(Les Echos) Patrick Drahi prêt à mettre près de 4 milliards pour

Patrick Drahi prêt à mettre près de 4 milliards pour racheter des clients Bouygues Telecom


Le propriétaire de SFR veut s’offrir des clients fixe et mobile.
Orange a beau dévoiler en grande pompe une nouvelle box, tous les regards sont aujourd’hui tournés vers le mariage quasi annoncé avec Bouygues Telecom. Mercredi, le pdg de l’opérateur historique, Stéphane Richard, a reconnu, devant les journalistes, qu’un accord de cession des actifs de Bouygues Telecom à SFR et Free était « sur le point d’aboutir ».
« On est à peu près d’accord sur les grandes masses de ces répartitions », a-t-il dit, même si officiellement rien n’est signé. Si le rapprochement Orange-Bouygues Telecom se fait, la vente de réseaux, boutiques, fréquences, clients... de Bouygues Telecom à SFR et Free est en effet essentielle pour obtenir le feu vert de l’Autorité de la concurrence.
C’est SFR qui rachèterait la majeure partie des actifs de Bouygues Telecom et plus particulièrement les clients fixe et mobile de Bouygues Telecom. Pour cela, le « tycoon » Patrick Drahi serait prêt, selon nos informations, à faire un chèque de près de 4 milliards pour emporter le morceau.
Un deal à 10 milliards
Par conséquent, Free pourrait débourser autour de 2 milliards d’euros de son côté pour récupérer des antennes et des fréquences, ainsi qu’une partie des 300 boutiques détenues en propre par Bouygues Telecom. Les cessions d’actifs devraient en effet représenter environ 6 milliards, sur un deal à 10 milliards.
Reste désormais à trouver un accord avec l’Etat qui détient 23 % du capital d’Orange et qui souhaite rester l’actionnaire de référence. Et aussi avec Bouygues qui veut obtenir entre 10 % et 15 % du capital d’Orange. « Le partage des actifs n’est qu’une étape dans le projet de rachat de Bouygues Telecom, a prévenu le pdg d’Orange, mercredi. Elle est indispensable, certes, mais il y en aura beaucoup d’autres ».
Les protagonistes se sont donnés jusqu’à la fin du mois pour trouver un accord. Une bonne source croit savoir qu’une annonce pourrait être faite le jour même du 31 mars

WSJ : Air Products in Talks to Sell Unit to Evonik Industries

Air Products in Talks to Sell Unit to Evonik Industries

Deal could value performance-materials operations at more than $3.5 billion

Air Products & Chemicals Inc. is in advanced talks to sell a business that makes chemicals used in sun lotion and paint to Germany’s Evonik Industries AG in a deal that could be valued at more than $3.5 billion.

The two companies are in exclusive talks for Evonik to buy Air Products’ performance-materials operations, according to people familiar with the matter. A deal could be reached in the coming weeks, according to one of them. As is always the case with mergers and acquisitions, there is no guarantee a deal will be consummated.

Air Products, which has a market value of nearly $30 billion and counts activist William Ackman among its investors, about six months ago said it aims to split into two publicly traded companies. They are: materials technologies—the business that houses performance-materials—and industrial gases. The materials-technologies unit’s remaining operations, which supply the semiconductor industry, wouldn’t be part of a deal and could be sold separately, some of the people said. The industrial-gases business mainly produces oxygen, nitrogen and the like for medical and industrial purposes.

A transaction would add to a recent flurry of deal-making in the chemicals industry. Dow Chemical Co. and DuPont Co. in December agreed to a merger that would create a giant worth more than $100 billion—before a planned breakup. More recently, China National Chemical Corp., known as ChemChina, agreed to buy Swiss pesticide and seed company Syngenta AG for $43 billion.

Should the Air Products deal be sealed, it would be one of the largest in Evonik’s history. The chemical company has been vocal about wanting to do a big deal to gain size and improve margins.

Air Products’ performance-materials unit recorded sales of $245 million in the quarter ending December 31.

