US & World News

The economic recovery in the euro area slowed slightly in August but companies are more optimistic for the months to come despite differences between countries in the region, show the first results of Monday's monthly survey Markit.

The PMI services, calculated on the basis of responses from purchasing managers of nearly 2,000 firms in the euro area fell slightly to 55.6 against 55.8 last month, but it is slightly better that 'expected as economists polled by Reuters had expected the average to 55.5.

It is over for the twelfth consecutive month the 50 between expansion and contraction of activity.

If growth slows, firms in the services sector, dominant in the 16 countries using the euro as their currency, appear rather more optimistic about the future, the business expectations index falling up to 68 1 after 66.5 in July.

"The recovery still has some momentum but we will witness a slowdown from the exceptional figures observed in the second quarter," warns Rob Dobson of Markit.

France and Germany, the two largest economies in the euro area, strongly rebounded in the second quarter, but this trend was not found in Spain and Italy.

"THE TAKEOVER COULD BEGIN TO SLOW DOWN"

Activity in the industrial sector has also slowed.The PMI manufacturing index is indeed stood at 55.0 in the first estimate in August against 56.7 in July, while economists polled by Reuters had expected 56.2.

The sub-index of production rose from 58.7 in July to 57.2 in August.

The composite index combines the two sectors, fell to 56.1 against 56.4 expected and 56.7 in July.

"The PMI decline in August in the euro area is a sign that the recovery could begin to slow," said Jennifer McKeown of Capital Economics.

"The decline was mainly driven by declines in the index of the manufacturing sector, particularly in Germany, suggesting that the weakening global demand could affect the resumption of exports, as was feared."

If companies continue to recruit, the pace of hiring slowed slightly from July, as the index of employment in manufacturing rose from 51.1 last month to 51.0 in August.

Economic growth in the euro zone came out at 1.0% in the second quarter, more than expected, but it should slow to 0.4% for the period July to September and 0.3% for the three months year.

ADDICTION TO GERMANY AND FRANCE

Especially, the growth differences between countries in the region have increased compared to previous periods.

"We note that (growth) is highly concentrated in the major nations, it has not extended to other peripheral nations and, in many respects, this gap is widening," said Rob Dobson.

"It's the same as in the second quarter, which saw a solid growth, particularly in Germany and to a lesser extent in France, marking a certain imbalance in relation to performance rather mixed for the Spain, Italy and Greece.So, apart from the two main countries, the situation is average. "

The PMI flash Germany show an acceleration of activity in services and a slowdown in the manufacturing sector, quite contrary to that exhibited by France.

In the euro area, the sub-index of producer prices reached its highest level since October 2008, at 50.3 against 49.4 in July. It is only the second time since October 2008 this indicator appears above 50.

This suggests that companies are now able to pass some of their higher costs to their customers.

Societe Generale on Wednesday posted a net income multiplied by 3.5 in the second quarter of 2010, above expectations, thanks to a decline in its stores and a smaller than expected loss in its toxic assets, and confirmed objectives.

The second French bank by market value after BNP Paribas, says that it achieved a net profit of 1.084 million euros for the quarter ended in June, where the consensus reached by the editor of Reuters expected a general result to 732 million.

His provisions for potential loss on the credit over the period fell by 6% but the rate of decline in the cost of risk is much slower than some of its rivals, reflecting a more cautious speech of SocGen on the strength of economic recovery.

BNP Paribas and British bank HSBC, for example reported Monday in stores near their level before the crisis.

"The economic recovery that began in late 2009 confirmed, but it remains fragile," said Frederic Oudéa, CEO of Societe Generale, said in the statement.

"Especially in Europe, growth prospects remain subdued," he adds.

Penalized by the toxic assets, and author of "profit warnings" on its books of 2009, SocGen tries since the beginning of the year to convince the market of its ability to turn the page on the financial and economic crisis and the of the Kerviel affair.

The new management team led by Frederick since May 2009 Oudéa promised mid-June to double the profits of Societe Generale in two years and is targeting a net profit of six billion euros in 2012 against a target of three billion this year.

The bank is also considering acquisitions but said it does not fund them through capital increases.

Besides the new strategic plan, the results of resistance tests conducted on 91 European banks and the announcement by the Basel Committee's flexibility to draft new banking regulation has been a breath of oxygen to the action SocGen, long shunned by investors.

