International Business News

Wall Street opened sharply higher Friday's session, the day after its worst session in more than two years.

The figure better than expected job creation in July in the U.S., coupled with an unemployment rate slightly down, eased the anxieties of the markets and given them new impetus.

A few minutes after the start of trading, the Dow Jones gained 1.5% to 11,554.5 points, Standard & Poor's 500 index 1.32% to 1215.91 points and the Nasdaq Composite 1.29% to 2589.38 points.

According to figures released Friday by the Labor Department, the U.S. economy created 117,000 non-farm jobs in July and the rate of unemployment has fallen from 9.2% to 9.1%.

Economists on average had forecast 85,000 new jobs.

Values, the way Procter & Gamble has reported an increase in its quarterly results, which pushed up the title of 2.14% on opening.

The benefit of General Motors has nearly doubled in the second quarter exceeded market expectations, thanks to an increase in market share, particularly in the United States, the number one U.S. auto.

Net income stood at $ 2.52 billion, $ 1.54 per share, against $ 1.33 billion, $ 0.85 per share, a year earlier.

Analysts polled by Thomson Reuters I / B / E / S had forecast $ 1.20 per share.

Revenues came out up 19% to 39.4 billion, better than the 36.74 billion expected by the consensus.

Major international banks have offered to European leaders a "menu of options" to allow more private creditors to participate in a second aid package to Greece, said Tuesday the president of the French Banking Federation (FBF ).

Echoing the position of German banks, François Perol, who is also president of BPCE (People's Bank, Savings Bank) has also estimated that the project of a tax credit to participate in the bailout of Greece was not the solution.

"We stopped for a month to make proposals to governments," said François Perol during a press conference. "First there was the proposal of French banks.There is now a broader proposal emanating from the IIF (Institute of International Finance, Ed) and includes a wider menu of options. "

The chairman of the FBF has not wanted to give more details on the proposals but said discussions were continuing while a summit of heads of state and government of the euro zone on Greece on Thursday.

French banks had proposed rescheduling the end of June ("rollover") voluntary debt Greek but the rating agency Standard & Poor's determined that this proposal would mean a selective default. (And)

"These proposals (the IFIs) are structured (…) they are on the table of the Council of European governments," he said François Perol."There are ongoing discussions."

"It's not for me to advertise the proposals in the press," he added.

FBF, however, indicated that to obtain the widest possible creditors of Greece, it was necessary to select several options.

"We were told that private sector involvement should be done in a voluntary," he said.

"If it is a voluntary framework, we need investors, according to their positions, have an interest in future operations that are proposed."

"LEADING MARKETS"

A two-day summit of European leaders and as investor concerns about a contagion of debt to other countries in the euro area remain high, government officials and banks are still struggling to find an area of agreement on new aid to Greece.

Asked about plans for a tax credit, François Perol held that a tax was not the right answer to problems facing Greece.

"It does not seem that this is the solution for Greece", said the chairman of the FBF.

For French banks, it is now up to politicians to make decisions as quickly as possible.

"It belongs to the European authorities to decide together, speaking with one voice and talking at once, what their strategy (…) for the euro," stressed François Perol. "This is not a technical matter, it is a political issue."

"The markets need to be guided. It's the political authorities to guide them."

Renault has revised down slightly its growth forecast Monday the global automotive market in 2011 because of the impact on the area of ​​the disaster that hit Japan in March.

The manufacturer announced plan for the overall market growth of 3 to 4% this year, whereas in January there was a growth of over 4%.Meanwhile, he said, the Japanese auto industry has been shaken by the tsunami and the nuclear disaster that struck the archipelago, causing major disruptions in the supply sector worldwide.

Despite these difficulties, Renault saw its global sales rise by 1.9% to 1.374 million cars and light trucks in the first half, a record level for the group, thanks to the international.

In Europe, sales of the brands Renault, Dacia and Renault Samsung Motors, but out Lada, fell 7.4% while the rest of the world, they were up 20.4%.

