Business & Financial News

Greece still has no government. The risk of bankruptcy and the issue of leaving the euro area is raised again. Result: the stock prices fall and investors flock to German bonds, even if they yield nothing. The Eurogroup meeting will be devoted to Greece and Spain

After a difficult week, the stock markets reopened on Monday sharply lower against the backdrop of prolonged political stalemate in Greece, epicenter of the debt crisis, while be held a meeting of the Eurogroup.

Monday morning, Paris was losing more than 2% in early trade, London 1.33%, 1.31% Frankfurt. In Milan (-2.02%) and Madrid (-2.47%), the decline was more pronounced after banks have announced they will place new provisions because of subprime mortgage they hold in their portfolios. The day promises to be difficult, while "the risks to the euro area are still very real," said Chris Weston of IG Markets.

More than a week after the parliamentary elections, Athens still has no government. But the prolonged absence of government raised concern among investors in a delay or suspension of financial aid promised in Athens to enable it to meet repayment dates and ensure payment of arrears.

Monday, the Greek President, Karolos Papoulias, will try to snatch a coalition government during the final meeting between the country's political leaders. But many observers believe the country is moving towards new elections in June as the positions between pro-and anti-austerity diverge.  

Another sign of market nervousness, the 10-year rate of German bond (Bund) fell Monday morning at their historic low (1.47%). The political situation seems to push investors to turn to these securities deemed safe. "Investors plébiscitent increasing security even if the debt did their German report anything," said Nordine Naam, bond strategist at Natixis. He added: "Fears of an output of Greece of the euro are strong and, in case of persistent political deadlock in that country, the Bund interest rate expected to fall further in the coming days".

It was in this tense situation the finance ministers of 17 member countries of the euro area shall meet this afternoon in Brussels. A signal strength should be sent to Athens, to push the Greek authorities to put in a faster end to this in-between chaotic. Spain will, too, part of the program. The Spanish Minister of Finance, Luis de Guindos, will try to reassure, giving an overview of the reforms that Madrid will set up to consolidate its public finances. Is that Spain is in the viewfinder markets. The rate of its 10-year government bonds is back above 6%.

France Telecom has managed to limit the impact on revenues of Free Mobile launch in the first quarter in spite of numerous defections among its customers, tempering the market pessimism on its ability to pass through this turbulence.

The incumbent has suffered a decline in its overall turnover and profit margins as a result of declining revenues in France, whose magnitude was, however, revealed lower than market fears.

The group has particularly benefited from the roaming agreement concluded with the new entrant for the use of its network that pays more than expected at France Telecom.

At 10:50, the title gained 2.3% to 10.48 euros, while the CAC 40 and the European telecoms sector index are 0.96%. 

"The motive in France was stronger than expected," commented analysts at Jefferies in a note, acknowledging also the commercial cost control, remained stable over the period despite increased competition in early January with the launch of Free on the mobile market.

The results of France Telecom, the first operator to provide its quarterly, were eagerly awaited by the market for an initial diagnosis of the impact of entering the fourth on the French market, while France Telecom does not disclose details of its margins by division.

The incumbent has recorded a total loss of 615,000 mobile customers in France during the first three months of the year, a figure to compare to the 219.000 departures recorded on the corresponding period last year.

Applications portability "returned the last two weeks of March to the level before the arrival of Free market," said CFO Gervais Pellissier during a conference call with reporters.

"The customer losses are slightly higher than what we expected but what is most reassuring is that the group indicates that the tumult caused by the arrival of Free market seems to calm down, "said Guy Peddy, Macquarie, which says a bit more optimistic even though" much work remains to be done. " 

NEW PROSPECTS EXPECTED TO SUMMER

Throughout the first quarter, the total turnover stood at 10.92 billion euros, down 1.8%, while adjusted Ebitda stood at 3 , 43 billion (-7.0%), giving a margin of 31.4%, down 1.7 points.

The market expected a turnover of 10.81 billion euros and an EBITDA of 3.45 billion euros, according to Thomson Reuters I / B / E / S.

