News & Financial Advice

Deutsche Börse announced Wednesday that the proposed merger with NYSE Euronext was blocked by the European Union. The trading of the NYSE Euronext has been suspended pending a statement from the group. The Competition Commissioner, Joaquin Almunia, who must hold a news conference at 12:30 to announce its decision, recommended last week the Commission to oppose the project. Deutsche Boerse, the operator of the Frankfurt Stock Exchange and NYSE Euronext, which includes the New York Stock Exchange and the Paris, Amsterdam, Brussels and Lisbon, presented in February of Last year their planned merger. But the prospect of the new entity control over 90% of listed derivatives market in Europe has raised concerns for competition in this market.

The Tokyo Stock Exchange ended up sharply Thursday, forgetting his concerns over the high yen, in the hope that the Europe Agreement on the night between Wednesday and Thursday will stem the debt crisis.

The Nikkei gained 2.04% or 178.07 points to 8,926.54 and the Topix has taken 2.18% (16.31 points) to 762.79.

The Bank of Japan is also stepped in to buy more assets in the markets, which helped improve investor sentiment.

"There are many unknowns about Europe, and it is now more likely that something disappointing for investors to happen, instead of a positive surprise," said Tomomi Yamashita, fund manager at Shinkin Asset Management .

About values, Olympus has seen a strong rebound after plummeting last few days, taking 23.29% to 1,355 yen.

Olympus gave a press conference defending its mergers and acquisitions Thursday following the resignation of its chairman.

Several major automakers have values ​​slightly outperformed the market: Toyota made 2.22% to 2,584 yen and Honda has awarded 2.75% to 2,393 yen.

In electronics, Sony jumped 5.43% to 1,650 yen, while qu'Elpida fell by 0.6% to 496 yen.

NEC (2.31% at 177 yen) and Softbank (0.91% to 2450 yen) released their quarterly earnings at closing.

Airbus said Tuesday that its net orders had reached 1,015 units in August 31, widening the gap with its rival Boeing.

The European aircraft manufacturer, a subsidiary of EADS, has seen its gross orders reach 1,156 units in eight months, and canceled orders was $ 141.

The manufacturer also announced it has delivered 334 aircraft since the beginning of the year.

By comparison, the U.S. manufacturer had received 370 net orders at the end of August.

However, Boeing hopes to catch up with her future MAX 737 for which it said it had received commitments for 496 aircraft orders.

Airbus had already struck his great American rival to the air show in June

The price of oil ended up on an increase of over 2% Monday in New York, a macro-economic indicator with better than expected U.S. reassured investors on the economic health of the United States.

On the Nymex, the contract on October U.S. crude (WTI) finished with a gain of $ 1.90, or 2.23% to 87.27 dollars a barrel.Meanwhile, Brent advanced to 0.44%, or $ 0.49, to 111.85 dollars.

Consumer spending of U.S. households rose 0.8% in July while economists surveyed expected an average spending growth of 0.5%.

Black gold has also benefited from the good performance of major stock exchanges worldwide, because of Hurricane Irene has done less damage than expected in the United States and the decline of the dollar.

European central banks have conducted in the afternoon to buy back bonds in Italy and Spain, told Reuters on Monday several traders.

These movements occur after the ECB decision to repurchase debt Italy and Spain to try to stem the fiscal crisis that has shaken the euro area.

"I saw the central banks – the Bank of Italy and others – again active in the market," reported one trader.

According to professionals, the ECB had done in the morning to buy back debt on the Italian and Spanish market tickets for 20 to 25 million euros. It should be acquired for several billion euros in late afternoon.

Standard & Poor's downgraded the sovereign rating on Friday the United States, culminating a week of panic in financial markets alarmed by the scale of public debts and a slowing global economy.

Sign of the deep concern of world leaders, they have stepped up phone calls Friday and Italian Prime Minister Silvio Berlusconi has called a meeting of G7 finance ministers.

