>>> What to look at today - 25th of May 2015

Dow-0.29% S&P-0.22% Nasdaq-0.03% Russell-0.36%
US Market settle near the flat line again Friday, CPI pushed investors to think that a rate hike could come quickly in the US. Fed Chair Janet Yellen spoke at the Greater Providence Chamber of Commerce and reiterated that the central bank is ready to begin raising rates later this year. Nine sectors ended the day in negative territory while technology (+0.02%) avoided a lower close by a hair and contributed to the daylong outperformance of the Nasdaq Composite. Shares of Apple (AAPL 132.54, +1.15) climbed 0.9%, underpinning the move, while Hewlett-Packard (HPQ 34.76, +0.93) gained 2.8% after reporting a one-cent beat and guiding Q3 earnings below consensus. Deere +4.3% on better numbers. Crude oil kept the sector under pressure, falling 1.7% to $59.66/bbl. For the week, WTI crude lost 1.5% while the energy sector fell 0.8%. Volume were below average @ 604mil shares. In spite of the hotter than expected CPI data out of the US on Friday and a late session-selloff on Wall St, Asian indices are tracking higher despite the implications of a potentially more proactive Federal Reserve. With US markets on holiday this Monday and conditions thinned by holiday closures in Korea and Hong Kong, investors are also looking ahead to Tuesday's forward looking durables data and Friday's release of 2nd estimate of US GDP...EUR/USD saw some early session weakness with a 40pip drop below 1.0970, as the standoff between Athens and European creditors appears to have taken a turn for the worse. Greek media report citing Interior Minister indicated Greece will not have the money to repay €1.6B to the IMF next month unless a new deal with creditors is reached. Likewise, PM Tsipras reiterated there is a limit to what Greek govt is prepared to accept from the creditors. And even if the standoff does result in a stalemate, a referendum is not likely to break the ice - according to a weekend poll, 59% of respondents support govt position of not giving in to European creditors, but 71% still want to keep the Euro. German-led creditors are hardly budging also - Fin Min Schaeuble speaking to German press said there is no need to discuss "alternatives" on Greece, as Athens needs to deliver what it promised.

Nikkei +0.56% Hang Seng Closed Shanghai +2.74%

Eur$1.0990 EurCHF 1.0349 GBP 1.5484 JPY 121.63 RUB 49.89 WTI $59.71 (-0.02%)

S&P +0.04% EuroStoxx -0.11% Dax-0.4%

Macro :
- Greece Should Stay in Euro, Reach Deal With EU Quickly: Sapin
- Greece Won’t Accept Unreasonable Creditor Demands, Tsipras Says
- Greece Exit May Strengthen the Euro, Buffett Tells Newspaper
- Merkel May Tap Confidence Vote to Continue Helping Greece: Bild
- EU’s Oettinger Seeks to Abolish Roaming Fees in Europe: Bild


Keep an eye on :
- ATC NA : Time Warner Cable Said to Be in Sale Talks With Altice, Charter (over $54bil, ie 10% premium, deal could be announced next week.
- AREVA FP : GDF Suez Open to Buying a Stake in Part of Areva, CEO Says
- ATL IM : Atlantia may bid with EdF Invest in Nice airport auction - Il Sole 24 Ore
- BSLN SW : Basilea subject of takeover speculation - Tagesanzeiger
- BMPS IM : Monte Paschi EU3b Shr Sale to Cost Bank About EU130m
- BBRY US : BlackBerry Laying Off Workers in Handset Unit
- EN FP : Bouygues Says Leaving Stock Market Wouldn’t Be a Viable Option
- CWC LN : Cable & Wireless Communications CEO admits larger rivals might consider takeover - http://bit.ly/1JP0tN5
- DTE GY : Dobrindt Sees EU1B Proceeds From Wireless Auction, Bild Reports
- ERICB SS : Ericsson Wins U.S. Wireless-Patent Case Brought by Wi-Lan
- FCA IM : CEO Marchionne had approached GM about a merger in March but was rebuffed - NYT- http://nyti.ms/1LsGx0F
- FCA IM : Fiat Chrysler Declines to Fix Some Vehicles in Recall: NYT
- GM US : to face criminal charges and penalty for over $1B over faulty ignition switches WSJ http://on.wsj.com/1EqRqLf
- PART SS : Scanfil Offers SEK35/Shr for PartnerTech
- QIA GY : Qiagen Seeks to Sell Its Cervical Cancer Tests in Germany: FAZ
- SAN FP : Sanofi’s Global Head of Jevtana, Zhen Su, Is Leaving
- SYNN VX : Monsanto May Need to Offer Over CHF500/Shr for Syngenta: SamS
- US IM : UnipolSai Assicurazioni Units to Buy Una’s Hotel Businesses
- VOD LN : Management being urged by key shareholders to accept $120B deal with Liberty Global - http://bit.ly/1F4LOGU & http://on.ft.com/1AsYQT5
- VOD LN : Vodafone Said to Revive Plans to List India Unit by 4QFY16: CNBC