The group has suffered from the 4.2% decline in sales in France related to the impact of Free mobile subscriber base and its price, which has however been partially offset by income generated by the first roaming agreement concluded with Free Mobile, a subsidiary of Internet service provider Iliad. 

The operator now believes that he should yield about one billion euros over three years against the same amount over six years previously.

France Telecom, which reiterated a target operating cash flow of nearly 8 billion euros in 2012, has however confirmed that he no longer maintained the objectives for the period 2013 to 2015 announced ; s in May 2011 as part of its strategic plan.

"While the arrival of Iliad was expected, the price level at which it is set in January is lower than what we have anticipated in May, or even what we might anticipate yet at last November, "said Gervais Pellissier, adding that the group continued to anticipate an early recovery for next year. 

"We made an appointment to investors in the summer to tell them what would be 2013," he added.

Despite pressure on its margins and its sales, France Telecom does not provide for downsizing in the Hexagon, said the CFO.

Competitors Bouygues and SFR have undertaken a series of measures to reduce costs.

U.S. stocks finished mostly slightly higher Friday, the Dow Jones having received solid results from several big names such rating Microsoft, General Electric and McDonald's, but the downturn in the technology sector weighed on the Nasdaq.

The Dow Jones industrials gained 30 0.5%, or 65.16 points, to 13,029.26. The S & P-500, wider, took 1.61 points, or 0.12%, to 1378.53.

The Nasdaq Composite, however, yielded 7.11 points (0.24%) to 3000.45, weighed down by including SanDisk, which dropped more than 11% after a warning on its sales business. The decline of Apple (-2.46%) also weighed.

For the week, the Nasdaq fell 0.4%, but the Dow Jones rose 1.4% and the S & P 500 0.6%, encouraged by the good start of the earnings season.

Of the 121 companies in the S & P 500 having reported their quarterly on the date of Friday, 81% exceeded Wall Street expectations, according to Thomson Reuters data.

Microsoft has topped the Dow Jones gains, surging 4.5% Thursday after reporting a profit above the consensus, PC sales are e , as revealed better than expected.

SanDisk has dropped 11.27% to 35.91 dollars. The memory manufacturer has said it expected a revenue well below Wall Street expectations in the second quarter due to lower prices in the sector.

In its wake, the index of the semiconductor sector fell 2.38% on the session. Apple has lost 2.46% to 572.98 dollars.

SEASON RESULTS STILL GOOD

General Electric closed up 1.1%. The first American industrial conglomerate reported earnings and sales better than expected first quarter thanks to strong demand for energy equipment Ticks and railway equipment.

McDonald's took 0.7%. The world's number one fast food has published quarterly results rise, driven by strong sales in its restaurants in the United States.

"Yesterday there was some concern to see McDonald's to miss the consensus, but he reached out and showed strong sales growth at stores constant. GE beat expectations. Overall the earnings season continues to be good, "said Peter Jankovskis for Oakbrook Investments LLC.

The industrial conglomerate Honeywell International has published its quarterly results next up and has revised upwards its annual financial targets. The stock closed up 2.4% to 59.39 dollars.

Schlumberger took 2.7%. The oil services group published the first-quarter net profit up 39% to $ 1.31 billion, or 97 cents per share.

A Wall Street as on the European stock exchanges, investors awaited further reassurance on the capabilities of the International Monetary Fund (IMF) to raise new funds to contain the crisis euro area.

The Group of Twenty (G20) is committed in the evening to give the International Monetary Fund (IMF) over $ 430 billion of additional resources, making more than double its capacity loan.

Areva announced Friday an agreement with EDF to provide the public with electrician nuclear fuel assemblies and related services for the years 2013 and 2014.

Financial details of the agreement were not specified.

The fuel assemblies, which confine radioactive material in sealed ducts, are the Centrally? Heart of a nuclear reactor, where fission takes place.

Areva and EDF also agreed to negotiate a framework agreement in the medium and long term on the fabrication of fuel elements.

The Supreme Court could reverse the conviction of Total over 12 years near the wreck of the tanker Erika off the Brittany coast in 1999, reported Friday Liberation and Ouest-France.

The highest French court, which must rule on May 24, could simply cancel the entire procedure conducted since the disaster in December 1999, according to two dailies.