Markets are less and less confidence in Spain and Italy to honor their debts and the scenario of a domino effect in the euro area continues to unfold.The fear of tipping the U.S. into recession has also fueled the drop in global financial markets, who lost 2500 billion in one week.

After the close of Wall Street, the United States for the first time lost their precious AAA.Sovereign debt is now rated AA + by rating agency Standard & Poor's, which raises the specter of a further deterioration in a year.

This decision, rather expected, reflecting the deteriorating global economic climate and could have implications on the status of reserve currency the U.S. dollar.

China asks in a comment to Xinhua news agency that the international community to reflect a new reserve currency, "stable and secure."

Beijing, the first creditor of the United States, attacks in this dispatch to the U.S. government, demanding that it "faces the problem of structural debt."

BERLUSCONI TRANSFERS

The impact on the financial markets Monday may be minimal because the degradation is not unexpected but the consequences for long-term status of the United States and the dollar will be much more important.

"The global system must now adapt to the many implications and uncertainties induced by the loss, once unthinkable, the American Aaa," said Mohamed El-Erian, the investment company Pacific Investment Management.

This new development in the debt crisis increased my pressure on governments.In its analysis, S & P said the deterioration by the lack of fiscal consolidation plan adopted by Congress and the failure of leading Democrats and Republicans to govern together.

European markets also expect a rapid and effective government too indebted to their liking.

After Greece, Ireland and Portugal, investors fear that it is the turn of Italy and Spain, third and fourth economies in the euro area, have to seek a rescue.

Silvio Berlusconi bowed to international pressure by promising to accelerate the implementation of austerity measures and social reforms.

CALLS FOR COORDINATION

Source familiar with the matter, it is stated that the European Central Bank (ECB) has requested that the Italian government agrees to return to a balanced budget by 2013 instead of 2014, before buying Italian bonds and liberate Rome of market pressure.

Thursday, investors did not appreciate that the ECB does not buy Spanish and Italian bonds, limited to the sovereign Irish and Portuguese, while the yield of securities issued by Rome and Madrid exceeded 6%.

Two days later, it seems that it was a maneuver to push Silvio Berlusconi to act.

"In principle, we can say that the ECB could start to buy bonds if Spain and Italy (both countries) made an extra effort in terms of fiscal and structural reforms," ​​said a senior official told Reuters the euro area.

The Governor of the Bank of Spain, Jose Manuel Gonzalez-Paramo said he expected new government announcements on August 19.

China and Japan, the two largest foreign creditors of the United States, called for international cooperation, joined by the European Union.

"The international policy coordination across the G7 and the G20 is crucial," said the Commissioner of Economic and Monetary Affairs Olli Rehn, who interrupted his vacation to return to Brussels.

Silvio Berlusconi announced a G7 finance ministers "in the next few days" but his spokesman later explained that this was simply a desire to Rome and it was not yet agreed with the other member countries.

Britain, also affected by the volatility of markets, called "a concerted international effort" to avoid another global financial crisis, three years after the collapse of U.S. bank Lehman Brothers.

The stock markets worldwide have tumbled this week. The cause of persistent fears weighing on the strength of U.S. growth and a risk of contagion from the crisis of debt in the eurozone.

The Paris Stock Exchange dropped 1.26% Friday, August 5, ending at a new low since July 2009 and signed its tenth straight session of declines, the most since the creation of the CAC 40 index in 1987. Good employment figures led to a slight American will rebound ephemeral. In fact, no stock has been untouched by the downward trend this week, culminating Thursday with a meltdown in the markets: Wall Street dropped from 4% to 5%, like the European stock markets mostly down over 3%, while the index of market volatility is highest in a year."You can say, it is indeed a crash summer even if the word is often whispered half-heartedly," writes in his daily note Philippe Cohen, manager at Barclays Stock Exchange.

Concerns about the recovery in the U.S.

