Shares of NXP Semiconductors NV (NASDAQ:NXPI) and Freescale Semiconductor Ltd (NYSE:FSL) jumped in premarket trade today, after Reuters reported that the companies have agreed on an acquisition deal, under which NXP will pay $11.8 billion to acquire Freescale.
Under the terms of the deal, Freescale stock holders will be paid $6.25 per share and will be allotted one NXP share for every three Freescale shares. The merger that will collectively value both entities at around $40 billion will complete its course by the second half of this year. This would value Freescale at $36.14, almost in line with the stock’s last closing price, on Friday. Credit Suisse has acted as NXP’s financial advisor in this regard, while Morgan Stanley guided Freescale.
NXP Semiconductors—a Dutch semiconductor giant valued at over $21 billion—said that it will facilitate the acquisition with $1 billion from its cash reserves (raised through debt financing) and the remaining amount will be covered by stock-based compensation. Freescale stockholders will subsequently own 32% of the resulting $32 billion chipmaker giant.
RBC analyst Doug Freedman regards this acquisition as a sensible move on the part of NXP. This is because a much larger size would enable the semiconductor giant to minimize the adverse impact of “product cycle and volatile end markets.” In addition, NXP management is of the view that the merger would allow the company to register $200 million in total cost savings for the year ahead.
NXP is already a huge supplier of semiconductors with presence in more than 25 countries. The company’s total revenue for 2014 came at $5.7 billion. During the quarter ended December 2014, its revenue of $712 million reflected year-over-year growth of 46.2%. Combined with Freescale’s revenue, which was $4.6 billion last year, NXP will witness an exponential rise in its sales along with cost cuts.
The deal between NXP and Freescale is the fourth acquisition deal in the semi-conductor industry this year. Back in February, Avago Technologies Ltd (NASDAQ:AVGO) announced that it would be acquiring Emulex Corporation (NYSE:ELX) in a deal that would value the wireless carrier at over $600 million. Likewise, earlier this year, Lattice Semiconductor (NASDAQ:LSCC) revealed that it would be purchasing Silicon Image, Inc. (NASDAQ:SIMG) for very much the same amount. In addition to these, MaxLinear, Inc.(NYSE:MXL) also unveiled its decision to buy Entropic Communications Inc (NASDAQ:ENTR) a month earlier, for $287 million.
Mergers like these strongly suggest that semiconductor manufacturers are making counter-efforts to their primary clients—cellular companies—, increasingly consolidating their suppliers.
NXP stock and Freescale stock were up by 11% and 15%, respectively, in premarket trading today.
Dont Forget To Subscribe To Our YouTube Channel!
Sign Up Here: http://www.youtube.com/mrtopstepgroup
Berkshire Hathaway CEO Warren Buffett isn’t a fan of Sen. Elizabeth Warren’s (D-Massachusetts) populist style.
In a Monday interview on CNBC’s “Squawk Box,” Buffett argued that Warren should be “less angry and demonizing.”
“I think that she would do better if she was less angry and demonizing. I believe in ‘hate the sin but love the sinner,'” he said. “And I’m not sure that I’ve fully convinced Elizabeth Warren that that’s the way to go.”
Warren has enthralled liberals with her outspoken criticism of Wall Street, and progressive activists strongly urged her to run for president in 2016 against Democratic front-runner Hillary Clinton. Warren ultimately declared she would not run.
But Buffett, who supports Clinton’s campaign, said Warren and other legislators should be more willing to embrace compromise.
“I think the whole nature of governing — particularly when you’ve got a divided government like we have now — is that you end up with bills that each side doesn’t like but they like it better than doing nothing,” he continued. “I mean, that’s the way that government has to function. And it does not help when you demonize … the people you’re talking to.”
Warren’s office did not immediately respond to a request for comment from Business Insider.
The S&P 500 cash (^GSPC:SNP) fell off on Friday but still closed out February with the largest monthly gain since October 2011. After a rough start to the year, February’s big push to new highs again showed how it takes bad news and turns it into good. On the last trading day of the month the Dow Jones Industrial Average (^DJI:DJI) fell 81.72 points or -0.4% to 18132.70. February was the best month for the Dow since January 2013, rising 5.46%. The S&P gained 5.49% while the Nasdaq Composite (^IXIC) closed down 24.36 points high or down 0.5% to 49.63.55, just 36 points away from its 15-year highs at the 5000 level.
