Top Economics News

General Motors announced Wednesday consider selling its manufacturing plant in Strasbourg gearboxes and be looking for investors willing to maintain the site activity.

The U.S. automaker, which announced in February an alliance with PSA Peugeot Citroen, has appointed an advisory bank and committed a "strategic review" concerning both the production engineer neering and development of this plant, says in a statement.

He was willing to explore the internal and external solutions to find "viable alternatives and potential solutions to secure the future of the site".

General Motors intends to favor buyers who will continue the work site, which employs a thousand people. 

This file may be one of the first industrial sensitive topics for the new president Francois Hollande, in a context of overcapacity in the hunt for European automotive sector.

Last year, the plant produced 280,000 automatic transmissions with six speeds, mainly for GM brands and BMW, mostly for vehicles assembled outside Europe.

This is the second time that General Motors is trying to lease the site. During the 2008 financial crisis, the company charged with liquidating the assets of the American manufacturer had not found a buyer. In 2011, a year after his brief for the procedure of bankruptcy, GM had bought the plant for a symbolic euro.

At the time, employees had accepted a two-year wage freeze in exchange for guarantees on jobs.

"There are several commitments in place to continue the manufacture of transmissions for years," assured Jim Cain, spokesman for GM.

Economists and analysts are far from unanimous on the eve of the first round of presidential elections on the possible impact of the vote in the markets and the debt of France.

This uncertainty was reflected in an excitement on the market of the French debt, whose resistance was tested Thursday on the occasion of a rumor of dice gradation of the sovereign rating of France.

"The continuation of the gap (between the French and German rates) depend on the evidence that will give the next president of the Republic of the fiscal framework that will implement , and this will depend on the coherence between the presidency and the majority it will enjoy in the Assembly, "said CM-CIC Securities in a note. 

The first round results on Sunday, to measure the influence that extremes may have on the face of the next National Assembly, while a socialist majority in the Senate and that a victory of Francois Hollande in the second round of presidential elections is seen as the most likely outcome among market professionals.

Uncertainty, they agree to say, will remain until the June parliamentary, government's announcement will come out and the decisions it will take to reduce budget deficits ; TARY. 

But, says Guillaume Menuet, an economist at Citigroup, "the markets could react negatively, especially if the candidate of the far left reaches Jean-Luc Melenchon third me, allowing his party and his Communist allies to influence policy, even at the margin ".

"DEBT RESISTS WELL"

A rate strategist at a major bank, who noted the relative stability of voting intention polls, sees no movement on the scale of market unless the two finalists are not Nicolas Sarkozy and Francois Hollande.

"There will not necessarily flow as a seller there is no flow buyer. Like right now, people will stay on the side," he said. He noted that currently, "(despite) the absence of flow buyer, the French debt up well", even as concerns over the euro area are back.

The French rate to 7 years maturity corresponding to the average of the entire French debt, varies from a low of 2.28% in early February 2.5% today, representing a decrease of 22 basis points only.

Many investors point out that the current market will continue to revolve around the financial situation of the countries 'peripheral' in the euro area, regardless of the next tenant of the Elysee. 

"We continue to believe that the first factor in the evolution of spreads will be the evolution of French spreads devices and macroeconomic prospects of the debt crisis in the eurozone" write economists and strategists from Barclays. "The elections will be a secondary factor behind Spain and Italy."

But for Robert Crossley, rates strategist at Citigroup, "the market seems serene, wrongly, on the prospect of victory in Holland. This victory is likely to result in a defeat on the economic front and market confidence "

." Mê ; myself skimming the election rhetoric, the hostility of Holland to the business world and his lack of experience in finance and bond markets begin to undermine the fragile market confidence, "he says

. He however advised to buy the debt of France to favor of widening spreads (yield spread with German debt, refer to the euro area) related to political uncertainties, this spacing to be temporary according to him. He suggests buying French bonds at 10 years and sell bonds or Austrian Belgian with the same maturity.

Meanwhile Sunday, the spread between the yield of the French loan to 10 years and its German equivalent has deviated 29 basis points (bps) since April 12, at 140 bps. The rate of the French loan to 10 years was him, stretched by 21 bps to 3.10%.

On the market very illiquid sovereign CDS, a sort of insurance policy against a default, the spread of the 5-year CDS of France rose from 177 to 210 points from 12 in April.

On the stock market, strategists advise to stay away from French values ​​facing their domestic market but to buy the CAC 40 index.

"The CAC 40 is not France," wrote Credit Suisse those that say that 66% of the turnover of the 40 companies in the benchmark index of the Paris Bourse are outside France, and 36% outside the euro area.

The Tokyo Stock Exchange ended down 0.53% Thursday, limiting its losses in the wake of the sharp drop on Wall Street and European markets.

The Nikkei fell 52.38 points to 9,767.61 points after touching a low four-week session and the Topix broader point yielded 2.79 points (-0.33%) to 832.57 points.

