US & World News

Standard & Poor's on Tuesday cut score of 15 large banking groups, mainly in Europe and the United States as a result of a major review of its rating criteria.

In total, the U.S. agency has reviewed the status of 37 major global banks. In particular, it confirmed the notes of BNP Paribas and Societe Generale."The lowering of S & P both on European and U.S. banks has undermined confidence in the markets," said Terry Pratt, IG Markets.

"This decision has overshadowed the progress made in Brussels on the issue of scaling the EFSF."

Another analyst, Guy Lebas of Janney Montgomery Scott, said that these banks will see their funding costs rise.

This month, officials from S & P indicated that they would gradually announce the ratings updated for more than 750 banking companies in the world, starting with the principal. New announcements are expected in the coming weeks.

For large banks, the rating adjustments are larger than S & P has provided for the entire industry.

Right in the debate on a more vigorous European Central Bank (ECB) in the rescue of the euro, the U.S. ambassador to the European Union said it had "the potential" to resolve the debt crisis. ECB

The U.S. ambassador to the European Union suggested Tuesday that the European Central Bank had the "potential" to do more to resolve the debt crisis in the euro zone, while the debate rages in Europe on this issue. "We are following with keen attention that the European Central Bank is able to do and the potential it has to do more" to the crisis, said William Kennard, in a meeting with some journalists in Brussels.Many economists believe that only the ECB is now able to effectively firefighters to extinguish the fire and should follow the example of the Federal Reserve (Fed). The U.S. central bank acts as "lender of last resort" for the administration by buying unlimited market U.S. Treasury bonds.

"At the peak of the (financial) crisis that we experienced (USA), we were able to use the Fed in a manner different from that in which Europe can use the ECB. It s' acts of a fundamental structural difference, "said the ambassador. Mr. Kennard said would not know how to change the debt crisis. "The outcome of this crisis is quite unpredictable, we do not know how it will be resolved and I think nobody knows," he said.

Ahold announced Monday a series of measures to accelerate growth, new cost cuts and a boost to the dividend, the Dutch retailer hoping to convince investors of the strength of his model.

While the group has performed better than its commercial rivals in recent quarters, as Ahold trades at a discount to many other names in the industry, because of the feeling that the company is too exposed to low growth markets.

Ahold, owner of the first supermarket chain in the Netherlands Albert Heijn, produces some 60% of its sales in the U.S., with retailers Stop & Shop, Giant-Landover and Giant-Carlisle.

The company last week released the results better than expected in the third quarter with a 5% increase in earnings, rising food prices and market share gains have boosted sales despite difficult market conditions .

Among the measures included in a presentation to investors, including the group intends to triple its online sales, to 1.5 billion euros, and open at least 150 stores over the next five years.

Specifically, Ahold wants to open at least 50 supermarkets in Belgium after the results of two test stores already established in the country.

European shares were down in early trade Friday, the pressure on interest rates fueling fears that some fragile countries in the euro zone no longer be able to refinance at an affordable cost.

At 9:03, Paris passed under the 3000 points and lost 0.83% to 2985.19 points.

At the same moent, London lost 0.95%, Frankfurt and Milan 0.83% 0.73%. The Euro Stoxx 50 index of the principal values ​​of the euro gave up 0.69%.

The Spanish 10-year rate rose above 7% (7.11%) and Italy's is 6.94% while the German Bund yield the same maturity is around 1.87% and that of the French OAT around 3.6%.

JCDecaux has significantly exceeded expectations in the third quarter, posting a sales growth almost twice the stated goal, boosted by its transport division and the dynamism of France.

World number one outdoor advertising company in front of the U.S. Clear Channel Outdoor, has for the first time provided a forecast for the full year, saying rely on organic growth of about 5% of its turnover .

"The current economic uncertainties lead us to be cautious," said Chief Executive and Co-CEO Jean-Francois Decaux, in a statement, while the group's growth stood at 6.7% in the first nine months of the year .

Wall Street finished sharply lower Monday, the initial enthusiasm born of the EU summit last week's fading from investors who question now no longer on how to resolve the debt crisis in the euro area but their use.

Still Wall Street has done its best month since 1991 and many analysts believe that the worst case scenario is ruled out at this time in Europe, the stock market is ripe for a further rise, investors are turning their attention to Chinese statistics and the U.S. better than expected.

The values ​​of natural resources have suffered from the fact that the dollar reached a peak three months against the yen as a result of intervention by the Bank of Japan to roll back the domestic currency.The Nasdaq Composite yield 52.74 points (1.93%) to 2684.41.