I remember vividly how the Nasdaq futures rallied almost every day for months leading up to the 2000 tech bubble and I also remember how fast it unraveled. While there was not a lot of fanfare when the Dow traded above 18000 and when the S&P finally broke through 2100.00 it’s been a long journey back to the top for the tech-laden Nasdaq. But for many people that were trading tech stocks it was frightening how fast the stocks went down. Some stocks went down so fast, investors couldn’t get out and many companies just disappeared. There were high-flying names that everyone piled into only to be stuck with a stock that lost 80% or 90% of its value in a matter of days or weeks. Some traders we know got stuck long the QQQ’s and held them for years. What was supposed to just be a quick scalp ended up a position of pain. It’s our guess the Nasdaq could be nearing an inflection point or a resistance area but we all know that until we see a pick up in volume on the downside selling weakness will be a difficult trade.
Traders complain when its too busy and they complain when its too slow. While we do think there will be a pick up in trade this week due to all the economic releases and fed speak we don’t get the feeling that the overall price action will change that much. Do I think the S&P can go down a little further? Sure but I don’t think it will last for very long. Its our guess the mutual funds will start out March like they did Febuary but not as strong a start.
In Asia of 11 markets closed and in Europe this morning of 12 markets are trading . Next week should be a busier week, there are a total of 27 economic releases, 14 T-bill or T-bond auctions or announcements, Janet Yellen speaks, 4 Federal Reserve Bank Presidents speak and the February Jobs number on Friday.
Monday starts with Personal Income and Outlays, Gallup US Consumer Spending Measure, PMI Manufacturing Index, ISM Mfg. Index, Construction spending.
Our view: The mutual funds sold the final days of January and bought the first 10 days of February. This buying pushed the S&P futures to new all-time highs. Today is the first trading day of the March and what we will be looking for is to see if the mutual funds start the month out buying again. For me I take a simple approach; there is no place else to put your money but then into stocks. And even when the fed starts to raise rates it will still be like that.
I said over a week and a half ago that the bus was getting too full, and despite it going up a little more, that was the right idea. The ESH15 had gone too far without a pull back and was overbought and still is. Our view is the the sell off is not over and that its possible the S&P runs some sell stops under 2100.00 before heading back up again. We lean to selling the early rallies and buying weakness but we will be looking to see if the mutual funds are buying on the half hour. If they are then we could be looking at a trend days up and buy imbalances for the close.
As always, please use protective buy and sell stops when trading futures and options.
Personal income increased $50.8 billion, or 0.3 percent, and disposable personal income (DPI) increased $52.6 billion, or 0.4 percent, in January, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) decreased $18.9 billion, or 0.2 percent. In December, personal income increased $45.3 billion, or 0.3 percent, DPI increased $37.3 billion, or 0.3 percent, and PCE decreased $35.7 billion, or 0.3 percent, based on revised estimates. Full Text
Timing is everything. And for Joe Moser the timing was bad.
He graduated from the University of Iowa’s law school in 2011, one of the worst years to graduate from law school ever. He worked as a bartender in St. Louis, Missouri, while applying for jobs. It took about a year for him to land his first, with a small law firm. While he was glad to be working on cases instead of mixing drinks, he wasn’t happy with his paycheck.
“Starting out, I was earning less than anticipated, but I just counted myself fortunate to have gotten a job at all,” said Moser, now 29 and an attorney with a medium-size firm doing mostly civil litigation in Des Moines, Iowa.
A bad economy had pushed Joe to go to law school in the first place. When he got his bachelor’s degree from Saint Louis University in 2008, right in the heart of the Great Recession, he was dispirited about finding work. The rising unemployment rate for young people solidified his choice to go to law school directly from undergrad, rather than try to work for a few years. “There weren’t a lot of jobs for my class anyway,” he said.
Many of Joe’s peers found themselves in similar situations. The financial crisis and Great Recession that ran from 2007 to 2009 were a shock to the entire U.S. workforce, but it was worst for those just starting their careers. College-educated millennials like Joe, who began to look for a first job in the depths of the recession and slow recovery, were hit especially hard.
We’ve long known that millennials — the Snapchatting army of those born between 1980 and 1997 — face unique economic challenges.1 They are poorer today than Americans of the same age in 1989. Many are also deep in a hole of student loan debt, unlike any generation has seen before. They are less likely to own a home — and if they do, those homes tend to be worth much less than the starter homes of twenty-somethings and thirty-somethings in the recent past.
