"It's simply incorrect to say that terrorism came only with the refugees," Merkel said.  "It was already here in myriad forms and with the various potential attackers that we have been watching,” she added, referring to the fact that most of the recent attacks in Europe had been perpetrated by EU nationals.  The chancellor’s mea culpa was issued on the one-year anniversary of her statement “wir schaffen das", or "we can do this”, which came to symbolise her open-door policy to migrants.  Germany last year took in almost 1 million people, prompting a political backlash against the government and rising support for anti-EU and anti-immigrant groups such as the AfD party and the Pegida movement.  Germany's top migration official Frank-Juergen Weise said last Sunday he expected the country to take in another 250,000 to 300,000 people this year.  Other EU leaders have also blamed Merkel’s policies for acting as a pull factor for refugees.  But her comments on how the problem had been initially mishandled could be aimed at central and eastern European leaders, who still reject migrant quotas, ahead of a summit on EU reform due in Bratislava later this month.  “It doesn’t work for some countries to say: ‘We don’t want to have Muslims at all, even if it’s necessary for humanitarian reasons’,” she told German broadcaster ARD on Sunday.

France wants the EU to stop its negotiations with the US for a free-trade agreement.

"That means the end" of the talks, not a suspension, he said, adding he would officially make the demand at an EU trade minister meeting at the end of September.

"There is no political backing by France to these negotiations anymore," Fekl told RMC radio and BFM TV, even though the Europeans can continue to negotiate "until the end of time [because] nobody can legally oppose it".

Fekl said that TTIP talks were "obscure" and that that the US "gives nothing or just crumbles".

"That is not how you negotiate between equals and allies," he said, adding that it was not the EU commission's fault.

The French minister's declaration comes two days after German vice-chancellor Sigmar Gabriel said that TTIP talks had "de facto failed, even though nobody is really admitting it."

The EU commission, for its part, said on Monday that the "ball keeps rolling". Their chief negotiator Ignacio Garcia Bercero had also said that news of TTIP's demise was "greatly exaggerated".

The leaders of the Czech Republic and Hungary say a "joint European army" is needed to bolster security in the EU.  They were speaking ahead of talks in Warsaw with German Chancellor Angela Merkel. They dislike her welcome for Muslim migrants from outside the EU.  Hungary's Prime Minister Viktor Orban said "we must give priority to security, so let's start setting up a joint European army".  The UK government has strongly opposed any such moves outside Nato's scope. The Czech, Hungarian, Polish and Slovak leaders are coordinating their foreign policy as the "Visegrad Group". Czech Prime Minister Bohuslav Sobotka said building a joint European army would not be easy, but he called for discussion to start on it.  The EU has joint defence capabilities in the form of 1,500-strong battle groups, but they have not been tested in combat yet.  Last year European Commission President Jean-Claude Juncker called for a European army to give the EU muscle in confronting threats from Russia or elsewhere.

Business confidence in Europe's biggest economy, Germany, has fallen unexpectedly after the UK Brexit vote, according to a closely watched survey.  The Ifo business confidence index, based on about 7,000 company responses, fell to 106.2 points for August from 108.3 in July.  It was the steepest monthly fall in more than four years and took the index to its lowest since December 2014.

Despite the gloom, the euro was up slightly against the pound and dollar  The latest drop follows a much smaller decline in confidence in July immediately after the UK voted to leave the EU.  Economist Carsten Brzeski at ING-DiBa said the ongoing decline "suggests that German businesses have suddenly woken up to Brexit reality".  "It is not the first time that the Ifo reacts with a delay of one or two months to global events,'' he said, adding that at present, the German economy remained in a "virtuous circle".  Across the sectors it examines, the Ifo found confidence had fallen in all but construction and services.  "The German economy has fallen into a summer slump," Ifo president Clemens Fuest said.  Other official figures released earlier this month showed the German economy grew 0.4% in the second quarter compared with the previous three-month period.  That was a slower pace than the 0.7% growth in the first quarter, but double what economists had expected.