Of the month, the Dow shows a gain of 9.5%, the S & P by 10.8% and the Nasdaq 11.1%.

The new concerns generated by the European debt situation are what feed the bankrupt broker MF Global Holdings derivatives, an event that affected financial stocks in particular.

The latter, who had engaged in heavy positions on European sovereign debt, filed for bankruptcy after the breakdown of negotiations to sell assets to Interactive Brokers Group.

MF Global transactions have been suspended. Interactive Brokers has closed up 1.05%.

Values, the S & P Natural Resources lost 4.2%.

European stock markets closed sharply higher Friday driven by hopes for concrete decisions for the euro area. Update on four major issues of the summit on Sunday. The European Council President Herman Van Rompuy, Nicolas Sarkozy and Angela Merkel in Brussels.

European stock markets have taken the bull by the horns Friday night, driven by renewed optimism for two days of the EU summit must respond to the crisis in the euro area. Paris ended up 2.8%, Frankfurt 3.5%, London 1.9%, 2.8% and Madrid. The eyes are now fixed on Brussels, which is expected to announce concrete steps Sunday to save Greece, prevent contagion of the crisis in fragile countries in the euro area, and reassure the markets.Update on four major issues in this summit.

The loan to Greece is he paid?

Greece has a positive decision of the creditors (IMF, EU, ECB) after passing the test on Wednesday and Thursday of the street. Parliament passed a new law Thursday austerity which provides further wage cuts and layoffs in the setting of 30,000 employees. But if the payment of this sixth installment of the loan of 110 billion seems to be accepted by Brussels, the IMF's involvement is less. The institution is actually more pessimistic than Europe on the development of public finances of the country.

What level of discount for Greece?

The discussions relate "50%" according to a European source. This level imposed on the country's private creditors would erase 67.5 billion euros of Greek debt that will culminate later this year to 357 billion euros (about 162% of GDP).That's a lot more than what was agreed at the Summit of 21 July, the discount was set at the time to 21% of the commitment of private creditors. If this hypothesis is confirmed, this discount will remove 20% of the debt. The Union of Greek Industrialists (SEV) held Friday consequences "dramatic" if this level should be imposed on private creditors. But this statement should not weigh very heavy in view of the issues … However, the whole question is about the ability of Europe to offer a discount to private creditors 'voluntary' of their claims. For without this principle, the credit event could be delivered, which would open the door to bankruptcy of the country.

How much money to recapitalize the banks?

To allow banks to withstand losses on the country's debt, the EU will reassess the capital ratios of European banks to the tune of 9%.For this, the European Banking Authority (EBA) has assessed the need for recapitalization of banks from 80 to 100 billion euros. The question is whether this amount will be enough to reassure the markets knowing that the IMF rather evoked a level of capitalization to 200 billion euros. In all cases, the major European banks were against a forced recapitalization. And warned that, given the difficulties to obtain financing, this would lead them to reduce the size of their balance sheets. In other words, to reduce their lending activity.

How to strengthen the EFSF?

This is where things get complicated. For Paris and Berlin have not yet found agreement on the issue. For France, it would give the banking license to the European Financial Stability (EFSF) to enable it to refinance with the European Central Bank (ECB).Leverage and the ability to fund intervention limited to 440 billion euros that can lift the markets. Paris also wants the ECB to continue to buy bonds fragile as it has done for over a year. But Berlin and the ECB refuses, and instead want to change the Fund's insurer. It would ensure any losses would have to suffer the investors in the bonds of fragile states up to 20 to 30% in case of difficulty in these states to honor their commitments. This idea has received support Friday from 10 major European banks and insurers. But here, in addition to France, Spain and Italy do not agree. Rome and Madrid, this will create a rate difference between bonds and debentures. "No one in a financial crisis, venture to purchase securities that need a crutch," said EU official.This is mainly because of these disagreements has been decided a second peak of the euro area, next Wednesday.

Europe should recapitalize its banks on an individual basis and not applied uniformly to all measures in the industry, said Tuesday the German BDB banking association.

"It would be absurd to book the same treatment to all banks," said Michael Kemmer, CEO of the BDB, in an interview on ARD television channel.

If the recapitalization is needed, they must be implemented in the right tempo, he added.

"First, banks themselves must make use of capital markets, although it is very difficult if not impossible, right now," said Michael Kemmer.