Now, six years after the Great Recession officially ended, we’re starting to understand that these setbacks might permanently affect this generation’s careers and lifetime earnings.
For starters, millennials earn less money than people of the same age earned 25 years ago, according to the Federal Reserve’s 2013 Survey of Consumer Finances. While the median income of all households fell 12 percent between 2007 and 2013, it dropped 19 percent for those headed by 18- to 33-year-olds (compared with the same age cohort in 2007). If anything, these numbers may overstate income: The data set doesn’t count millennials living with their parents. (The survey only covers the heads of households.)
Yet the Great Recession, blunt as it was, didn’t affect this generation equally. While it left economic scars on older, college-educated millennials — let’s call them “bubble” millennials — they at least had a few years to get their careers started before the job market took a nose dive.
Millennials who are a little younger — call them the “recession” millennials, the ones like Joe with bad timing — were knocked flat on their backs before they even had a solid footing.
We can see the different impacts in the income gap between these two groups. The median household income of bubble millennial college graduates was about $66,000 in 2013, down nearly 25 percent from the same age group’s earnings in 2007. But the median college-educated recession millennial is earning 36 percent less, or $49,000.
Richard Palmer, like Joe Moser, is a recession millennial. And like Joe, Richard began his career earning a disappointing paycheck.
After graduating in 2008 from Howard University, he got a job selling tickets for the Cleveland Cavaliers by making cold calls. “I honestly didn’t know what to expect,” said Richard, who is now 28 and lives in Raleigh, North Carolina. “But the income was on the lower-end; it was commission-based.” The ticket sales job lasted a year, and then he went on to graduate school, earning an MBA from Seton Hall University in 2011. That led to work as a sales manager for Reebok for three years, before he got laid off last March. He’s been searching for jobs since.
Already unlucky because of their graduation timing, Richard and Joe — like many millennials — are also burdened with tens of thousands of dollars in education debt.
“It’s always over your head: the number,” Richard said of his student loans. “Instead of buying this pair of sneakers, I’ll have to focus on paying off the loans.”
The share of millennials with any student loan debt is 42 percent, much higher than the 17 percent of those of the same age in 1989 who had debt and up from 35 percent in 2007 and 40 percent in 2010. The median student loan debt for those 18 to 33 years old was $17,000 in 20132, the highest ever. (The average is much higher, more than $40,000.)
“No question about that — it’s a burden,” Joe said. “I barely scratch at the principal of my loans; the interest costs are so high.”
Joe considered buying a house, but ultimately just couldn’t pull it off because of his debt payments. A new car is too much as well. “I’ll be running my trusty Toyota into the ground,” he said.
Compared with those of the same age, today’s young people are significantly less likely to own a home. The homeownership rate for 18- to 33-year-olds in 2013 was 34 percent, down from 38 percent in 2007 and 39 percent in 2004, and even below the historical low of 35 percent in 1992.
And when millennials are homeowners, their homes are worth less. The median value of a home owned by a millennial is $133,000 — a steep drop of 32 percent from a median of $197,000 in 2007 for those in the same age bracket. Compared to all households, whose homes dropped in value by 24 percent between 2007 and 2013, young homeowners are much worse off.
Still, compared to his peers, Joe feels like he’s doing OK: “I’ve certainly had friends that struggled to find jobs; that moved home; that worked, doing whatever they could, to scrape by.”
But what’s worse, recession millennials like Joe, Richard and their friends are hard-pressed to make up the ground they lost, just because of their unlucky timing. Research from Yale University economist Lisa Kahn shows that when college graduates enter the labor market affects their lifetime earnings. Her 2009 article in Labour Economics studied the timing of college graduates in the early 1980s using the National Longitudinal Survey of Youth. Those who graduated in a bad economic year had lower earnings even 14 to 23 years later. Specifically, for each percentage-point increase in the unemployment rate when graduating from college, there was an average wage loss of 3 to 4 percent per year.
Kahn’s research on graduating in a recession indicates that Joe, Richard and other recent college graduates will feel the effects for decades.
The January report on personal income and spending is set for release at 8:30 am ET.
Expectations are for personal income to rise 0.4% over the prior month with spending expected to decline 0.1%.