In the past four weeks, the title, boosted by good news on the European banking sector jumped 40%. Since the beginning of the year, however, still leaves nearly 8% and continues to underperform its benchmark Stoxx 600 European banks.

Danone issued a first-half operating result slightly better than expected and has carefully noted the objective of sales growth for the full year, considering that the crisis would continue to weigh on European consumption.

The food group, which focuses on further development of emerging markets, now provides that its comparable sales will grow at least 6% when he was previously an increase of at least 5%.

He always bet on an increase in operating free cash flow in historical data at least 10% and stability of its operating margin in 2010 compared to 2009.

"We continue to invest in countries, products and brands with strong potential: Child Nutrition in Asia, fresh dairy products in the United States, Brazil, Russia, where Danone and Unimilk merger provides us with very significant growth opportunities long term, "said Franck Riboud, CEO of Danone.

In a statement, he confirms that water and medical nutrition, the group continues "to identify potential for growth in emerging markets and through new models."

At the same time, Danone has continued its efforts to improve productivity, says its chief executive.

The action Danone, with brands ranging from yogurts Actimel waters of Evian, lost 2.23% to 45.285 euros at 9:38, while the CAC 40 0.93% but took the DJ Stoxx European " Food yielded 1.13%.

Commenting on the first half, Francis Priest, CM-CIC Securities, believes they are "good bill" but noted that Danone "remains cautious on the S2 due to a persistently difficult".

The analyst believes that the decline of the title, which takes place in small volumes, reflects disappointment with the failure to raise the target group at the ROC, which the market had anticipated.

INCREASE IN VOLUME OF THE 2ND QUARTER 8.9%

On a comparable basis, the EBIT of Danone rose 2% on a comparable basis to 1280 million euros over the period January to June, showing a margin of 15.30%.His current net income was up 10.1% to 848,000,000 euros.

Turnover amounted to 4.386 million in the second quarter (+6.9%) or 8.364 million in the half. Excluding the effects of exchange rates (+7.0%) and changes in scope of consolidation (+0.1%), it grew 6.9% on a comparable basis in the second quarter.This organic growth is divided into volumes rising by 8.9% and a decrease in value by 2.0%.

Sales rose only 1.4% to 2,420 million euros in Q2 while they increased by 15.3% to 635 million in Asia and 15.9% in the rest of the world to 1331000 .

The consensus Thomson Reuters StarMine, the operating result was expected of 1.265 million euros (+5%) and turnover of 8.261 million (+9.8%), representing an operating margin of 15.3 %.

The fresh dairy products division, which represents 55% of sales in Q2, increased its sales by 6.6% to 2.436 million euros over the period. On the entire first half, the operating margin of this sector appears to 13.94% (-94 bps).The volume effect was positive at 9.3% but the negative value effect of 2.7% due to price reductions made in several countries, Danone said.

The division "Water" (19% of sales) has seen its sales grow by 4.8% to 828 million while its margin declined 75 basis points over the first half to 13.70%.

Sales of the "Child Nutrition" (19.5% of sales) rose 8.7% to 857 million (margin down 27 bps in the first half to 19.19%).

Finally, those of the pole "medical nutrition" increased by 10.8% to 265 million (margin decline of 86 bps to 19.90% in the first half).

Free cash flow from operations increased 34.9% to EUR 858 million, or 10.3% of sales in the first half, against 636 million and 8.5% of sales from the same period of last year.

In turn, capital expenditures totaled 275 million euros, or 3.3% of turnover. This level is below the annual forecast, ranging from 4% to 5% in sales due to a timing effect, Danone said.

Net debt amounted to 3180 Danone million euros in the first half.

* Danone Graph comparing to its competitors:

here

From early 2011, the European bankers will no longer affect more than one third of their bonus in cash and the payment of 40% of the total variable pay will be deferred over time, according to an agreement reached Wednesday between MEPs and member states .

Moreover, bank managers who have not repaid the state aid paid to the height of the financial crisis will not be eligible for variable pay and their salaries can not exceed a certain limit.

Finally, extraordinary payments related to retirement are covered by these rules.

"Parliament has managed to get 70% bonus is linked to the results when states were content to pay portmanteau words as 'balanced' or variable part" reasonable ", welcomed the French MEP Canfin Pascal, who was negotiating the text for the Greens.

