Business

The Eurozone Could be in for a Rough Few Months

Published

8 years ago

November 25, 2016

Bchcomber

greece1

BRUSSELS – With a rapid-fire series of elections in Italy, the Netherlands and France plus Britain’s upcoming move toward leaving the European Union could buffet the 19-country monetary union – just as it is struggling to finally leave behind its troubles with slow growth and high debt.

Analysts say it will take more than one unexpected outcome to provoke a renewed eurozone crisis that goes beyond temporary market turbulence around the time of the votes.

But multiple surprises and falling dominoes cannot be ruled out.

That’s especially true after the unexpected votes in Britain for Brexit and for Donald Trump in the United States on Nov. 8.

“Since the 9th of November, times have changed,” said Carsten Brzeski, chief German economist at ING-DiBa bank.

“You can walk through all these political events one by one,” he said. “I think each has the potential to derail the eurozone, to further disintegrate the eurozone, to maybe possibly even lead to a breakup of the eurozone – but only in the worst, worst-case scenario.”

Here are the key dates:

– On Dec. 4, Italians vote on constitutional changes that would limit the power of the upper house and make it easier for governments to pass legislation. Prime Minister Matteo Renzi has said he will resign in case of a “no” result. New elections, if held, could bring to power the Five Star Movement, which has said it wants to hold a referendum on euro membership.

– On March 15 in the Netherlands, the anti-immigration, anti-EU Party for Freedom stands to do well in national elections and could influence the stance of any new government.

– By the end of March, British Prime Minister Theresa May is expected to formally start Britain’s talks to leave the EU, which are due to last at least two years. Market and business confidence could take a hit if it looks like Britain could leave without some privileged access to the EU single market.

– On April 23 and May 7, France holds presidential elections. Far right National Front leader Marine Le Pen is expected to at least make the second round. She wants France to leave the EU. And unlike Britain, France is a member of the euro, and its exit from that would likely be even more disruptive.

Polls indicate Le Pen doesn’t have much of a chance of winning. Problem is, that’s what many people thought about Britain’s EU vote and Trump’s chances in the U.S. election.

So Le Pen is making pro-EU politicians and economists more nervous than before.

Should investors outside Europe be worried? It’s hard to tell. Craig Mackenzie, senior investment strategist at Aberdeen Asset Management, says the lack of a plunge in stocks after the U.S. and U.K. votes “is teaching the market that political shocks are not necessarily the start of the next bear market… The market is harder to shock.”

While a less likely Le Pen victory would be “an immediate existential threat” to the EU, the Italian troubles require multiple steps to materialize and “won’t be a short, sharp shock.”

Right now, companies and investors are hardly pricing in a new crisis. Eurozone business activity is strengthening and German economic confidence is at a 31-month high. Overall, Europe is enjoying moderate growth, following a crisis over high debt in 2009-2012 that pushed Greece, Ireland, Portugal, Spain and Cyprus into needing bailout loans and raised the possibility the euro would break up.

Commerzbank chief economist Joerg Kraemer says the bigger risk is in Italy. He cautions that there would have to be several triggers over a period of months: first, a “no” in the referendum, then new elections, and then a win by the Five Star Movement. Kraemer and other analysts think a caretaker government is more likely, at least at first. But regular elections would be held in 2018 in any case.

Kraemer argues that a Five Star government would likely spend more money and bust the eurozone’s rules limiting deficits, adding more debt to Italy’s already heavy burden of 135 percent of economic output.

More deficit spending and debt “will create a huge conflict with the fiscal rules and the European Commission,” Kraemer said. “And in such an environment there is a significant risk that private bond investors will go on strike and refuse to buy Italian government bonds. That means there is a significant risk that we will see a return of the southern debt crisis if the Five Star movement continues to lead in the polls and there are early elections.”

Italy also faces potential disruptions in coming weeks from troubled bank Monte dei Paschi di Siena. The bank is trying to offload bad loans and raise new capital. If it fails, it could need a bailout from the government. But in that case new EU rules would trigger losses for some bond holders, including many small retail savers – political poison.

The currency union has new safeguards against turmoil. Banking supervision was toughened and moved to the EU level, lessening the chance that bad banks will bring down government finances.

And the European Central Bank has been buying government bonds to raise inflation and growth. In countries like Italy, that has driven bond prices up and interest yields, which move opposite to bond prices, down. That’s key because it was exorbitant bond market rates in 2011 that threatened Italy’s financial solvency.