This report also includes the personal consumption expenditures deflator, a measure of inflation, which is expected to show prices declined 0.5% over last month and rise 0.1% on a “core” basis, which exclude the more volatile cost of food and energy.
We’ll be back with the live numbers when they hit.
Welcome back to the workweek. Here are our snowy Monday morning train reads:
• A Dozen Things Taught by Warren Buffett in his 50th Anniversary Letter that will Benefit Ordinary Investors (25IQ) see also Uncle Warren Explains It All to You (Epicurean Dealmaker)
• Institutions Pour Cash Into Bond ETFs (WSJ)
• 8 things millennials want—and don’t want—show how different they are from their parents (WonkBlog) see also Retirement Planning for Millennials (A Wealth of Common Sense)
• Data Security Is Becoming the Sparkle in Bitcoin (NYT)
• Why Does the U.S. Chamber of Commerce Oppose the Interests of American Business? (Scholarly Financial Planner)
The Mobile World Congress 2015 brought various new products that will likely shape the future. Samsung Elect Ltd for one unveiled its much hyped Galaxy S6 and Galaxy Edge to the world, and also took the wraps off its new payments system, Samsung Pay.
Mobile payments have been one field as of late where most major smartphone players are rushing to get to the top. Recently acquired LoopPay by Samsung Elect Ltd (F)(OTCMKTS:SSNLF) has helped the South Korean electronics maker enter the payments game.
Samsung Pay will allow users to link their credit, debit, and loyalty cards to the Galaxy S6, and allow them to buy whatever they need, while also adding or redeeming loyalty cards. However, if you’re thinking this is the same thing Apple Inc. (NASDAQ:AAPL) and Google are offering through Apple Pay and Google Wallet, you’re in for a surprise.
LoopPay helps gives Samsung an edge over Apple and Google Inc (NASDAQ:GOOG) because it works with the already-set-up magnetic stripe machines that are all over the United States. Samsung states it has partnered up with MasterCard, Visa, American Express, Citigroup as well as other financial institutions to get the service rolled out.
The way Samsung is going to go ahead is that retailers will have to install the next generation Neat Field Communication (NFC) readers for them to be able to accept Apple Pay and Google Wallet payments. Meanwhile, Samsung Pay will already and easily work with cash registers around the US.
Meanwhile, Apple has stated Apple Pay is available at around 220,000 locations in the US, but that doesn’t amount up to much when the country has around 12 million checkout registers.
Major credit/debit card networks are pushing that retailers get the technology for chip and pin technology, however, smaller retailers might not want to switch because of the high costs. Samsung will have an in here as its payments service will work with the old cash registers, while also functioning with NFC readers.
Wall Street Journal reports that if, for example, a checkout machine has an NFC reader, users can pay with that. In case there isn’t, a user can hold their smartphone near the cash register and the payment will go through. Samsung gets the better end of both the deals, while Apple Pay is only available in one mode. Moreover, Samsung will be using tokenization for the process of its payments to add some security elements to the mix.
Jim McCarthy, global head of innovation and strategic stated: “This is a pretty big step forward. Samsung Pay’s acceptance is very broad because it can use the old terminals, while also running on the existing tokenization system that we have set up for Apple Pay. These devices will work at almost any terminal in the US.”
Samsung Pay will roll out in the US and South Korea later this year, and will eventually release in Europe and China. To read more about the way Samsung Pay (formally LoopPay) works, check out a previous article on it by Bidness Etc.
Warren Buffett is currently speaking with CNBC’s Becky Quick after he released his 50th letter to Berkshire Hathaway shareholders on Saturday.
Among the topics Buffett addressed is the investing challenges Buffett currently faces, and whether it is easier to invest now than it was 20 or 30 years ago.
In response, Buffett didn’t say if it was easier, but said he now has a different investing problem: size.
“If we’re going to buy 5% of a company,” Buffett said, “to make that purchase worth 1% of Berkshire, it has to be a $2 billion company … and if the stock doubles Berkshire makes 0.5%.”
In other words, the size of Berkshire makes the opportunities for Buffett to see a dramatic increase in his wealth, or the value for Berkshire Hathaway shareholders, more sparse because of the company’s size.
Last week, we highlighted comments from Buffett made 50 years ago about the size of the hedge fund he was then running, which he worried was getting too big.
