Business & Financial News

Wall Street opened the session sharply down Monday after four consecutive weeks of gains, including a fold related to the decline in commodity prices, hurt by the strong dollar.

In early trade, the Dow Jones lost 1.05% to 12.10,05 points.

EDF shares fell more than 5% Friday afternoon in Paris Stock Exchange, market participants have cited an article in Le Monde that the Socialist Party and environmentalists are about to sign an agreement providing for election closures nuclear power plants.

Interviewed by Reuters, the two sides, however, said no such thing had been decided yet and that negotiations for the presidential and legislative elections of 2012 in France continued.

The electrician public asked the Financial Markets Authority (AMF) to investigate the collapse of the course.

"Discussions are at this stage, more general," he told Reuters Michel Sapin, former economy minister, Francois Hollande close and involved in these negotiations.

As for Yannick Jadot, spokesman Eva Joly, candidate of Europe Ecologie-Greens, he felt that the article in Le Monde shows a vision "a little fictionalized" reality.

"Should there be an agreement between the two, Fessenheim shut fairly quickly.(…) We are still at an output of nuclear power including actual closing fast enough for the older plants, "he said.

He hoped that negotiations with the Socialist Party end up in the next 15 days.

François Hollande, Socialist candidate for president, wants a drop from 75% to 50% of the share of nuclear in electricity generation.

The central Fessenheim is the oldest in France and has two reactors of 900 megawatts each.

Last summer, the Nuclear Safety Authority (ASN) found that the No. 1 reactor of the plant was capable of being operated ten years older.

The agreement snatched in the night between Wednesday and Thursday by leaders of the euro area has temporarily turned off the fire that threatened the single currency but many risks still on the Greek debt restructuring and strengthening of the support fund the euro.

After more than ten hours of the summit, the Heads of State and Government of the single currency agreed with banks to reduce by 100 billion euros Greek debt and endorsed a complex mechanism to bring the firepower the European Financial Stability Fund (EFSF) to 1,000 billion.

European markets jumped and reached their highest level in three months while the euro was appreciating at more than $ 1.40, a value that had not crossed since early September.

But if this complex agreement among the most ambitious concluded since the bursting of the debt crisis in Greece in late 2009, it is nonetheless flawed, full of question marks and carries significant risks on its realization.

The bankers must first confirm their voluntary commitment to participate in the new bailout of Greece – a process that was long winded in the previous program.

Countries in the euro area should then agree on a series of far from trivial details in the implementation of the new EFSF, as the participation of international investors to it.

"I think the main risk would be to wait too long the implementation of these agreements," warned Thursday Ewald Nowotny, a member of the European Central Bank.

"Speed ​​is essential in this case," he told Austrian radio ORF.

GREEK RESTRUCTURING

Three months ago, European leaders had already reached agreement on a major debt reduction Greek involving private creditors, but the delays in implementing the plan and its lack of ambition have quickly rendered inoperative, at least in the eyes of the markets.

Decisions taken at dawn Thursday, finally attacking head-on questions of Greek debt and contagion of the crisis to larger countries such as Italy, Spain or France, are expected to avoid the euro area to repeat the same mistakes.

For Greece, it is expected that the debt be reduced from more than 160% of GDP to 120% in 2020, a level considered sustainable by the European authorities.

To do this, the governments of the euro area will set the table 130 billion euros in loans and guarantees, while private creditors will remove 100 billion from 210 billion euros of Greek securities they hold.

This voluntary contribution, expected to be received by the end of the year will amount to a waiver of 50%, said Nicolas Sarkozy and Angela Merkel, who had to meet in person with representatives of banks and weigh their weight to force the decision.

The Director General of the Institute of International Finance (IIF) Charles Dallara, who represented the banks in the negotiation, welcomed the agreement, which revises the plan of July 21, in which the private sector was engaged only up to 50 billion euros.

As expected, the leaders of twenty-seven have also endorsed the plan to recapitalize banks to the tune of 106 billion euros by June 30, 2012, of which 8.8 billion for French banks.