FT : Bid hopes from US trigger Colt pick-up (Vodafpone)


Dotcom survivor Colt Group made a return to London gainers board on Friday on hopes of a bid from the US. Level 3 Communications would be an ideal buyer for Colt, analysts at Cowen & Co said.

With Level 3 having paid down debt from the 2011 purchase of Global Crossing, its management should now look at tackling its poor performance in the highly fragmented European corporate broadband market, the broker said.


“As the pieces come together in the US, Level 3’s next major initiative could be to look to European M&A,” Cowen told clients. “Colt’s mostly continental-focused network makes for an ideal complementary footprint both from a long-haul and metro-fibre perspective.”

European regulators are taking an increasingly relaxed view of consolidation in a telecommunications market dominated by incumbents and local operators, said Cowen. It argued that Colt is one of just a few pan-European providers within Level 3’s price range.

Colt spent three years of the dotcom boom as a member of the FTSE 100 with its market value peaking in early 2000 at more than £26bn. That had fallen to £1.4bn on Friday with the highly illiquid stock squeezed 1.6 per cent higher to 151.4p.

The FTSE 100 rose for a fifth straight day, albeit with a slim gain of 0.3 per cent, or 18.25 points, to 7,031.72. For the week, the index was up 1 per cent.

Continuing bid speculation lifted Vodafone 4.6 per cent to 253.8p. Meetings this week between Liberty Global management and investors were said to have been supportive to the idea that Liberty could finance a bid for the whole of Vodafone, with a view to spinning off the African and Indian operations later.

Meanwhile, Goldman Sachs told clients after hosting a Vodafone investor roadshow that group finance director Nick Read is open to doing deals but seems less keen on an autonomous break-up.

“Vodafone is willing to consider both acquisitions and disposals where the financial rationale makes sense, [but] changing the structure of the group in the absence of a tangible offer for its assets would create a number of dis-synergies,” Goldman said.

“Given Liberty’s recent publicly stated preference for a tax-efficient capital structure, in contrast to Vodafone shareholders preference for dividends, we believe Vodafone may be more likely a seller than a buyer of assets.”

Website Just Eat rallied 5.2 per cent to 456p after successfully placing 105m shares at 425p to fund its acquisition of an Australian peer Menulog.

IG Group rose 1.1 per cent to 794.5p amid hopes that it has been taking customers from Plus500, the contracts-for-difference broker that admitted this week that it had suspended UK accounts because its identity checks had been too lax.

Plus500 sunk 35 per cent to 258p having first been the subject of a critical report from Cable Car Capital, a US short seller, then having had its shares temporarily suspended while it clarified the scope of its recent issues with the Financial Conduct Authority.

>>> Cable & Wireless Communications CEO admits larger rivals might consider take

Cable & Wireless Communications CEO admits larger rivals might consider takeover

Cable & Wireless Communications (CWC) Chief Executive Phil Bentley has admitted that the listed Caribbean-focused telecoms group might attract takeover interest from a larger rival, The Sunday Telegraph reported. Bentley, quoted in a longer interview, described CWC as a “big fish” in a small sea and added that CWC is no longer a global player.

Bentley noted that larger players such as AT&T, Carlos Slim, Telefonica and Altice are making acquisitions and investments.

Cable & Wireless Communications’ market capitalisation stood at GBP 2.93bn (EUR 4.12bn) at the close of trading on Friday, 22 May.