Hundreds of aftershocks have rocked devastated areas of central Italy, hampering search efforts after a deadly earthquake.  A strong tremor with magnitude 4.3 struck on Thursday afternoon, sending rescuers fleeing from already fragile buildings.  About 5,000 rescue workers are combing through rubble for survivors using heavy machinery or bare hands.  At least 250 people are now known to have died after Wednesday's quake.  The 6.2-magnitude quake hit at 03:36 (01:36 GMT), 100km (65 miles) north-east of Rome in mountainous central Italy.  More than 300 people have been treated in hospital and dozens are believed to be trapped under rubble.  Worst affected are the towns of Amatrice, Arquata, Accumoli and Pescara del Tronto.  The towns are usually sparsely populated but have been swelled by tourists visiting for summer, making estimates for the precise number missing difficult.  The hunt for survivors continued throughout Wednesday night and into Thursday. With many buildings unsafe, some people were forced to sleep in their cars or in tents.

Search teams have asked locals to disable their wi-fi passwords to help efforts.

The Italian Red Cross says residents' home networks can assist with communications during the search for survivors.  Rescuers have advised journalists and bystanders to leave Amatrice urgently, as "the town is crumbling", the BBC's Jenny Hill says.

The drama of Brexit may soon be matched or eclipsed by crystallizing events in France, where the Long Slump is at last taking its political toll.  A democracy can endure deflation policies for only so long. The attrition has wasted the French centre-right and the centre-left by turns, and now threatens the Fifth Republic itself.  The maturing crisis has echoes of 1936, when the French people tired of 'deflation decrees' and turned to the once unthinkable Front Populaire, smashing what remained of the Gold Standard.  Former Gaulliste president Nicolas Sarkozy has caught the headlines this week, launching a come-back bid with a package of hard-Right policies unseen in a western European democracy in modern times.  But the uproar on the Left is just as revealing. Arnaud Montebourg, the enfant terrible of the Socialist movement, has launched his own bid for the Socialist Party with a critique of such ferocity that it bears examination.

France has a host of home-grown economic woes that have nothing to do with the EU. The social model is funded by punitive taxes on employing labour, creating one of the worst 'tax wedges' in the world.  A quarter of French aged 60-64 are in work – compared with 40pc for the OECD average – due to early retirement incentives. The state consumes 56pc of GDP, a Nordic level without Nordic labour flexibility.  There are 360 separate taxes, some predating the revolution. Trade unions have a legal lockhold on companies with over 50 employees, yet command 7pc of membership. "It is an inferno that sadly lacks the poetry of Dante," says Prof Brigitte Granville, a french economist at Queen Mary University London.

Hard reforms were put off by leaders of all parties. They coasted through the boom years of the euro, and now it is too late. France is trapped within the straight-jacket of monetary union. The International Monetary Fund's health check in June said the 'real effective exchange rate' is up to 9pc overvalued. It is roughly 16pc overvalued against Germany. The only practical way France can claw back competitiveness is through deeper deflation than in the rest of the eurozone, but this would prolong the slump and play havoc with nominal GDP and debt dynamics. It would be self-defeating.

 

Oil has finally found a strong bull in Savita Subramanian, commodity strategist at BofA Merrill Lynch, who believes oil will rally to $54 a barrel by this year-end and continue its march higher to touch $69 a barrel by June of next year.  The commodity team led by Savita has upgraded the energy sector to outperform. The analysts have added Devon Energy to the firm’s US 1 list and raised ratings on four other stocks.  “Oil production continues to fall as global oil & gas investment has been cut by nearly $300bn (41%) and rig counts have dropped by 37% since the 2014 peak. In contrast, low oil prices continue to drive healthy demand growth, putting the oil market on pace to see its biggest supply-demand deficit since 2011,” the report noted. They estimate the shortfall to last through 2020, if prices remain below $80 a barrel.  The firm has raised the outlook for the energy sector from marketweight to overweight considering the following factors.

List of stocks that have been upgraded by Merril Lynch

1. Marathon Oil Corp. (NYSE: MRO) to a buy from neutral, with a price target of $21, which is higher than the $18 consensus of various analysts. The new target price implies a gain of more than 33% from the current price of $15.7.

2. Noble Corporation PLC (NYSE: NE) from underweight to neutral. However, the target price of the stock is unchanged at $7.5, which is below the consensus target price of $8. The stock closed at $6.39 hitting a new multi-year low.