The plan also provides government guarantees to enable banks to secure funding in the medium and long term, similar to those that were implemented in fall 2008 at the height of the financial crisis.

1.000 BILLION FOR EFSF

Third and final part of the European response to the crisis, Europeans also agreed on a scaling capabilities of the European Financial Stability (EFSF), which could then be brought up to 1.000 billion euros.An initiative likely to reassure markets on its ability to fly, if any, help from countries like Italy or Spain.

The Fund had in its creation of 440 billion euros but the support in Portugal and Ireland and the complex financial arrangements necessary to give it a AAA rating reduced to about 250 billion today its actual capacity remaining.

The leverage will be achieved via a dual mechanism: on the one hand it will provide partial debt issued by troubled countries and, secondly, to create a new "special vehicle" backed by the EFSF and the International Monetary Fund (IMF) with the participation of international investors, such as China and other emerging countries.

Nicolas Sarkozy, who said in Brussels that the Chinese participation was envisaged, met Thursday on the phone with his Chinese counterpart Hu Jintao.

The Director General of EFSF, Klaus Regling, will visit China on Friday to meet with investors.

If he had been excluded from the weekend to leverage the EFSF by providing access to unlimited liquidity to the European Central Bank, the central bank has been active in the preliminary summit.

Providing some relief to markets, the future President of ECB, Mario Draghi, stated Wednesday morning that the bank would remain present in the bond markets as they would be unstable, an expected sign for several days which was welcomed by Nicolas Sarkozy.

"I am not the spokesman for the ECB. The ECB is an independent institution. Mr. Draghi did not interviewed before making that decision, we did have asked for anything, but it is permitted to rejoice in what 'he said, which is quite clear, "he said at a press conference, then insisting on these redemptions of debt.

European shares move in a disorganized Tuesday, investors playing the caution on the eve of an EU summit which many hope it will bring a muscular response to the debt crisis that has shaken the region for two years now.

In Paris the CAC 40 index yields 0.20% to 3213.19 points to 13.30.

At the same time, London was up 0.29% and 1.32% Frankfurt wins.

After two sessions of gains, the markets are showing signs of slowing, traders citing concerns about the vote of the German parliament Wednesday prior to the expansion of bailout funds in the euro area, as well as the implementation by Italy austerity measures demanded by its European partners.

The energy values, however, argue the market.The Stoxx European oil and gas sector gaining 1.5%, driven notably by better than expected results from BP, which estimates that its production is about to rise.

In the banking sector, Deutsche Bank, UBS and Swedbank grew respectively by 1.46%, 4.66% and 2.42% after all beaten the consensus in the third quarter despite the difficult economic conditions.

Action Air France-KLM gives 2.6% as a result of information from the radio BFM Business that the airline may soon issue a warning on its results.

STMicroelectronics acknowledges since opening the biggest drop of the CAC 40, yielding almost 7% after announcing a decline in sales in the third quarter in a context of deteriorating market for semiconductors and uncertainty general economic conditions.

The euro, which has entered Monday a six-week peak against the greenback, still rising beyond $ 1.39 on hopes of convincing the top end of Wednesday.

Between the peaks decisions that decide nothing and unexpected twists, difficult to navigate in the soap extension to the rescue of the euro. L'Expansion. Com reported on what appears achievements and problems that appear before the appointment-critical? – Wednesday. European leaders meeting in Brussels.

While the EU summit Sunday was to end months of indecision and too limited solutions, the world was offered a new appointment on Wednesday to see whether the euro area will finally be saved. Back to what appears to finally being resolved and the problems that remain … or emerging.

What is clear

The discount massive Greek debt

The banking lobby is hoping for a discount of 40%, Brussels wants instead to 50 or 60%.But if negotiations continue on the final figure, the principle of a very significant effacement of the Greek debt appears to act for both parties. To justify this level, Europe is based on a report of the troika, which includes the country's creditors, European Union, ECB and IMF. According to the report, banks must accept losses from 50% to 60% for the country's debt is sustainable. This prospect terrifies but investors in Greece. The Athens Stock Exchange fell Monday. Concerns focus on the consequences of such a discount to banks and pension funds in the country, who hold 15% of Greek sovereign debt. Local employers in turn denounced a decision that would lead to a "devaluation of financial assets and real estate" of the Greeks and "suffocation of the private sector."

