Category Archives: Finance

Inflation Soars to 4.34% in June

 

 

 

MEXICO CITY – The consumer price index rose 0.46% in Mexico in June, a level not seen since at least 2003, said Monday by the National Institute of Statistics and Geography.

With this, annual inflation stood at 4.34%, the highest value since December 2010, when prices climbed 4.4%.

Core inflation is considered a better parameter to measure price trends because it eliminates items of high volatility, which was 0.22% in June, the institute said.

The Bank of Mexico has an inflation target of 3% + / – one percentage point.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wall Street Closed the Week Lower

 

NEW YORK – U.S. stocks fell on Friday after data showed another weak month in terms of job creation highlighted fears that the economy is stagnating, but not enough to generate more stimuli in the Federal Reserve anytime soon.

Based on latest available data, the Dow Jones industrial average fell 124.20 points, or 0.96%, to close at 12,772.47 points, while the Standard & Poor’s 500 lost 12.90 points, or 0.94%, ending at 1,354.68 units.

Meanwhile, the Nasdaq Composite ended with a drop of 38.79 points, or 1.30%, to 2,937.33 units.

United States said Friday that its economy, the largest in the world, created in June, a net of 80,000 jobs, which is less than the 90,000 expected by analysts, although more than 77,000 open in May, according to revised figures.

 

Oil Recedes 3.18%

 

NEW YORK – The U.S. oil fell more than 3% on Friday after a disappointing employment data for June that prompted deepest fears on a stalled economic recovery.

In New York, crude for August delivery fell $2.77, or 3.18%, to close at 84.45 dollars a barrel. For the week, it fell 51 cents, or 0.60%, after climbing 6.5% in the week ended June 29.

Brent crude fell sharply Friday after the jobs report reinforced concerns that a slow global economy will limit the demand for oil.

Brent crude futures closed low of 2.51 dollars, or 2.49%, to 98.19 dollars a barrel. For the week, the Brent rose $0.39, or 0.4%.

The rise in Brent during the week was driven by a strike of oil workers in Norway and the growing tensions over Iran’s disputed nuclear program.

Labor unions and the oil industry of Norway agreed to meet on Saturday with a government mediator to try to reach an agreement and end the measure that has reduced the country’s oil production by 13% and threatening to cut exports.

The U.S. economy created just 80,000 jobs in June, which is 10,000 less than what analysts had expected, while the unemployment rate remained at 8.2%, encouraging fears that the debt crisis in Europe is changing the pace of growth.

“People expected something better, an indicator that can show that we are out of this depression,” said Nigel Gault of IHS Global Insight. “But everything here indicates that we are still in it,” he said.

The disappointing U.S. jobs report remained hopes intact that the Fed will take additional steps to shore up the economy.

Meanwhile, China, Europe and Britain eased its monetary policy on Thursday, indicating an increasing level of alarm about the global economy.

Adding to the negative tone, the head of the International Monetary Fund (IMF) on Friday expressed concern about a deteriorating world economy, saying the IMF revised down some of the predictions. The oil was pressed further by the weak dollar.

The euro fell to a two-year low against the dollar when the U.S. jobs report added to concerns that the European debt crisis is affecting U.S. economic growth and encouraged a strong aversion to risk and a shift to safe haven assets insurance.

 

 

BlackBerry Falls 19% on NASDAQ

 

Shares of Research In Motion Ltd (RIM), maker of BlackBerry, collapse on Friday more than 18% on Nasdaq on Thursday after the company report a quarterly loss and postpone the launch of the new BlackBerry 10.

The Canadian papers lost 18.84%, or 1.72 dollars to 7.41 trading on greenbacks, according to data from CNNMoney at 12:38 hours Mexico City.

RIM reported a quarterly operating loss higher than expected, the first in eight years, and delayed the expected launch of its new line of phones BlackBerry 10 until next year, in a potentially devastating setback for the company.

The adjusted net loss was $192 million, or 37 cents a share, for the quarter ended June 2. Revenue decreased 33% to 2.800 million.

