AFS Morning Note 7 November 2014

AFS Morning Note – November 7, 2014
NL corporate events: Arcelor Mittal, Aperam, AMG
Eurocommercial properties;
NL corporate events Monday: -;
EU/US corporate events:Allianz, Enel, Freenet, Swiss Re,
Richemont,
EU/US corporate events Monday: Carlsberg, Telefonica
Deutschland, Kabel Deutschland;
NL/EU Ex-div: -;
EU Ex-div Monday:-;
Macro
08:30 Bank of France Business Sentiment
08:45 France Industrial Production, Budget Balance , Trade
Balance
09:00 EU Finance Ministers Hold Meeting
09:00 Spain Industrial Output
09:00 ECB's Noyer speaks
09:30 Netherlands Industrial Production
10:30 UK Trade Balance
11:15 ECB's Nouy speaks
12:00 ECB Announces 3-Year LTRO Repayment
14:30 US Nonfarm Payrolls, Unemployment Rate
15:15 Fed's Evans Speaks
16:15 Fed's Yellen Speaks
16:15 ECB's Coeure Speaks
20:30 Fed's Tarullo Speaks
21:00 US Consumer Credit
23:00 ECB's Constancio speaks
Weidmann, Kuroda, Carney at Bank of France Conference
Financials
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EU Nations Remain Divided on Financial Transactions Tax -- A wide gap remained between European countries that have pledged to
start taxing some financial transactions by 2016, as a year-end deadline to reach a deal on the levy looms. Eleven of the 28 European Union
countries--including France, Germany, Italy and Spain--agreed to push ahead with a planned tax on share and derivative trades, after
discussions for an EU-wide financial-transaction tax broke down in 2012. But agreeing on what instruments to tax--and who should get the
money--has proved difficult. Some countries, led by France, are now pushing for a limited tax that would only hit shares and a limited number
of credit-default swaps, which can be used to bet on the default of a company and country. Others still want a more-ambitious levy that would
also include a wider range of derivatives and hence create more revenue for governments. "We're not available for a fig-leaf tax," said
Austrian Finance Minister Hans Jörg Schelling, referring to France's proposals, as he arrived for a meeting with other eurozone finance
chiefs. Informal talks between ministers Thursday produced little progress ahead of a public discussion among ministers planned for Friday.
"I don't see a breakthrough tomorrow," said an EU official. Taxing financial trades is very popular with voters in Europe, where many
countries spent billions bailing out failing banks in recent years and governments are still cutting spending. Some finance ministers have also
hailed the tax as a way of curtailing high-frequency trading and speculation they see as damaging for their economies. However, fears that
imposing a levy on financial trades would just push investors to move transactions to other countries have stopped many governments from
demanding a broad-ranging tax--or supporting it at all. The European Commission, the EU's executive arm, first proposed a financial
transaction tax in 2011, but only 11 countries have so far committed to the idea. The commission proposed a 0.1% tax on share and bond
trades and 0.01% levy on derivative transactions, generating annual revenue of EUR30 billion ($37 billion) to EUR35 billion. The options
currently under discussion are set to yield much less. (DJ)
Singapore Returns Up to $9 Billion to Banks After Rate Probe -- Singapore’s central bank gave back as much as S$12 billion ($9.3
billion) that it took from 19 lenders last year as a penalty for trying to rig benchmark interest rates. The banks have taken steps to prevent a
recurrence of attempts to manipulate the rates, the Monetary Authority of Singapore said in an e-mailed statement today. UBS AG, Royal
Bank of Scotland Group Plc and ING Group NV were among firms asked to post reserves ranging from S$100 million to S$1.2 billion for a
year at zero interest in June 2013. The return of the funds follows investigations in Singapore that started last year amid a widening global
review of benchmark rates. Barclays Plc, UBS and RBS have paid billions of dollars to settle claims with U.S. and U.K. financial regulators of
rigging the London interbank offered rate. MAS has said it will make rigging key rates a criminal offense and bring supervision under its direct
oversight. (BN)
Fed Said to Seek More Time to Mull Actions Against FX Traders -- The Federal Reserve asked some currency traders under
investigation for foreign-exchange manipulation to waive the deadline for civil actions against them, according to two people with knowledge
of the situation. The Fed sent the requests, known as tolling agreements, to at least two individuals in recent months, said the people, who
asked not to be identified because the letters are private. The agreements would suspend the statute of limitations, usually five or ten years
depending on the relevant law, which isn’t clear as no accusations have been made yet. The move indicates the Fed -- which is also in
settlement talks with some banks in the matter -- is weighing civil action against individuals. The U.S. Department of Justice is planning to file
criminal charges against individuals in its currency- rigging probe next year, people with knowledge of the matter have said. Criminal cases
often take priority over civil actions, dragging those matters out. Authorities can ask for waivers as a way to preserve their ability to bring
cases. (BN)
Banks Said to Face U.K. Fines of Up to $380 Million Each for FX -- The U.K. Financial Conduct Authority is preparing to levy fines
ranging from GBP225m ($358m) to GBP250m vs six banks in the first settlements in a global probe into currency manipulation allegations,
three people with knowledge of the talks said. * The FCA could announce settlements as soon as next week with Barclays, Citigroup, HSBC,
JPMorgan, RBS and UBS, according to the people, who asked not to be identified because the talks are private * At least one U.S. regulator
is likely to settle with the banks alongside the FCA, two of the people said; the CFTC, the Fed and the Office of the Comptroller of the
Currency are all pressing to announce agreements with some banks when the FCA does, people with knowledge of the matter have said
(BN)
Banif to Hold Shareholder Meeting on Deferred Tax Asset Regime -- Portuguese lender to hold shareholder meeting on Nov. 28 to vote
on opting for the deferred tax assets regime, according to regulatory filing. (BN)
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Paschi Chmn Says Bank Never Considered State Bailout: Corriere -- Monte Paschi didn’t consider state bailout to address capital
shortfall, Chairman Alessandro Profumo says in intw with Corriere della Sera. He also said: * Capital increase expected in 2015 * Biggest
challenge for bank is quality of loans as it reflects small-medium co. economic difficulties * Paschi reacted in timely fashion to fill capital gap
(BN)
UBS, Credit Agricole Capital Surcharges Are Lowered in FSB List -- UBS AG and Credit Agricole Group had their planned capital
surcharges lowered in the Financial Stability Board’s 2014 list of too-big-to-fail lenders, which expanded to included Agricultural Bank of
China Ltd. The FSB, led by Bank of England Governor Mark Carney, said HSBC Holdings Plc and JPMorgan Chase & Co. remain in line
to face the highest-level capital surcharge -- 2.5 percent of risk- weighted assets -- imposed on the list’s banks. The addition of Agricultural
Bank of China takes the number of Chinese banks on the list to three. The updated list expanded to 30 from 29 in 2013. The phase-in of the
surcharges will begin in 2016. UBS and Credit Agricole are now set for a 1 percent surcharge, down from 1.5 percent. Changes in the list
compared with last year “reflect the combined effects of data quality improvements, changes in underlying activity and the use of supervisory
judgment,” the FSB said in the statement. Regulators are ranking financial firms by their potential to cause a global meltdown and demanding
bigger financial cushions from them to avert any repeat of the 2008 credit freeze. The surcharge represents the amount of capital a bank
must have beyond the minimums, known as Basel III, already set by global regulators to fortify all internationally active banks in their ability to
cope with losses. The impact of the drop in the FSB’s list on Credit Agricole Group and UBS will probably be slight. (BN)
BofA’s Quarterly Profit Erased as FX Probe Drains $400 Million -- Bank of America Corp. cut third- quarter earnings by $400 million,
wiping out the surprise profit it reported last month, as the firm braced for the end of probes into foreign-exchange dealings. U.S. regulators
faulted systems and controls for currency trading and called for fines and remedial actions in draft documents sent late last month, the firm
said yesterday in a quarterly report. The lender posted a loss of $232 million, or 4 cents a share, for the three months ended Sept. 30.