Senior judges make this recommendation in their conclusions with the main argument that the wreck, which caused the pollution of 400 km of coastline, has not occurred in French waters, writes Libération ration and Ouest-France.

The Erika disaster led to two trials in 2007 at trial and on appeal in 2009. The judgment established each time the liability of defendants, which the charterer Total.

The oil company could not be contacted immediately to make a comment.

Wall Street opened sharply lower Wednesday, still within the scope of the minutes of the last meeting of the Monetary Policy Committee of the U.S. Federal Reserve seems to suggest that that new measures to support the economy are no longer topical.

In early trade, the Dow Jones yielded 0.91% (or 120.49 points) to 13,079.06 points. The Standard & Poor's, wider, lost 0.86% (12.10 points) to 1,401.28 points while the Nasdaq composite fell back to 0.89% (27.82 points) to 3085, 75.

This decline, following a decrease of about 0.5% yesterday, comes despite better than expected figures for employment in the private sector. According to ADP monthly survey, the private sector has indeed created 209,000 jobs in March, against 200,000 expected.

But what continues to attract the attention of investors is that only two members of the Monetary Policy Committee of the Fed felt that other measures could be necessary if the Economic activity weakened or if inflation remained at a low level for an extended period.

Support measures implemented by the U.S. central bank was the main catalyst for a jump of 30% recorded by the S & P 500 since October, although improving conditions in the United States, as reflected by the indicators, also played. 

"The minutes of the Fed questioned the certainties of those who thought they could relax without end," said Sal Arnuk, co-head of investments at Themis Trading.

For its part, the European Central Bank has unsurprisingly left rates unchanged at a record low, Mario Draghi, chairman of the ECB, saying it was pre premature to start talking about the withdrawal of the measures to end the crisis.

The title General Electric, Heavyweight Dow Jones down 1.3% to 19.70 dollars after Moody's downgraded the industrial conglomerate from Aa2 to Aa3. 

The action Sandisk falling more than 9% after the specialist NAND chips has reduced its forecast for sales in the first quarter, citing lower demand than expected and conditions unfavorable pricing.

The deficit narrowed more than expected in 2011. Good news for the future president. But the deficit target of 3% of GDP by 2013 seems difficult to achieve, given the campaign promises made by candidates at the Elysee Palace. View of the Ministry of Economy and Finance at Bercy.

At twenty-three days of the first round of presidential elections, Nicolas Sarkozy may finally assert some good news on the economic front: the public deficit of France was reduced to 5.2% of GDP in 2011, against 5, 7% initially foreseen in the budget law. President, UMP candidate at the Elysee Palace, was granted the first to hear the announcement this morning on Europe 1, grilling politeness in passing at the National Institute of Statistics.

Members of his government were also quick to react. Valérie Pécresse, the budget minister, welcomed an effort "historic". "Never has the government deficit in France has fallen as far from one year to another," Francois Fillon welcomed. "This is the result of both structural reforms that the president and government have undertaken since 2007 and the reactivity of which we have been to take timely steps to preserve our cap facing the crisis, "said the Prime Minister.

In fact, the deficit is indeed historic. It is almost two percentage points of GDP – the deficit was 7.1% in late 2010 – or nearly 40 billion euros. "This is a performance ever," says Jean-Christophe Caffet, economist at Natixis. This improvement comes at a time of buoyant revenue, which rose from 49.5% to 50.7% of GDP, and expenditure restraint, which rose from 56.6% to 55.9% of GDP. The sharp increase in expenses is largely due to strong tax bases and good elasticity of taxes to the moderate growth – 1.7% in 2011.

Taxes on income and wealth have risen by 10% in 2011: the increase in tax revenue comes from both the corporate income tax (8.7 billion) that the income tax (3 , 6 billion) and social contributions (13.3 billion) due to higher payroll. Measures taken in the context of both austerity also had a positive effect: the CSG revenues increased 5.2 billion due to the introduction of taxation over the water revenues of life insurance, VAT receipts were boosted (5.8%) by increasing the tax on insurance contracts and the removal of VAT reduced on triple play.  