The recapitalization of banks

To absorb losses arising from the discount and deal with a possible extension of impairment to Spain and Italy, banks are encouraged to recapitalize. With two options. Either they agree to promote their sovereign debt to market, whereby they are set a target to achieve a capital ratio of hard 9% by mid-2012. Either they refuse, and then have to meet a higher target of 9.5%. According to a European source, this would represent a comprehensive effort to recapitalize "107 or 108 billion euros."The scenario always favors a priority call to the private sector and the public opening of windows and finally, in case of failure the use of a solution through the EFSF.

On French banks, Baroin reiterated on Monday that Europe 1 "may not need to open this window public" and that they would carry out this recapitalization "at the expense of dividends and bonuses" . Christian Noyer, Governor of the Bank of France, for his part spoke of a limited effort at "least ten billion euros."

Strengthening the EFSF

It is unclear exactly how the European financial stability but we know it will not be converted into bank, as called Paris. Berlin vetoed because it would require the fund to refinance with the ECB, that "treaties do not allow," said Chancellor Angela Merkel.Options to leverage the capacity of intervention of EFSF without increasing resources have been reduced to two. First possibility: make a guarantee fund for the obligations of troubled countries (Greece, Italy and Spain) that protects owners up to 20 to 30% of the loan amount. This insurance should put downward pressure on interest rates. Second option on the table: create a special fund to accept contributions from outside investors, and could be backed by the IMF. But as the EU president, Herman Van Rompuy, both options could ultimately be chosen. "Combined, these two models could have a cumulative effect," he said Sunday.

The new problems that emerge

The non-European contribution to EFSF

The proposed involvement of outside investors – outside the euro area – raises some reservations.The fear of other states to mix with European desnquiétudes rise. "The Chinese said they were interested, but some member states are skeptical about the idea of ​​integrating a Chinese contribution to the EFSF," said one diplomat. Which could ultimately leave the field open to the German proposal as EFSF Guarantee Fund.

The payment of the IMF to Greece

To avoid suffocation in the country, the creditors of Athens must pay the sixth installment of the loan of 110 billion euros. But if Europe accepted Friday the payment of its share (5.8 billion), the IMF still has not cleared the release of funds. The Secretary General of the IMF, Christine Lagarde, said Friday she would recommend the Fund to pay the remaining share (2.2 billion).But for this it will be another meeting of the Board of the IMF in November …

The use of Italy EFSF

Italy is under pressure to further reduce its debt and deficits. Prime Minister Silvio Berlusconi was ordered to reach the European summit Wednesday with a detailed road map for further reforms of its economy, particularly on pensions. "This is not to appeal to the solidarity of partners if we do not effort," even said Nicolas Sarkozy. Now Italy has indeed need that help. She is a candidate to benefit from new support program called "precautionary" developed in July. The tool is expected to be able to provide credit lines or to allow the EFSF to buy government debt from one country to investors in the market "secondary" to influence interest rates.Relief Fund would replace the ECB and redeeming debt from the Italian August but warned that it would not do it forever. Except that Europe now poses its terms. Silvio Berlusconi has already given some pledges by suggesting that it might raise the retirement age to 67. It could also speed up privatization to relieve the huge debt the country to 1,900 billion euros.

The Irish budget deficit has reduced by 4 percentage points of GDP since 2009. Corporate profitability recovered sharply. But deleveraging too fast may influence the activity against becoming productive. Pedestrians in Dublin

If Ireland is still part of PIGS, it can not be in the same category as Greece or Portugal, as progress in a few months by former Tiger European are important. The Irish budget deficit – excluding bank recapitalization needs – fell by 4 percentage points of GDP since 2009. The current account deficit turned into a small surplus. Finally, corporate profitability recovered sharply.