Regulators in the U.K. and U.S. are preparing to levy fines on at least a half dozen firms after probing allegations they manipulated the $5.3
trillion-a-day currency market, people with knowledge of the situation have said. The reviews, including scrutiny of traders’ communications
and how firms policed their activities, have prompted the world’s biggest banks to overhaul operations and bolster legal reserves. (BN)
Kagoshima, Higo Become Latest Japan Banks to Consider Merging -- Two banks on Japan’s southern Kyushu island became the latest
regional lenders to consider merging following government calls for consolidation of the industry. Kagoshima Bank Ltd. and Higo Bank Ltd.
said they are in talks to combine, according to separate statements issued after public broadcaster NHK Television reported the move.
Shares of both lenders extended gains. Japanese officials have been urging local banks to consider merging to shore up profits weighed
down by a shrinking population, sluggish growth and declining interest rates. Bank of Yokohama Ltd., the country’s largest regional lender by
market value, said earlier this week that it’s considering combining with Tokyo-based Higashi-Nippon Bank Ltd. Kagoshima Bank shares
climbed 5.2 percent to 744 yen at 1:27 p.m. in Tokyo, heading for the highest close in five years. Higo Bank surged as much as 6.5 percent,
the biggest intraday gain since June 2013. The Topix Banks index rose 0.8 percent. (BN)
Citigroup Said to Anticipate Final Bids for Japan Retail Bank -- Sumitomo Mitsui Financial Group Inc. is among Japanese banks that are
preparing to make final bids for Citigroup Inc.’s local retail banking operations by a deadline today, said people with knowledge of the matter.
Sumitomo Mitsui Trust Holdings Inc., Resona Holdings Inc. and Shinsei Bank Ltd. may also participate, said the people, who asked not to be
named, citing confidentiality. As well as provide a price, the banks are being asked to explain their plans for branding, due diligence and
employees, one of the people said. Bidders may offer about 50 billion yen ($430 million) for the Japanese retail bank and credit-card
businesses, according to the person. Citigroup may give the right of first refusal to a candidate as soon as the end of the month, the person
said. (BN)
Allianz to Lift Payouts, Affirms Goals Amid Pimco Fund Outflows -- Allianz SE pledged to pay a higher share of profit to shareholders
and confirmed its full-year profit target as the Pimco asset management unit struggles to contain outflows following the departure of Bill
Gross. “Starting with the financial year 2014, the intention is to propose an increased regular payout to Allianz shareholders of 50 percent of
net income,” the Munich-based company said yesterday in a statement. That compares with a pay-out ratio of 40 percent at Europe’s biggest
insurer in the past. Investors have pulled billions of dollars from Pacific Investment Management Co.’s funds since the Sept. 26
announcement that Gross, who was chief investment officer and co-founded Pimco more than four decades ago, was joining Denver- based
Janus Capital Group Inc. Pimco, based in Newport Beach, California, suffered 49.2 billion euros ($60.9 billion) in client redemptions in the
third quarter, Allianz said. Most of the outflows occurred in the last week of September. (BN)
Swiss Re 3Q Net Income Beats Ests; Proposes 2 New Board Members -- Swiss Re 3Q net income rises 14% to $1.23b; est. $928.6m,
says on track to meet 2011-2015 financial targets. * Says 3Q earnings boosted by lower than expected burden from natcat and better L&S
oper margin * ROE 14.8% vs 14.3% * EPS $3.59 vs $3.12 * P&C net income $842m vs $784m; premiums earned $4.3b vs $4.0b * L&H net
income $160m vs $35m; premiums earned and fee income $2.9b vs $2.5b * CFO David Cole says all units delivered solid performance (BN)
Sweden Government Says ‘Worried’ About Banks’ Required Returns -- Sweden’s government is “somewhat worried” about Swedish
banks’ “high required returns,” Financial Markets Minister Per Bolund says in speech. * Required returns of more than 15% risk hurting hurt
confidence in banking sector, possibly fuel risk-taking: Bolund * Government’s biggest priority for banks is to maintain financial stability *
Sweden must “proceed with caution” to stem private debt to avoid triggering falling home prices, financial instability * * Sweden has no
plans to introduce financial transaction tax * (BN)
Fed’s Powell Calls for Greater Oversight of Derivatives Clearing -- Federal Reserve Governor Jerome Powell called for more
coordinated global regulation of derivatives clearinghouses to increase their liquidity, transparency and ability to withstand shocks without
government bailouts. “Given the increasingly prominent role that central clearing will play in the financial system going forward, it is critical
that we collectively get central clearing right,” Powell said in the prepared text of an address he is scheduled to give today at a conference in
Chicago. After losses in over-the-counter derivatives helped push insurer American International Group Inc. to the brink of failure, Group of
20 regulators agreed in 2009 that standardized derivatives should be centrally cleared. While the move has brought more transparency to the
market, it has also raised the risk posed by a potential failure of any large clearinghouse, Powell said. To ensure clearinghouses “do not
themselves become too- big-to-fail entities, we need transparent, actionable and effective plans for dealing with financial shocks that do not
leave either an explicit or implicit role for the government,” he said. (BN)
Research Updates
Goldman resumes PostNL as conviction buy, Goldman cuts Randstad, Adecco, Michael Page to neutral from buy, upped Snam to neutral
Berenberg upped Barry Callebaut to hold from sell,
Tech/Telecoms
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Telekom Austria to Sell Up to EU1b in New Shares -- To offer up to 221.5m newly issued bearer shares; shareholders can buy 1 new
share for every 2. * The shareholders can exercise their subscription rights at EU4.57 per new share * Rights offering will start on Nov. 10,
end Nov. 24 * Trading of subscription rights (ISIN AT0000A1AD41) on the Vienna Stock Exchange expected to start Nov. 12, end Nov. 19 *
Says each of America Movil, Carso Telecom and OIAG has committed to participate in capital increase * Proceeds to be used to re-establish
target capital structure and maintain a credit rating of at least BBB (stable) by Standard & Poor’s (BN)
Telecom Italia 3Q Sales Beat; Mobile Service Rev. Improves -- Telecom Italia 3Q sales EU5.42b vs est EU5.37b, Ebitda EU2.24b vs est
EU2.26b. * Italian mobile service rev. -6.6% y/y vs a 13.7% drop in 2Q * Says 3Q results demonstrate improving competitive dynamics in
mobile; expects to see gradual recovery in operating performance * Says 3Q results demonstrate improving competitive dynamics in mobile;
expects to see gradual recovery in operating performance</li></ul> * Italian fixed-line rev. -6.1% y/y vs a 7.9% decline in 2Q * Adj. net debt
EU26.6b at end of Sept. vs est EU26.7b * Sees Italian telecoms mkt declining at a more moderate pace this year * Reiterates mid-term
financial targets (BN)
Atos 3Q Statutory Revenue Rises 6%; Confirms 2014 Outlook -- * 3Q statutory rev. EU2.21b vs EU2.09b * 3Q rev. at constant scope, FX
EU2.21b vs EU2.23b * order backlog of EU16.3b at end of Sept. * 3Q order entry EU2.2b; book to bill ration 101% * Free cash flow EU2m,
net cash EU762m at end of Sept. * Expects 2014 to grow ~5% y/y including 4 month of Bull contribution, nearly stable organically * Still sees
2014 operating margin of ~7.5% to 8% * Still sees 2014 free cash flow above 2013 level targets (BN)
Freenet 3Q Ebitda Climbs 4% to EU96.3 M -- 3Q group result rises 4.1% to EU66.2m * 3Q free cash flow up 6.3% to EU79.6m * 3Q
customer ownership grows 230,000 to 8.9m * 3Q group revenue falls 3.5% to EU762.1m (BN)
America Movil to take Telekom Austria cap hike allotment-CFO -- Mexican tycoon Carlos Slim's America Movil plans to subscribe to
Telekom Austria's upcoming capital increase proportional to its shareholding in the company, Chief Financial Officer Carlos Garcia Moreno
told Reuters on Thursday. "In the capital increase, we're committed to subscribing to the part that's proportionate to us in terms of our
shareholding," Garcia Moreno said in an email. Telekom Austria, in which Slim holds a 59.7 percent stake, is set to launch its long-awaited 1
billion euros ($1.24 billion) cash call before the end of the year. Austrian state holding company OIAG with its 28.4 percent stake has said it
did not want its stake to be diluted in the capital hike. (R)
Apple Blocking Malicious Software Aimed at China Users -- Apple Inc. has begun blocking malicious software aimed at users of its
products in China. The iPhone maker announced the steps following a report yesterday by security service provider Palo Alto Networks Inc.
about WireLurker, a new type of malware designed to steal information from applications running on Apple’s OS X operating system for
laptops and computers, and mobile devices with iOS. Products by Cupertino, California-based Apple are considered less vulnerable to
viruses and hacks compared with other computers, such as those running Microsoft Corp.’s Windows. While the burden of detecting and
preventing security threats is now increasingly handled within computer networks, there are still threats that can reach individual
devices.(BN)
Game Makers Zynga, King Digital Rise After Sales Top Estimates -- Zynga Inc. and King Digital Entertainment Plc, casual game makers
that have struggled to build on their marquee hits, reported quarterly sales that beat estimates, boosting the shares of both companies.
