US & World News

Volvo reported Wednesday a 4% drop in shipments from trucks in April from a year earlier, sluggish demand in Europe and South America have overshadowed ; a strong recovery in North America.

The second largest global industry saw its shipments fall by 22% in Europe, its biggest market, while increasing by 39% in North America.

The industry is facing hard times in Europe, with widespread debt crisis, but also in Brazil, the first South American market, where demand is suffering from new rules on emissions.

Deliveries from Volvo in South America fell 30% while they increased by 9% in Asia. 

The Volvo share fell by 1.9% to 82.40 Swedish kronor (9.02 euros) to 8:35 GMT, while the benchmark index of the Stockholm Stock Exchange yielded 0.84%.

Volvo, which manufactures trucks under the brand name but also under names Eicher, Mack, Renault Trucks and UD, had raised its annual targets for Europe in late April, saying anticipate an increase in production over the coming months.

The band, which rivals the industry leader Daimler, said Wednesday that its production would increase slightly in his division in the second quarter and Renault for its Volvo brand in the third.

Volvo expects a contraction of the European market for heavy trucks to 230,000 vehicles this year, against 242,400 in 2011.

The priority given by the European Union to austerity should not be questioned even if the means of stimulating growth are in the focus of next week, has Monday said the German finance minister, Wolfgang Schäuble.

"Fiscal consolidation is not only necessary but is necessary for a specific purpose: to generate sustainable growth, which is the best way to generate employment" , he said during a joint press conference with the Spanish Minister of Economy, Luis de Guindos.

"The economic and fiscal consolidation is the first condition. If we now speak of growth, we must not understand this as a change of course. It would be wrong. Priority (for austerity) must remain, "he added, before holding that Spain was on track

… Referring …… French presidential election, he felt that his result would not call into question the European fiscal pact

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Societe Generale has crossed the threshold of 5% stake in Vivendi, becoming with a participation of 7.86% the largest shareholder in the group of media and communications confronted with rumors, dice ; menties, decommissioning.

This rise of the French bank, announced Friday by an opinion of the Financial Markets Authority (AMF), comes as the businessman Vincent Bollore could rise, according a source familiar with the matter, up 5% stake in Vivendi against 1% currently.

According to the AMF, Societe Generale said to have crossed over on April 20 the threshold of 5% of share capital and voting rights of Vivendi and Vivendi hold 98,045,823 or 7.86% of share capital and voting rights. 

This total includes a participation of 5.25% effective in custody and the balance by assimilation.

The bank was not immediately available for comment on whether share purchases had been made for herself or on behalf of a client.

Bollore announced in September 2011 a proposed sale to Vivendi of free TV channels Direct 8 Direct and Star in exchange for remuneration in Vivendi shares up of 22.4 million shares.

The source familiar with the matter, Bolloré could reach 5% stake in Vivendi by the combined effect of the implementation of this agreement and new purchases of securities on the market. 

Citing people familiar with the matter, the Bloomberg news agency reported Wednesday that the conglomerate was considering an overhaul of its structure that could lead to a dismantling of the group, which was denied by Vivendi.

BNP Paribas and Societe Generale Wednesday reaffirmed their commitment to carry through their plan to reduce balance sheet.

Speaking at a conference organized by Morgan Stanley in London, Jean-Laurent Bonnafe, the CEO of BNP Paribas, has announced that the bank would be able to completed by the end of her program initiated in the second half of 2011, at the height of the debt crisis in the euro area.

He recalled that the group had given the end of February to the U.S. bank Wells Fargo loan portfolio to oil companies and sold in early March a 28 , 7% in the property company Klépierre. 

"Our number one priority remains the implementation of our plan to reduce balance (…) In all, we have already achieved 70% of the program," said ; John Lawrence Bonnafé.

BNP Paribas announced in September will reduce by 10% the size of its balance sheet by the end of 2012. In late 2011, its assets amounted to 1.965 billion euros against 1.998 billion at end-2010.

Speaking at the same conference, the CEO of Société Générale Frédéric Oudéaa assured that SocGen, whose market capitalization has shrunk by half last year, was also determined to achieve the reduction of its balance sheet.