3. Patterson-UTI Energy Inc. (NASDAQ: PTEN) to neutral from underperform. The new target price on the stock is $22, whereas the consensus target price is also the same. The stock closed at $19.96.

4. Sasol LTD. (NYSE: SSL) to a buy from an earlier rating of neutral. While the consensus target price of the stock is $32.09, the stock closed the day at $27.71.

5. Devon Energy Corp. (NYSE: DVN) makes it to the US 1 list of top ideas for Merrill.

Notwithstanding, the valuations of the energy sector at 40 times its forward price-to-earnings (P/E) is more than double to the S&P 500’s forward P/E of 17, according to Yardeni Research.

Though the Merrill Lynch report agrees that “energy looks expensive on depressed earnings,” they believe that “higher oil prices should drive higher earnings estimates. Investors are still underweight the sector and the sector’s weight in the S&P 500 has fallen to historically bullish levels”.

Elderly Germans may have to keep working until the age of 69 if a Bundesbank proposal is adopted.

It says Berlin should consider raising the retirement age to that level by 2060, from around 65 at the moment.  The central bank says that otherwise the country may struggle to honour its pension commitments. It points out that the state pension system is in good financial health at present, but will come under pressure in coming decades. The Bundesbank says that as baby-boomers - those born in the post-World War Two period - retire, there will be fewer younger workers to replace them.. The retirement age for Germans is set to rise gradually to 67 by 2030.  However, the bank believes that from 2050 this increase will not be enough for the German government to keep state pensions at their target level of at least 43% of the average income.  It is therefore proposing pushing the retirement age up to 69.  "Further changes are unavoidable to secure the financial sustainability (of the state pension system)," the Bundesbank said in its monthly report.  But German government spokesman Steffen Seibert said they stood by retirement at 67.  "Retirement at 67 is a sensible and necessary measure given the demographic development in Germany. That's why we will implement it as we agreed - step by step," he added.

You can see the oil industry's woes for yourself, at anchor in the Firth of Forth. Very Large Crude Carriers are parked off the coast of East Lothian until the price rises, full of North Sea oil recently loaded through the Hound Point terminal.  Onshore storage facilities are full. You can see other tankers at rest and laden with the crude stuff off the coasts of Suffolk and Cornwall.   The gamble made by oil traders is that the cost of storing oil in these tankers - two million barrels in each of the larger ones - is less than the gain to be made out of waiting to sell it.  But industry hopes of a rise in the oil price have been dashed time and time again over the past two years.  Other consequences can be seen over the horizon, on Shell platforms, where Wood Group maintenance workers are back on strike this coming week, in protest at the sharp cut to their pay.  Others have protested at the change to rotas, shifting from two-week turnarounds to three-weeks. The consequences were also clear from another grim week for the oil and gas industry, as the majors unloaded their half year results.  The message was consistent, and no reassurance to those offshore workers facing diminished pay and conditions - the cost-cutting goes on.  As the results were published, the oil price fell yet again. Brent crude fell below $43, down 20% from a peak it reached in early June.  With global supply still buoyant, the short-term expectation is for a continued fall, even if those tankers at anchor in the Forth are a sign of expectations that the price will pick up again before too long.  In Britain, it is no compensation for the oil industry that the dollar value appear more attractive in pounds, following the weakening of sterling. The industry thinks, invests, accounts and reports in US dollars. The exchange rate becomes an issue when it reaches the customer.  That rise in the sterling price for a given dollar rate represents the increased cost, for those who earn and invest and buy their fuel in pounds - businesses and households alike.