A year ago, the company reported in the same period net income of $ 695 million, or $ 1.33 per share, based on sales of 4.910 billion.

RIM said the launch of its new BlackBerry 10 was postponed because the integration of functions and a large amount of code on the platform need “to consume more time than anticipated”. They had previously said it would have the line in late 2012.

RIM, which has pledged to cut 1.000 million in operating costs this year, said he plans to dispense with 5,000 employees-about 30% of its workforce-after BlackBerry shipments fell sharply for the second consecutive quarter.

“From the point of view, the figures could hardly be worse and will deteriorate from now,” said Edward Snyder, managing director of Charter Equity Research.

Research In Motion Ltd. is under increasing pressure to consider unpleasant options, like selling its networking business or form an alliance with Microsoft Corp, after the maker of Blackberry again delay the launch of its new line, said three people who were familiar with the matter.

This new setback has increased pressure on RIM’s board to more seriously evaluate other options, including some that could mean admitting that the firm can not survive tied to its current strategy, the sources said, asking not to be identified because the information was confidential.

One option for RIM is abandoning its own operating system and take the upcoming Microsoft Windows 8.

Microsoft CEO, Steve Ballmer, had approached RIM in recent months, seeking to close an association similar to the sealed Nokia Oyj, the sources said. From this partnership, Nokia will use Microsoft’s operating system in its “smartphones”.

Barclays Demand with 450 Million Dollars

 

LONDON – British bank Barclays will pay at least $450 million to U.S. authorities and Britain, in an agreement of an investigation into the handling of interbank lending rate known as Libor.

Regulators have been investigating allegations that several banks, including Barclays, manipulated the rate known in English as the London Interbank Lending Rate, which is the benchmark for derivatives contracts worldwide by billions of dollars, and also is used for corporate loans.

Barclays regularly reported lower rates than was actually paid during the financial crisis in order to hide their problems, according to a Wednesday’s statement on Trading Commission Commodity Futures U.S.

Some e-mails that regulators reported on Wednesday makes it clear that operators and managers to report rates every day for years worked together to make the rates given coincide with the aims of the operators and the bank.

In some cases, these managers were set reminders on their agendas to deliver low rates on certain dates, according to the emails. In others, operators expressed a big thank you for the supply of low rates to protect them from loss.

The CFTC said Barclays attempted to manipulate the presentation of the Libor “sometimes on a daily basis” for a period of four years starting in 2005. The CFTC ordered the bank to pay a fine of $ 200 million, saying it was the largest fine imposed civil money ever.

Barclays also agreed with the U.S. Justice Department and the Financial Services Authority of Britain, and pay fines of $160 million and 92.8 million, respectively.

Greece Wants to Relax its Austerity

 

ATHENS – Greece aims to cut taxes, bring additional support to poor and unemployed, freeze public sector layoffs and more time to reduce its deficit, according to new government program that could find strong opposition at the summit of the European Union scheduled for next week.

The coalition government’s program reflected the public pressure to relax the terms of a rescue package of €130.000 million to save Greece from bankruptcy, but only at the cost of severe austerity measures.

If fully implemented, the new program would disrupt many government austerity measures that the country agreed in February to get the rescue package, the second since 2010.

The partners of the euro area have provided settings, but not radically revise the terms of the rescue, with the main contributor (Germany) showing a particular resistance to the benevolent orders of Greece.

The program includes an order for Athens to recapitalize the country’s fifth lender, ATEbank, the Agricultural Bank of Greece as European sources is among the various entities that the Commission wanted to disappear. The Finance Ministry rejected the report.

The program agreed by leaders of the three-party coalition after the election of June 17, will face its first test in the European Union summit that starts on Thursday and would be dominated by the debt crisis began in Greece and now threatens to engulf Italy and Spain, the third and fourth eurozone economies, respectively.

Inspectors from the “troika” (group represented by the European Union, the European Central Bank and the International Monetary Fund) is responsible for reviewing the progress of reforms in Greece are planning to return on Monday in Athens to review progress of the country.