Zynga, once the leader in games played on Facebook, made progress moving its titles to smartphones and tablets. The money-losing maker
of FarmVille said yesterday that mobile bookings more than doubled from a year earlier. While third-quarter sales fell to $176.6 million, they
exceeded the $166.6 million average of analysts’ estimates compiled by Bloomberg. The loss for the quarter narrowed to 1 cent a share
excluding items, in line with analysts’ estimates. “I’m encouraged by the results of the quarter as we navigate through this time of transition,”
Chief Executive Officer Don Mattrick said on a conference call with investors. “As we move forward, we aspire to improve our execution in
terms of product quality and audience growth.” Bookings, the value of virtual goods sold during the quarter, grew 15 percent to $175.5
million. Ad sales advanced 32 percent from a year ago. The company stumbled with an update of Zynga Poker and brought back the classic
version after customers complained, said Mattrick, who joined the company in July 2013. “While we’re making progress, deliberate
investments take time to play out,” Mattrick said. Zynga rose 6.8 percent to $2.52 yesterday in extended trading. The stock, which advanced
0.4 percent in New York before the results, has declined 38 percent this year. At King, the company was able to reduce its reliance on the
fading Candy Crush Saga, even as total revenue fell 17 percent to $514.4 million from a year earlier. Analysts had estimated $491.1 million.
Forty-nine percent of third-quarter bookings came from games other than Candy Crush, versus 41 percent a year earlier, the company said
yesterday in a statement. Profit dropped 38 percent to $141.7 million, or 45 cents a share, from $229.8 million, or 75 cents, a year earlier.
Analysts had predicted $148.9 million. The company also authorized a $150 million stock buyback. “Throughout the year, we have been
executing on our plan to develop our portfolio of games for our network of players,” CEO Riccardo Zacconi said on a conference call. The
share buybacks are “a testimony to our confidence and the strength of the future cash generation of our business.” King, based in Dublin,
rose 4.5 percent to $13.78 in extended trading after the results. The shares, which dropped 3 percent at the New York close, have fallen 41
percent this year. (BN)
Logitech to Revise FY2013 Financial Statements, Restate FY2012 -- Logitech to revise selected financial data in part II, item 6 for FY
ended March 2013 and for 2010, co. says in SEC filing. * Cites previously announced accounting misstatement for inventory valuation
reserves (BN)
Commodities
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Brent Crude Poised for Seventh Weekly Drop as OPEC Cuts Outlook -- Brent headed for a seventh weekly drop as the Organization of
Petroleum Exporting Countries predicted it will need to supply less crude amid the U.S. shale boom. West Texas Intermediate fell in New
York. Futures slid as much as 0.7 percent in London and are down 4 percent this week. OPEC reduced every forecast for its crude through
2035 except next year, according to the group’s annual World Oil Outlook. Libya plans to resume production from its biggest field that was
halted after an attack, an official said. Oil has slumped into a bear market amid signs that global supply is outpacing consumption. Leading
OPEC members have resisted calls to cut output as they compete with the U.S., which is pumping at the fastest pace in more than 30 years.
Brent for December settlement declined as much as 54 cents to $82.32 a barrel on the London-based ICE Futures Europe exchange and
was at $82.40 at 4:05 p.m. Sydney time. The contract lost 9 cents to $82.86 yesterday. The volume of all futures traded was about 21
percent below the 100-day average. Prices have decreased 26 percent in 2014. WTI for December delivery dropped as much as 36 cents, or
0.5 percent, to $77.55 a barrel in electronic trading on the New York Mercantile Exchange. Prices are down 3.7 percent this week. The U.S.
benchmark crude was at a discount of $4.80 to Brent, compared with $5.32 on Oct. 31. (BN)
Islamic State to Get Less From Crude Than Expected: Sueddeutsche -- Islamic State to gain less than $100m/yr revenue from sale of
crude oil as output declines as a result of U.S.-led air strikes in Syria, Iraq, Sueddeutsche Zeitung reports, citing confidential analysis by
Germany’s BND intelligence service. * Lack of experts to operate facilities in Syria, Iraq * Much of output consumed by IS in areas it controls
* Earlier estimates of $1b-$3b/yr “greatly exaggerated,´´ according to analysis * IS still world’s richest terror group with >$1b obtained from
extortion, art theft, kidnappings and smuggling, taxes and control over much of the wheat trade in Iraq (BN)
Enel Green Power in Pact W/ Endesa Chile Worth ~$2.3b -- Contract for supply of renewable energy, sale of green certificates, Enel
Green Power says in statement. * Green certificates with term of ~20 yrs for 2 wind power projects, ~25 yrs for 3 photovoltaic projects part of
deal * Contract to enable Enel Green Power Chile to develop wind and photovoltaic plants for total installed capacity ~307mw, total
investment of ~$611m * Enel Green Power operates 284mw of wind, hydroelectric, solar capacity in Chile; additional 284mw, currently under
construction, will be added in coming mos. * Including 307mw stipulated in agreement with Endesa Chile, co.’s installed capacity will total
875mw (BN)
EDF Affirms Financial Target; Sees Nuclear Output at High End -- EDF 9-month total group rev. EU52.3bn vs restated EU52.1b (UBS
est. EU51.9b). * Sales at constant scope and fx -1.3% * Nuclear output up 2.5% in France; organic sales growth +0.5% * Sees 2014 nuclear
output at high end of 410-415 twh range * Work “ongoing” to update medium-term plan to reflect regulatory development and allow for
delivery of plan for positive cash flow after dividends by 2018 * NOTE: At 1H results on July 31 confirmed 2014 targets incl. organic Ebitda
growth ex-Edison of at least 3%, net financial debt/Ebitda between 2x-2.5x * Target unchanged, excludes effects of 2012 tariff revision *
Sees payout ratio at 55%-65% of net income excl. non- recurring items * Sees payout ratio at 55%-65% of net income excl. non- recurring
items (BN)
Vallourec 3Q Net Falls 69%: 2014 Forecast Affirmed -- Vallourec 3Q net EU25m vs EU80m y/y. * Rev. EU1.34b, down 3.7% at constant
fx; in line with ests. * Continues to see 2014 rev. close to 2013, Ebitda to fall ~10% * 3Q Oil & Gas results still affected by destocking in
EAMEA * Expects higher U.S. sales of OCTG tubes in 4Q Statement (BN)
ArcelorMittal Reports Profit Rise as Steel Offsets Ore Slump -- ArcelorMittal, the world’s biggest steelmaker, said third-quarter profit rose
11 percent as rising steel demand offset a slump in iron-ore prices. Earnings before interest, taxes, depreciation and amortization climbed to
$1.91 billion in the three months ended Sept. 30 from $1.71 billion a year earlier, the Luxembourg-based company said today in a statement.
That beat the $1.81 billion average of 13 analysts’ estimates compiled by Bloomberg. ArcelorMittal maintained its full-year Ebitda target of “in
excess” of $7 billion. A collapse in iron-ore prices has crimped profits at the company’s mining unit, undercutting rising demand for steel in
the U.S and Europe, ArcelorMittal’s biggest markets. The key steelmaking ingredient fell to the lowest level in more than five years this week
as producers including BHP Billiton Ltd. expanded output, exacerbating a glut. “This quarter’s results show the considerable improvement in
our steel business, which has more than offset the fall in the iron-ore price,” Chief Executive Officer Lakshmi Mittal said in the statement.