Link to article : http://bit.ly/1JP0tN5

Source Sunday Telegraph

(BFW) Goldman Cuts Commodities Outlook as Recovery Seen Temporary

BFW 05/24 23:14 *GOLDMAN SACHS SAYS IT'S MOST BEARISH ON COPPER
BFW 05/24 23:14 *GOLDMAN SEES OIL PRICES WEAKENING IN 3Q TO LOWS SEEN IN 1Q
BFW 05/24 23:13 *GOLDMAN COMMENTS ON COMMODITIES OUTLOOK IN E-MAILED REPORT
BFW 05/24 23:12 *GOLDMAN SACHS CUTS COMMODITIES INDEX FORECAST OVER 12 MONTHS
Goldman Cuts Commodities Outlook as Recovery Seen Temporary
2015-05-24 23:52:31.743 GMT


By Jasmine Ng
(Bloomberg) -- Bank cuts 12-month total return forecast for
S&P GSCI index to -7.5%, according to e-mailed report dated May
22.
* Goldman says “bearish themes” of deflationary pressure
from oil prices, divergence of U.S. economic growth/U.S.
dollar and deleveraging and rebalancing in emerging markets
will reassert themselves
* As bearish long-term macro themes return, bank sees downside
pressure on commodity prices re-emerging
* Most bearish on copper, which is most exposed
* Sees oil prices in 3Q falling to levels seen in 1Q
* Cuts U.S. natgas price forecast for 2016 to $3.50/mmBtu from
$3.80/mmBtu previously



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

To contact the reporter on this story:
Jasmine Ng in Singapore at +65-6212-1531 or
jng299@bloomberg.net

To contact the editor responsible for this story:
Alexander Kwiatkowski at +65-6212-1329 or
akwiatkowsk2@bloomberg.net

>>> Asian Update

Asian Mid-session Update: Japan trade deficit more narrow than expected; Greece says the money for IMF repayment does not exist


***Economic Data***
- (JP) JAPAN APR MERCHANDISE TRADE BALANCE: -¥53.4B V -¥351.1BE; ADJ TRADE BALANCE: -¥208.7B V -¥386.8BE

***Index Snapshot (as of 02:30 GMT)***
- Nikkei225 +0.7%, S&P/ASX +1.2%, Kospi closed, Shanghai Composite +2.0%, Hang Seng closed, Jun S&P500 flat at 2,125

***Commodities/Fixed Income***
- Jun gold flat at $1,204/oz, Jul crude oil +0.2% at $59.86/brl, Jul copper -0.1% at $2.81/lb
- (IR) Iran Oil Minister: OPEC unlikely to change production ceiling at its upcoming meeting in June - financial press
- USD/CNY: PBoC sets yuan mid point at 6.1165 v 6.1131 prior setting; weakest Yuan setting since May 6th
- (JP) BOJ offers to buy ¥375B in 1-3yr JGBs, ¥375B in 3-5 yr JGBs, and ¥400B in 5-10yr JGBs

***Market Focal Points/FX***
- In spite of the hotter than expected CPI data out of the US on Friday and a late session-selloff on Wall St, Asian indices are tracking higher despite the implications of a potentially more proactive Federal Reserve. With US markets on holiday this Monday and conditions thinned by holiday closures in Korea and Hong Kong, investors are also looking ahead to Tuesday's forward looking durables data and Friday's release of 2nd estimate of US GDP.

- EUR/USD saw some early session weakness with a 40pip drop below 1.0970, as the standoff between Athens and European creditors appears to have taken a turn for the worse. Greek media report citing Interior Minister indicated Greece will not have the money to repay €1.6B to the IMF next month unless a new deal with creditors is reached. Likewise, PM Tsipras reiterated there is a limit to what Greek govt is prepared to accept from the creditors. And even if the standoff does result in a stalemate, a referendum is not likely to break the ice - according to a weekend poll, 59% of respondents support govt position of not giving in to European creditors, but 71% still want to keep the Euro. German-led creditors are hardly budging also - Fin Min Schaeuble speaking to German press said there is no need to discuss "alternatives" on Greece, as Athens needs to deliver what it promised.

- Economic data out of the far east was limited to Japan's April merchandise trade. Despite returning into deficit, trade balance was much better than expected at -¥208.7B V -¥386.8BE on adjusted basis. Shipments to US were particularly strong, rising by over 20% once again, while shipments to China slowed to 2.4% growth from 3.9% in prior the month. Crude oil imports were higher by 9% after a 15% drop last time, but lower prices kept the imports component bill relatively lower. USD/JPY saw some follow-through bids from Friday's higher US CPI figures, rising another 20pips toward 121.80.