The ECB also has a special program dubbed outright monetary transactions, or OMT, under which it could buy a country’s bonds to prevent it from facing ruinous borrowing costs.

But the ECB’s bond purchases will have to end at some point. Right now the earliest end is March, 2017, although that may be extended by three or six months at a Dec. 8 meeting.

And Kraemer warns that deploying the OMT could strengthen support for anti-euro parties in Germany and the Netherlands, where stimulus skeptics argue such assistance only undermines the will to reform shaky government finances.

Right now, it’s all hypothetical.

“I still hope that by the end of this period, we have a couple of elected leaders who can get across more integration at the eurozone level,” said Brzeski.

“The negative scenario is, I’m wrong with at least one of these outcomes, we get a move toward more nationalist politics and policies in Europe, and we get a gradual further disintegration. “

“And then it would be more than noise.”

By DAVID McHUGH | THE ASSOCIATED PRESS

Business

PepsiCo Reduces Revenue Projections As North American Snacks And Key International Markets Underperform.

Published

2 months ago

October 8, 2024

Salman

(VOR News) – In the third quarter of this year, Pepsi’s net income was $2.93 billion, which is equivalent to $2.13 per share. This was attributed to the company.

This is in stark contrast to net income of $3.09 billion, which is equivalent to $2.24 per share, during the same period in the previous year. The company’s earnings per share were $2.31 when expenses were excluded.

Net sales decreased by 0.6%, totaling $23.32 billion. Organic sales increased by 1.3% during the quarter when the effects of acquisitions, divestitures, and currency changes are excluded.

Pepsi’s beverage sales fell this quarter.

The most recent report indicates that the beverage and food sectors of the organization experienced a 2% decline in volume. Consumers of all income levels are demonstrating a change in their purchasing habits, as indicated by CEOs’ statements from the previous quarter.

Pepsi’s entire volume was adversely affected by the lackluster demand they encountered in North America. An increasing number of Americans are becoming more frugal, reducing the number of snacks they ingest, and reducing the number of times they purchase at convenience stores.

Furthermore, Laguarta observed that the increase in sales was partially attributed to the election that occurred in Mexico during the month of June.

The most significant decrease in volume was experienced by Quaker Foods North America, which was 13%. In December, the company announced its initial recall in response to a potential salmonella infection.

Due to the probability of an illness, the recall was extended in January. Pepsi officially closed a plant that was implicated in the recalls in June, despite the fact that manufacturing had already been halted.

Jamie Caulfield, the Chief Financial Officer of Pepsi and Laguarta, has indicated that the recalls are beginning to have a lessening effect.

Frito-Lay experienced a 1.5% decline in volume in North America. The company has been striving to improve the value it offers to consumers and the accessibility of its snack line, which includes SunChips, Cheetos, and Stacy’s pita chips, in the retail establishments where it is sold.

Despite the fact that the category as a whole has slowed down in comparison to the results of previous years, the level of activity within the division is progressively increasing.

Pepsi executives issued a statement in which they stated that “Salty and savory snacks have underperformed year-to-date after outperforming packaged food categories in previous years.”

Pepsi will spend more on Doritos and Tostitos in the fall and winter before football season.

The company is currently promoting incentive packets for Tostitos and Ruffles, which contain twenty percent more chips than the standard package.

Pepsi is expanding its product line in order to more effectively target individuals who are health-conscious. The business announced its intention to acquire Siete Foods for a total of $1.2 billion approximately one week ago. The restaurant serves Mexican-American cuisine, which is typically modified to meet the dietary needs of a diverse clientele.

The beverage segment of Pepsi in North America experienced a three percent decrease in volume. Despite the fact that the demand for energy drinks, such as Pepsi’s Rockstar, has decreased as a result of consumers visiting convenience stores, the sales of well-known brands such as Gatorade and Pepsi have seen an increase throughout the quarter.

Laguarta expressed his opinion to the analysts during the company’s conference call, asserting, “I am of the opinion that it is a component of the economic cycle that we are currently experiencing, and that it will reverse itself in the future, once consumers feel better.”

Additionally, it has been noted that the food and beverage markets of South Asia, the Middle East, Latin America, and Africa have experienced a decline in sales volume. The company cut its forecast for organic revenue for the entire year on Tuesday due to the business’s second consecutive quarter of lower-than-anticipated sales.