The deficit target for 2012 is achievable

Result the tax burden rose 1.3 points to 43.8% of GDP last year, surpassing 2007 levels, while Nicolas Sarkozy promised to lower them. As for spending, they have continued to increase, but it is true more slowly than inflation. Operating expenses of the state, including staff salaries, slowed sharply (+1.6% after +2.1% in 2010), by freezing of the index which is indexed on the salaries of civil servants . Spending inputs have, they, down 1.5% due to very low shipments of military equipment in 2011, and public investment has registered a moderate increase (+1.6%). Ultimately, Jean-Christophe Caffet calculates, "the structural effort of the government is only about a third of the deficit reduction in 2011."

Nevertheless, the result is there. And strength of this success, the executive has even lowered the public deficit target for this year to 4.4% of GDP against 4.5% previously. Given the growth overhang the first half of 2012 to 0.5% according to INSEE – and reduces the effort required this year – 0.8 percentage points of GDP or 16 billion euros -, "this goal deficit is largely achievable, "said Jean-Christophe Caffet. Especially as many measures as part of the austerity plan – increase in VAT reduced from 5.5% to 7%, establishing an outstanding contribution on high incomes, freezing the scale of the income tax, freeze benefits, etc.. – Come fully into force this year.

A boon for the next president to be elected in May and the government that emerges from the polls in June. "The big uncertainty is 2013, warns economist of Natixis, because nothing is known about how the structural effort that will achieve, or about 30 billion euros". France has indeed committed to Brussels next year to bring its public deficit to 3% of GDP. Nicolas Sarkozy and François Hollande, have both confirmed this objective during the campaign. The two favorites in the race to the Elysee to differ only after the UMP candidate promising to balance the budget by 2016 while that of the PS wants to achieve in 2017.

The problem is that Nicolas Sarkozy has not announced anything else, for now, that further measures of reduced spending over the past two years. But it will not be sufficient to reach 3%, especially if growth is still not at the rendezvous. As for Francois Hollande, it provides 25 billion of new spending on the five-year and 40 billion annual tax increases. Increases which will focus on businesses, which may penalize growth. From this perspective, The Economist is right: "Whoever wins on May 6 will adopt a tough stance against the deficit, writes the weekly UK this week. Nicolas Sarkozy will make further cuts in the budget, Despite his promise to protect the French austerity. Francois Hollande will push, if not waived, that many of its spending promises. "

India has formally followed the lead of China Thursday asking its airlines to refuse to participate in the program of the European Union to tax carbon emissions in the air transport, confirming what was said a senior Indian official told Reuters.

"While the European Union ordered the Indian carriers to submit the details of their aircraft emissions by 31 March, no company due to the fact the government's position" , said Ajit Singh, Minister of Civil Aviation.

"Therefore, the imposition of a carbon tax is not an issue," he said in a letter.

The European Commission was not immediately available for comment information. 

The opposition of India in the exchange system of emission quotas for greenhouse gas (ETS) could jeopardize the chances of New Delhi to reach an agreement, being born in ; negotiation, free trade with Brussels.

China first allowed its air transport sector to participate in this program.

Since 1 January, all airlines flying from airports in the EU are subject to a trading system of emission quotas for greenhouse gas (ETS).

A company failing to observe these rules is liable to a tax of 100 euros per tonne of carbon emitted quota allowed. The EU ban of up to serve European airports.

China has suspended the purchase of Airbus representing $ 14 billion because of the dispute with Brussels over the carbon tax. India is also a major customer of Airbus.

Airbus officials, airlines and European engine wrote last week in the Old Continent's political leaders urging them to resolve the dispute caused by the introduction of this carbon tax.

Boeing has supported Airbus in this matter, despite the bitter legal battle being waged for years the two aircraft manufacturers about the legality of state aid received to develop their planes. 

"It is no Airbus and Boeing, this is what is most beneficial to our customers and how the industry as a whole can reduce its carbon footprint," said ; Reuters Jim Albaugh, CEO of the Civil Aviation Division of the U.S. group.