- ECB forum on central banking in Portugal drew the heads of the BOJ, ECB, and Fed vice chair Fischer. ECB's Draghi continued to call for quicker transition to economic and monetary union in the euro zone, citing "strong divergences remaining in terms of unemployment, growth, and productivity" as dangerous. BOJ's Kuroda remarked that a proactive monetary policy could help ease the implementation of structural reform. Fed's Fischer commentary was notably more reserved, indicating that while there is temptation on the FOMC to discuss structural reform, policymakers skirt around the topic.

***Equities***
US equities / ADRs:
- TWC: Charter said to prepare offer large premium for Time Warner Cable - FT
- AMZN: Said to have changed tax practices in Europe; Will pay taxes in individual countries rather than funnel payments to low-rate Luxembourg - financial press
- FCAU: CEO Marchionne had approached GM about a merger in March but was rebuffed - NY Times
- ETSY: Company's sellers have been targeted by an email from Amazon, promoting their handcraft-goods marketplace - financial press

Notable movers by sector:
- Consumer discretionary: Guangdong Qtong Education 300359.CN -10.0% (CSRC to crack down stock manipulation); Skilled Group SKE.AU +11.8% (enters into talks with Programmed)
- Financials: Greattown Holdings Ltd 600094.CN +6.9% (to set up investment firm)
- Industrials: Aerospace Communications Holding 600677.CN +10.0% (to invest in IT companies)
- Materials: Evolution Mining EVN.AU +4.4% (to acquire Cowal gold mine); Sirius Resources SIR.AU +22.5%, Independence Group IGO.AU -9.4% (Independence to acquire Sirius); Fortescue Metals Group FMG.AU +3.6%, BC Iron BCI.AU +1.9% (rumors of foreign interest)
- Healthcare: Healthscope HSO.AU +2.0% (to sell pathology business)
- Utilities: Tokyo Electric Power Co Inc 9501.JP +5.1% (won bid for project in Qatar)

FT: ohn Malone locked in battle with Altice for Time Warner Cable


John Malone locked in battle with Altice for Time Warner Cable

John Malone, the US cable tycoon, is locked in a $48bn battle for control of Time Warner Cable, the second-largest US cable company, against Franco-Israeli billionaire Patrick Drahi, chairman of France’s Altice.
Charter Communications, the US cable company backed by Mr Malone, is leading the negotiations to acquire Time Warner Cable as discussions continued through the weekend, according to people familiar with the matter.

One person informed on the talks said that Charter was prepared to pay a large premium to secure Time Warner Cable.
Some of these people added that Time Warner Cable could reach a deal with either party before the end of the long US weekend, as markets are closed on Monday for the Memorial Day holiday.
All, however, cautioned that no outcome was certain and that the situation remained fluid.
People familiar with Altice’s thinking said that Mr Drahi was serious in his pursuit of Time Warner Cable. Altice has lined up financing from banks including JPMorgan Chase, Barclays, Royal Bank of Canada, Nomura and Société Generale to support a possible bid, some of these people said.
But one other person close to the company said Altice had only just struck a $9bn deal five days ago and the company usually studies a new market for several months before seeking further deals.
Altice, TWC and Charter all declined to comment
Charter had until last week appeared seemingly uncontested in its efforts to acquire its larger rival Time Warner Cable, until Altice made its first foray into the market by acquiring Suddenlink, the US’s seventh-largest cable operator.
Following the deal, which valued Suddenlink at $9.1bn including debt, Altice fed speculation that further moves would follow soon by declaring that any company smaller than the largest US cable operator Comcast was a potential consolidation target.
Time Warner Cable only last month saw a $45bn takeover attempt by Comcast, which was agreed in February 2014, collapse because of regulatory scrutiny.
That deal was originally struck as Time Warner Cable sought to escape the clutches of Charter, which had previously offered $132.50 in cash and stock. Time Warner Cable asked Charter for $160 per share at the time but then agreed a deal with Comcast that valued it at $158.82 per share.
Shares in Time Warner Cable rose 3.1 per cent to $171.18 on Friday, giving the company a market value of $48.4bn as speculation of a deal with either Altice or Charter continued.
The takeover talks come amid sweeping changing in the US cable industry as consumer habits are shifting away from television sets in favour of mobile and broadband connections and as content providers are exerting greater pricing pressure on distributors for premium programming that keep their customers’ attention.
By consolidating, cable operators look to cut costs and use their scale to combat prices set by content providers.