>>> Asian Update

Asian Market Update: Commodities and high-beta FX soar after dovish Fed statement tempered tightening expectations

***Economic Data***
- (CN) China banks Feb net forex sales CNY228.5B for clients v sold CNY454.8B m/m - SAFE
- (CN) China National Energy Administration (NEA): China Feb power consumption at 381B kWh, +4% y/y
- (AU) AUSTRALIA FEB EMPLOYMENT CHANGE: 0.3K V 13.5KE; UNEMPLOYMENT RATE: 5.8% V 6.0%E
- (NZ) NEW ZEALAND Q4 GDP Q/Q: 0.9% V 0.7%E; Y/Y: 2.3% V 2.1%E
- (JP) JAPAN FEB TOTAL MERCHANDISE TRADE BALANCE: ¥242.8B V ¥400BE; ADJUSTED TRADE BALANCE: ¥166.1B V ¥235BE
- (JP) Japan investors bought net ¥897B in foreign bonds v bought net ¥1.5T in prior week; Foreign investors sold net ¥1.6T (record) in Japan stocks v sold net ¥139B in Japan stocks in prior week
- (SG) SINGAPORE FEB ELECTRONIC EXPORTS Y/Y: 0.7% V 5.7%E; NON-OIL DOMESTIC EXPORTS M/M: +2.1% V -0.8%E; Y/Y: -4.1% V -1.1%E

***Index Snapshot (as of 03:30 GMT)***
- Nikkei225 +1.4%, S&P/ASX +1.4%, Kospi +1.0%, Shanghai Composite +0.5%, Hang Seng +1.4%, Jun S&P500 +0.4% at 2,025

***Commodities/Fixed Income***
- Apr gold +2.2% at $1,256/oz, Apr crude oil +1.7% at $39.11/brl, May copper +1.4% at $2.26/lb
- GLD: SPDR Gold Trust ETF daily holdings rise 3.0 tonnes to 795.2 tonnes; 2nd straight increase
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.4961 V 6.5172 PRIOR; first stronger setting in 4 sessions
- (CN) PBOC to inject CNY40B in 7-day reverse repos
- JGB: (JP) Japan's MoF sells ¥1.09T in 0.4% (1.0% prior) 20-year JGBs; Avg yield: 0.427% (record low) v 0.786% prior; bid-to-cover: 3.08x v 3.50x prior
- (NZ) New Zealand sells NZ$100M in 3% 2020 bonds at 2.26%

***Market Focal Points/FX***
- Asian equity markets are higher, tracking the strong close on Wall St that followed a more dovish than anticipated FOMC statement. While the Fed held off on another rate hike as widely expected, staff projections for rates this year were reduced by 50bps at the median to 0.875% - implying just 2 more hikes in 2016 against prior expectations of 4 moves. 2017-end median est also came in 50bps to 1.875% and the long-run rate was reduced to 3.25% from 3.50%. FOMC forecasts also lowered 2016 GDP ests to 2.1-2.3% from 2.3-2.5% and PCE inflation to 1.0-1.6% from 1.2-1.7% in justifying new rate expectations. In her statement, Fed Chair Yellen reflected on inflation persisting below 2% long-run objective and noted economic conditions will evolve so as to warrant only gradual increases. In the Q/A, Yellen maintained that April remains a live meeting for another tightening, but Fed watcher Hilsenrath remarked that the new staff projections pose a "high hurdle" to moving off the 0.25% rate. Note the statement also had 1 dissenter - Esther George - who voted for a 25bp hike. USD crashed across the board in the wake of the decision and consolidated in Asia. USD/JPY was down as much as 120pips around 112.40, EUR/USD got up to 1.1240 or 160pips, AUD/USD was up some 180pips above 0.76 - 8-month high - with added gains from Aussie jobs numbers, and NZD/USD hit a high of 0.6780 - up 200 ticks from pre-FOMC levels with added strength from better Q4 GDP. Gold rose $35 to as high as $1,265, oil is close to its 2016-highs above $39, and copper was up over 1% at $2.27.

- In notable economic data out of Asia Pacific, Japan February trade balance was slightly lower than expected but components were robust, with exports falling 4% vs 13% prior and imports down 14% vs 16% expected. Shipments to China were especially significant with a 5% rise, though analysts pointed out those numbers were distorted by timing of Lunar New Year. Shipments to Europe were up 9% and US were flat vs -3.6% and -5.3% respectively. In Australia, February jobs numbers came in mixed with lower than expected unemployment and lower net new jobs, as participation rate hit a 5-month low of 64.9% v 65.2%e amid ongoing transition away from mining economy. New Zealand Q4 GDP maintained its level of growth from Q3, beating expectations on the strength of capital formation component rising 1.6% after a decline of 3% in Q3. China Commerce Ministry put out its Feb FDI figures of CNY53.63B, +1.8% y/y amid property market recovery. Note the YTD FDI figures were released last week.