"In my opinion, the European ETS is not the right approach. It must be suspended and we must work with the ICAO (aviation agency of the United Nations) to establish regu international rules that everyone can see. "

The objective of the British government to eliminate the budget deficit within five years is still valid, said Wednesday the finance minister, presenting a tight budget for the third consecutive year.

This budget, however, reduce the income tax and to accelerate the reduction of corporate tax (IS). These measures will be funded from the taxation of banks and wealthy landowners.

George Osborne added that the UK economy should avoid recession, says a new anticipate an acceleration of the recovery next year.

The growth rate of the UK economy is projected at 0.8% this year to 2.0% in 2013 to 2.7% in 2014 to 3.0% and the next two years.

The OBR had planned in November to 0.7% growth this year, 2.1% in 2013 and 3.0% in 2015 and 2016.

In terms of fiscal measures, the tax bracket of 50% for taxpayers whose annual income exceeds 150,000 pounds (180.000), introduced by the previous Labour government, will be reduced to 45% from April 2013, a move that will cost a maximum of 100 million pounds, said the Chancellor.

The minimum tax is increased to 9205 pounds of annual income (11,000 euros), an increase higher than expected, from April 2013 also.

The rate of corporation tax will be narrowed down from 26% to 24% next month and to 22% by 2014.

To fund these measures, a stamp duty of 7% will be levied on sales of land and property, above the two million pounds. In addition, the bank tax will be increased to 0.105% effective January 2013, so that the reduction of the SI does not benefit the banks.

DECREASE IN LOANS

The Office for Budget Responsibility (OBR) of the government projects a decrease in net borrowings to bring them back to 21 billion pounds for the year 2016-2017 as they totaled 126 billion over the year 2011 to 2012.

The new projection of the OBR is somewhat more optimistic than in November, when Chancellor of the Exchequer had to extend the package of austerity beyond the e elections of 2015.

The public sector debt and must reach a peak of 76.3% of GDP in 2014-15 before falling. 

"We are well positioned to meet this mandate and eliminate the structural current account deficit by 2016-2017," said the Chancellor of the Exchequer to Parliament on the occasion of the budget.

However, this deficit has reached record levels in February, reflecting a lower tax revenues and higher public spending.

Only a narrow majority of 15 out of 29 economists polled by Reuters had expected Tuesday that the coalition government to succeed in reaching its target of reducing the public accounts in balance, in structural terms at the horizon 2016-2017. 

They were 23 to consider that the debt ratio would have declined by that date and provided only a 25% probability of risk for the country to lose its precious triple-A, against 27.5% during a similar survey a month ago.

The Office of Debt Management announced that its part of the state debt would total 167.7 billion pounds in the 2012-2013 biennium, or about ten billion pounds less than when the previous year.

A Reuters poll gave 180 billion.

The number of referrals to the Ombudsman of energy increased 14% in 2011. At issue: payment difficulties. The Ombudsman proposes to introduce a general truce breaks from November 1 to March 15.

The cases of fuel poverty rose sharply last year in France, as a result of the crisis and rising energy bills and gas, says National Energy Ombudsman in his 2011 report published Tuesday. The Ombudsman, an independent administrative authority which began operations in 2008, saw its number of referrals increase by 14% last year, in 8044, it said in its annual report, up a bit weaker than the explosion recorded in previous exercises.

But of that total, the number of cases related to payment difficulties has increased by 80% compared to 2010, and represented over 15% of all referrals, calculated the Ombudsman. "The economic crisis and rising energy prices have compounded the problem of fuel poverty", that is to say, struggling to pay their electric bills or gas, and pushed more and more income households to seek mediation, the institution said. The Ombudsman recalls in passing that the regulated gas prices rose 25% in two years, and those of electricity by 8%.

The Ombudsman also proposes measures to better fight against the rise of fuel poverty, considering the schemes (such as social tariffs for electricity and gas, whose allocation has been made automatic for all eligible households ) insufficient, even if they are "in the right direction." It proposes the establishment of a general truce breaks from November 1 to March 15 for all consumers, on the model of the winter break of evictions (a truce energy cuts already applied but only for some consumers), and the establishment of an "energy check", which may be substituted for social tariffs.