Berkshire is now a massive conglomerate with a market cap over $300 billion. So, that problem certainly hasn’t eased at all.
According to people familiar with the matter, Comcast Corporation (NASDAQ:CMCSA) is considering taking over ad-targeting firm, Visible World.
New York-based Visible World was founded in 2000 and is known for its technology that allows advertisers to make personalized TV ads for specific and targeted audiences, using data from cable set top boxes and other means. The company has served over 200 advertisers, enabling them to deliver location-sensitive ads to customers – thereby increasing the focus on market niches.
The acquisition of Visible World will provide Comcast with a strategic advantage in the TV-ad industry. The TV-ad industry has not yet fully adopted the data metrics-based advertising. A majority of TV ads are still based on wider demographics, which lack precision provided by the data-based targeting.
In 2013, Visible World launched its subsidiary, AudiencXpress, which allows advertisers to purchase TV commercials through its Web-based interface. AudienceXpress boasts its diverse TV inventory, which consists of national cable networks, as well as local satellite and cable providers.
The deal has not been finalized yet, and might even be dropped, given that Comcast's venture arm is an investor in Visible World. However, if the companies go ahead with the acquisition, it would provide the cable giant a strong hold on personalized TV ads, thanks to Visible World’s potential to manage and customize creative content for reaching a niche market.
It is too soon to comment on whether Comcast would treat Visible World as a separately owned subsidiary or not. However, we can expect supplies from rivals to be suspended following the takeover.
The finalized deal would not be Comcast’s first acquisition though. The company bought the ad management firm FreeWheel Inc for $320 million last year, and has also proposed a $45 billion takeover bid to Time Warner Cable. Also, in December 2014, the company entered a deal with its client, Magna Global and Cox Media, the ad-segment of Cox Communications.
Meanwhile, Comcast reported fourth-quarter fiscal'14 earnings February 24, missing the Street’s estimate for earnings per share (EPS) by 1 cent, at a reported figure of 77 cents. Its reported revenue of $17.73 billion however reflected a 4.7% year-over-year growth, and beat the consensus estimate by $30 million.
Analysts are extremely bullish on Comcast stock. Of the 32 analysts covering the company stock, 24 rate it a Buy, while eight analysts rate it a Hold. The 12-month price target for the firm is $65.23, an upside of 9.9% on the stock's last closing price.
The UK just got a new version of the Queen’s face on its coins.
The Royal Mint unveiled the design on Monday, and it’s only the fifth time in the Queen Elizabeth II’s 63 years as monarch that the portrait has been redone.
Here’s how it looks:
The UK’s current coins mostly carry the portrait which was done 17 years ago, in 1998, so the new one is the first of the 21st century.
The artist who did the work is called Jody Clark – you can see the “J.C” gracing the coin just below the head.
This from the Royal Mint on the changes:
There are some noticeable changes to The Queen’s image in the new portrait by Jody Clark. Her Majesty is seen wearing the Royal Diamond Diadem crown worn for her Coronation and earrings, similar to those in the portrait by Raphael Maklouf, are included. The Inscription ELIZABETH II – DEI – GRA –REGINA – FID – DEF hasn’t changed, however its position has, encompassing the effigy entirely.
Unlike in previous iterations, the new drawing was done entirely digitally. If you’ve got £3,700 to spare and are that way inclined, you can get the new coins struck in 22 carat gold.
The approval of Greece’s bailout extension could only cushion National Bank of Greece (ADR) (NYSE:NBG) temporarily, as it is currently down by over 9%, having plunged almost 16% between Wednesday and Friday last week. Greece faces acute pressure from the Eurozone to fulfill requirements of the bailout extension, especially with the fast-approaching March cash crunch. In fact, Eurozone’s chief negotiator has continually warned Greece to start working on the reforms promised to its creditors, to be able to receive the emergency funds.
Chairman of the Eurozone finance ministers group, Jeroen Dijsselbloem, informed the Financial Times that he was gearing up for a “first disbursement” totaling $8.05 billion of the $192.26 billion emergency funding. Mr. Dijsselbloem, who is also the leader of Greek talks in the finance ministers group of the Eurozone, stated that he was looking into making the first disbursement as soon as this month. The anti-bailout Greek government was initially reluctant on accepting the reforms, but having succumbed to Eurozone pressures, Greece promised implementation of the bailout terms. The stream of emergency funding is conditional on Greece initiating the reforms, as Mr. Dijsselbloem stated: “My message to the Greeks is: try to start the program even before the whole renegotiation is finished. There are elements that you can start doing today. If you do that, then somewhere in March, maybe there can be a first disbursement. But that would require progress and not just intentions.”