Officials of the euro area have argued that the rescue package should be revised only to reflect the loss of time in two elections since early May and a deeper recession than expected.

“The overall goal is that no further reductions in wages or pensions or higher taxes,” said the Greek government program.

It also requires a reduction in the current value added tax (VAT) of 23% for restaurants and farmers, the freezing of public sector layoffs and unemployment benefits are paid for two years instead of one.

The Government will also request two more years, until 2016, to reduce its budget deficit to 2.1% of national economic output from 9.3% in 2011, an extension that would require additional foreign financing.

The coalition brings togethe++r the conservative party New Democracy, PASOK and the Socialist Democratic Left alliance will face constant pressure from an opposition bloc led by the radical left SYRIZA.

“The general agreement is not further reduce wages or pensions, or higher taxes,” said the three ruling parties on Saturday.

The ruling came after the new Prime Minister Antonis Samaras was successfully undergone eye surgery and Finance Minister Vassilis Rapanos, was hospitalized for observation after collapsing Friday.

Samaras, the conservative New Democracy party, arrived first at the polls on June 17 but did not get absolute majority to govern alone.

Although promised to respect the agreements signed by rescue the country with other European nations and the International Monetary Fund, the three parties said they will try to renegotiate certain items.

Crisis Threatens Airline Profits

 

BEIJING, China – The benefits of the airlines will drop this year at $3 million due to the crisis in Europe, according to the International Air Transport Association (IATA), currently holding its general assembly in Beijing.

It will be the second consecutive fall to record industry profits after that in 2011 were 7.900 million and 15.800 million in 2010, according to IATA.

The crisis in Europe and rising fuel prices as a result of rising oil prices are the main reasons for this forecast, said the chairman of the IATA, Tony Tyler, during the opening of the general assembly involving more than 600 delegates from 242 airlines around the world.

Passenger traffic will continue to increase, and it is expected that by 2012, the total number of seats reserved reach 2.966 million; 2.835 million compared to 2011.

The Asia-Pacific, with China leading the way, continues to lead the growth in passenger traffic. And in 2012, they will bring much benefit for airlines, with some two billion dollars.

United States also improves the prospects, and it is estimated that airlines recorded profits of 1.400 billion of that market, according to the source. However in Europe, in the words of Tyler, is the “greatest risk” to the airlines.

 

Spain Will Ask Help from Europe

 

BRUSSELS – Saturday, Spain became the fourth country to ask for help from the beginning of the debt crisis in Europe.
The country will order financial assistance to its partners in the eurozone, but not until you have a clear idea of ​​the amount of capital that banks need from private audits will be completed in a few weeks, told Reuters on Saturday three sources of the European Union (EU).

Spain said during a teleconference with the finance ministers of 17 countries in the euro area would aid its banks, but could not specify the amount until Oliver Wyman and Roland Berger (two independent consultants) present its assessment of capital requirements by 21 June.

“They want the help, but only say how much money is in a few days,” said one source.

A bailout of faltering banks in Spain could reach up to 100,000 million (125,000 million) once it is requested by Madrid.

It is unclear whether the figures are defined Rescue on Saturday, but the International Monetary Fund (IMF) gave a clear guide to what you think is needed to say that in a scenario of “stress”, several Spanish banks need additional capital 40.000 million. However, the agency advised to collect more than that.

“Going forward will be critical to clearly communicate the strategy to provide a deterrent credible to the scarcity of capital, a brake as experience shows, it is better to overestimate than underestimate,” Ceyla Pazarbasioglu, assistant director of the Monetary Department and Capital Fund, said in a statement .

Eurozone leaders want to strengthen the position of Spain before the Greek elections of June 17, which could bring the country Hellene a block output and unleash a wave of contagion.

Members of the Government in Spain have said that in practice, the parameters of the audits of the IMF and private firms are the same, implying that Spain could make your request for assistance based on figures from the bottom instead of waiting to another report.