"Despite mixed results in Europe, the group continues to grow sales and achieved record sales for first half," said commercial director of the group, Jerome Stoll, in a statement.

The market share of Renault was still packed to 3.7% in the first six months of the year, against 3.8% a year earlier.

The group maintained between zero and 2% its forecast for the European market and noted that for France to -4% / -6%, against -8/-10% expected in January in the wake of the cessation of premiums to breakage.

He also expressed confidence of seeing the reverse of July supply problems affecting Europe since the beginning of the year, and that still weighed on the French registration of Dacia and Renault in June. These problems, foreigners in Japan are related to supply disruptions in the supply chain providers, particularly in terms of diesel engines.

Crisis in the euro area, weak growth in the United States, overheating in the emerging economies: the threats could plunge the world into recession, says the Fund.

There are "very clear risk" for global economic recovery, said Friday, June 17 the International Monetary Fund during the update of its economic forecasts. The debt crisis in the euro area, disappointing growth in the U.S. and the risk of overheating in some emerging economies are threats to the global economy, said Olivier Blanchard, chief economist of the IMF.

The IFI, in an update of its economic forecasts, financial and budgetary biannual published in Sao Paulo, has virtually maintained its forecast for global growth to 4.3% against 4.4% in April, but found that "the activity was slowing down temporarily".

The IMF has also lowered its growth forecast for the United States. He did not table more than 2.5% in 2011, against 2.8% in its April forecast, and 3% in those of January. At the time, he felt that the extension of rebates on income tax would bear fruit. But "growth has disappointed the United States," he said.

This "weak activity than expected" is "partly due to transitory factors, including rising commodity prices, weather, and disruption of the production chain in the U.S. industry caused by the earthquake in Japan, "explained economist Institution of Washington. The Fund has urged Congress to meet "immediately" the legal limit of public debt of the federal state, which is now hostage to disagreements between Republican and Democratic members on the budget.

"In contrast, growth has surprised on the upside in the euro area, driven by investments more generous in Germany and France", welcomed the IMF. For the entire area, the IMF raised its forecast to 2.0% in 2011 against 1.6%. Germany had the highest growth in the G7, to 3.2%.That of France would reach 2.1%, a figure still higher than the 2% announced two days before in the preliminary findings in a Fund's annual report on the economy.

The smaller economies in the euro area do not show the same health. Bending under their public debt, they threaten the stability of the banking sector on the continent and beyond, said the Fund. He said "political leaders must strive to make rapid progress in the consolidation of the financial system." And the opportunity to take the necessary measures "could be lost in an unpredictable manner." Or "in the event of a severe market event, a shock could impact beyond the euro area by the game at a time of exposure border [of banks to the debt of these countries] and to a general decline in risk appetite, "said Fund.

This warning is issued while Greece, countries which the IMF in May 2010 granted a loan of 30 billion euros, continues to sink into the economic crisis. She took a political turn with the sling of the parliamentary majority against a draconian fiscal discipline.

The French Finance Minister was in New Delhi Tuesday as part of his tour in emerging countries to plead his candidacy. .

The French Finance Minister Christine Lagarde said Tuesday she would have a "lower level of testosterone" to head the International Monetary Fund (IMF) if its bid was accepted.

"If I am elected CEO, I'm plumb as a woman, not necessarily pants, and certainly with a testosterone level that is lower than many in this room today," he quipped with a smile Lagarde.

She was responding to a question on how she would manage the international organization at a press conference in New Delhi after meeting Indian Prime Minister, the Minister of Finance and Chairman of the committee plan.

Considered the favorite, she applied to succeed his compatriot Dominique Strauss-Kahn, who resigned after being accused of attempted rape of a maid in a hotel in New York.

In October 2008 an extramarital liaison with a Hungarian economist of the IMF, which was the direct supervisor, had nearly cost him his job.

After the recent "thunder" from the DSK affair, several French politicians have found inappropriate comments they could be targets during their political career.