Investors’ love for bonds continued in July, with intermediate-term bonds seeing an inflow of $15 billion for the month — the largest inflow of any Morningstar category. Intermediate-term bonds, which have gained 4.74% the past 12 months, have led Morningstar’s monthly report for the past five months. At the same time, investors — mainly with advisers at their sides — yanked $27.3 billion from U.S. stock funds and $5.3 billion from international stock funds. For the most part, investors seem to be driven by fear, not greed, said Todd Rosenbluth, director of ETF and mutual fund research at S&P Global Market Intelligence. “There’s a nervousness among investors, given that we’re in the 8th year of a bull market,” Mr. Rosenbluth said. Rotating into investment-grade corporates isn’t exactly a daring move. “Verizon, ATT, General Electric are all doing fine.” Investors also seem to be less convinced that passively managed fixed income funds are better than actively managed ones, Mr. Rosenbluth said, despite the fact that any supporting data for active management is “mixed at best.” Investors put $13.5 billion into actively managed bond funds, vs. $20.5 billion for passively managed once. In contrast, investors pulled $32.9 billion from actively managed stock funds and added $33.8 billion to actively managed stock funds. The big worry is whether investors are seeking riskier types of bonds in their search for yield. Unfortunately, the answer seems to be “yes.” High-yield bonds, which have returned an average 13.59% this year, saw a $3.2 billion inflow in July. Emerging-markets bond funds saw a $2.9 billion inflow. Those funds have gained 12.88% this year.  Rising interest rates could short-circuit any bond rally, although that doesn’t seem to be a danger in Europe, where the economy is still stagnant. But both high-yield funds and emerging-markets funds could take significant hits if the U.S. or world economy falls further.

Oil charges into bull market territory on hopes of output freeze Brent crude charged into bull market territory, smashing $50 a-barrel, as the world’s biggest oil producers prepared to discuss a possible output freeze at next month’s Opec meeting in an attempt to curb the global supply glut.Since hitting a low of $41.69 on August 3, oil has rallied almost 22pc, touching an intraday high of $50.87 yesterday - its highest level since July 4 when it touched $51.29. The latest leg up in the black stuff is pinned on the hopes that Opec’s meeting in Algeria on September 26 to 28, which takes place on the sidelines of the International Energy Forum, will revive talks on freezing production levels to help bolster prices. It was also lifted by the weak dollar which makes commodities cheaper for other currency holders. However, the oil price bounce comes less than three weeks after it fell into bear market territory, having fallen by more than 20pc from June 8 to July 29 amid oversupply concerns and pressures about slowing economic growth. Joshua Mahony, of IG, cautioned: “Given that this market turned higher almost instantaneously after confirming a bear market earlier in the month, perhaps this definition should be something to worry about rather than drive enthusiasm.”

The return of the bulls prompted oil majors to make gains, BP rose 2.8p at 435.6p, Tullow Oil climbed 5.5p to 239.6p and Amec Foster Wheeler advanced 13.5p to 540.5p.

Britain’s economy will slow down but should not go anywhere close to a recession, according to economists at credit ratings agency Moody’s, while growth in the rest of the world is also “stabilising.” Although markets dived on the referendum result in June, stock prices have recovered and now economists also believe the impact of the vote will be relatively modest, compared with some early fears.  The lower pound should support economic growth in the UK, Moody’s said, while the government is expected to loosen the purse strings to shore up GDP.

Moody’s economists predict growth of 1.5pc this year and 1.2pc in 2017.

 

SAN FRANCISCO — Cisco Systems, the computer-networking giant that is in the midst of a major technological pivot, on Wednesday said it will eliminate up to 5,500 jobs.

The job reduction is Cisco's second major one in two years. The San Jose, Calif.-based company laid off 6,000 in a restructuring in 2014.  The Silicon Valley company announced the cuts — about 7% of its global workforce — during its fiscal fourth-quarter earnings report. Sluggish spending by corporations and telecom carriers on network switches and routers, Cisco's big moneymakers, have prompted it to shake up staff ranks as it turns toward other fields, such as cloud computing.  The news sent Cisco shares (CSCO) down 1%, to $30.36, in after-hours trading.

Cisco slightly beat analysts’ estimates with a quarterly profit of $2.8 billion, or 56 cents a share, on revenue of $12.64 billion, off 1.6% from a year ago. Adjusted profits would have been 63 cents. Analysts surveyed by FactSet predicted adjusted earnings of 60 cents a share on revenue of $12.57 billion.