The company’s performance during the quarter was adversely affected by the Quaker Foods North America recalls, the decrease in demand in the United States, and the interruptions that occurred in specific international markets, as per the statements made by Chief Executive Officer Ramon Laguarta.

Pepsi has revised its forecast for organic sales in 2024, shifting from a 4% growth rate to a low single-digit growth rate. The company reiterated its expectation that the core constant currency profitability per share will increase by a minimum of 8% in comparison to the previous year.

The company’s shares declined by less than one percent during premarket trading. The following discrepancies between the company’s report and the projections of Wall Street were identified by LSEG in a survey of analysts:

SOURCE: CNBC

Business

Old National Bank And Infosys Broaden Their Strategic Partnership.

Published

2 months ago

October 8, 2024

Salman

(VOR News) – Old National Bank, a commercial bank with its headquarters in the Midwest, and Infosys, a firm that specializes in information technology, have recently entered into a strategic expansion of their link, which has been in place for the past four years.

This expansion is more likely to take place sooner rather than later, with the likelihood being higher.

For the purpose of making it possible for Old National Bank to make use of the services, solutions, and platforms that are offered by Infosys, the objective of this expansion is to make it possible for the bank to transform its operations and processes through the application of automation and GenAI, as well as to change significant business areas.

This lets the bank leverage Infosys’ services, solutions, and platforms.

Old National Bank Chairman and CEO Jim Ryan said, “At Old National, we are committed to creating exceptional experiences for both our customers and our fellow employees.”

This statement is applicable to Old National Bank. Infosys is carefully managing the business process innovations that it is putting us through, putting a strong emphasis on efficiency and value growth throughout the process to ensure that it is carried out efficiently.

This is a routine occurrence throughout the entire operation. Because of Infosys’ dedication to our development and success, we are incredibly appreciative of the assistance they have provided.

Old National has been receiving assistance from Infosys in the process of updating its digital environment since the year 2020, according to the aforementioned company.

Ever since that time, the company has been providing assistance. The provision of this assistance has been accomplished through the utilization of a model that is not only powerful but also capable of functioning on its own power.

Infosys currently ranks Old National thirty-first out of the top thirty US banks.

This ranking is based on the fact that Old National is the nation’s largest banking corporation.

It is estimated that the total value of the company’s assets is approximately fifty-three billion dollars, while the assets that are currently being managed by the organization are valued at thirty billion dollars.

Dennis Gada, the Executive Vice President and Global Head of Banking and Financial Services, stated that “Old National Bank and Infosys possess a robust cultural and strategic alignment in the development, management, and enhancement of enterprise-scale solutions to transform the bank’s operations and facilitate growth.”

This remark referenced the exceptional cultural and strategic synergy between the two organizations. Dennis Gada is the one who asserted this claim. This was articulated explicitly concerning the exceptional cultural congruence and strategy alignment of the two organizations.

We are pleased to announce that the implementation of Infosys Topaz will substantially expedite the transformation of Old National Bank’s business processes and customer service protocols. We are exceedingly enthusiastic about this matter. We are quite thrilled about this specific component of the scenario.

Medium-sized banks operating regionally will continue to benefit from our substantial expertise in the sector, technology, and operations. This specific market segment of Infosys will persist in benefiting from our extensive experience. This phenomenon will enable this market sector to sustain substantial growth and efficiency benefits.

SOURCE: THBL

Business

American Water, The Largest Water Utility In US, Is Targeted By A Cyberattack

Published

2 months ago

October 8, 2024

kiaragrace

The largest regulated water and wastewater utility company in the United States stated Monday that it had been the target of a cyberattack, forcing the company to halt invoicing to consumers.

American Water, The Largest Water Utility In US, Is Targeted By A Cyberattack

American Water, based in New Jersey and serving over 14 million people in 14 states and 18 military facilities, said it learned of the unauthorized activity on Thursday and quickly took precautions, including shutting down certain systems. The business does not believe the attack had an impact on its facilities or operations and said employees were working “around the clock” to determine the origin and scale of the attack.

water

The corporation stated that it has alerted legal enforcement and is cooperating with them. It also stated that consumers will not be charged late fees while its systems are unavailable.

According to their website, American Water operates over 500 water and wastewater systems in around 1,700 communities across California, Georgia, Hawaii, Illinois, Indiana, Iowa, Kentucky, Maryland, Missouri, New Jersey, Pennsylvania, Tennessee, Virginia, and West Virginia.

SOURCE | AP