The experts of the International Monetary Fund (IMF) of the European Central Bank (ECB) and European Commission, who have just completed their assessment mission in Ireland, are seduced. "The ongoing adjustment is solid.The 2011 budget targets will be achieved and the ongoing structural reforms will also contribute to sanitation, "they note in their report.

However, Ireland is now entering a delicate phase. Or the risk of too rapid deleveraging weigh on activity, against becoming productive. The experts of the IMF, the ECB and the Commission to admit the hint. "Ireland will have to find a balance between the imperatives of debt reduction and limitation of the barriers to growth and job creation," they point out in their report. This sentence harmless and a bit blurry could announce a change in strategy for Ireland. The country needs it, says a recent report by Goodbody Broker.

Make concessions

Indeed, in Ireland, over-indebtedness affects both the public sector, private sector and banks.Simultaneously reducing the three is clearly a bad idea, says the report. If Ireland is determined to meet all objectives at the same time, the evolving recovery will be quickly suppressed. A risk highlighted recently by the Finance Minister Michael Noonan. Especially since the motor only turns in exports. The domestic market remains depressed by lower prices (unit labor costs fell by 15% and commercial property prices have been divided by two).

We must therefore make concessions to one side. But which one? As for households, the government can not do much. The debt reached 220% of disposable income, nearly twice the international average. And fall of financial markets could reduce household net wealth of 250 billion euros. The Irish are going to have to tighten their belts for several years.Make concessions on the public debt is also not in a financial crisis. Ireland recorded a primary deficit of 6% of GDP in 2011. This is the worst result of the euro area.

Remaining banks. They must bring their ratios to 122% loan to deposit by 2013. The challenge today is to allow banks to achieve that clean without excessively penalizing the credit. This will doubtless involve additional time but also further aid from the ECB, economists now believe. Lengthy discussion in perspective.

On the eve of crucial European summit must agree on strengthening the EFSF, rumors are going well. The scenario of the report shook the stock markets. The trading floor in Frankfurt

According to information from the daily Die Welt, Germany could request that the date of the scheduled EU summit be postponed Sunday. Significant differences remain in effect for the implementation, especially the status of the EFSF "reinforced". A European diplomat had already emphasized this point of contention with the AFP in the morning.

The silence of Angela Merkel and Nicolas Sarkozy after their meeting Wednesday Express is not a good sign according to some analysts.

The summit, originally scheduled October 17, has already been postponed once.But several senior sources directly involved in the preparation and organization of the EU summit on Sunday, said on Thursday told Reuters not be aware of any proposed postponement of the meeting.

Another fear of the markets, they are trying to learn more about a paper on the EFSF, obtained by news agencies and that the European fund would be used as a last resort to recapitalize banks after the stress shareholders, private investors and governments.

Markets nervous

In this waiting period, nervousness is being felt in markets. Losses CAC40 who had reduced to just 0.5% to double and even more since the French values ​​now fall -1.35% to 15h.

European markets were down -1.1% on average (such as Madrid and Milan), but Frankfurt falls of -1.5%.

Morgan Stanley said Wednesday it posted a profit in the third quarter, supported by an accounting effect that stems from a new valuation of its debt.

The second U.S. investment bank posted a profit of $ 2.15 billion (1.55 billion), $ 1.15 per share against a loss of 7 cents a year earlier.

Net banking income rose 46% to 9.89 dollars.

Excluding a gain of $ 3.4 billion attributed to an adjustment of the value of its debt, Morgan Stanley gained 2 cents a share.This is related to an accounting rule known as an "adjustment to the valuation of debt" (debt valuation adjustements or DVA).

Clearly, the fact of integrating into account the increased risk associated with a reduced commitment required of the holder, thus generating accounting profits.

Before Morgan Stanley, JPMorgan and Goldman Sachs have also used the accounting process.

Forward Exchange, the title of Morgan Stanley advanced 18 cents to 16.81 dollars.

Income from its trading activities more than doubled from the third quarter of 2010 and an increase of 24% over the period April-JuneThis sharp increase reflects the gains attributable to the DVA.

Its asset management segment has meanwhile reached a revenue of 3.26 billion dollars, 5% more than last year at this time, but less than the second quarter.