The French Minister of Sports, Chantal Jouanno, for example, said she dressed in trousers rather than skirts when she had to go to a mostly male audience.

Falling commodity prices, oil and metals in the lead, led a growing number of fund managers to stay out of the compartments riskier equity markets, which could be the harbinger of a correction on Wall Street.

In recent weeks, investors have come out of cyclical stocks such as energy and basic materials to turn to defensive sectors to more stable growth as pharmaceuticals and utilities.

Market players are increasingly concerned that more shares are valued based on overly optimistic economic forecasts.The recent fall in commodity prices – the price of silver fell 30% – and the comeback of pharmaceuticals in this direction.

Those responsible for the investment policy at Goldman Sachs and Credit Suisse estimate that the results will be better for the actions that are not related to the economic cycle.

Some indicators of the program next week will learn a little more about the health of the U.S. economy, as the Empire State index and "Philly Fed" relating to manufacturing and more data on the real estate sector.

Over the whole of last week, the Dow Jones sold only 0.3%, the S & P 500 and Nasdaq 0.2% remained stable, despite the emergence of concerns about slowing economic crisis.

Specialists, however, are not necessarily agree on the reason for the drop in raw materials.

Some say that near the end of quantitative easing program of $ 600 billion the Federal Reserve, intended to buy U.S. Treasury bonds, helped spark a massive investment into equities and commodities, with creation a bubble in these assets and that the bubble began to burst.

For others, the decline in raw materials is a sign of weak economy.And to quote the copper, used in many sectors of the economy, which has fallen to its level of five months ago.

"MUCH LESS OPTIMISTIC"

Nevertheless, any investor appetite for shares is reflected in the performance of defensive stocks. The S & P 500 defensive stocks and that of utility companies have respectively gained 2.9% and 2.6%.

However, water companies and electricity decreased by 1.5% over one year of their first quarter results. This is the worst performance of the ten sectors of the S & P.

Pharmaceuticals, which were long shunned, are up for seven weeks.They have won nearly 15% since the beginning of the year.

Conversely, the energy sector, down 7.8% over the last seven weeks is the worst student.

Goldman Sachs said "much less optimistic about the short-term actions" and Doug Cliggott, head of equity strategy at Credit Suisse, expects a decline of 10% of the market when the program of quantitative easing by the Fed ( QE2) will end in June.This is already what had happened at the end of the first wave of purchases by the Fed.

EPFR Global, which tracks flows of capital, announced Friday that the funds invested in international equities had recorded their first withdrawal of funds since mid-March.

Small and mid-cap, which generally lead the charge in a bull market began to show a lower outperformance relative to large "capos."The IPO market is showing signs of fatigue after a flurry of arrivals of Chinese companies on the market.

UNDER HIS COURSE INTRODUCTION

The current Chinese Dating Site Jiayuan.com fell for her debut on the Nasdaq, while the social network RenRen, said the Facebook of China, has fallen back all its gains since its IPO and is trading now as the price of introduction.

The CBOE volatility index, the VIX is now at its levels before the financial crisis, which could mean that investors are a little too happy about themselves.

Some say however that the market can still go before the next profit taking. They highlight the good performance of companies in the first quarter.Just under three quarters of companies in the Standard & Poor's reported results above expectations.The S & P distribution has recently hit record highs.

The earnings season is coming to an end in the United States, which is still pending, however, the quarterly performances of Wal-Mart Stores, the leading distributor worldwide.

Given the good performance so far, the results of the first quarter of the components of the S & P 500 that have already announced their figures – just under three quarters emerged at a level higher than expected – more market believe that Wall Street still has some room for improvement before the announced withdrawal.

Peter Lee, technical analyst at UBS, believes that the S & P will go up to 1400-1450 points this summer before declining.The S & P ended Friday at just under 1340.

Ken Fisher, Fisher Investments, which manages in $ 38 billion of shares, believes that high expectations are a sign of a market that was difficult to hover around current levels with movements into and out of each other over short periods.