Technically, according to the agreement, 30% of earnings will be pocketed immediately, 30% will be paid in shares not immediately salable and the remaining 40% will be paid later, half in cash and half in financial instruments linked to the performance of long After the bank.

The directive, known CRD3 (Capital Requirements Directive), also increases the capital requirements for operations re-securitization, which will affect the activity of investment banks.

The new rules should be in force early next year to cover bonuses and variable compensation paid in January 2011.

The recovery should continue at low speed in France by the end of the year, with a growth rebound in the second quarter but remain moderate then provides INSEE.

In his memo on the economy released Wednesday, the Statistical Institute expects a 0.5% of GDP in the second quarter and growing 0.4% in the next two quarters.

For the full year, growth would be 1.4%, in line with the government's forecast and just enough to stabilize unemployment.

The acquired at year end would be +0.6% and should in this case a 0.8% growth in each quarter of 2011 for achieving the government target of 2.5% was calculated INSEE which the forecast is however limited to 2010.

After rising 0.5% in the fourth quarter of 2009, GDP stagnated in the first three months of 2010 (+0.1%), fearing a relapse of the economy even if this figure is likely to be revised upwards on Friday when the national accounts are published in detail.

Entitled "In mid-stream, Note Insee business survey suggests a continuation of the recovery but at a moderate pace and with high uncertainty.

Turbulent waters

"An upturn in global activity was engaged for several quarters but there is still some way to go in this crisis and in waters which may be turbulent," said Sandrine Duchêne, head of the Business cycle, at a press conference.

Two forces are at work in France as in other advanced economies, "she said.On the one hand, the global recovery, but more beneficial to the country heavily exposed to foreign trade such as Germany or Japan, the other the need for fiscal consolidation that has already resulted in the listing Plan rigor.

"The year 2010 is a transition year between recovery and fiscal consolidation," said Sandrine Duchêne.

"In the very short term, the second quarter looks good but there is currently a cap on surveys which is expected a slowdown in activity by the end of the year."

According to INSEE, the attenuation of growth in the second half will not call into question both the positive contributions of the first quarter, namely the beginnings of a revival in business investment and re-creations of net jobs in the commercial sector.

"This trend will continue throughout the year but the pace of recovery will be slow and does not transmit only gradually income households," said Sandrine Duchêne.

In this context and with unemployment still high but stable, Insee sees household consumption stagnated in the second quarter as the first, before rising moderately (0.3%) in the next two quarters.

Demand for business will be limited but the depreciation of the euro will bring them a breath of fresh air by making their exports more competitive.

POSITIVE EFFECT OF THE EURO

In total, according to projections by INSEE, the recent decline of the euro should have a positive impact of 1.6 points on exports this year and 0.5 percentage points on growth that otherwise would therefore was only 0.9%.

Business investment in turn will benefit from improved market opportunities but will remain constrained by production capacity remains under-used, with a rate currently of 76% – ten points below the long-term average.

After eight consecutive quarters of decline, Insee sees the investment by non-financial leave of 0.6% in the second quarter, but he would decline a further 2.0% in total over 2010, following a drop of 7.9% in 2009.

Regarding employment, creation of the 24,000 net new market sectors in the first quarter – after seven quarters of destruction – would be followed by 8,000 others in the second, 4,000 and 15,000 in the third to the fourth, a total gain of 51,000 jobs this year 337,000 after destruction in 2009.

After six quarters of strong growth, the unemployment rate would remain stable for its 9.5% in France (9.9% in the counties overseas), to its highest level since late 1999.

Insee said its forecasts are surrounded by uncertainties. A resurgence of financial stress and / or the impact of measures to reduce the deficit might weigh on growth, since, unlike the depreciation of the euro, if continued, would allow countries Eurozone to benefit more from the dynamism of world trade.

"It is imperative to increase the soundness of the banking system, all G20 countries are convinced", said this morning Christian Noyer, governor of the Bank France, during an interview with The Tribune.

On the slopes of the reforms currently being tested, he explained that "the general philosophy of the reform is to require banks to allocate a larger share of their findings to their own funds, without affecting the distribution of credit, adding that "priority is to complete our work at the end of the year."