"The deleveraging will continue," said Frederic Oudéa. "We have clear objectives."

During the fourth quarter of 2011, SocGen sold for 10 billion euros in assets, but analysts still expect the bank's most significant disposals to strengthen its solvency.

"BNP CLEARLY IN ADVANCE"

"On the 'deleveraging' (reducing balance, Ed), BNP Paribas is clearly ahead, with an impact on NLP ('profit and loss', Ed) quite limited. It's rather good news, "said Alex Koagne, an analyst at Natixis

." However, the Company General ; eral, I think they come to do their 'deleveraging' on the sale of loans but they are now waiting on disposal of business units, "he says ……

… "It's been several months since they announced they would sell assets and there was still nothing yet."

To strengthen their financial strength undermined by the crisis in the euro area and alleviate tensions in interbank liquidity, European banks have also begun to re reduce and diversify their funding sources and reduce their financing needs

. Their difficulties in dollar funding has also forced the European Central Bank has injected over $ 1.000 billion euros of liquidity to three years (LTRO) in the European banking system.

BNP Paribas said the bank had reached since the beginning of the year 60% of its funding needs for 2012, raising 12 billion euros between January 1 and March 22.

Societe Generale, for its part said it has raised 7.6 billion euros of debt since the beginning of the year, with a maturity average of 6.3 years.

SocGen is continuing its efforts to restructure its BFI, said its CEO. This table and a reduction of 50 to 60 billion euros of liquidity needs by 2013 in these activities.

In exchange, like most European banking stocks, securities of French banks have closed in the red Wednesday because of investor concerns about growth in the U.S. and the budgetary situation of Spain.

In Paris, BNP Paribas and Societe Generale ended the session down 1.3% and 2.89% respectively. Credit Agricole – who canceled his participation at the London conference – sold 2.82%. The European banking index ended down 1.45%.

Declining in most European countries, the activity has only slightly slowed in France in the fourth quarter 2011 before stagnating earlier this year, according to INSEE, which had considered the possibility of a recession. Better resistance does not prevent unemployment to continue rising. French executives come to the business district of La Defense

France is going through a little better air hole that affects the entire euro area. After avoiding a decline in activity in the fourth quarter – unlike Germany, it should just happen to stabilize its GDP over the first three months of the year before starting to rebound slowly, according to forecasts revised upwards published Thursday by the National Institute of Statistics.  

"For France, we expect a stable activity in the first quarter, zero percent growth, and then a sluggish 0.2% in the second quarter," he told reporters Sandrine Duchene, head of the Department of conditions of INSEE. In December, INSEE had planned a short recession with contraction of economic activity in the last quarter 2011 and first quarter 2012, before there is a growth of 0.2% on October to December last year. "We had a shock on the euro area in the summer of 2011 we are coming out" and "recovery is slow," noted Ms. Duchene presenting the note of economic INSEE March. But gross domestic product (GDP) "regain its pre-crisis level in the forecast horizon," that is to say, late June, said during a press conference an analyst of the INSEE, Dorian Roucher.  

The institute has also revised sharply upwards its forecast of growth acquisition for 2012 that would be achieved by mid-year: 0% predicted in December, it would increase to 0.5%. This represents growth of GDP this year if the last two quarters remained the same as the second quarter. Ms. Duchene explains this revision by the better than expected growth in the last quarter of 2011 and the upward revision of its forecasts for the first half.

Consequently, the Minister of Economy and Finance Baroin announced an increase in the government's forecast for growth of the French economy in 2012, now expected at 0.7% against 0.5% previously.

The engines of growth remain low

Optimism, however, must be very measured. The chief economist at INSEE emphasizes that household consumption, the traditional engine of growth in France, "remains low". She would grow by 0.2% in the first quarter before stagnating in the second. And because "a 0.3% decline in purchasing power in the first half."

Several factors contribute to this weakness. Purchasing power would suffer first the relatively high level of inflation (2.2% yoy). In addition, earned income will slow due to the deteriorating labor market. This will not only result in further loss of 49,000 jobs in the first half but it will also affect wage negotiations. Finally, household incomes will be further tapped by taxes, supported by measures enacted in Finance Act which come into force in 2012.

