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FRIDAY TICKER: OCTOBER 31TH 2014: - The re-election of President Dilma Rousseff on Sunday has important implications for Brazil's Baa2 sovereign rating, as well as for the credit quality of the country's banks, corporations and securitisations, says Moody's. The rating agency says the narrow margin of her victory underscores the challenges she faces as she looks to revive Brazil's lacklustre economic performance - Facebook has reported third quarter results, again showing strongest year-on-year growth in mobile, where daily active users (DAUS) rose by 39% to 703 million, while overall daily users rose 19% to 864 million DAUS - Francisco Partners, a global technology-focused private equity firm, today announced it has completed the acquisition of Vendavo, Inc., a leader in business-to-business (B2B) pricing solutions. David Mitchell, an operating partner of Francisco Partners, will join Vendavo as CEO and lead the company’s worldwide business strategy and operations. Incumbent CEO Neil Lustig will transition into an advisory role with Vendavo. Francisco Partners now has a controlling stake in the Silicon Valley company. The acquisition by Francisco Partners provides additional resources to bolster Vendavo’s aggressive growth strategy, enabling the company to expand sales and marketing while accelerating cloud development. Vendavo completed a record first half of 2014, with nearly 30-percent growth in bookings, and the release of two breakthrough solutions for price and sales effectiveness. Based in Mountain View, Calif., Vendavo provides revenue and price optimisation solutions for B2B mid-market and enterprise companies.Francisco Partners was advised by JMP Securities, and Vendavo was advised by William Blair. Financial terms of the transaction were not disclosed – The International Finance Corporation, or IFC, issued the four-year, triple-A rated bond only to Japanese retail investors, tapping into the growing interest in low-risk investments with a social or environmental focus. The World Bank, has sold several billion dollars in green bonds over the past six years, with proceeds going to help countries and firms cut greenhouse gas emissions and adapt to climate change. The latest offering, Inclusive Business bonds, would finance firms that work with or sell to the 4.5bn people in the world that make less than $8 a day. IFC said while most poor people do not spend a lot individually, as a whole they represent an estimated $5trn consumer market that firms could tap into - NAKA Mobile, a telecoms and technology specialist based in Switzerland, has claimed the industry’s first virtualised evolved packet core (vEPC). Utilising Cisco’s NFV services, NAKA claims it will transform its network architecture, expand beyond Switzerland, and provide its mobile Internet services to customers across the world - The Internet Society and Alcatel-Lucent have agreed to provide support and equipment for the development of the Bangkok Internet Exchange Point (BKNIX). The project will utilise the Internet Society’s Interconnection and Traffic Exchange (ITE) programme and is intended to deliver a stronger and more robust Internet infrastructure for South East Asia.

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The European Review

By Patrick Artus, chief economist at Natixis

US reindustrialisation poses challenge for eurozone

Tuesday, 22 May 2012 Written by 
US reindustrialisation poses challenge for eurozone A reindustrialisation process has been underway in the U.S. since 2009, linked to the trend in the profitability of industrial companies, wage costs and energy prices. It has already enabled the U.S. to regain market share in global trade, creating an additional problem for the euro zone given it is already faces market share losses to emerging countries and weak domestic demand. The euro-zone economy is therefore likely to be further weakened if it loses more export trade to the U.S. http://www.ftseglobalmarkets.com/

A reindustrialisation process has been underway in the U.S. since 2009, linked to the trend in the profitability of industrial companies, wage costs and energy prices. It has already enabled the U.S. to regain market share in global trade, creating an additional problem for the euro zone given it is already faces market share losses to emerging countries and weak domestic demand. The euro-zone economy is therefore likely to be further weakened if it loses more export trade to the U.S.

Reindustrialisation process under way in the U.S.

The reindustrialisation of the U.S. is evident from the upswing in productive investment and manufacturing employment as well as from the upturn in manufacturing output, which has outpaced the euro zone since the crisis. Yet – for the time being – U.S. reindustrialisation has mainly affected the automotive and capital goods sectors.



Growth of U.S. industry can be ascribed to three factors:

-       rapidly increasing profitability of industrial companies in the U.S.;

-       labour costs in industry, which are lower in the U.S. than in Germany or France;

-       and the low cost of energy thanks to the fall in the price of natural gas, due to shale gas production.

The United States is regaining export market share

The U.S. situation in terms of export market share has been improving since the end of 2008. It appears that the U.S. has increased its market share in global exports largely at the expense of the euro zone and Central European countries (CEEC). Since end-2008, the U.S. trade deficit with the euro zone, Asian emerging countries excluding China, other American countries and Japan has been shrinking, though its trade deficit with China has stopped deteriorating. But in terms of export market share, U.S. improvement seems to match the deterioration in Europe.

An additional problem for the euro zone

The euro zone is already faced with a decline in domestic demand as a result of the restrictive fiscal policies, a decline in real wages due to the rise in unemployment and a loss in market share to emerging countries.

So – any further losses in export market share to the U.S. will therefore come on top of these problems. A depreciation of the euro could obviously correct the euro zone’s loss of competitiveness (in terms of wages and the price of energy). However, even during periods when the euro-zone crisis is acute, the euro still remains overvalued against the dollar

Patrick Artus

A graduate of Ecole Polytechnique, of Ecole Nationale de la Statistique et de l'Adminstration Economique and of Institut d'Etudes Politiques de Paris, Patrick Artus is today the Chief Economist at Natixis. He began his career in 1975 where his work included economic forecasting and modelisation. He then worked at the Economics Department of the OECD (1980), before becoming Head of Research at the ENSAE. Thereafter, Patrick taught seminars on research at Paris Dauphine (1982) and was Professor at a number of Universities (including Dauphine, ENSAE, Centre des Hautes Etudes de l'Armement, Ecole Nationale des Ponts et Chaussées and HEC Lausanne).

Patrick is now Professor of Economics at University Paris I Panthéon-Sorbonne. He combines these responsibilities with his research work at Natixis. Patrick was awarded "Best Economist of the year 1996" by the "Nouvel Economiste", and today is a member of the council of economic advisors to the French Prime Minister. He is also a board member at Total and Ipsos.

Website: cib.natixis.com/research/economic.aspx

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