“Based on today’s market conditions, I do not foresee a deterioration in our performance in the fourth quarter.” Net debt rose to $17.8 billion
in the quarter, the company said. ArcelorMittal is trying to reduce its borrowings to about $15 billion after its credit rating was cut to below
investment grade by Moody’s Investors Service, Standard & Poor’s Corp. and Fitch Ratings. (BN)
ArcelorMittal 3Q Ebitda Beats, Reiterates FY Ebitda Forecast -- ArcelorMittal says operating conditions remain generally favorable,
impact of declining iron ore price on Mining segment profitability is being offset by improvement in the steel business. * Doesn’t see
deterioration in performance in 4Q, maintains forecast that 2014 Ebitda to be in excess of $7b * 3Q revenue $20.1b vs est. $19.9b * 3Q
Ebitda $1.91b vs est. $1.81b * Steel shipments of 21.5mt vs 20.7mt y/y * 3Q own iron ore production of 15.8mt vs 14.9mt y/y * Net debt
increased to $17.8b at Sept. 30 vs $16.2b June 30 on investment in operating working capital, dividends paid * $15b medium term net debt
target unchanged maintained * 2014 capital expenditure expected to be ~$3.8b (BN)
Aperam 3Q Ebitda $137m vs Est. $120m; Sales Miss Estimates -- 3Q sales $1.35b vs est. $1.43b. * Shipments of 433kmt down 7% vs
466kmt in 2Q * Co. sees 4Q Ebitda down vs 3Q * Co. sees net debt decreasing in 4Q (BN)
Netherlands / AEX
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Van Lanschot Reports ‘Modest’ 3Q Net as Client Assets Rise -- Client assets increased by EU0.8b to EU56.9b as of Sept.-end vs. Juneend. * Fully loaded CET1 ratio was 11.8% at end of qtr (BN)
Binckbank Says Sales Process of BPO Terminated -- Services of Business Process Outsourcing to be phased out and integrated within
retail organisation. * Related integration costs about EU1m (BN)
SNS to Investigate Strategic Options for Securities Business -- SNS to review options for securities unit as part of new strategy focused
on retail banking, co. says in e-mailed statement. (BN)
M&A and other Corporate News
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Most Asian Stocks Advance, Paring Weekly Loss, Before U.S. Jobs -- Most Asian stocks rose, paring a weekly decline on the regional
index, after a drop in American jobless claims bolstered optimism in the world’s largest economy before a government report on employment.
More than three shares climbed for each that retreated on the MSCI Asia Pacific Index, which gained 0.1 percent to 140.18 as of 9:03 a.m. in
Tokyo, before markets opened in Hong Kong and China. The measure is headed for a 1.2 percent decline this week. The European Central
Bank vowed yesterday to increase stimulus efforts if needed, less than one week after the Bank of Japan decided to bolster alreadyunprecedented easing. The yen held at 115.21 per dollar after falling 0.5 percent yesterday. The number of Americans filing jobless claims
for the first time dropped to a three-week low of 278,000 in the week to Nov. 1, below the 285,000 median forecast of 50 economists
surveyed by Bloomberg. Today’s data may show nonfarm payrolls rose by 235,000 last month, after climbing 248,000 in September,
according to the median of 100 estimates compiled by Bloomberg. The jobless rate probably held at a six-year low of 5.9 percent in October.
ECB President Mario Draghi said policy makers will be ready to implement further measures if needed as he signaled officials may cut
growth forecasts next month. Speaking at a press conference in Frankfurt yesterday after the ECB left interest rates unchanged, Draghi said
that the Governing Council “is unanimous in its commitment to using additional unconventional instruments within its mandate.” Japan’s
Topix index gained 0.7 percent. Australia’s S&P/ASX 200 Index rose 0.5 percent and New Zealand’s NZX 50 Index advanced 0.3 percent.
South Korea’s Kospi index slid 0.1 percent. (BN)
U.S. Stocks Gain as Jobless Claims Data Boost Economic Optimism -- U.S. stocks rose, sending benchmark indexes to records, as the
European Central Bank vowed to increase stimulus efforts if needed and a drop in American jobless claims bolstered optimism in the
economy. Tesla Motors Inc. rose 4.4 percent as it predicted “several years” of 50 percent sales growth amid a surge in orders. Whole Foods
Market Inc. rose 12 percent after posting better-than-forecast quarterly profit. Genworth Financial Inc. plunged 38 percent as the insurer
predicted a tougher path ahead after a record loss. Qualcomm Inc. slid 8.6 percent after saying a Chinese government probe will curb profit.
The Standard & Poor’s 500 Index rose 0.4 percent to 2,031.21 at 4 p.m. in New York. The Dow Jones Industrial Average added 69.94 points,
or 0.4 percent, to 17,554.47. About 6.8 billion listed shares changed hands in the U.S., about 6 percent higher than the three-month daily
average. (BN)
EUROPE -- European stocks are seen extending the gains seen in the U.S. and Asian trade as investors remain upbeat ahead of U.S. jobs
data. For Friday, IG has called the DAX up 32 points at 9409, the CAC up 13 points at 4240, and the FTSE up at 19 points at 6560. (DJ)
MSCI Global Index Adds Five Japan Stocks, Deletes Three -- MSCI announced changes to its Global Standard Indexes, adding
smartphone app provider Colopl , Keihan Electric Railway , machine component maker Minebea , social network site operator mixi and
Recruit . Colopl is up 0.7% at 3,810 yen, Minebea adds 1.5% at 1,484 yen, Keihan rises 3.8% to 578 yen, and Recruit gains 2.1% to 3,890
yen. However, mixi is down 3.8% at 6,530 yen after being bid up 8.8% the prior day in speculative buying. Deletions are Daido Steel , which
lost 0.2% to 431 yen, SNS operator DeNA , which ends flat at 1,436 yen, and Gree , which edges up 0.1% at 774 yen. (DJ)
Pirelli 3Q Ebit, Rev In Line; FY Rev. Forecast Widened -- Pirelli 3Q rev. EU1.54b, est. EU1.54b. * 3Q Ebit EU203.5m, est. EU203.3m *
Outlook confirmed for 2014 Ebit, net financial position; rev. target changed to EU6.1b-EU6.2b, was EU6.2b (BN)
Rhoen-Klinikum 9-Mo. Rev. EU1.24b; Declines to Give 2014 Outlook -- Co. declines to give outlook for 2014 sales, earnings citing
modified corporate structure, effects of the sale transaction. * 9-mo. ebitda EU1.39b vs EU222.9m y/y; current period includes proceeds from
hospital sale * 9-mo. rev. EU1.24b vs. EU2.26b y/y * Keeps 2015 forecast of EU1.06b-EU1.12b, Ebitda of EU145m- EU155m (BN)
ThromboGenics Consumes EU12.2m Cash in 3Q, Reiterates Targets -- ThromboGenics says cash, equivalents dropped to EU136.6m as
of Sept. 30 vs EU148.8m end of June. * ThromboGenics repeats targets for U.S. profitability in 2016 with Jetrea sales of EU30m, cash flow
generation as of 2017 and rev. of EU100m by 2019 * ThromboGenics repeats it plans to start U.S. phase 2 study with Jetrea in diabetic
retinopathy patients in 1H 2015 * ThromboGenics repeats plans to spin out oncology development in partnership with VIB * OASIS study on
Jetrea use in VMA/VMT initial topline results due in 1Q 2015 (BN)
Richemont First-Half Profit Misses Estimates on Asian Slowdown -- Cie. Financiere Richemont SA, the world’s largest jewelry maker,
reported first-half operating profit that missed analysts’ estimates as luxury-goods demand in Asia weakened. Operating profit dropped 4
percent to 1.31 billion euros ($1.6 billion) in the six months through September, the Geneva- based owner of the Cartier and Montblanc
brands said in a statement today. Analysts had expected 1.35 billion euros, according to the average analyst estimate compiled by
Bloomberg. “The external environment remains difficult ahead of the holiday trading period,” Chairman Johann Rupert said in the statement.