Toshiba has closed up 1.73%. The world number two flash memories is considering an alliance with South Korea's SK Hynix Semiconductor to buy Elpida Memory, according to the Nikkei newspaper.

Values ​​have been car clearances, leaving Toyota and Honda Motor 0.72% 1.13%.

The countries pledged to reduce its public deficit to three points of GDP by 2012. To achieve this, the government announced tax increases and lower spending. The Spanish head of government right, Mariano Rajoy.

Brussels had requested an additional effort of 20 billion euros. Spain is best. The Spanish government on Friday approved its draft budget for 2012, which provides "over 27 billion euros' savings and new revenues, including through the wage freeze for civil servants and lower departmental budgets by 16.9% on average.

"We are facing an extreme situation," admitted the government spokesman Soraya Saenz de Santamaria after the Council of Ministers, and "our first obligation is to return to public accounts cleaned up", while the Spain pledged to cut the end of 2012 the government deficit, from 8.51% to 5.3% of GDP.  

Spain is the country with the least restated its fiscal 2011, the experts calculated at Credit Suisse. Its structural deficit (independent conditions) was reduced by 1 percentage point of GDP. A figure that is stain when compared to the effort in neighboring countries: more than 3 points in Portugal and almost 6 percentage points in Greece. To compensate for the delay in 2011, Spain had to work twice as hard. It's done. At least in part.

Most analysts expected the need for Spain to find about 50 billion euros between savings and new revenues, taking into account the recession, which should reduce the Spanish GDP by 1.7% this year. The rest of the effort must come from particular regions and municipalities, the fragile financial health since the bursting of the housing bubble in 2008.

Madrid, in any case, does not completely stifle the economy by embarking on a program of excessive rigor.

The return to a lower deficit will be "not achieved at any price," warned Soraya Saenz, stressing the need to "support those who need it most and does not block growth and job creation "In a country with record unemployment (22.85%). Thus, "we decided to keep the revaluation of pensions, freeze the salaries of civil servants rather than decrease, maintain unemployment benefits and social spending, including grants," she said. Similarly, "we will not raise VAT to not harm the consumer and the economic recovery, but we will increase the corporation tax for large companies."

Roche said Thursday it raised the price of its unsolicited offer on American society Illumina to $ 51 per share, against 44.5 dollars previously.

The new price values ​​the American specialist of gene sequencing to more than $ 6 billion (4.5 billion euros), Roche hoping to make a difference before the general meeting of the group from San Diego to be held next month.

"Based on our discussions with shareholders of Illumina, we collected the interest of accelerating the acquisition process. Accordingly, we are increasing our price to $ 51 per share, "said the Swiss pharmaceutical group Roche said in a statement

. has pre ; fied that the other terms of its offer remained the same and he still favored the opening of negotiations

. Monday, the group Basel had indicated that it was extending its offer again, without changing the price and making it run until April 20

. Roche softens its position, while its CEO Severin Schwan repeated that he did not raise its offer. But nothing says that this gesture will be enough to persuade shareholders, analysts suggesting a price of $ 60 per share, better able to convince the recalcitrant.

Illumina was adopted in late January the principle of a "poison pill" by distributing as a dividend right to purchase preferred share per share outstanding at February 6, exercisable if a shareholder reach or exceed the threshold of 15% stake.

Key values ​​to follow Friday on Wall Street.

* GAP has disappointed expectations Thursday, saying wait for fiscal 2012 earnings per share 1.75 to $ 1.80, while analysts polled by Thomson Reuters I / B / E / S on average had expected $ 1.79.

Gap posted a fourth quarter profit of $ 218 million, or 44 cents a share, against 365 million (60 cents) a year earlier.

In pre-market value fell by 2% to 23.10 dollars.

* AMERICAN INTERNATIONAL GROUP. The insurer reported a profit of $ 19.8 billion in the fourth quarter of 2011, due to an accounting change that allowed him to display a huge windfall.

This change, which raises the price of AIG from 6.5% to 29.81 dollars in pre-market means that the group will not pay tax on billions of dollars in profits in the coming years.

* Interpublic. The advertising agency has published a quarterly profit above expectations, thanks to emerging markets in a context of recovery of the sector.

EPS for the fourth quarter is 50 cents per share while the market was expecting 39 cents per share. Revenues for the quarter amounted to $ 2.07 billion, or less stable over one year. The turnover abroad rose by 6%.

In 2012, Interpublic expects organic growth of 3%.

In pre-market value gains 4.2% after finishing at 10.91 dollars Thursday.

* CITIGROUP. The bank has raised $ 1.95 billion sale of its stake in Indian company Housing Development Finance Corp, said on Friday, sources familiar with the matter.

In pre-market value gains 1% to 32.95 dollars.

PSA Peugeot Citroën is the star of the Paris stock exchange today. Its title flies by nearly 10%, boosted by the announcement of cooperation projects and a possible alliance with General Motors. A PSA Peugeot Citroën plant in Coventry, UK.