- Among key speakers and press, RBA's Debelle said Australia central bank would welcome slightly lower AUD to help economic rebalancing, leading a to a brief AUD retreat below 0.7540 in early Asia session. ASB and ANZ economists noted that soft dairy sector and cautious global outlook justify expectations for more RBNZ easing this year despite the strong Q4 GDP report. In Japan, a Nikkei piece remarked that average OIS for the next 12 months see rates at just under -0.1% vs slightly below -0.2% average in February, suggesting markets are now very skeptical of further BOJ easing. Separate report also saw a steep reduction in the number of Japan firms that plan to offer increases in base wages for next year. Outside Asia, Brazil ETF and main ADRs (PBR, Vale) were up sharply afterhours as the move to oust deeply unpopular Pres Rousseff shifted into higher gear with appointment of a prosecutor general to launch a formal investigation.

***Equities***
US equities / ADRs:
- VTAE: Achieves proof-of-concept with first-in-class RORyt inhibitor in moderate to severe psoriasis; +58.2% afterhours
- RSTI: Coherent Inc. acquires ROFIN-SINAR for $32.50/shr in cash, valuing it at $942M; +46.2% afterhours
- FDX: Reports Q3 $2.51 v $2.33e, R$12.7B v $12.3Be; +5.1% afterhours
- AMD: Intel said to be in talks to license graphics technology from AMD - financial press; +4.6% afterhours
- APD: Said to be in talks to sell performance-materials unit to Evonik; estimated value as much as over $3.5B - financial press; +0.3% afterhours
- CTRP: Reports Q4 $0.11 v $0.00e, R$468M v $434Me; -4.1% afterhours
- WSM: Reports Q4 $1.52 adj v $1.59e, R$1.59B v $1.62Be; -6.0% afterhours
- JBL: Reports Q2 $0.57 adj v $0.59e, R$4.40B v $4.53Be; -6.0% afterhours
- GES: Reports Q4 $0.57 v $0.58e, R$658M v $655Me; -10.6% afterhours

Notable movers by sector:
- Consumer discretionary: Li Ning Co 2331.HK +5.7% (FY15 result); Wanda Commercial Properties Group Co 169.HK -5.3% (FY15 result); Myer Holdings MYR.AU +13.4% (H1 result)
Samsonite 1910.HK +1.4% (FY15 result)
- Technology: Kingdee International Software Group Co 268.HK -7.8% (FY15 result); Toshiba Corporation 6502.JP +2.8% (FY16 profit speculation)
- Materials: Hyundai Steel Co 004020.KR % (to increase major steel product prices); CGN Mining Co 1164.HK % (guidance); Lingbao Gold Co 3330.HK % (guidance)
- Energy: Sinopec Shanghai Petrochemical 600688.CN +4.7% (FY15 result); China Shenhua Energy Co 1088.HK +3.8% (Feb result)
- Telecom: China Unicom 762.HK +7.1% (FY15 result)
- Utilities: CGN Meiya Power Holdings Co 1811.HK +1.7% (FY15 result)

>>> After Hours Summary: FDX +6%, WSM -6%, GES -11% following earni


After Hours Summary: FDX +6%, WSM -6%, GES -11% following earnings

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance:  FDX +6.3%, SYNC +4.3%, MLHR +2.2%

Companies trading higher in after hours in reaction to news:  VTAE +52.1% (announces positive top-line results from its Phase 2a proof-of-concept clinical trial of VTP-43742 in psoriatic patients ), RSTI +44% (to be acquired by Coherent (COHR) for $32.50/share), AQXP +5.9% (Baker Bros adds ~1 mln shares to active position, now hold 45%), RDS.A +1.9% (signs non-binding Letter of Intent with the Saudi Arabian Oil Company to divide the assets of Motiva Enterprises)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance:  GES -10.9%, JBL -6%, WSM -5.8%,

Companies trading lower in after hours in reaction to news: SALT -10.9% (commences 21 mln common stock offering), LINE -2.4% (Moody's downgrades Linn Energy's Corporate Family Rating to Ca)

NY Post : Tech billionaire Peter Thiel raises $1B to plow into startups

Peter Thiel has raised yet another billion-dollar tech fund.

The Silicon Valley maverick — an early Facebook investor who has since made big bets on marijuana, cancer research and space travel — will launch his venture firm’s sixth fund as soon as this week, The Post has learned.