>>> What to look at this Week End - 23rd & 24th of May 2015

Dow-0,22% S&P+0.16% Nasdaq+0.81% Russell+0,67% Eurostoxx+2.97% Dax+3,21% CAC+2.99% Nikkei+2.69% Shanghai+9.10%

Assured by an apparent stabilization in global interest rates, market participants sent global equities higher this week on central bank largess and any scrap of perceived good news to hit the tape. In Europe, indices saw a marked upturn despite the emerging sense that Greece was headed for default, while the Shanghai Composite notched seven-year highs on a 7% gain for the week. After emerging from recession in Q4, Japan's Q1 GDP report was even better, growing by its highest rate in a year on an annualized basis at +2.4%. China data remained soft, but the implicit promise of more PBoC support no matter what kept stocks boisterous. US May data was tepid, and the FOMC minutes gave a strong feeling that the Fed would not be raising rates before September. Fed Chair Yellen's Friday afternoon speech did little to alter that notion. There was mixed economic data in Europe, but comments by ECB's Coeure that the ECB would front-load its QE purchases because of the seasonal lack of liquidity in the summer helped gird markets. The US 10-year yield is held near its 200 day moving average just above 2.2% and the Greenback found some buyers. The DJIA and S&P500 saw fresh all-time highs before some very modest selling late in the week, while the Nasdaq approached recent all-time highs. For the week, the DJIA ended down 0.2%, the S&P500 gained 0.2% and the Nasdaq rose 0.8%.


Macro :
- Greece Should Stay in Euro, Reach Deal With EU Quickly: Sapin
- Greece Won’t Accept Unreasonable Creditor Demands, Tsipras Says
- Greece Exit May Strengthen the Euro, Buffett Tells Newspaper
- Merkel May Tap Confidence Vote to Continue Helping Greece: Bild
- EU’s Oettinger Seeks to Abolish Roaming Fees in Europe: Bild


Keep an eye on :
- ATC NA : Time Warner Cable Said to Be in Sale Talks With Altice, Charter (over $54bil, ie 10% premium, deal could be announced next week.
- AREVA FP : GDF Suez Open to Buying a Stake in Part of Areva, CEO Says
- BSLN SW : Basilea subject of takeover speculation - Tagesanzeiger
- BMPS IM : Monte Paschi EU3b Shr Sale to Cost Bank About EU130m
- BBRY US : BlackBerry Laying Off Workers in Handset Unit
- EN FP : Bouygues Says Leaving Stock Market Wouldn’t Be a Viable Option
- DTE GY : Dobrindt Sees EU1B Proceeds From Wireless Auction, Bild Reports
- ERICB SS : Ericsson Wins U.S. Wireless-Patent Case Brought by Wi-Lan
- FCA IM : CEO Marchionne had approached GM about a merger in March but was rebuffed - NYT- http://nyti.ms/1LsGx0F
- GM US : to face criminal charges and penalty for over $1B over faulty ignition switches WSJ http://on.wsj.com/1EqRqLf
- QIA GY : Qiagen Seeks to Sell Its Cervical Cancer Tests in Germany: FAZ
- SAN FP : Sanofi’s Global Head of Jevtana, Zhen Su, Is Leaving
- SYNN VX : Monsanto May Need to Offer Over CHF500/Shr for Syngenta: SamS
- VOD LN : Management being urged by key shareholders to accept $120B deal with Liberty Global

FT : Big Data’s infinite harvest

Big Data’s infinite harvest

Welcome, customers, to this column. I write articles and you subscribe to the FT and tell me how wrong I am (to be fair, some of your are kinder). Now, let us imagine you read this piece, or other FT content, for free on Facebook or Google. It is a far sweeter deal, right? You get something for nothing and Big Data can bask in its own beneficence. Apply that to any amount of diverse content. Rarely in the history of human knowledge have so few offered so much to so many for nothing.
That, at least, is the story most of us have downloaded. In the rare cases where an entity — such as the European Commission, which is probing Google’s alleged abuse of its dominant position — raises objections, the obloquy is instant. Google, the US government and others accuse Brussels of thinly veiled protectionism.