GNP derived from asset management is in turn stood at $ 215 million, 73% from the third quarter of last year and 67% less than in April-June 2011.

This decline is attributed to losses on investments in its banking business and its activities in real estate.

Wall Street opened in fall Monday after two weeks of gains, weighed down by a statement by the German Finance Minister Wolfgang Schäuble that the next EU summit will not produce a definitive solution to the debt crisis.

In early trade, the Dow yielded 0.59% (56 points) at 11,575 points.The Standard & Poor's, wider, fell by 0.62% (7.5 points) to 1217 points while the Nasdaq composite lost 0.64% (17 points) in 2650.

Germany warned Monday against the dream "unrealistic" to see the European Summit of 23 October Sunday settle the debt crisis in the euro area, keeping the pressure on banks to grant a discount over important Greek debt.

Wall Street was completed Friday a second consecutive week of gains, seeing the S & P 500 gaining over 8% on the hope of curbing the euro area's debt crisis and the global economy avoid a recession.

But a barometer of manufacturing activity in New York Monday revived fears about the U.S. economy.

The Empire State index of the Federal Reserve of New York stood at -8.48 in October, its fifth consecutive month in negative territory, while the market expected a slightly less marked contraction (-4.00) from -8.82 in September.

Industrial production has in turn increased by 0.2% in September, as expected, the manufacturing sector offsetting a decline in the utilities.

Citigroup gained 1.2% at the opening after reporting a profit increase in the third quarter.The bank has indeed had to be provisioned are less clear for its losses from toxic assets, while benefiting from an accounting gain that banks can reap when financial markets are turbulent.

Wells Fargo lost 5.6% after posting a profit rise in third quarter but have just missed the consensus of analysts.

Finance ministers and central bank governors of the G20 agreed Saturday to impose a surcharge mandatory capital up to 2.5% of their capital for systemically important banks, to be set up gradually from 2016.

According to the statement issued after a two-day meeting in Paris, they endorsed the device in the sense proposed by the Financial Stability Board (FSB), ignoring calls from financial wishing a review of it these or additional time for implement.

Overload, which can be between 1% and 2.5%, will apply to all institutions, by their size, would be of overall risk to the financial system in case of failure.

Would be affected banks like Goldman Sachs, HSBC, Deutsche Bank, JPMorgan Chase but also the largest French banks: BNP Paribas, Societe Generale and Credit Agricole.

"Now that we have agreed on the framework for these institutions, we urge the FSC to define how to extend this system without delay to all systemically important financial institutions," we read in the statement.

The aim is that these banks have enough capital to get through the turbulence of markets so that states are not forced to wear to their rescue when the next crisis.

This overload should be finally adopted at the next G20 summit on 3 and 4 November in Cannes, at which the names of the banks concerned will be announced.

It is one of a set of provisions on the financial sector ministers and central bank governors have adopted Saturday.

AGREEMENT "TEST BANKS"

Among these include the use by supervisory authorities in the sector of "common tools" to liquidate banks in trouble, writing "wills" by major banks to facilitate their dismantling in case of difficulties or strengthening the monitoring of such institutions.

The CSF, which coordinates the work on financial regulation for the G20, has already defined the criteria implemented in a systemic overload.He identified 28 banks that could be subject, but a source close to the G20, it was reported that the number will be between 29 and 50.

The CEO of JPMorgan Chase, Jamie Dimon, the device has already denounced as "anti-American", while the banks concerned will apply in addition to the new prudential framework called Basel III will require them to hold capital "hard" to at least 7% of their commitments.

The CSB has received other support from the G20 for his work on the definition of "shadow banking system" to a regulation of it, with a view to prevent risk activities will migrate banks to other parts of the financial sector such as money market funds or special entities.

Regarding the regulation of commodity markets, one of the priorities of the Presidency of the G20, Paris could not succeed in setting limits on positions that investors can hold.

The statement calls for implementation by the end of 2012 recommendations of IOSCO, the umbrella organization for national supervisors of markets, derivative markets of raw materials that do not provide for such limits.