Thiel’s decade-old Founders Fund has secured commitments of more than $1 billion for its latest fund — about equal in size to the San Francisco-based firm’s fifth fund that was launched in 2014, sources said.

That’s despite a slew of markdowns on tech companies that lately has slammed the valuations of high-fliers such as Snapchat, Dropbox and Palantir, a secretive data-sleuthing startup that was co-founded in 2004 by Thiel himself.

Industry insiders say tech “unicorns” valued at $1 billion or more may struggle to get new financing this year from venture firms, which are increasingly concerned about downside risk, or at least limited upside.

Last month, Morgan Stanley slashed the value of its Palantir stake to nearly a third below the $20 billion valuation the company got from big investors in a funding round last year.

That spurred others to question whether Palantir — which Thiel originally helped launch with members of PayPal’s antifraud team — deserved such a slap.

Still, many agreed that recent “down-rounds” at firms like food-delivery startup DoorDash have been a long time coming.

“There have been cuts to valuations and down-rounds, but you have to ask yourself whether those valuations were realistic,” a source close to Thiel’s firm told The Post, speaking about the recent tech wreck in general. “If anything, this is an opportunity for smart investors.”

Most insiders say smaller tech firms are still driving innovation rather than Fortune 500 firms, with many predicting that 2016 will see as many new venture funds as last year.
Thiel’s new fund isn’t the only sign that Silicon Valley remains unbowed by the recent carnage.

Earlier this week, venture-capital giant Accel Partners announced it’s launching two new funds worth $2 billion. A smaller, $500 million fund will focus on early-stage companies, Accel said, while a larger, $1.5 billion fund will fund growth at larger, more mature firms.

Thiel’s new, billion-dollar fund hasn’t told its investors much about its specific plans, according to sources close to the situation.

But they can expect more big bets on “moonshot” startups that build spacecraft, robots and revolutionary medical treatments, sources said.

“What they do is make lots of early stage bets and then large concentrated bets in businesses that they really believe can be outliers,” according to one source close to Thiel.

Those have included Elon Musk’s SpaceX startup, which was valued at $11 billion in a funding round last year. Founders Fund began investing in SpaceX in 2008, when the company was valued at just over $300 million, according to investors.

Founders Fund’s other key investments include New York-based Oscar Health Insurance, Airbnb and DeepMind, whose artificial-intelligence machine this week beat champion Lee Sedol in a five-game match of Go, an ancient Asian board game said to be more complex than chess.

Officials at Founders Fund didn’t respond to requests for comment Wednesday.

FT : US M&A bull run to end this year – survey

US dealmakers expect mergers and acquisition activity in America to fall in 2016, as worsening market conditions are set to end a two-year bull run of mega deals, an annual M&A survey from Brunswick has showed.

Out of more than 100 M&A advisers who participated in the survey, 70 per cent project deal activity in the US to drop compared with 2015, which hit an all time record of about $5tr worth of transactions, report James Fontanella-Khan and Arash Massoudi.

Globally, most dealmakers forecast business to stay at similar levels to 2015, partly energised by more takeovers by European and Asian companies.

With about $494.5bn worth of deals announced around the world so far this year, overall activity is down 18 per cent, according to Thomson Reuters data. Dealmaking in the US has fallen 25 per cent to $220bn, while in Asia, excluding Japan, the total value in transactions has dropped 40 per cent to $103bn.

The only bright spot, after a prolonged negative period, was Europe, where total deal volumes are up 24 per cent to $150bn.

“Following an unprecedented year for deals in 2015, US dealmakers are concerned the M&A party may be over,” said Steven Lipin, US senior partner at Brunswick. “US M&A practitioners have tempered expectations and see a steady flow of smaller deals driving deal activity instead of the mega deals that we saw in 2015.”

Dealmakers were divided over who would be the best US president to help boost M&A activity.

Donald Trump, the New York property developer and frontrunner for the Republican nomination, received the backing of 22 per cent of US-based dealmakers, a percentage point higher than Hillary Clinton, the Democratic Party favourite.

>>> US Close Dow+0.43% S&P+0.56% Nasdaq+0.75% Russell+0.73%

Closing Market Summary: Fed Policy Statement Leads to a Rally in Averages

The stock market ended its Wednesday affair broadly higher as the major indices rallied in response to the Federal Open Market Committee's policy statement for March. Other contributing factors to today's gain included a sharp uptick in oil prices and key sector leadership from the heavyweight technology sector (+1.1%). The Nasdaq Composite (+0.8%) ended its day ahead of both the S&P 500 (+0.6%) and the Dow Jones Industrial Average (+0.4%).