The markets are worried about the health of the global economy. As well as one side of the Atlantic than the other, the news is bad. United States First, the political crisis surrounding the raising of the ceiling of debt is certainly over, but doubts about the strength of the economy are stronger every day, with the accumulation of worrying signs. Manufacturing activity is down, consumer spending and hold the GDP grew by only 1.3% in the first half. If Friday's unemployment figures are better than expected, it remains very high level of 9.1%.

Fear of contagion from the debt crisis in Europe

In the euro area, the second Greek rescue plan developed in July is not enough to reassure markets and fears of contagion from the debt crisis continues to worsen. Italy and Spain are again under pressure from the markets. Now Jean-Claude Trichet failed to allay fears on Thursday. It certainly has announced a special operation to refinance in six months, and especially his decision to make new purchases on the debt market, while the ECB had not done since May. Except it turned out that these purchases related only Irish and Portuguese bonds and that the problems are now in Spain and Italy, who, between them, weigh 30% of GDP in the eurozone.

Markets revved

The markets tumbled was also due to a runaway effect and conformism that leads investors to sell their shares en masse. "The movements are always rough due to runaway. It is anticipated that others will anticipate and so on", says Gunther Capelle-Blancard, Professor of Economics at Paris 1. This effect, potentially explosive, was at work during the financial crisis in 2008, after the fall of Lehman Brothers, then in May 2010 at the outbreak of the debt crisis in the eurozone. "We're starting to get used to three years of steady decline 3 to 4% daily, which was extremely rare in the past," says Mr. Capelle-Blancard.

The psychological dimension is even stronger than the market goes into the summer, traditionally more volatile.The magnitude of the changes is also fueled by technical reasons, certain thresholds achieved by the index, triggering sales orders from institutional investors. In addition, the mathematical algorithms used by some operators, which is difficult to know the real impact on the movements are abrupt and may increase volatility. Overall, the market reaction is "exacerbated but not irrational" as the economic fundamentals are deteriorating, warns Mr. Capelle-Blancard.

Limited options

The bad news is that there is not much to be done to stabilize the situation. As noted by Henry Blodget on Business Insider, the crash of 2000, the Fed rate was 6.5% and were immediately lowered. During the 2007 crisis, it was 5.25. Today, however, it is 0.25. The U.S. central bank can no longer play on the lever.While fiscal stimulus is also impossible. In Europe and the United States, the time is at best, no question of setting up new stimulus measures. Again, the situation is more restrictive than in previous crashes. In 2000, the U.S. budget was in surplus during the 2007 crisis, the deficit was only 200 billion. Today, it reached 1.4 trillion.

Again, it is for the central banks to play firefighters. The Fed will probably have to launch a third wave of quantitative easing (EQ3), ie purchase of treasury bills. It could announce the end of August. As for the ECB, market rumors suggest possible debt buybacks Italian and Spanish.One member of the Governing Council, the Belgian Luc Coene, has not ruled in any case to do so, provided that these countries make the necessary efforts in advance. In the longer term, however, the ECB seems to maintain its forecasts on inflation risks and did not rule out further up interest rates.

The morale of French households is somewhat back in July but remains below its long-term average.

The morale of French households is somewhat back in July after months of stability, with a gain of 3 points in the index that measures at 86 points, according to data released Tuesday by INSEE. This level remains low compared to the long-term average (100 points), especially since the French expect increasingly to a new rise in unemployment, is the National Institute of Statistics and Economic Studies .

Households are more satisfied with their personal situation before last (three points) and are more optimistic about the future (two points). The French are also higher than in June to be considered appropriate to make major purchases (4 points). They believe, moreover, that their ability to save is more important, although they consider the least favorable time to do it.

Cons: The households are much more numerous in July to expect a rise in unemployment (10 points), while their predictions were improving in this area since the beginning of the year. However, their views on the general standard of living improved slightly in France, and households less than previously feared a price hike to come.

Major European banks have managed to limit their losses on Greek debt to 5.4 billion euros, by negotiating a discount of 21% of their assets during the debate on second bailout plan.