David Joy, head of investment policy at Columbia Management Investment Advisers, one of the largest fund managers with over U.S. $ 350 billion under management, has reduced its equity investments in the last three months.

He began the year with a modest overweight position in equities, then return to a neutral weighting.

Exports of cocoa from the Ivory Coast resumed Sunday with the loading of the first ship since the beginning of the political crisis arising from the second round of presidential elections in late November, said a Reuters journalist in the port of Abidjan.

Côte d'Ivoire, in normal times, the largest exporter of cocoa in the world.

Beans were loaded aboard a vessel owned by the Bolloré Africa Logistics.

"We have 1,796 tons, and another boat will arrive at a later date to handle 9,000 tons," said Kwame Kwassi, an employee of Bolloré.

Nearly half a million tonnes a year 2011 were included in the ports of Abidjan and San Pedro during the post-election violence that rocked Ivory Coast in a civil war in the early evening of disputed election. The crisis ended on April 11 with the arrest in Abidjan from outgoing President Laurent Gbagbo by soldiers loyal to Alassane Ouattara.

Greek and European authorities can deny all they want, markets do not believe Athens able to repay its entire debt astronomically. Remains to be seen what form the restructuring. Greek students fleeing Greece to seek employment abroad

The debt restructuring Greek "is not part of our strategy, and it will not be part." Difficult to be more categorical than the Economic Affairs Commissioner Olli Rehn, who spoke Monday in Brussels. But most economists do not share his belief. According to a Reuters survey, 46 out of 55 economists expect a restructuring of the Greek debt before 2013. Officials are already behind the scenes trying to find ways to do so.

Why restructure?

First, because Greece has almost no choice: it can not repay its entire debt will reach astronomical $ 340 billion (150% of GDP) at year end. Improvements have already been made: the IMF loans and the EU will ultimately not pay until 2020 or 2025. Athens and obtained a lower interest rate on these loans. But without restructuring, ie without reducing the stock of debt, it is nevertheless an unsustainable level. Because the country can not devalue, being stuck in the euro area, inflation or play – it does not control monetary policy. As for the austerity measures intended to save the State, they have mostly depressive effects on the economy that result in lower tax revenues.The unemployment rate exceeds 15%, and the Central Bank forecasts a contraction of at least 3% of GDP this year. Restructuring would thus loosening the grip that is suffocating the Greek economy and give the country time to focus on growth

That restructuring is unavoidable, investors are not mistaken and require intolerable rate: 25% for debt to two years, 16% for those 10 years, rates still higher than in April 2010, just before the adoption of the rescue plan. And the usual effect of self-fulfilling prophecy, the more rates will be high, unless Greece will return as expected on the market in 2012 to refinance half of its financing needs. And therefore the greater the risk of default rises."If we do not negotiate a voluntary restructuring and orderly debt, Greece may be lacking unilaterally," said Jean-Pierre Dumas, an economist consultant.C is what Argentina did in 2001.

What form would take a restructuring?

Several options exist. Some more conciliatory toward the market than others.

A way that seems at once excluded is that of the output of the euro area. Yet it is by picking up the dollar as Argentina's economic recovery could begin only nine months after failing, the devaluation to quickly gain a competitive advantage. Except that a devaluation would mean also a euro debt more burdensome to repay. No need to come to that. After all, this is not the first time a piece of a currency area would be lacking without leaving New York did in 1975. That has not undermined the dollar or the national economy.

An option "soft", which would be the preferred creditors since it implies no reduction in debt stock, is the rescheduling. Lengthen the duration of payments would in effect reduce the monthly payments of Greece. Nout Wellink, an official of the ECB has even acknowledged Monday honoring its debts can "sometimes take longer than expected," in response to questions from students at the University of Tillburg, the Netherlands. "Uruguay has so successfully combined in 2003 a longer-term payments with lower interest rate, says Jean-Pierre Dumas. In practice, banks that wanted could exchange their old securities for new Uruguayan cons good in the longer term and lower interest rates. 93% of banks have agreed and everyone has been refunded.Except for Greece, "it will probably not sufficient, says the Economist, the State is not only facing a liquidity problem but also the solvency. Greek debt "can not be refunded without a real restructuring," says Jean-Pierre Dumas.

