilities and its annual revenues.

London-listed BAE Systems also appeared in the top-10 list of the worst-funded company pension schemes.

MSCI blamed the growing deficits on retirees living longer, very low interest rates globally, lower stock market returns relative to assumptions, and companies not having set aside sufficient funds to meet obligations.

Ros Altmann, former UK pensions minister, said: “The size of BT’s deficit clearly could be a worry, but don’t forget that some of the scheme benefits have a government guarantee. I also think that we need to see how long-term interest rates develop in coming months.

“If rising bond yields lead to lower deficits, some of the pressure will be removed. Central banks have been deliberately driving long rates lower, but I am not sure that can keep on going and it could be unwound at some stage.”

Of the top 10 companies with the highest underfunded ratios, six are American: DuPont, Hess, Dun & Bradstreet, Delta Air Lines, Centurylink and Entergy.

Howard Sherman, head of corporate governance business development at MSCI, said: “Our findings confirmed the short-term concerns over a widening gap between pension obligations and funds set aside to meet those obligations. With very few exceptions (Australia, Ireland, Portugal and Italy), the average underfunding ratio for each country deteriorated in 2016 relative to 2015.”