France can not be counted as late last year on exports. Thanks to sales of Airbus, they have indeed been the main driver of growth in the fourth quarter that helped prevent the recession. But their contribution to the activity will become neutral due to weak demand in the euro area.

The context would finally have some good investment: the business outlook remains bleak, the conditions for granting loans were tightened before the massive intervention of the ECB and the margin of the companies is at an historic . Besides factors such as more timely consequences of the cold wave on construction.L business investment would decline so slightly in the first quarter 2012 (-0.4%), before rebounding in the second quarter (+0.8% ).

But the big downside of these forecasts is unemployment. INSEE entails loss of 49,000 in the market sector in the first half after a fall of 54,000 over the last six months of last year. Total employment would nevertheless be supported by intensified supported employment. Finally, the unemployment rate should continue to increase to 9.7% in France in June (10.1% including Dom).

European shares ended sharply up Thursday, supported by jobless claims near their lowest in four years in the U.S. and the new massive injection of liquidity from the European Central Bank (ECB) yesterday.

The CAC 40 index closed up 1.37% to 3499.73 points, new peak of year, having stumbled in the afternoon against the bar psychological 3,500 points. London took 1.02%, Frankfurt and Milan 1.25% 2.93%. The pan-European Euro Stoxx 50 index has been 1.45%.

The increase was particularly driven by the banking sector, which jumped 1.85% after the sharp decline in borrowing costs of Spain and Italy on the market ; s bond.

Other U.S. indicators have yet been considered disappointing, including the ISM manufacturing index, which signals an unexpected slowdown in growth in industry in February, and spending construction, which fell against all odds in January for the first time in six months.

Fitch Ratings downgraded Wednesday the long-term rating of Greece from CCC to C, a decision widely expected after the announcement by the Greek government that could force private creditors to bear their losses if they were not involved voluntarily agree to exchange debt.

The note of Greece at Fitch is no longer only a notch above default.

The rating agency said that this decision follows the announcement Tuesday by the Eurogroup agreement on a second bailout program and those of Greece on how to the debt swap involving voluntary participation of the private sector. 

She believes that the exchange, if completed, will constitute a debt exchange and forced the decommissioning and spoke "indicates that a default is likely in the short term. Ratings securities affected by this exchange were also lowered to 'CCC' to 'C' ".

When the exchange is completed, the rating of Greece will be lowered to "restricted default" and after being re-evaluated, with the emission new obligations, "to a level consistent with the evaluation of the agency's structure and its credit profile post-default".

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.

The economic downturn continued in September in the major economies, particularly Germany, the United Kingdom, Italy and Brazil, show OECD leading indicators published Monday.

Declined for the sixth consecutive month, the leading indicators are below the 100 – which distinguishes the increase in lower activity – in most countries of the Organisation for Economic Cooperation and Development.

Japan, the United States and Russia are the only three countries where the leading indicators remain above that level.

The CLI for the OECD area as a whole declined to 100.4 in September from 100.9 in August to 101.4 in July.

The G7 folds 100.6 after 101.1.

Europe is moving towards an agreement on the sovereign debt crisis but "banks must now accept the necessary sacrifices," said Jean-Pierre Jouyet, the president of the Financial Markets Authority, in an interview published Tuesday by The Tribune.

"A lot of the success of the second meeting of the Eurozone is in their hands," he adds.

Finance ministers from the euro area opened Friday six days of intense negotiations, punctuated by an EU summit Sunday to a high of the euro area, where the outcome expected Wednesday is considered crucial for the future of the single currency.

For reassurance on the risks of contagion, "the markets want a political Europe even stronger. A battle will hopefully gained Wednesday, but not the war.It will be played on fiscal consolidation and real political integration, "the president of the AMF.

He said Germany is now "the business model and budget the most efficient in Europe."

Jean-Pierre Jouyet also known as the European Commissioner for Internal Market Michel Barnier to go further in reforming financial markets.

"Today there is an excess of power of financial markets on policy choices. It is time to regain control in the regulation of markets," said he.