If Europe could innovate like the US, perhaps it would spend less time trying to bring others down. There is a reason Google’s motto is “Don’t be evil”. It invests in ways of bringing ever more knowledge to humankind.
Peter Thiel, a co-founder of PayPal, describes Google as a benign monopoly. If it encountered real competition, its research and development budget would vanish — and with it the self-driving car, wearable computers, “loon balloons” beaming cellular data from the stratosphere and so on. We should appreciate the upside to its dominance. Google’s monopoly returns enable it to fund the equivalent of AT&T’s legendary Bell Labs, or Xerox Park, which made so many breakthroughs. Besides, the data industry’s barriers to entry are low. The disrupters can be disrupted.
But there are other sides to this story. The first is that Google’s chief complainants are US companies. This is not a transatlantic spat. It just so happens that Brussels has a tougher competition regime.
Yelp, Microsoft, Expedia and others have complained both to Brussels and Washington’s Federal Trade Commission about Google’s alleged anti-competitive practices. Indeed, in a 2012 report, the FTC’s own staff recommended action on three counts against Google for conduct that had resulted in “real harm to consumers and to innovation”. Google had been presenting content “scraped” from other sites as its own. It had also been privileging its own commercial sites in search results — a clear conflict of interest. However, the FTC’s commissioners rejected their staff’s conclusions. It might have been different had the probe been carried out by the Department of Justice, as was the case with Microsoft, which was penalised on both sides of the Atlantic more than a decade ago.
Not even Goldman Sachs can match Google’s lobbying clout nowadays. When the report was leaked to the Wall Street Journal in March, Google cajoled the FTC into distancing itself from its own conclusions.
The idea that US regulators had in fact agreed with their EU counterparts was too dangerous. Johanna Shelton, Google’s chief lobbyist, has visited the White House more than 100 times . Eric Schmidt, Google’s chairman, is closer to President Barack Obama than any other business leader. Google even has its own “data diplomacy” outfit, Google Ideas, which is headed by a former state department official. It combines data initiatives against autocracies with business acumen to open up new markets. What is good for Google is good for America — and the world.
But there are hidden costs. Ponder how Google and Facebook, are interacting with you. In exchange for free social networking, emails, videos, search, satellite maps and now telephone calls, they are building your profile in ever more granular detail.
Without really digesting it, we have made a Faustian bargain. They give us free computing power — beyond our wildest imagination — and we reveal ever more about ourselves. The more Google knows about you, the better it teases out preferences you never realised you had.
It is an asymmetric exchange. Big Data has our profiles but few of us know how extensive that is. It is the information equivalent of Walmart. The big box retailer drove countless Mom and Pop stores to the wall by acquiring ever more pricing leverage. The job losses went deep, and some of the victims were customers. The model is self-cannibalising.
Apply the Walmart example to the data industry. We now receive most of our content for free (like Asterix against the Romans, the FT, among others, is holding out). Producers of content are suffering.
By the end of this decade, most of the world’s books will have been uploaded to Google’s online library. The company’s sway over our culture and knowledge will be unprecedented. Should we charge Big Data for our personal data? Jeff Hammerbacher, former head of data at Facebook, said: “The best minds of my generation are thinking about how to make people click ads.” In a parallel universe, they might be figuring out something more noteworthy. But what they do brings us untold benefits. Evil does not come into it.
We should nevertheless embrace the bargain with open eyes. We are not Big Data’s customers but its product. As long as we grasp that we users are also being used, let the harvest continue.

FT : Oil price slide puts producers under pressure

Oil price slide puts producers under pressure

Natural gas is flared off at a plant outside of the town of Cuero, Texas. Texas, which in just the last five years has tripled its oil production and delivered hundreds of billions of dollars into the economy, is looking at what could be a sustained downturn in prices. Crude oil prices today are almost 60 percent lower than they were six months ago.While the Texan economy has become more diversified over the years, oil is still the states largest monetary generator and any sustained downturn would be devastating for employment and the economy. Outplacement firm Challenger, Gray & Christmas this month said a drop in oil prices have been responsible for 39,621 job cuts in the first two months of the year. (Photo by Spencer Platt/Getty Images)©Getty
The oil price plunge has triggered a string of bankruptcies, debt defaults and rescue measures to save companies nearing collapse, with almost two dozen oil and gas groups now under stress.
A 40 per cent slide in Brent crude prices from a peak of $115 a barrel last June, has put smaller, cash-strapped producers in financial trouble, according to City analysts, with up to a quarter of a million barrels a day of oil supply at risk of being curtailed.