The alternative, more radical and painful for creditors is to be guided by the "Brady Plan" which had been successfully applied in 1987 to 18 indebted countries in South America. It was the old sovereign securities exchange risky cons of new "Brady bonds" guaranteed by the U.S. Treasury. In this case, the idea would be to encourage bondholders to exchange their good Greek cons of new risky securities backed by the euro area and the market price, implying a loss of about 30% . Representing a discount equivalent to that experienced in the system of Brady bonds."Ideally, one would imagine that the Fiscal Stabilization Fund is responsible to provide the collateral for the moment but the mechanism has the skills to do it," says Zsolt Darvas, an economist at Bruegel. For Jean Pierre Dumas, "the ECB would in theory be best placed to act as guarantor and chief orquestra negotiations."

Another solution would be to allow the European financial stabilization fund, or its successor, the European mechanism of stability, the banks buy the securities at a price less Greek than the nominal value. It is, as the Brady plan, requiring creditors to give up some of their claims.

What are the risks?

Only government bonds acquired after June 2013 will be accompanied by collective action clauses to modify the terms of repayment.So do not be fooled: it will be difficult to avoid panic if Greece decides to restructure before this time. Last week, Governor Jose Manuel Gonzalez-Paramao brandishing the specter of U.S. investment bank Lehman Brothers, whose bankruptcy in September 2008 had precipitated the financial crisis.

First, the entire financial sector Greek stuffed with government debt, risk of going bankrupt. Banks and pension funds hold Greek indeed about one third of the total bond debt Greek by Greek daily Kathimerini Liberal. "If the country's banks collapse, the state should bail out the banking system. It's like when you dig a hole to plug another!" Explained one senior European official recently.To avoid the worst, says Patrick Artus, chief economist at Natixis, should therefore ensure that the failure of Greece applies only to foreign debt holders do not reduce to a minimum capital of local banks.

The other risk for Greece, in the longer term is that it has trouble returning to financial markets during recent years. "We would be excluded from markets for at least ten or fifteen years", warned Tuesday the Greek Finance Minister George Papaconstantinou. In fact, Argentina was ignored for nearly a decade. Concretely, the EU and the IMF should therefore continue to provide liquidity

But what most worries its European neighbors, is the contagion effect. If Greece restructures, it is likely that Portugal and Ireland followed suit. But the debt of the peripheral countries is 600 billion dollars.A discount of 30% is potentially $ 180 billion. As banks do not record their sovereign debt to market value but at face value, they would suffer huge losses. Some institutions will therefore still be recapitalized by public money if they can not raise private funds.

Manufacturers of commercial aircraft will form alliances to share an application to be insufficient for the sector, says executive chairman of EADS.

In an interview published Friday by the Spanish daily Expansion, Louis Welsh predicted that Airbus-Boeing duopoly will be broken by the increased presence of four other manufacturers on the market.

He said the Brazilian Embraer, Chinese Comac, Canada's Bombardier and Russian UAC will shade the western two giants in the production of medium and large aircraft sizes.

"Demand will not be enough for everybody and it will require to form alliances.The competition between these giants to seal strategic agreements will be even rougher and more aggressive than the competition in the sale of their products, "he says.

The agreement announced in March between Bombardier and Comac on commercial aircraft could encourage manufacturers of components to build alliances to deal with market saturation.

"A merger would allow them to strengthen their positions in a world increasingly competitive," said Louis Welsh.

If commercial air travel has taken recently, manufacturers currently suffer from soaring oil prices weighing on profits from their customers.

Louis Welsh, who is leaving his post within a year, does not exclude the possibility that a Spaniard could succeed him.

EADS is held up by about 22.5% by Germany and France. Spain has only 5.5% of capital.

"The group should ignore the nationalities when it comes to form his management team," said Louis Welsh.