However, the governor of the Bank of France was cautious about the actual creation of a tax credit, a project supported by the Franco-German: "This proposed tax is the responsibility of States," he said business daily.For now, the new rules adopted in the context of Basel III are not yet determined, although a number of proposals have been put on the table. "All the rules laid down will not necessarily accepted," said Christian Noyer The Tribune, adding that 'the dosage and timing are not yet established'. One thing is sure: the economic impact on banks will be taken into account.

Credit rating agencies under scrutiny

Furthermore, Christian Noyer considered "incomprehensible" the recent decision of Moody's notes the degrade of Greece speculative grade. "The rating agencies should be alert indicators in judging upstream on the strengths and weaknesses of borrowers.Cause abrupt movements of the market once the problems identified and solutions have been made, is cons-productive, "he has told La Tribune. Before concluding:" Moreover, in the case of Greece we rely more on analysis of the IMF – more aware of the situation – as those of rating agencies.

See also: The financial regulation for Dummies

The British oil giant BP has already spent 1,250 billion dollars trying to contain the oil spill in the Gulf of Mexico, "he said Monday, indicating also be collected Saturday a total of 10,500 barrels after the installation of a funnel flight.

Between 3 and 5 June, BP and 16,600 barrels of oil collected with this new device.

Read also: This bumbling boss of BP
See also: Why BP has it all wrong

The amount advanced by the group does not include $ 360 million promised for the construction of artificial islands to Louisiana, he said.

"The optimization (device) continues and we hope to improve the collection in the coming days, but it will be some days yet before we can evaluate the success of this attempt at containment," BP said in a statement.

BP also said it was too early to quantify the total costs of the oil spill caused by the explosion late April of the platform Deepwater Horizon, in which 11 employees were killed.

More than six in ten French (63%) feel negatively action of Nicolas Sarkozy since 2007 on social policy, against 34% positive, according to a CSA poll published Cap Friday, June 4 by the Journalists Association of social information (AJIS) and DomPlus. When they think about the action of the President of the Republic since 2007 in social policy, 29% of the French as "very negative" and 34% "fairly negative", while 3% are "very positive" and 31 % "fairly positive". They have been 3% did not comment.

Read about our investigation: Why Sarkozy's policy is so unpopular

When asked specifically about various fields is in terms of purchasing power that the French seem most critical: More than three quarters (76%) perceive the action of the Head of State as "rather negative", only 18% consider it "somewhat positive".For a majority of French, is also rather negative opinion on the fight against unemployment (68% against 27%), the fight against poverty (69% against 26%), the incentive to work harder (60% cons 36%), dialogue between management and unions (57% against 30%, 13% did not). Concerning the effectiveness of the minimum service in transport during strikes, the action is seen as "rather negative" to 48%, against 40% (12% did not).

About the pension reform, only unions inspire "somewhat confident" a majority of French people (54% against 42% who have "not much confidence"), according to the poll. In contrast, over two thirds (67%) were "not much confidence" in the patronage of the reform, against 26% experiencing more confidence.At 64%, the French have not much confidence in Nicolas Sarkozy to reform, against 32% who tend to trust.

The leftist opposition also inspires rather not trust a majority of French, but to a lesser extent (55% against 38%). Of the decisions taken by the President to deal with the crisis, 49% of French people consider them bad, against 47%. Nearly one in two French (49%) said the French company less united than three years ago, while 37% say "neither more nor less" and 11% supportive.

The survey of the CSA institute and Cap for Ajisai DomPlus and was conducted by telephone 19 and May 20 from a nationally representative sample of 1,000 persons aged 18 years or older, constituted under the quota method.

On June 5, 1947, in a speech at Harvard University, General George C. Marshall announced a program of development aid as the world had ever known. The reconstruction program in European history will keep the name of its author.Spread over four years, resulting in a total of $ 13 billion of loans or donations in cash or in kind: tractors, equipment … is the equivalent of $ 115 billion in 2008 to rebuild Europe at the end of the Second World War.

In other words, not much in terms of the 3600 billion in 2008 for public intervention in World War II and the 700 billion spent during the Vietnam War, calculates Dessertine Philip, director of the Institute of High Finance.

And trifle when compared to the Marshall Plan 700 billion plan Obama in 2008 and 2008 of $ 1.095 trillion (750 billion euros) of the system put in place the euro area and by the IMF to maintain stability currency.