The title of French carmaker PSA Peugeot Citroen flew Wednesday morning at the Paris Bourse, boosted by the prospect of an alliance with General Motors. At 10:10 (9:10 GMT), the value gained 9.80% to 15.80 euros and largely occupied first place in the CAC 40, which lost 0.29%. Analysts at Natixis bank have in turn raised to "buy", against "neutral" before their recommendation on the title, with a price target to 20 euros.

The French manufacturer, sentencing, said review "projects of cooperation and alliances" about which "discussions are ongoing". The site reported Tuesday LaTribune.fr advanced negotiations for a marriage with General Motors. Labour Minister Xavier Bertrand confirmed Wednesday that French was in talks with the U.S.. Florent Couvreur, analyst at CM-CIC Securities, said that PSA is among the largest European manufacturers "most isolated" and that furthermore it is difficult to generate sufficient margins in its core automotive operations. The analyst also puts forward the fact that the company Opel, GM's European subsidiary, "is in the same situation."

Analysts at Bank of America-Merrill Lynch, "the first result of such discussions is the need for both companies to improve their position in Europe where all groups except two (Renault and Volkswagen) have recorded losses in the second half 2011 ". Thus, an alliance with PSA GM "could allow these two groups of strong synergies and economies of scale", such investments and R & D (research and development), for Mr. Slater. This merger would allow PSA to benefit from the GM position in Asia and the U.S. while the U.S. would have the opportunity through the French to build on small models, explains the analyst.

"GM-PSA could be the new Fiat-Chrysler", states Mr. Couvreur, while warning against a number of uncertainties. These include the future participation of the Peugeot family, the reaction of other PSA partners (Ford on diesel engines and Toyota in the "mini cars") and whether the alliance has held a probable reduction in overcapacity Europe. Analysts at the U.S. bank, however, wonder if this alliance fear materialize and warn that PSA longer needs this merger as GM, "given its dependence on Europe and its inability to cut costs fast enough ".

The European Central Bank (ECB) is considering allowing Greek bonds held by central banks in the euro zone to experience discounts similar to those offered by private investors, told Reuters sources within these central banks.

Central banks in the euro area hold some 20 billion euros of Greek securities in their investment portfolios. They are distinct from the 40 billion euros of debt acquired by the ECB as part of its share buyback program launched in May 2010.

The chances of such a discount applied is 50%, said one source, adding that the issue in discussions within the ECB, to be decided before a definitive agreement with the private sector on debt restructuring Greek, whose conclusion is expected by early next week.

If central banks were willing to take losses on their securities Greek, this would bring to Greece immediately available funds, in addition to 12-15 billion euros in capital gains realized es by the ECB on its debt and that the Greek proposes to reassign indirectly in Athens.

Repair cracks appeared on the wings of the Airbus A380 jumbo could cost up to 100 million euros in the aircraft manufacturer, writes Der Spiegel Sunday.

The identification and repair of cracks on the 69 aircraft already in service would cost in themselves within 70 million, thirty million then being attributable to a change production procedures, continues the weekly said, citing experts and people of Airbus.

Der Spiegel also quoted a spokesman for Airbus, an EADS subsidiary, which states that a long-term technical solution will be found by the summer, without comment on the cost. 

European authorities are preparing to extend the inspection process to all Airbus A380 fleet after the discovery of cracks on the wings of some copies of trè s jumbo jet, said on Wednesday sources close to the matter.

Moreover, in an interview published Monday in WirtschaftsWoche, Louis Welsh, CEO of EADS, said he wanted make 350 million euros in savings this year by unifying procedures for various business functions.

He added that in view of recent successes in the U.S., EADS should seriously consider building a plant there.

Welsh also said that the A320neo should be profitable in its first delivery in October 2015. "Development costs are limited and therefore we will have depreciated even before the start of production" No he said.

The EDF Group, through its subsidiary EDF Energies Nouvelles Spread (EDF ENR), today announced it filed Friday an offer for the resumption of Photowatt, the only French manufacturer of solar cells ; silicon.

Nicolas Sarkozy announced Thursday that he will present next week a bailout of Photowatt, the leading French photovoltaic, involving EDF.

The company employs 441 employees at Bourgoin (Isère), was placed in receivership after filing for bankruptcy last November. 

The Head of State, speaking during a visit to the Fessenheim nuclear power plant, said he would travel next week Photowatt "because thanks to EDF, we pre ; senterons employees Photowatt a formula of industrial recovery. "

In a statement, EDF said that Photowatt owns 40% of PV Alliance, the leading research and development in the field of photovoltaic technology, in which EDF ENR has already a 40% stake alongside the CEA (20%).

"The offer of EDF ENR will be conditioned to include the recovery of 100% of PV Alliance and to obtain an exclusive worldwide license on heterojunction technology, called to replace the current technology in the years to come, "the group wrote. 

"Given its presence in Photowatt through PV Alliance, EDF ENR appears as the natural candidate for the resumption of Photowatt," said Jean-Louis Mathias, Chief Executive ; EXECUTIVE group in charge of renewable energy.