Even after a rebound in prices from January’s lows to about $66 a barrel, there have been “numerous small corporate casualties” across the globe, and especially in the US and Canada, says a report by Bernstein Research.
It has identified 22 companies “under duress” from lower oil prices, with $33bn of assets, including eight that have filed for bankruptcy protection and others warning of insolvency or deferred interest payments on bonds.
A dozen of the groups identified by Bernstein had their production assets in North America, with the rest spread across South America, Europe and the Asia-Pacific region. Their total output was put at 383,000 barrels of oil equivalent a day, of which 239,000 b/d was oil and the rest gas.
The fallout from the price slide has yet to match that which followed the 2008-09 collapse, when 61 companies filed for bankruptcy. However, those groups were much smaller than the energy producers which are now struggling to meet obligations to lenders amid dwindling revenues.
Bernstein’s Oswald Clint said that similarities with the 1980s supply-driven slump, and uncertainty over the scale of any price recovery, made companies more vulnerable than in 2008-09.
“There are a lot of differences between this downturn and the last one. The most important is that the last recovery was rapid, much quicker than the industry could react. There is greater perceived uncertainty of where we are in the cycle today,” he said.

Five years ago, the consequences of the price plunge were limited by the rise in US production that heralded America’s shale boom. This time, those higher cost shale resources make up a much bigger proportion of US output. Most of the casualties this time round are in the US and Canada where the tumble in crude has hit oil sands producers hard.
They include little known companies such as shale gas producer Quicksilver Resources, WBH Energy and Southern Pacific Resources, which have filed for bankruptcy protection.
Larger players such as Samson Resources, another shale producer, have warned investors of possible default, while UK-based Afren has delayed payment of interest to bondholders and Gulf Keystone, the Kurdistan producer, is in talks over a possible sale of assets or the company.
John Gerstenlauer, chief executive of Gulf Keystone, said the group, which was owed more than $330m by the Kurdistan authorities for its share of oil sales, said it was burning through cash at the rate of $8m to $10m a month.
“For us, it’s a matter of keeping our heads above water until the Kurdistan situation improves. We’re trying to live within our means and generate enough income to cover that,” he said. The company had slashed capital and operating expenditure.

FT : Hopes for further evidence of Japanese recovery

Hopes for further evidence of Japanese recovery

Bank holidays in the UK and US today mark the start of a quiet week of data releases for many of the major economies. The focus will be on Japan, where last week encouraging GDP data and a confident announcement by the Bank of Japan to maintain its current monetary policy suggest a recovery that is gathering strength.
Analysts will be looking at Japanese trade data, out today, for further evidence in support of this trend. A combination of stronger exports and a sharp fall in imports due to lower global energy prices pushed the March trade balance into surplus for the first time since June 2012, a similar effect is expected for April with another small surplus expected.
Inflation data for April are released on Friday. Japanese core inflation rebounded to 0.2 per cent year-on-year growth in March (taking into account last year’s consumption tax hike) up from zero growth in February. Analysts do not expect this upward momentum to continue, with annual core inflation remaining at 0.2 per cent for April.
Japanese labour market data for April are also out on Friday. March data showed some improvement, with the headline unemployment rate dropping to 3.4 per cent from 3.5 per cent in the previous month. Analysts expect little change in the April data, with unemployment remaining at 3.4 per cent.
Looking elsewhere, the Bank of Canada is set to announce its interest rate decision for May on Wednesday, the decline in energy prices is likely to have a negative effect on the Canadian economy but adjustments are not thought likely to manifest themselves for a couple more quarters yet. As a result, the BoC is expected to keep monetary policy where it is, but a shift to a less optimistic tone on the performance of the first quarter is expected. First-quarter performance will be confirmed on Friday with the release of GDP data, with most analysts expecting marginal growth compared with the final quarter of last year.
First-quarter GDP revisions for the UK and US are also out Friday, with the second estimates expected to show stark divergence. In the US the first estimate showed growth of 0.2 per cent at an annual rate, this is expected to be revised down to -0.9 per cent, a result of downward revisions to trade performance and inventories. UK GDP, at 0.3 per cent quarter on quarter is likely to be subject to a small upward revision, with better performance from industrial production and construction than first thought.