Meanwhile, the president of the Bundesbank, Jens Weidman said that Spain should use available tools, such as the European Financial Stability Fund (EFSF), if they feel overwhelmed by their financial needs.

Although all indications are that Spain will join Greece, Ireland and Portugal to receive a European bailout, officials say that the aid would focus only on its banking sector, without taking the Spanish state of credit markets.

That would be crucial to avoid overloading the bailout funds from the euro area, which would struggle to cover the costs of the Spanish debt over the next three years, plus possible additional assistance to Portugal and Ireland.

Any political conditions on aid would not be excessive, would be related to banks and probably adding to the austerity measures and structural economic reforms that the Government of Rajoy has already started, sources said the EU and Germany.

Loan, not bailout: Spain

The Spanish government admitted his intention to seek foreign funding to capitalize the banks.

At a press conference at the headquarters of the Ministry of Economy of Spain, the portfolio holder, Luis de Guindos, said it’s not a bailout but a loan.

The official noted that the amount will be sufficient to meet the needs and added a “significant cushion” in addition there will be no macroeconomic conditions, since the measure is limited to the financial sector.

They argued that the loan application to the EU to the Spanish banks will only conditions for financial institutions, so it is excluded country’s economic policy.

In Guindos, downplayed the Spanish prime minister, Mariano Rajoy, has not appeared to explain the application of EU aid to Spanish banks.

Rajoy said that was not brought “by a very simple question, I am the member of the Eurogroup and the Prime Minister”.

In the press conference, the Spanish minister said that this is a loan on highly concessional terms, better than the market, and that “will not leave the slightest loophole for doubt.”

He said that the injection is made through the Rescue Fund Management Banking (FROB), which will interface and divert government entities need.

Ministers confirm agreement

The 17 finance ministers from the eurozone reported that Spain will “soon” formal request for assistance to its members and will receive up to 100,000 million (125,000 million) once the application is processed.

After a conference of more than two hours, the ministers said in a statement that financial assistance would be provided by some of the two mechanisms rescue the block, the EFSF or MEDE, and would be designed to recapitalize banks Spain going through more trouble.

German recognition

German Finance Minister, Wolfgang Schaeuble, recognized Spain for its decision to seek help from their partners.

Madrid said he was “big steps” to control their economic and financial problems and was on the right track.

“It has launched structural reforms. Spain, and this is what they are saying all international institutions, is on the right track,” he said.

Schaeuble believes Spain can control its banking problems.

Starbucks Plans to Buy La Boulange

 

Starbucks announced this week that it plans to buy Boulange Bakery for 100 million dollars. The cost of the acquisition will dilute earnings by 0.02 cents per share in the second half of 2012, and expects further dilution in the value per share next year.

La Boulange Bakery operates 19 stores in the San Francisco Bay and sells its products to several upscale restaurants, hotels and shops in the region. The acquisition is intended to improve Starbucks baked goods offered in their cafeterias and represents, in our view, a significant risk by Howard Schultz and his team.

This purchase, along with the acquisition of the chain Evolution Fresh juice at the end of last year, it appears from the “multi-channel strategy” applied by Starbucks to introduce a new product through its national network of cafes and then expand the supply in the channel of consumer packaged goods brand once the gain traction. The logic behind this strategy seems to be based on the success of your product VIA, a line of packets of instant coffee. The risk, in the case of products of La Boulange, is that the strategy was successful VIA as a product of Starbucks, but that success may not be transferred to a branded product that is not Starbucks or perhaps may take longer planned for the brand resonates with consumers nationwide.

In terms of timing to launch the new offering from La Boulange, the company reported that only products first appear in Starbucks stores in San Francisco in 2013. The offering will initially focus on pastries and bread.

While we understand the appeal of multi-channel strategy and we can see the potential benefits, assuming that all efforts will be successful, Starbucks is hardly a correct position, if history is any guide. Starbucks is an extraordinary organization for three years and have followed their stock performance. However, the company seems to have entered a phase of investment, and that changes the landscape of their actions. Simultaneously enter into two major initiatives (juices and food) increases the risk of setbacks for action, in terms of earnings per share (EPS), the consequences of any slowdown in income is over the future than in recent years.