(BN)
China Poised to Resume Broker IPO Approvals After 3-Year Gap -- China’s securities regulator pledged to review Guosen Securities
Co.’s application to sell shares, signaling that it’s poised to resume approvals for initial public offerings by brokerages after a three-year halt.
The China Securities Regulatory Commission’s review will be on Nov. 14, it said on its website yesterday. Guosen, which is based in
Shenzhen, plans to sell as many as 1.2 billion shares, according to a draft prospectus from June. Shares of brokerages jumped today with
Citic Securities Co. gaining as much as 6.6 percent in Hong Kong amid prospects for extra capital for a fragmented industry. The companies
need money to fund fast-growing quasi-lending businesses such as securities lending and margin finance. The prospect of Guosen getting
the green light “adds to other positive developments for China’s brokerages,” Zhang Yanbing, a Shanghai-based analyst at Zheshang
Securities Co., said by phone today. “Industry earnings have improved this year and the Shanghai-Hong Kong stock link program is gaining
momentum; we are bullish on brokerages.” The CSRC halted all IPOs for at least a year through November 2013 to try to strengthen the
quality of listed businesses and prevent investors from colluding to manipulate prices. (BN)
Macro, Politics and Central Banks
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ECB Preparing Further Measures to Implement If Needed: Liikanen -- The European Central Bank’s officials and committees are
preparing further measures to be implemented if needed and boosting their capacity to act in case something needs to be done, Governing
Council member Erkki Liikanen says. * Doesn’t elaborate on what further measures might be * Speaks in interview on YLE TV1 * “If someone
asks me in the future whether we did everything we could, I want to be able to respond, we did everything possible within our mandate:”
Liikanen * Says growth outlook is subdued, inflation expectations low * “We will keep monetary policy loose for as long as necessary and we
will do more if that’s needed” (BN)
IMF Welcomes Today’s Comments by Draghi on Using Tools: Vinals -- It’s a good signal that the ECB is ready to do more if needed,
Jose Vinals, director of IMF’s monetary and capital markets department, says at Peterson Institute for International Economics in
Washington. • ECB asset-buying program needs more time to show results • Just because the IMF sees a risk of a recession in Europe,
doesn’t mean that a recession would cause a global crisis, • Some advanced-economy sovereign bonds overpriced (BN)
Schaeuble Expects Government Plan to Multiply Private Investment -- German Finance Minister Wolfgang Schaeuble said he expects
the government’s plan to step up public spending will unlock additional private sector outlays for a 300 billion-euro ($372 billion) European
Union stimulus program. Speaking to reporters in Brussels hours after a surprise announcement that the government will inject an additional
10 billion euros into the economy from 2016, Schaeuble said boosting investment in the EU will be the dominating theme at a two-day
meeting of the bloc’s finance ministers. “Public investments, employed correctly, can trigger additional private investments,” Schaeuble said,
welcoming industry commitments to match public spending. “We need more investments in Europe and that’s why we’re working intensively
within the framework of the initiative” of European Commission President Jean-Claude Juncker. With Europe facing slower growth,
Chancellor Angela Merkel is under pressure from European peers to boost spending. A multi-year tax revenue forecast published today
creates leeway to do so while still allowing for a balanced budget next year for the first time since 1969, Schaeuble said earlier today in
Berlin. “We should invest mainly in the areas that stand for growth: foremostly energy efficiency and building renovation,” Economy Minister
Sigmar Gabriel said in e-mailed comments. “And of course we have to create further incentives for private investments.” By a December
European Union leaders’ summit, plans will be ready on how to achieve sustainable growth by combining higher investment with structural
reform, Schaeuble said. In addition to an extra 5 billion euros in infrastructure funding pledged by Merkel for her third term, Germany has
scope to boost investment spending by an additional 50 billion euros, through 2018 and still adhere to deficit rules, the International Monetary
Fund said in a report in July. (BN)
Dijsselbloem: Budget Meeting Planned for Nov. 21 to Be Delayed -- Meeting provisionally set for Nov. 21 for euro-area finance ministers
to debate countries’ draft 2015 budgets wouldn’t give enough time for new European Commission to finalize opinions, Dutch Finance
Minister Jeroen Dijsselbloem says. * “We now await the opinions that the commission will issue on the draft budgetary plans based on the
common economic scenario 2014 autumn forecast,” Dijsselbloem tells reporters after meeting of finance ministers in Brussels * “On the basis
of those opinions, to be published late November, the Eurogroup will discuss the budgetary plans and the broader policy mix in a dedicated
meeting later this year,” he says (BN)
Luxembourg Fends Off Tax Haven Allegation as Juncker -- Luxembourg denied it broke global rules to help hundreds of multinational
companies dodge taxes after a report revealed details of secret deals during the tenure of new European Commission President JeanClaude Juncker. The nation’s government called an emergency press conference with Prime Minister Xavier Bettel and Finance Minister
Pierre Gramegna after the disclosure of tax rulings bestowing low-tax status. The revelations triggered a rebuke from Germany’s finance
minister who said Luxembourg has work to do to meet global standards. “What has happened here is totally legal,” Gramegna told reporters
in Brussels, where he arrived this afternoon to attend meetings of European Union finance ministers. More than 340 companies have
transferred profits to Luxembourg using complicated tax arrangements, according to leaked documents obtained by the International
Consortium of Investigative Journalists. The report, which reviewed almost 28,000 documents and identifies companies such as PepsiCo
Inc., Ikea Group and FedEx Corp., said some corporations effectively lowered their tax bill to less than 1 percent of profit. Luxembourg, with a
population of about 500,000, is already one of the countries under investigation by the European Commission, the EU’s executive body, over
whether unfair tax deals violated the 28-nation bloc’s rules on state aid. Firms named so far include Amazon.com Inc. and Fiat Finance &
Trade in Luxembourg, Starbucks Corp. in the Netherlands and Apple Inc. in Ireland. (BN)
Schaeuble Doesn’t See Juncker Damaged From Luxembourg Leaks -- German Finance Minister Wolfgang Schaeuble says the
Luxembourg tax-haven allegations haven’t damaged Jean-Claude Juncker’s Commission, commenting to reporters in Brussels. * When
asked how much damage has been done, says “none at all, one doesn’t have anything to do with the other. Juncker was a successful prime
minister and also finance minister in Luxembourg. He was chairman of the Eurogroup. The fact that Luxembourg tries, like other European
countries, through internationally-active, highly-qualified advisers, to minimize the tax burden isn’t exactly new and has little to do with
individual governments.” * “It is within the framework of existing law, but we’re trying to change the law. I hope that this public debate” will
give a push to the BEPS initiative to fight tax base erosion and profit-shifting. (BN)
BaFin’s Koenig Among Candidates to Head SRM, Handelsblatt Says -- BaFin President Elke Koenig is one of three candidates to run
Single Resolution Mechanism, Handelsblatt reports in an e-mailed extract from an article to be published today, citing unidentified govt
sources. * Other candidates are Belgian central bank Governor Luc Coene and former European Investment Bank President Philippe
Maystadt * BaFin and German Finance Ministry declined to comment: Handelsblatt (BN)
EU Likely to Extend Payment Period for U.K., Dutch Contributions -- The European Union appeared headed for a compromise that
would give the U.K. and the Netherlands more time to pay extra EU budget bills they received last month. Details of a deal were still being
negotiated but the European Commission proposed to member states Thursday that payments could be made in installments through mid2015, according to two people briefed on discussions. The bloc's finance ministers will discuss the issue at a meeting in Brussels on Friday.