"Then, each country must see if we recapitalize banks and only if it is unable to do that EFSF should intervene," he added, referring to the European Stability Financial.

France and Germany have given themselves until the end of October to overcome many obstacles on the recapitalization of banks, the euro and its sickest member, Greece, and on European Governance, at where the sovereign debt crisis has put down the bank Dexia.

German banks, which have increased their level of capital in recent months, are stable and doing well, said Michael Kemmer.

He added that European leaders should stick to the agreement July 21 on Greece, which provides that private creditors pass a discount of 21% on Greek bond holdings.

Many experts believe that this level of discount ("haircut") is insufficient, forcing banks to take further writedowns in the third quarter.

Deutsche Bank, one of the most important members of the BDB with Commerzbank, said late September that the discount that private investors have agreed to take on Greek sovereign debt in the second bailout of Greece could be greater than 21% retained.

Last week, the German IDW auditors are said German banks could follow the example of Deutsche Bank in the third quarter by re-evaluating their market prices Greek bonds.

Investors weary of the impact of the crisis in the euro area financial markets will have something else to put in their mouths this week: the results of business.

As each "earnings season" quarterly, the aluminum producer Alcoa, which will open the ball, his numbers are expected in the third quarter after the close of Wall Street Tuesday.

Business performance and prospects announcing they are considered an important barometer of the state of the global economy and are also likely to give an indication of the impact of the crisis in the euro area on profits companies.

But, having risen sharply over the whole of last week, Wall Street may have difficulty continuing to rise even if corporate earnings are better than expected.

Technical analysts have said in effect that the moving average of 50 days S & P 500, currently at 1178 points, could represent a significant resistance.

In the past week, the S & P benchmark for fund managers, has gained 2.1% to 1155.46 points, buoyed by the feeling that European leaders are now determined to solve the problems of their banks weakened by the debt crisis.

Nicolas Sarkozy traveled to Berlin on Sunday for talks with Angela Merkel of crisis, with a priority to overcome their differences on how to recapitalize European banks.

"Over the next three weeks, attention will focus on results – even if the situation in Europe will always be present in people's minds," said Ken Polcari, an analyst at ICAP Equities.

In addition to Alcoa, next week will also see the results of PepsiCo, Google, JPMorgan Chase and Mattel.

CONSERVATIVE ANALYST ESTIMATES

In light of the debt crisis of the area, but also signs announcing a slowdown in the global economy, many corporate earnings forecasts were revised downward by analysts in recent months .

"The forecast for the quarter just ended were very conservative so there are chances that companies do at least as well as the consensus," said Marc Pado, technical analyst at Cantor Fitzgerald.

In terms of macroeconomic indicators, market players expect including the minutes of the last meeting of the Federal Reserve, retail sales for the month of September and the feeling of households for the month of October, according to Index Thomson Reuters / University of Michigan.

The latest U.S. statistics have been rather better than expected, which has banished the specter of a return to recession in the United States and contributed to the rebound on Wall Street last week.

But, and this also applies to any positive impression left by the business results, although some indicators of the coming week confirm this trend, the positive effect could be negated if further deterioration of the debt crisis the euro area.

Peter Brabeck-Letmathe, the chairman of Nestlé, is sounding the alarm over soaring food prices. It could mean new revolts in poor countries. An Indonesian dried corn grows, without benefit of the inflation of commodity prices. Indonesia is now the largest importer of maize. REUTERS / Sigit Pamungkas (INDONESIA – Tags: BUSINESS FOOD) AGRICULTURE)

The food prices are expected to remain high, which could lead to new hunger riots in developing countries, said President of the Swiss group Nestle in an interview published Friday.

"We have reached a level of food prices substantially higher than we had before. They are expected to stabilize at this level," said Peter Brabeck-Letmathe in this interview with the daily Salzburger Nachrichten.

"When you live in a developing country and we spend 80% of its income on food, we feel bound to it differently from us," where such expenses are around 8%, he argued.

For him, new hunger riots like those that had rocked Africa, Haiti or Indonesia in 2008 are likely to recur. "The situation is similar, it has become the new reality," he said.

Soaring food prices this year is considered one of the reasons that contributed to the "Arab Spring" in North Africa and the Middle East.

The price increase is attributed both to speculation, climate change, increasing population, or to changes in dietary habits in some emerging countries like India, where the middle classes have significantly increased their consumption meat.

For M.Brabeck-Letmathe, the issue of water is also crucial. "We already consume today" too much water, he said, encouraging businesses and consumers to waste less.