The fast-approaching cash crunch, coupled with the drain on Athens funds, is signaling toward the possibility of a default in payments. In fact, officials from Greece bailout monitors have estimated a time frame of default, stressing that Athens runs the risk of being cashless within the next two to four weeks. These predictions are raising concerns that Greece might default on $4.80 billion of debt repayments due in March. The amount also includes $1.56 billion owed to the International Monetary Fund. In response to Eurozone worries, Athens has suggested that the European Central Bank (ECB) remove the $16.76 billion cap on the amount of short-term debt issued. Greece has stressed that once the ceiling is lifted, it could prevent a funding shortfall. ECB, on the other hand, is reluctant to increase the limit.
Moreover, German Finance Minister Wolfgang Schaeuble insisted that it was highly crucial for the country to fully utilize the four-month period. The four-month period was granted on conditions that Greece would implement a reform plan to be able to lock in future cash packages. Mr. Schaeuble further pressed that he had no assurances the Greek government would, in fact, instill reforms during the period.
Greek Finance Minister Yanis Varoufakis, on the other hand, announced today that he would be in talks with Eurozone partners in the coming weeks for a stream of further assistance. The assistance would help “smooth over a cash-flow hump” on EU loans provided to Greece.
“We intend to begin the conversation with our partners and institutions regarding debt sustainability and debt rescheduling,” he stated. He further stressed that it would be “impossible” for Greece to adhere to obligations totaling $12.86 billion within the time frame of June-August. The minister further stated that Greece would not demand for a loan write-down but ask for flexibility in loan repayment to ECB instead.
Over the weekend, Greece’s Eurozone partners picked up on signs hinting that the debt-ridden country might be rolling back on bailout extension terms. Indeed, Mr. Varoufakis was reported as suggesting a renegotiation strategy on the $7.49 billion bond payments owed to the ECB.
However, Mr. Dijsselbloem, on numerous occasions, has expressed: “If we spent two months talking to each other and not doing anything, at the end of April there are major problems.”
CNBC’s “Squawk Box” program is live this morning in Omaha, Nebraska to speak with Berkshire Hathaway CEO Warren Buffett.
On Saturday, Buffett published his 50th letter to Berkshire Hathaway shareholders on Saturday morning.
We’ll be back with the live updates as Buffett speaks.
As most commodities face a bear market, Ford Motor Company (NYSE:F) is helping to uplift prices of aluminum by increasing its industrial usage amid surging demand for its all-new aluminum 2015 F-150 full-size pickup.
According to analysts at Morgan Stanley, consumption of metal in the US will rise around 7% for the present year to 5.38 million tons – the highest in the last eight years. The expectations of the increased usage of metal are largely driven by a flourishing US auto market.
The use of aluminum has enabled the new version of F-150 to weigh 700 pounds less than its previous version, resulting in the best fuel economy among all other pickup trucks available in the market. According to estimates obtained from the US Environmental Protection Agency (EPA), the new F-150 has a mileage of 26 miles per gallon (mpg) on highway, an improvement of 29% from its previous version.
It is still early to accurately forecast the success of the 2015 F-150. However, the initial numbers are turning out to be impressive. For January, Ford reported best monthly sales for F-150 since 2004, despite the fact that it was on the dealership for only 12 days of the month.
At the same time, there has been a huge influx of news over the last few weeks that the nation’s second-largest automaker is expanding its workforce in order to meet better-than-expected demand for the new F-150. The company also recently announced training programs for thousands of its workers to initiate production of F-150 at its Kansas Assembly Plant. Before that, Ford announced to hire 1,550 additional workers to accelerate the production of F-150 trucks in Michigan and Missouri.
According to David Wilson, an analyst at Citigroup, “The demand profile for aluminum is positive, for sure, and that’s from the light-weighting trends in the auto sector.”
“There’s longer-term pressure on auto companies to reduce car fuel consumption, and I suspect we’ll continue to see those trends in light-weighting,” he added.