The first half of today's trade was a balancing act as investors weighed a hotter-than-expected core CPI reading (+0.3%;consensus +0.2%) against the impending rate decision from the FOMC. The concern was initially that the above-consensus data might support continued tightening. As a result, the benchmark index traded in a narrow six point range. Also of note, the financial sector (-0.2%) displayed some early strength, but the group slid down the leaderboard in the afternoon.

In the early afternoon, the latest directive from the FOMC provided enough dovish undertones to illicit a rally from the equity market. The FOMC voted 9-1 to leave its benchmark interest rates unchanged. Furthermore, the Fed lowered its target rate projection for 2016 to 0.875% from 1.40% and cut the 2017 outlook from 2.40% to 1.90%. This was essentially in-line with the projections in the fed funds futures market.

Eight of ten sectors ended the day in positive territory with commodity-sensitive materials (+1.7%) and energy (+1.6%) leading the pack, while influential technology (+1.1%) rounded out a distant third place. On the flipside, the heavyweight financial (-0.2%) and health care (-0.3%) sectors ended in the red.

The energy (+1.6%) space enjoyed a sharp rebound in oil prices as investors responded to smaller than expected builds in this week's American Petroleum Institute and Department of Energy stockpile reports. To be fair though, the energy component was also boosted by headlines that OPEC and non-OPEC members will meet in Qatar on April 17 to discuss a potential production cap agreement. WTI crude ended its pit session higher by 5.6% at $38.52/bbl.

Large-cap names saw increased interest following the FOMC's rate decision as investors demonstrated an increased appetite for risk. Heavily-weighted Microsoft (MSFT 54.35, +0.76) and Apple (AAPL 105.97, +1.39) ended near their highs with respective gains of 1.4% and 1.3%. Elsewhere, Oracle (ORCL 40.22, +1.48) gained 3.8% after beating bottom-line estimates in the third quarter and raising its fourth quarter earnings estimates above consensus.

The economically-sensitive financial (-0.2%) sector abandoned some early strength and tumbled to the bottom of the leaderboard by the end of the session. Money center banks bore the brunt of the decline as Wells Fargo (WFC 49.54, -0.44) and Citigroup (C 42.23, -0.36) ended lower by 0.9% apiece. The sub-group was likely responding to decreased earnings prospects in light of revisions to the Fed's projected rate hike path.

Biotechnology also abandoned some early strength, as the iShares Nasdaq Biotechnology ETF (IBB 250.20, -1.27) slipped 0.5% after showing a gain of 1.6% at the start of today's session. To be fair though, large cap constituents like Allergan (AGN 272.76, -10.24) and Dow component Pfizer (PFE 29.04, -0.50) also weighed on the sector. The health care space settled lower by 0.3%, extending this week's decline to 2.3%.

The Treasury complex slipped to session lows shortly after receiving the hotter-than-expected core CPI data and floated there until the FOMC'c policy statement was released.Treasuries rallied to new session highs following the policy statement, sending the 10-yr yield lower by six basis points to 1.91%.

The U.S. Dollar Index (95.67, -0.97) plunged as the greenback surrendered gains against both the yen and euro. The dollar/yen finished lower by 0.5% at 112.57 while the euro/dollar pair rose to 1.1225 (+1.1%).

Today's trading volume fell beneath the recent average as fewer than 913 million shares changed hands at the NYSE floor. 

Today's data has included the weekly MBA Mortgage Index, February CPI /Core CPI, February Housing Starts, February Building Permit, February Industrial Production Report, Capacity Utilization: 