Several of the ministers said Thursday a compromise deal is likely. U.K. Prime Minister David Cameron reacted angrily last month after being
confronted with a huge new bill for EU membership and said he would not pay the full amount by the December 1 deadline. While some
other EU countries were also being hit by the one-time charges, Britain is getting the biggest bill: an additional EUR2.1 billion ($2.6 billion) or
almost a fifth of its annual payment to the EU budget. (DJ)
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Soros Says Euro Faces Political Crisis, Le Figaro Reports -- Euro area is heading towards zero or even sub-zero inflaton, George Soros
tells Le Figaro in an interview. • EU is incapable of devising appropriate policy to combat austerity and budgetary constraints: Soros • ECB
quantitative easing is likely to lead to weakening of the euro, Soros tells Le Figaro. (BN)
Deutsche Bahn Faces ~EU100m in Train Strike Costs: DPA -- German economy faces same cost every day of strike, Deutsche Presse
Agentur reports, citing comments by Deutsche Bahn lawyer Thomas Ubber to Frankfurt court. (BN)
Deutsche Bahn Suit to Call Off Rail Strike Rejected, DPA Says -- A German court denied a request from Deutsche Bahn AG, the stateowned railway, to halt the longest transport walkout in the country’s history, DPA reported. The ruling yesterday by Ursula Schmidt, a judge
at the Frankfurt labor tribunal, came after the magistrate failed to get the rail company and the GDL union to arrive at a settlement. Schmidt
ruled that strike wasn’t illegal and wasn’t disproportionate in relation to the issues involved, the news service said. “We want to leave nothing
undone and have decided with a heavy heart to now take legal steps against this strike,” Ulrich Weber, the railway’s personnel chief, said in
a statement yesterday before the ruling. “We are aware that the judges in the past often decided against the employer. We are accepting that
risk.” Deutsche Bahn had asked a Frankfurt labor court to halt the GDL union strike set to run until Monday, arguing that the walkout will do
“‘severe damage’’ to customers, the company and entire German economy. Passenger train drivers walked off the job yesterday morning,
joining freight-rail staff who started picketing a day earlier, marking the sixth strike in nine weeks at Deutsche Bahn. Caught in the middle are
passengers traveling across the country and commuters in cities including Berlin, expecting one of the busiest tourism weekends ever for
celebrations of the 25th anniversary of the fall of the Berlin Wall. (BN)
Germany Tightens Immigration Citing Abuse of EU Free Movement -- German lower house of parliament votes to restrict rights of
immigrants from other European Union nations, citing cases of abuse of EU free movement of labor. * Changes oblige German authorities to
limit stay of people from other EU countries who previously committed immigration fraud, worked illegally or abused benefits while in
Germany * Authorities can limit stay of EU citizens in Germany looking for work * Level of proof for receiving child subsidies is increased *
Govt says all changes conform with EU freedoms * “Abuse committed by a minority must be effectively addressed on the basis of existing
European law”: text of bill posted on parliamentary website * Bill’s passage cited on website of German lower house, or Bundestag (BN)
German Lawmakers Approve EU Banking Union, Rescue-Fund Rules -- Lower-house lawmakers approve German participation in
European Union system for bank resolution, including a single EU resolution fund, and possibility of European Stability Mechanism directly
recapitalizing banks. * Legislation obliges German govt to vote for EU60b ($74.5b) limit on bank recapitalization on ESM governing board *
Package of laws passes today with votes of Chancellor Angela Merkel’s Christian Democratic bloc and junior partner Social Democrats; 2 of
311 Merkel bloc lawmakers vote against (BN)
German September Exports +5.5% M/m; Est. +2.7% M/m -- Germany’s Federal Statistics Office in Wiesbaden reports trade data for
September today. * Exports forecast range 1% to 5% m/m from 10 economists * Imports seasonally adjusted +5.4% m/m; est. +1.1% m/m *
Trade NSA surplus EU21.9b; est. surplus EU19b * Current account NSA surplus EU22.3b; est. surplus EU18b (BN)
German Industrial Production Rises Less Than Economists Forecast -- German industrial production rebounded less than analysts
forecast in September, signaling that Europe’s largest economy is struggling to recover. Production, adjusted for seasonal swings, rose 1.4
percent from August, when it contracted a revised 3.1 percent, the biggest decline since January 2009, the Economy Ministry in Berlin said
today. Economists surveyed by Bloomberg News predicted a 2 percent increase in output. Production declined 0.4 percent in the third
quarter. (BN)
Padoan Says Germany Should Invest More in Infrastructure: Bild -- Italian Finance Minister Pier Carlo Padoan says Germany remains
the economic leader of Europe even if the country’s goal of bringing borrowing to zero is understandable, Bild reports, citing interview. *
Italy’s priority is to focus on growth, investment and job creation * Italy’s high public debt is only a symptom and needed reforms are difficult
to implement because the country has been in a recession for 3 yrs (BN)
Hollande Says He Won’t Run Again If Unemployment Doesn’t Decline -- French President Francois Hollande, confronting a record-low
approval rating, said he won’t seek a second mandate if unemployment doesn’t begin declining in the remaining two-and-a-half years of his
first term. “The goal was to reduce unemployment, and I’ve said to myself: if I have not managed by the end of my mandate, do you think I
will put myself before the French people?” Hollande said in a TF1 television interview. “They will be merciless.” Pressed later in the interview
about whether he’ll run again in 2017, he responded “it’s in 2-1/2 years; be patient,” Hollande appeared in the 90-minute interview last night
to mark the halfway point of his five-year term, taking questions from journalists and common citizens. He also said there will be no new
taxes “beyond what’s been announced,” promised further measures to help young people find jobs or training, and announced plans to
introduce more computers in the country’s schools. Jobless claims have risen in all but three months since Hollande took office in May 2012,
with the total rising by 508,600 to a record 3.4 million. Unemployment stands at 10.2 percent, and the French economy is in its third year
without tangible growth. (BN)
Renzi Urges EU to Exclude Technology Spending From Budget Rules -- Italian Premier Matteo Renzi says in a posting on Twitter that
expenses for technology, innovation and broadband should be “freed up” and not accounted for when calculating the the deficit of member
states within the Stability and Growth Pact. * Says that would show that the EU Commission does not apply rules in a bureaucratic way (BN)
Spanish Banks Create Fenix Fund to Rescue Companies: Expansion -- Spain’s six largest banks have reached an accord to create a
fund to group loans made to companies that are viable but heavily endebted, Expansion reports. • Fund known as Fenix to be established in
coming days: Expansion • N+1 and McKinsey to manage fund: Expansion • General de Alquiler de Maquinaria and Bodegas Chivite are first
companies to be incorporated into fund: Expansion • Expansion cites unidentified people with knowledge of the matter (BN)
[yday] Spain’s Supreme Court Rejects Catalan Appeal on Vote -- Supreme Court rejects appeal from Catalan government against ban
on informal independence vote planned Nov. 9, court says in an e-mailed ruling. * Catalonia’s government was seeking to annul ruling from
Constitutional Court earlier this week banning public officials, public property from being involved in the consultation (BN)
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Finland’s Stubb Faces First Test of His Razor Thin Majority -- Finland’s Prime Minister Alexander Stubb faces the first challenge to his
one-seat majority in parliament as the opposition pushes to topple him in a confidence vote. The opposition is driving to overthrow the
cabinet to accelerate a general election from April 19, citing lack of economic growth and worsening unemployment. The vote will be held
at 1 p.m. local time in Helsinki. The motion was prompted by Standard & Poor’s decision to strip Finland of its AAA credit rating at last month,
the opposition parties said. The economy is expected to contract for a third consecutive year and it may take until 2018 for it to reach the
output level of 2008, Stubb has said. His majority narrowed to 101 voting lawmakers in the 200-seat legislature after the Green League left
the coalition in September. Should the government lose the parliament’s confidence, Stubb may take a stab at forming a government without
bringing forward elections. Failing that, he may ask President Sauli Niinistoe to expedite the vote. A vote can be held earliest 50 days after
the president’s decision. “The government’s failure has been so complete that key economic policy goals are now further than at the start of
their term,” said Jari Lindstroem, a lawmaker from the opposition “The Finns” party, said in in parliament on Nov. 5. Stubb took over in June
from Jyrki Katainen. The four-party coalition, which started out with six groups in 2011, has failed to deliver on any of its key economic policy
goals. It has fallen short of halting debt growth, missed its 1 percent central-government deficit target and its 72 percent employment rate
goal as it also was downgraded to AA+ from AAA. Unlike neighboring Sweden and Norway, Finland has no tradition of sustainable minority