The Financial Services and Markets Authority (FSMA) of Belgium has issued an announcement to inform that the authority establishes a framework for the distribution of OTC Derivatives (Binary options, CFDs, etc.).According to FSMA’s announcement, the distribution of certain financial derivatives among Belgian retail clients will be restricted as from 18 August 2016. Certain derivatives such as binary options, CFDs with leverage, etc. may not be distributed, and certain distribution practices will also be prohibited. The Regulation drawn up by the Financial Services and Markets Authority (FSMA) on this matter has been approved by royal decree.  The Royal Decree of 21 July 2016 is published with today’s date in the Belgisch Staatsblad/Moniteur belge (Belgian Official Gazette). The Royal Decree approves the FSMA’s Regulation (published in French and Dutch) on the distribution of OTC derivatives. The Regulation applies to derivative contracts distributed to consumers in Belgium, usually from abroad, via electronic trading platforms. According to the providers, these are products that can generate high yields at a time of historically low interest rates. In reality, however, these are products that are marketed aggressively and are extremely risky, often involving transactions over a very short period and without any connection to the real economy.

The Regulation consists of two elements which apply cumulatively. The first element is a ban on distribution of a few specific types of derivative contracts to consumers via electronic trading platforms. These are:

• binary options: a binary option is a contract in which one party undertakes to pay the other party a specified amount if the value of a given asset (listed share, currency, commodity, index, precious metal, etc.) changes in a specified direction within a predetermined – sometimes very short – period (a few seconds or minutes);
• derivative contracts whose maturity is less than one hour;
• derivative contracts with leverage, such as contracts for difference (CFDs) and rolling spot forex contracts. A CFD is a contract between a buyer and a seller in which the parties agree to exchange the difference between the current price of an underlying asset (listed share, currency, commodity, index, precious metal, etc.) and the price of that asset at the end of the contract. A rolling spot forex contract is a type of contract for a foreign exchange transaction which is renewed indefinitely until one of the parties closes its position; at that point, the transaction is settled in cash on the basis of the changes in the underlying currency since the beginning of the contract.

IMF surveillance, intended to detect economic vulnerabilities and imbalances, was inadequate. While staff sometimes pointed to booming credit, gaping current-account deficits or stagnant productivity, they downplayed the implications. This reflected a tendency, conscious or not, to think that Europe was different. Its advanced economies did not display the same vulnerabilities as emerging markets. Strong institutions such as the European commission and the European Central Bank (ECB) had superior management skills. Monetary union, for some less-than-fully articulated reason, changed the rules of the game. Such self-serving claims were in the interest of European officials, but why was the IMF prepared to accept them? One answer is that European governments are large shareholders in the Fund. Another is that the IMF is a predominantly European institution, with a European managing director, a heavily European staff and a European culture.  Still on familiar ground, the report goes on to criticise the IMF for acquiescing to European resistance to debt restructuring by Greece in 2010; and for setting ambitious targets for fiscal consolidation – necessary if debt restructuring was to be avoided – but underestimating austerity’s damaging economic effects.  More interestingly, the report then asks how the IMF should coordinate its operations with regional bodies such as the European commission and the ECB, the other members of the so-called troika of Greece’s official creditors. The report rejects claims that the IMF was effectively a junior member of the troika, insisting that all decisions were made by consensus.

A cultural association based near Barcelona is asking the mobile messaging service WhatsApp to add the porrón to its list of emojis, claiming the spouted glass pitcher possesses a “cultural and social meaning” that warrants recognition. In a petition at Change.org, the Blaus de Granollers argue that the wine flask – beloved of locals and feared and abused in equal measure by tourists who struggle to master its vinous stream – is “a symbol of our land” that occupies a unique place in Catalan culture. “[It] is much more than a kitchen tool,” the group says in a letter to WhatsApp’s CEO, Jan Koum. “It helps to create community, to strengthen bonds during meals.” The porrón, it adds, is passed from hand to hand, allowing many people to drink from the vessel, thereby creating a sense of cohesion and equality.  “It makes you feel part of a team. Besides, it helps us Catalans remember our roots – and you already know that if you lose your roots, you lose your identity.”