  • The latest Consumer Price Index (CPI) is going to give the Fed something extra to think about at today's meeting as it helped the argument for another rate hike, perhaps as early as the April meeting.
    • The point of debate won't be total CPI. It declined 0.2% in February as expected, driven lower by a 13.0% decline in the gasoline index that offset a 0.2% increase in the food index.
  • The main point of debate will be core CPI, which excludes food and energy. It rose 0.3% for the second straight month and is now up 2.3% year-over-year on an unadjusted basis.
    • The Fed has gotten tuned in more to core price trends based on its belief that the adverse impact of the decline in energy prices and the strong dollar is transitory.
    • Frankly, the February CPI report gives the Fed some data-based room to raise rates at today's meeting considering core CPI is now above the longer-run inflation target of 2.0% (to go along with a 4.9% unemployment rate) and knowing that the February uptick was spurred by price increases in almost all major components, namely shelter (+0.3%), apparel (+1.6%), and medical care (+0.5%).
    • At the least, this February CPI report could sway the FOMC to create an impression for the market that a rate hike at the April meeting is indeed a "live" possibility.
  • Housing starts were at a seasonally adjusted annual rate of 1.178 million in February (consensus 1.137 million), which was the highest rate since September and up 5.2% from an upwardly revised January rate of 1.120 million (from 1.099 million).
    • The Housing Starts report also provided some good news with respect to first quarter GDP forecasts. That good news was wrapped up in the number of homes under construction, which jumped to 987,000 from 978,000 in January. The first quarter average here is 983,000 versus the fourth quarter average of 962,000.
    • The increase in starts was powered by a 7.2% jump in single-family starts. The West region led the way there with a 24.8% increase in single-family starts.
  • Building permits dipped 3.1% to 1.167 million (consensus 1.204 million) due entirely to an 8.4% drop in permits for multi-unit buildings. Single-family permits were up 0.4%.
  • Industrial production declined 0.5% in February (consensus -0.3%) after increasing a downwardly revised 0.8% in January (from 0.9%). on a year-over-year basis, industrial production is down 1.0%.
    • The downturn in February was fueled by large declines in the indexes for utilities (-4.0%) and mining (-1.4%). The former was the result of unseasonably warm weather, which lowered the demand for heating, while the latter was a byproduct of decreases in crude oil extraction, coal mining, and oil and gas well drilling and servicing.
    • The silver lining in the report is that manufacturing output increased 0.2% on top of a 0.5% increase in January. That uptick was led by a 0.4% increase for durable manufacturing, which offset a 0.1% decrease for nondurable manufacturing. Total manufacturing output was up 1.8% year-over-year.
  • With less demand for heating, total capacity utilization slipped to 76.7% from 77.1% in January.
    • The capacity utilization rate for utilities fell to 74.8% from 78.0%. Manufacturing capacity utilization was unchanged at 76.1%, which is 2.4 percentage points below its long-run average.

Tomorrow's data will include weekly initial claims (consensus 266k), March Philadelphia Fed Survey (consensus -1.4), and Q4 Current Account Balance (consensus -$116.0 Billion) each crossing the wires at 8:30 ET. Meanwhile February's Leading Indicators (consensus 0.2%) will be reported at 10:00 ET. 

>>> Text of Fed’s Monetary-Policy Statement

Text of Fed’s Monetary-Policy Statement
Released by the Federal Open Market Committee

The following is the verbatim text of the Federal Reserve’s monetary policy statement as issued Wednesday by the Federal Open Market Committee:

Information received since the Federal Open Market Committee met in January suggests that economic activity has been expanding at a moderate pace despite the global economic and financial developments of recent months. Household spending has been increasing at a moderate rate, and the housing sector has improved further; however, business fixed investment and net exports have been soft. A range of recent indicators, including strong job gains, points to additional strengthening of the labor market. Inflation picked up in recent months; however, it continued to run below the Committee’s 2% longer-run objective, partly reflecting declines in energy prices and in prices of non-energy imports. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed, on balance, in recent months.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee currently expects that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace and labor market indicators will continue to strengthen. However, global economic and financial developments continue to pose risks. Inflation is expected to remain low in the near term, in part because of earlier declines in energy prices, but to rise to 2% over the medium term as the transitory effects of declines in energy and import prices dissipate and the labor market strengthens further. The Committee continues to monitor inflation developments closely.

Against this backdrop, the Committee decided to maintain the target range for the federal funds rate at 1/4 to 1/2%. The stance of monetary policy remains accommodative, thereby supporting further improvement in labor market conditions and a return to 2% inflation.

In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its objectives of maximum employment and 2% inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. In light of the current shortfall of inflation from 2%, the Committee will carefully monitor actual and expected progress toward its inflation goal. The Committee expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.

The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction, and it anticipates doing so until normalization of the level of the federal funds rate is well under way. This policy, by keeping the Committee’s holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions.

Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; James Bullard; Stanley Fischer; Loretta J. Mester; Jerome H. Powell; Eric Rosengren; and Daniel K. Tarullo. Voting against the action was Esther L. George, who preferred at this meeting to raise the target range for the federal funds rate to 1/2 to 3/4%.

WSJ : J.P. Morgan, Citigroup Shareholders to Vote on Potential Breakup Plans

J.P. Morgan, Citigroup Shareholders to Vote on Potential Breakup Plans

The breakup question will be included in the banks’ proxy filings at the request of a shareholder activist

Shareholders of J.P. Morgan Chase & Co. and Citigroup Inc. will get to vote later this year on one of the most popular questions on the campaign trail: Should the banks break up into smaller pieces?

The question will be included in the proxy filings for the two big U.S. banks and voted on at shareholder meetings later this year, according to people familiar with the matter.

Analysts have said it is highly unlikely that shareholders will support a proposal to break up the banks. A similar proposal at Bank of America Corp. last year gained about 4% of the votes.

The shareholder votes were requested by Bartlett Naylor, a shareholder activist and a financial policy advocate at the liberal lobbying group Public Citizen. He and others have raised the issue multiple times in previous years as well, without getting much traction.

Mr. Naylor, a small shareholder in both Citigroup and J.P. Morgan, said he believes the firms should split into smaller pieces because that could boost shareholder value if they are easier to manage. He said he continues pressing the case because “obvious problems demand obvious answers, or at least obvious questions.”

Whether banks are too big has become a flashpoint since the financial crisis, and this year Democratic presidential candidate Bernie Sanders has made the issue a central part of his campaign. Nearly all current or former Republican presidential candidates have knocked the big banks as well. U.S. regulators have also made it clear that they are wary of giant banks, imposing higher capital requirements on the biggest firms as an incentive for them to slim down.

The banks have generally defended their size, saying they need scale to compete with banks in China and around the globe. They also say they need to offer a wide breadth of services, including both investment banking and retail banking, to meet their clients’ needs and that breakups would be hugely complicated.

“The synergies (of being big) are huge, both expense and revenue,” J.P. Morgan Chief Executive James Dimon said last year. In the event of a breakup, “the unscrambling would be extraordinarily complex…in debt, in systems, and technology and people.”

Mr. Naylor proposed that the J.P. Morgan and Citigroup boards each create an independent committee to address whether the bank would be more valuable to shareholders by divesting all noncore banking business segments. The committee would be required to report back to shareholders within 300 days.

Citigroup said in securities filings that it “has already substantially implemented” Mr. Naylor’s proposal.

“The board shares the proponent’s goal of divesting noncore assets,” the bank wrote in response to Mr. Naylor, disclosed in securities filings.

In a Wednesday statement, a Citigroup spokesman said the bank “is a much simpler, safer, smaller and stronger institution than before the financial crisis.” He added that the bank has sold more than 60 businesses and shed more than $700 billion in assets, and its board conducts an annual review of the bank’s strategy and progress.

J.P. Morgan, the largest U.S. bank by assets, offered Mr. Naylor a meeting with Chief Financial Officer Marianne Lake in hopes he might withdraw his proposal, Mr. Naylor said, adding that he declined. A person familiar with the matter said it is customary for J.P. Morgan to offer private meetings to shareholders to educate them on different topics.

About two years ago, when Mr. Naylor submitted a similar proposal, J.P. Morgan submitted a roughly 50-page request to the Securities and Exchange Commission asking for permission to leave Mr. Naylor’s proposal off the ballot. The agency granted J.P. Morgan’s request, denying Mr. Naylor’s inclusion on the proxy filing. Banks often make those requests on a variety of shareholder proposals each year.

J.P. Morgan didn’t make a similar request this year, according to people familiar with the matter.

Mr. Naylor’s proposal for Bank of America last year, which garnered 4% support, was more prescriptive than what he is proposing for J.P. Morgan and Citigroup. He asked the Bank of America board “to develop a plan for divesting all noncore banking business segments,” rather than just addressing the topic.

Bank of America, the second-largest U.S. bank by assets, opposed Mr. Naylor’s proposal, arguing that it has already shrunk substantially since the financial crisis and has made its trading operation less risky.

Mr. Naylor said he got a small amount of votes because of “bank-controlled voters, self-selected owners who don’t rock votes...and few advocates.”

He said he tried to get the proposal on Bank of America’s ballot again this year, but his request was rejected on a technicality that it didn’t specify that his account owned the bank’s shares.