governments. The country was last ruled by such a coalition in September 1976. That administration lasted until May 1977. (BN)
Moscovici Says Troika to Return to Athens to Speed Review Work -- “The idea is that the troika should return to Greece very soon,
before the end of next week, so that we’re able to prepare decisions that need to be taken at the Eurogroup meeting at the 8th of December,”
EU Economic Commissioner Pierre Moscovici says. * EU authorities will discuss review and end of current program before considering other
solutions, Moscovici says at press conference in Brussels * “We’re willing to consider a credit line, which is a different form of program” than
Greece has now, Moscovici says * “Everyone feels that we should cease to micromanage the situation in Greece. Greeks have the
impression that we’re holding their hand, that we’re dealing with all sorts of details. At the same time, Greece will continue to need the
support of the European Union and the European Union will be there” * Moscovici says will travel to Greece ahead of Dec. 8 finance
ministers’ meeting, also says will accompany EU Commission President Jean-Claude Juncker to G-20 Summit in Australia (BN)
Euro Area Says Greece Needs More Oversight After Any Rescue Exit -- The euro area signaled that Greece must stay on a tight
economic leash after any early exit from its rescue program, highlighting political risks for Greek Prime Minister Antonis Samaras as he seeks
to avoid a snap election. Greece will probably need a precautionary credit line underpinned by “enhanced” policy conditions as of January,
Dutch Finance Minister Jeroen Dijsselbloem told reporters late yesterday in Brussels after chairing a meeting with his euro- area
counterparts. He also said the International Monetary Fund, co-financer of Greece’s 240 billion-euro ($297 billion) rescue along with the euro
area, should have a role in the future Greek program. Follow-up support would be financed by the European Stability Mechanism, or ESM,
the euro area’s permanent rescue fund. “Taking into account the still-fragile market sentiment and the many reform challenges still lying
ahead, there is strong support for a precautionary credit line in a form of an existing ESM tool called the ECCL, an Enhanced-Conditions
Credit Line,” Dijsselbloem said. “There’s also a broad understanding that the IMF needs to continue being involved.” With the European
portion of Greece’s rescue due to end this year, Samaras wants to forgo emergency IMF loans next year and in 2016 to ease international
oversight of Greece’s fiscal policies. The lifeline offered to Greece by the euro area and IMF since 2010 has been in exchange for unpopular
budget cuts that deepened a six-year recession. Throwing off the shackles of the aid program could bolster Samaras’s goal of avoiding an
early election that polls indicate would be won by the main opposition Syriza party. The popularity of Samaras, head of the New Democracy
party that governs in a coalition with the Socialist Pasok, has suffered as Syriza leader Alexis Tsipras lashed out at the belt-tightening
conditions of the bailout. Samaras has until February to pull together a supermajority in the national parliament to elect a new president or
Syriza will force a snap election. Greece’s next general election isn’t due until 2016. An early ballot would return Greek voters to their 2012
dilemma when the country’s membership of the euro bloc hung by a thread, Greek Minister of Administrative Reform Kyriakos Mitsotakis said
last week. (BN)
Cyprus Says It Gets Euro-Area Green Light for Next Aid Tranche -- Cypriot Finance Minister Haris Georgiades says his euro-area
counterparts gave the green light for the region’s next payout of emergency aid to Cyprus. * The disbursement of EU350m from the euro
area’s permanent rescue fund, the European Stability Mechanism, will take place in December, Georgiades tells reporters in Brussels *
Cyprus should also receive a separate aid payout of EU86m from the International Monetary Fund at about the same time, he says after
stepping out of a meeting of euro-area finance ministers * The euro-area gathering acknowledged “the important progress in the effort aimed
at the reform and the recovery of the Cypriot economy,” Georgiades says (BN)
Jordan Says SNB Requires Flexible Balance Sheet for Policy: SRF -- Switzerland could suffer all sorts of financial shocks “and for that
we need flexibility,” Swiss National Bank President Thomas Jordan says in television interview with Swiss public broadcaster SRF. * Says
initiative “Save Our Swiss Gold” would impede central bank’s ability to act (BN)
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Mester Says Fed Should Stress Policy Depends on State of Economy -- The Federal Reserve’s guidance on the outlook for policy
should stress that changes in interest rates depend on shifts in the economy, said Loretta Mester, president of the Cleveland Fed. “I favor the
committee being as clear as it can be that monetary policy will be contingent on the state of the economy,” Mester, who votes on policy this
year, said yesterday in speech in New York. “I favor putting less focus on a particular calendar date for liftoff.” Mester said it was “an
important step in the right direction” when the Federal Open Market Committee last week added language to its statement that rates could
rise sooner if progress toward its goals is faster than expected and increase later if progress disappoints. Fed officials debating when to raise
interest rates for the first time since 2006 are weighing how to overhaul their communications policy. Last week, they ended their third round
of asset purchases while retaining a pledge to keep rates low for a “considerable time.” Most officials expect to raise rates next year. “After
several years of nontraditional monetary policy, the transition toward a more normal economy is likely to entail some uncertainty about
monetary-policy setting,” said Mester, who is a member of a subcommittee on communications headed by Fed Vice Chairman Stanley
Fischer. “I believe clear policy communications can and should play a key role in reducing that uncertainty,” she said. Mester also said the
Summary of Economic Projections released quarterly could be amended to “play a central role in helping the public better understand how
policy is likely to respond to economic developments.” The SEP contains forecasts for growth, unemployment, inflation and the federal funds
rate without identifying the officials making individual projections. “The SEP could be enhanced by linking the variables for each participant’s
projection so that the public could see what each policy maker is projecting” as well as “what policy path he or she believes will achieve those
outcomes,” Mester said. “This could be done without revealing the identities of the participants and would convey information on each
individual policy maker’s reaction function.” The Fed aims for full employment along with inflation of about 2 percent. The jobless rate fell to
5.9 percent in September, while consumer prices rose 1.4 percent from a year earlier, as measured by the Fed’s preferred gauge. Inflation
has remained below the goal for 29 months. Speaking to reporters after the speech, Mester said she expects inflation to rise toward the
Fed’s goal as oil prices stabilize. Mester said she expects unemployment at the end of next year to fall to 5.5 percent, which she called the
long-run level. “As the expansion continues, you get the 3 percent growth that I’m expecting, we have the unemployment rate continue to
come down, we will see wages start to accelerate,” she said. (BN)
Obama Said to Send Letter to Iran’s Khamenei on Islamic State -- President Barack Obama sent a secret letter in October to Iran’s
Ayatollah Ali Khamenei asking for support in fighting Islamic State, said two U.S. officials who spoke on condition of anonymity. Obama
stressed the two nations’ common interests in fighting the militant group, writing that such cooperation depends on reaching a nuclear
accord, said the officials, who asked for anonymity because the letter isn’t public. The letter seeks to discourage Iran’s top leader from
concluding that his cooperation in the fight against Islamic State in Iraq would give Iran leverage to demand concessions from the U.S. and
its partners in negotiations over restricting Iran’s nuclear programs, one of the officials said. The letter represents a quiet new effort in
Obama’s goal to “degrade and destroy” Islamic State, which has taken over parts of Iraq and Syria. While the U.S. doesn’t have formal
diplomatic relations with Iran, back-channel communication occurs between the two countries, which Obama has said share a common
enemy in Islamic State. The two countries are engaged in talks to come to an agreement on limiting Iran’s nuclear program with a deadline
set for later this month. (BN)
Man Being Tested in Japan for Possible Ebola Case, NHK Says -- Man in his 60’s who had been in Liberia within the last 3 weeks had a
fever and sought treatment at a hospital in Tokyo, NHK reports, citing the Health Ministry. * No indication man had contact with Ebola
patients when in Africa: NHK * Man had fever exceeding 38 degrees; undergoing tests: NHK (BN)
China Trust Assets Grow Least Since 2010 in Drag on -- China’s trust assets grew the least since 2010 in the third quarter as regulators
tried to limit shadow banking risks and investors grew more wary of defaults. Trust companies’ assets under management climbed 3.8
percent to 12.9 trillion yuan ($2.1 trillion) as of Sept. 30 from three months earlier, the China Trustee Association said in a statement today.