According to Bloomberg, “Ford’s 2015 F-150 is the largest production ever of an aluminum-bodied vehicle.” The use of expensive metal was previously restricted to luxury vehicles including Jaguars. However, Ford’s F-series pickup trucks have been the top-selling vehicles in the US for the last three decades and stream in over 90% of the company’s profits, according to the estimates provided by Morgan Stanley.
The bullish stance behind the recovery of aluminum prices is backed by the increasing demand for F-150. Moreover, other automakers are also in line to incorporate greater use of aluminum in their vehicles in order to meet the regulatory requirements. Honda Motor Co Ltd (ADR) (NYSE:HMC), for example, is also using lighter-weight components in its vehicles to improve fuel efficiency.
In September last year, President Barack Obama pushed other leaders at a United Nations summit to work upon a collective strategy to fight global climate change. For this purpose, regulators have been working with automakers and establishing fuel efficiency standards which require the automakers to have an average mileage of 54.5 mpg for light trucks and passenger cars by 2025. The regulatory requirements apply within the US only.
Mikhail Fridman is threatening to sue the British government, after the Department of Energy blocked his purchase of 12 oil and gas fields in the North Sea because of Western sanctions over Ukraine, the FT reports.
Until a few months ago, Fridman had focused on strengthening his position in Russia’s domestic energy industry, but in August last year he bought RWE Dea, the oil and gas division of German utility giant RWE. According to Bloomberg, Fridman’s investment group, LetterOne, spent £3.7 billion (€5.1 billion) to buy RWE Dea, which include several North Sea fields among its assets.
To complete the purchase, Fridman and his business partner German Khan founded a new energy company, L1 Energy, and planned to have it chaired by Lord Browne, the former CEO of BP and a top figure in the British energy industry.
The German government had given the OK to the purchase of RWE Dea, but the British Department of Energy blocked the sale. Fridman’s name is on the black list of Russian oligarchs hurt by economic sanctions over the conflict in Ukraine.
In a statement published on February 28, Secretary of State for Energy Ed Davey expressed his concerns about the effect that further sanctions could have on LetterOne, L1 Energy parent company.
In the letter, Davey wrote that “if the proposed acquisition were to proceed in its current form, he [Davey] would be minded to require the companies to arrange for a further sale to a suitable third party.”
Despite British opposition, LetterOne said it is committed to the acquisition anyway, and would possibly try to use a Dutch company to overcome British sanctions according to the New York Times.
Fridman is planning to invest almost £300 million ($450 million) in the North Sea, and was confident the partnership with Lord Browne would play in his favour. The former BP chief, who said he would give up his partnership at Riverstone Holdings to chair L1 Energy, described Fridman as “one of the shrewdest and most focused businesspeople that I know.”
BRUSSELS (Reuters) – Euro zone consumer prices fell by less than expected in February and core inflation held steady and unemployment eased in January for the third month in a row, data from the European statistics office showed on Monday.
Eurostat estimated that consumer prices in the 19 countries sharing the euro dropped 0.3 percent year-on-year after in February a 0.6 percent annual drop in January and a 0.2 percent fall in December.
Economists polled by Reuters had expected a 0.4 percent price decline.
Eurostat said that much cheaper energy, the prices of which were 7.9 percent lower in February than a year earlier and a 0.2 percent decline in prices of non-energy industrial goods were the main factors pulling down the overall index.
Without the volatile energy and unprocessed food components — a measure the European Central Bank calls core inflation — prices grew 0.6 percent year-on-year, the same as in January.
The ECB wants to keep inflation below, but close to 2 percent over the medium term, so to accelerate price growth it will start printing money later this month to buy euro zone government bonds – a policy known as ‘quantitative easing’.
The ECB, which is expected to give more details of the plan after its policy meeting on Thursday, plans to spend 60 billion euros ($67.2 billion) a month on the program – buying mainly sovereign bonds, but also some private sector assets.
By September next year, more than 1 trillion euros will have been created under quantitative easing, the ECB’s last remaining major policy option for reviving economic growth and warding off deflation.
Eurostat data showed there were reasons for cautious optimism as euro zone unemployment, usually the last indicator to react to improving economic conditions, fell for the third month in a row to 11.2 percent of the workforce in January from 11.3 percent in December, 11.4 percent in November and 11.5 percent in October.
The number of people without jobs in the euro zone was 18.059 million in January against 18.199 million in December.
(Reporting By Jan Strupczewski; editing by Philip Blenkinsop)