Fresh Evolution strategy, although unproven, may be positive in the medium term given the limited capital investment required to bring the product to stores. But to apply the multi-channel strategy to baked goods a greater risk for EPS in the coming years. There is also the additional risk that, by increasing rapidly the product offerings of La Boulange in U.S. stores nationwide, the company can compromise the integrity of La Boulange made a success.

Based on the conference that gave managers on the acquisition, our view is that the strategy of La Boulange likely require a significant capital investment by Starbucks. In the coming weeks more details will be announced, but right now we believe that short-term investment could be significant, while the reward, though possibly substantial but not guaranteed, it could take years to materialize.

These are the main points that left the conference call:

– Currently income food accounts for 1.500 million dollars in national establishments (U.S. only) on company-owned Starbucks, a figure which recorded an increase of 14% during the first two quarters of fiscal 2012. Management expects that this acquisition will help drive growth in the long term, but few details were provided in the conference.

– Management will introduce the first product La Boulange in Starbucks stores in the area of ​​San Francisco, from 2013. Tenders will focus on pasta and bread at first.

– The product prepared in facilities and property management company seeks to build the brand La Boulange on a national presence. Both require a significant investment of capital.

– Once La Boulange brand products are distributed in Starbucks stores nationwide, management wants to promote the brand through the channel of consumer packaged goods.

Kellogg Purchases Pringles

 

Kellogg on Friday finalized the purchase of Pringles at Procter & Gamble for $2.695 billion.

The acquisition makes Kellogg the world’s second largest maker of snacks, salty, and international business triple the company’s snacks.

“With Pringles, Kellogg acquired a great company with exceptional employees, manufacturing world-class facilities, an iconic brand and a great platform for growth,” said John Bryant, President and CEO of Kellogg Company, in a statement.

The executive stressed that the operation is a step forward for the company in its goal to build a global business of snacks.

Pringles is the second largest player in the supply of snacks salty world, with 1.500 billion in sales through more than 140 countries.

With over four decades in the market, Pringles makes its snacks in over 80 different flavors.

It is expected that P & G, which makes Tide detergent, Crest toothpaste and the Pampers diapers, a gain after tax of between 1.400 and 1.500 billion.

“The business of Pringles is an excellent strategy to Kellogg and help them to advance the goal of a global business of snacks alongside the cereal business,” said P & G in February.

Europe Paves the Way for Eurobonds

BRUSSELS – In June, the European Council President, Herman Van Rompuy, will present a road map to “strengthen and deepen” the monetary union, in an attempt to lift the euro in the current crisis.

“We have to bear the monetary union to a new phase. There is a consensus that we must intensify integration,” said Van Rompuy at a press conference this morning, at the end of an informal meeting with the leaders of the European Union (EU) in the Belgian capital.

Greater fiscal and monetary integration in the euro area is considered by many countries as a prerequisite for the creation of so-called Eurobonds, an initiative by France, which relies on it to help stimulate growth in the commonwealth.

However, after nearly eight hours of discussion with their counterparts, French President, Francois Hollande said he understood that “certain countries are totally hostile” to the idea, particularly Germany, a historical ally of France.

German Chancellor, Angela Merkel, said that, “Eurobonds are a tool for integration, not growth.”

“I respect your point of view (Merkel) when you say that Eurobonds are not an instrument of growth in themselves. But they are tools that can help you get growth,” the French President added.

Moreover, the rulers agreed on the need to adapt EU policies to promote growth, including the area of ​​international trade, and improve labor mobility and investment in training to support job creation.

It also called on the European Investment Bank (EIB) to analyze, in the face of June, how it will strengthen its capital to improve access of SMEs to credit.

The OECD and World Bank said that emerging countries have taken steps to help them cope with the crisis.