Government efforts to control shadow banking are sapping momentum from an economy that expanded in the third quarter at the slowest
pace since 2009. China had 397 “risky” trust products valued at 82.4 billion yuan as of September, today’s report said, down from 91.7 billion
yuan three months earlier. (BN)
China Said to Adjust Policy Toward HK in Wake of Protests: SCMP -- Mainland to “pay more respect” to “two systems” element of
relationship with city; South China Morning Post, citing unidentified person familiar with Chinese central govt’s thinking. * China to make
“appropriate adjustments” in policy for city * China wants to improve H.K. young people’s understanding of Chinese history, development *
Person didn’t give details on expected changes (BN)
China Said to Plan Using FX Reserves to Fund Construction Abroad -- China plans to set aside tens of billions of dollars from its foreign
reserves to finance infrastructure construction abroad, according to government officials familiar with the matter. * Fund is part of President Xi
Jinping’s New Silk Road plan, which seeks to build infrastructure that facilitates trade over land and shipping routes, say officials, who asked
not to be identified because plan hasn’t been made public * NOTE: Initiative is separate from Chinese plans to set up fund worth 100b yuan
to finance construction of domestic infrastructure to link up to markets overseas * People’s Bank of China doesn’t respond to faxed request
for comment * President Xi Jinping said Nov. 4 govt would set up fund to finance overseas infrastructure, and Asian Infrastructure Investment
Bank would also fund some projects, Xinhua reported yday * Caixin reported yday China would set up fund with as much as $50b for
overseas infrastructure, with some coming from FX reserves; article was later taken down from website (BN)
RBA Sees Slow Growth, Warns Japan Flows May Keep Aussie High -- The Reserve Bank of Australia said the nation’s economy is set to
remain subdued and warned Japan’s monetary policy could spur flows that support the local dollar. “Gross domestic product growth is still
expected to be below trend until mid-2015,” the RBA said in its quarterly monetary policy statement in Sydney today, leaving its growth
forecasts largely unchanged. Capital flows from investors seeking higher yields “could hold the Australian dollar at a higher level than real
economic fundamentals would imply,” it said. Policy makers are fretting over a disconnect between the currency and falling commodity
prices, led by a more than 40 percent drop in iron ore. The RBA forecast the terms of trade, or export prices compared to import prices, will
fall about 4 percent over the rest of 2014 and early 2015. The RBA has adopted a policy of patience, keeping interest rates at a record-low
2.5 percent for 15 months and flagging they will remain unchanged, as it aims to stimulate domestic drivers of growth. In response, the
housing market has boomed, while companies have refrained from opening their pocket books. “The very accommodative monetary policy
settings will continue to provide support to demand and help growth to strengthen, in time,” the central bank said today. Business spending
outside the mining industry “remains subdued, and liaison continues to suggest that firms are reluctant to undertake significant new
investment projects until they see a more substantial improvement in demand,” it said. “Recent data suggests that a substantial pick-up in
non-mining investment is still some way off.” (BN)
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Sweden Debt Office Wants Careful Approach on Private Debt: DI -- Sweden needs to move “carefully”, “step by step” with new measures
on household debt to avoid creating a crisis, Debt Office Director-General Hans Lindblad says in Dagens Industri interview. * New
amortization culture step in right direction (BN)
Hungary’s Government Debt May Fall Below 75%/GDP By Yr-End: MTI -- Debt level expected to fall 1.7 percentage points this yr, state
news service MTI reports, citing Economy Ministry. (BN)
Ukraine Lurches Back Toward Open War as East Fighting Picks Up -- Ukraine’s east lurched back toward open war as the government
in Kiev and pro-Russian rebels accused each other of starting major offensives in the region. The Ukrainian government said there were 26
outbreaks of fighting yesterday between its forces and separatists in the east, while the rebels said the Kiev government’s troops had gone
on a large-scale military push there. The standoff is coming to a head after Ukraine and its allies accused separatists of undermining peace
efforts with Nov. 2 elections in Donetsk and Luhansk. Russian President Vladimir Putin said Nov. 5 that Ukraine’s “civil war” isn’t subsiding as
cities continue to come under shelling and the civilian death toll rises. Russia’s RIA Novosti state news agency quoted Andrei Purgin, deputy
premier of the self-proclaimed Donetsk People’s Republic, as saying that Ukraine had begun a large-scale offensive against the separatists
in the east. Purgin said he sees “all-out war” and claimed Ukrainian forces had broken the Sept. 5 truce, according to RIA. The Russian
Foreign Ministry said in a statement on its website it was rejecting the possibility of Geneva talks with the U.S. and the European Union on
Ukraine. Ukrainian Prime Minister Arseniy Yatsenyuk has called for a return to “Geneva format” talks to resolve the conflict. Putin discussed
the deteriorating security situation in eastern Ukraine with Russia’s security council, Interfax news service said yesterday. (BN)
Russian Banks Assoc. Asks Central Bank to Start QE Program: RBC -- Program may help to stimulate economic growth, RBC newswire
says, citing document, which association plans to send to Central Bank. (BN)
Brazil’s Next Finance Minister Said to Have Freedom to Pick Team -- Brazil’s next finance minister will be free to replace the ministry’s
current team, including Treasury Secretary Arno Augustin, according to a government official with direct knowledge of the matter. President
Dilma Rousseff will identify her next finance minister by the beginning of December, and the new economic team will take over the Finance
Ministry days after being named, according to the official who asked not to be named because the cabinet discussions aren’t public.
Investors and business leaders are awaiting Rousseff’s economic appointments as an indication of what direction her policy decisions will
take in her second term. The next finance minister will be tasked with implementing policies that will restart economic growth that’s expected
to end the year at less than 1 percent, without stoking inflation that has breached the 6.5 percent upper limit of the central bank’s target
range. (BN)
Last Trading Day Stats
Index
EuroStoxx 50
CAC
DAX
FTSE 100
SMI
OMX
S&P 500
Dow Jones
Nikkei 225
Close
3102.07
4227.68
9377.41
6551.15
8863.88
1415.3
2031.21
17554.47
16860.37
AEX Close
ADR Impact
ADR Impact %
AEX Parity
AEX Ex-div impact
ADR
Aegon
Arcelor Mittal
ASML
ING
Philip
Reed Elsevier
Royal Dutch Shell
Unilever
Close in NY
$
8.14
$ 12.38
$ 101.82
$ 14.23
$ 28.00
$ 46.06
$ 69.46
$ 38.51
1D %Chg
0.34%
0.46%
0.66%
0.18%
0.23%
0.09%
0.38%
0.40%
0.40%
YTD%Chg
-0.22%
-1.59%
-1.83%
-2.93%
8.06%
6.18%
9.89%
5.90%
3.49%
1Y% Change
1.94%
-1.25%
3.26%
-2.18%
7.71%
10.17%
16.26%
12.57%
18.50%
413.15
0.85
0.21%
414
0.00
Difference from Amsterdam closing
0.08%
1.27%
0.32%
-0.12%
-0.02%
0.30%
0.82%
0.15%
Currency
EURUSD
EURJPY
EURCHF
Rate
1.2378
142.76
1.20413
Bund
1yr
2yr
5yr
10yr
Yield
-0.061
-0.059
0.119
0.828
Sovereigns
Dutch 10 yr
U.S. 10 yr
Ital i a n 10 yr
Spa ni s h 10 yr
Fra nce 10 yr
Portuges e 10 yr
Yield
0.967
2.391
2.382
2.159
1.189
3.232
Volatility
VIX
VDAX
13.67
20.02
AFS GROUP AMSTERDAM
Research: Christopher Ho [email protected] +31 20 522 0242, Arne Petimezas [email protected] +31 20 522 0244
Sources amongst others: Bloomberg (BN), Reuters (R), BBC, CNN, NY Times (NYT), Washington Post(WP), The Guardian (G), het Financieele
Dagblad (FD), Telegraaf (T), Volkskrant (VK), NRC, Wall Street Journal Europe (WSJE), Dow Jones (DJ), AFX and the Financial Times (FT)
The information and opinions contained in this document have been compiled or arrived at from sources believed to be reliable but no
representation or warranty, express or implied, is made as to their accuracy, completeness or correctness. All opinions and estimates expressed
in this document are subject to change without notice. AFS does not accept any liability whatsoever for any direct or consequential loss arising
from the use of this document. This document is for information purposes only and is not, and should not be construed as, an offer to buy any
securities or derivatives. The information contained in this document is published for the assistance of the recipient, but is not to be relied upon
as authoritative or taken in substitution for the exercise of judgement by any recipient.

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