This is the French BNP Paribas, which should suffer the greatest losses in the sector, with the evaporation of about 950 million euros of its debt. The French bank is the first European settlement in the most exposed to debt in Athens, Greece out.

The fact that the losses of the banking sector are not heavier relieved investors and calm the fears of contagion from the crisis with Spain and Italy.

"The danger of default (Greek) is spread uncontrollable.This does not mean that all is well, only a disaster was averted, "said Oliver Flade, fund manager at Allianz Global Investors.

"A discount of 40-50% would have made sense economically. But between the banks that want 0% and political leaders who demanded more, 21% consensus was reached.For banks, it's better than what they could expect. "

The cost for European insurers, who held the end of last year 24 billion euros of Greek debt, should be similar to that of banks.

However, exposure of the insurance sector is less clearly defined than the banks, which have revealed many details of their assets in the stress tests last week.

DISCOUNT TO ALLOW A SECOND?

But the fear of increased losses anticipated by the banks remain.Greek bonds are currently trading at a price implying a discount of 45% against 50% last week.

"We believe that long most likely outcome is that the Greek debt holders will have to undergo first a small discount, and a larger later.For that Greece has a chance to succeed, they will probably give up about 65%, "said Gary Jenkins, the analyst firm Evolution.

Four options are available to creditors, including exchange offers of securities and capital (rollover) and a scheme to buy back debt.

These changes in loan terms have led rating agency Fitch to prevent it would put Greece in partial default.

The program based on voluntary activity in order to avoid a complete failure, some institutions may not fully participate.

Greek debt held by the private sector reached about 150 billion euros.A 90% would affect 135 billion euros, of which about 54 billion by mid-2014.

The net contribution of the private sector equivalent to the $ 54 billion, less the cost, borne by Greece, the news service obligations to 30 years.

BNP Paribas has 4.5 billion euros of Greek debt. It is followed by the Franco-Belgian Dexia and Cyprus Marfin, both at 3.4 billion euros.

Both banks could therefore suffer a loss of 700 million euros each.

This is followed by Commerzbank with 3 billion euros of assets, and Societe Generale 2.4 billion.Losses expected to reach 630 million and 500 million euros.

Insurers are the most exposed Italian Generali, with 3 billion euros, French CNP Assurances with 2 billion and Germany's Allianz, with 1.3 billion euros, according to figures from Barclays Capital.

Prepare France to live with a few degrees warmer is the goal of this plan over 5 years, the first of its kind in Europe. NKM

To anticipate the inevitable effects of global warming expected by the end of the century, France will adopt a national plan of adaptation declined by more than 230 measures and presented Wednesday by the Minister for Ecology Nathalie Kosciusko-Morizet . "Climate change is not in doubt, the uncertainty that still hangs over its size should not prevent action," says one to the department.

The 5-year plan, the first of its kind adopted by a country of the European Union said the report, prepare a list of measures and recommendations for agriculture, water management and forestry, transport, disaster such as floods, or to adapt tourism to the new climate.The exercise is based on scenarios developed by Météo France and the Institut Pierre-Simon Laplace who expect a temperature increase of 2 to 3.5 degrees by the end of this century including a lengthening periods of summer drought and higher temperatures than previously known.

For the only example of water, the plan incorporates the idea of ​​a consumption reduction of 20% by 2020 advanced in May, for aid to recover rainwater, reuse of treated wastewater , improve the performance of cooling towers of nuclear power plants or even better leak detection on networks of drinking water. They are currently responsible for 25% loss of this precious natural element.

Health side, rising temperatures will promote the development of insects, microorganisms producing toxins and allergenic pollen. The creation of a climate-health monitoring must alert the government on critical situations. Learning from the 2003 heatwave, which caused deformation of rails, the plan focuses on the adaptation of transport infrastructure with the establishment, among others, a methodology for assessing the vulnerability of networks .