Perpetually weak growth has bedevilled attempts to tackle Greece’s chronic debt problem. Back in May 2010, when the European commission, the European Central Bank and the International Monetary Fund organised the first bailout, it was assumed that a rapid recovery and tight budget controls would see Greek national debt as a share of gross domestic product fall steadily. These forecasts proved to be wildly optimistic. As Greece sank deeper and deeper into recession, the debt ratio carried on rising, and now stands at about 180% of GDP.  Unfortunately, lessons have not been learned. The 2015 bailout package assumes that Greece will run a budget surplus, once debt interest payments are excluded, of 3.5% of GDP year in and year out. The IMF, which now has a more realistic assessment of Greece than the commission or the ECB, says few countries have managed to sustain budget surpluses of this size, and that Greece could do so only by further cutting wages and pensions. The IMF also thinks “it is no longer tenable” to imagine that Greece can move from having one of the eurozone’s weakest productivity growth rates to the highest. The IMF says that without debt relief, Greece’s debt could hit 250% of GDP by the middle of the century. Germany would prefer those discussions to be delayed until after its election in autumn next year. But the chances are that Greece will be back in the headlines before then.

Italy's economy failed to grow between April and June as the country struggled with its creaking banking sector. GDP growth shrank to 0% in the second quarter compared to 0.3% in the first quarter.Germany's economy also slowed in the second quarter, albeit less markedly than had been expected.  Europe's largest economy expanded by 0.4%, down from 0.7% in the first quarter, but above forecasts of 0.2%. Overall, a second estimate of GDP across the eurozone confirmed that growth halved to 0.3% from 0.6% in the first three months of the year.GDP also fell across the 28-nation European Union to 0.4% from 0.5% between the first and second quarters.  In Italy, analysts had expected GDP to grow by between 0.1% and 0.3%.Italian Prime Minister Mario Renzi, is battling to reduce the bad debt in its banking sector, which is currently buried under €360bn worth of bad loans. Monte dei Paschi di Siena, Italy's third largest bank and the world's oldest lender, is saddled with €46.9bn of bad debt.  Alberto Bagnai, economic policy professor at the University of Chieti-Pescara, said: "There is no way to solve the banking problem without economic growth. If the whole nation doesn't start earning more it can't pay back its debts - public or private." The government expects the country to grow by 1.2% this year. However, the International Monetary Fund recently reduced its economic growth from 1.1% to 1%.The new data means that growth in the Eurozone's three biggest economies - Germany, France and Italy - has either slowed or completely stalled between the first and second quarters. France recorded no growth between April and June after GDP rose by 0.7% in the first quarter, boosted by business from the Euro 2016 football tournament.

Turkey tried to assure its citizens and the outside world on Thursday that there will be no return to the deep repression of the past, even though President Tayyip Erdogan has imposed the first nationwide state of emergency since the 1980s.  With Erdogan cracking down on thousands of people in the judiciary, education, military and civil service after last weekend's failed coup, a lawmaker from the main opposition party warned that the state of emergency created "a way of ruling that paves the way for abuse". Announcing the state of emergency late on Wednesday, Erdogan said it would last at least three months and allow his government to take swift measures against supporters of the coup that attempted to topple him over the weekend.  It will permit the president and cabinet to bypass parliament in passing new laws and to limit or suspend rights and freedoms as they deem necessary. For some Turks, the move raised fears of a return to the days of martial law after a 1980 military coup, or the height of a Kurdish insurgency in the 1990s when much of the largely Kurdish southeast was under a state of emergency declared by the previous government.   Deputy Prime Minister Mehmet Simsek - who previously worked on Wall Street and is seen as one of the most investor-friendly politicians in the ruling AK Party - took to television and Twitter in an attempt to calm nervous financial markets and dispel comparisons with the past. "The state of emergency in Turkey won't include restrictions on movement, gatherings and free press etc. It isn't martial law of 1990s," he wrote on Twitter. "I'm confident Turkey will come out of this with much stronger democracy, better functioning market economy & enhanced investment climate." But markets were less than confident. The lira currency was near a new record low, while the main stock index was down 3.6 percent. The cost of insuring Turkish debt against default also surged.  Erdogan blames a network of followers of an exiled U.S.-based cleric, Fethullah Gulen, for the attempted coup in which 246 people were killed and hundreds more wounded as soldiers commandeered fighter jets, military helicopters and tanks in a failed effort to overthrow the government.