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Tuesday, February 22, 2011

EUR/USD wave analysis for February 22, 2011



Having declined by slightly more than 50 pips the EUR/USD currency pair is demonstrating uncertainty in its attempt to form another downside section of the estimated inclined triangle. At the same time its d wave looks quite complete which together with overbought Stochastic might indicate forthcoming formation of the e wave of this complicated correction structure. However, we should not exclude the possibility of the wave in the d to become more complex and prolonged, which might result in advance above the 1.3750 level.

Performed by Alexander Dneprovskiy, Analytical expert
InstaForex Companies Group © 2007-2011

Stock markets fall on Libyan unrest and high oil price

As violence spreads across Libya, fresh concerns have been raised about a fall in global oil supply
European stock markets have fallen sharply after unrest in Libya and the Middle East sent oil prices to a two-and-a-half year high.

The UK's FTSE and France's Cac index lost about 1.5% in early trading, while Germany's Dax was 0.7% lower.
Earlier, Asian stocks fell, in part due to an earthquake in New Zealand.
London Brent oil rose by almost $2 a barrel to $107.7, while US light crude jumped $8 a barrel to $94.2 following a market holiday in the US on Monday.
The price of London Brent crude had risen by more than 3% on Monday.
Brent is now at its highest price since September 2008, while US crude is at its highest point since October of the same year.
On Tuesday, Standard & Poor's (S&P) credit rating agency downgraded Libya from A- to BBB+, and said it could lower the rating further.
"We expect that the violent outbreaks of civil unrest seen in Libya's eastern region, and particularly the city of Benghazi, of the past few days will persist," S&P said.
Fellow agency Fitch downgraded the country on Monday.

Growing tension
 
Libya is the world's 12th-largest exporter of oil, and there are concerns that growing tensions in the country could hit oil production.
Spillover into other big regional producers, such as Saudi Arabia and Kuwait, is another concern that is forcing up the price of oil.
"The market is reacting to violence in the Middle East... and not to fundamentals," said United Arab Emirates Energy Minister Mohammad bin Dhaen al-Hamli.
However, Saudi Arabia's Oil Minister Ali al-Naimi said his country's spare production capacity could help "compensate for any shortage in international supplies".
Global oil companies have been pulling staff out of Libya as unrest continues to spread.
On Tuesday, Royal Dutch Shell said it had successfully relocated all its expat employees.

Very nervous

The rising price of oil, which fuels further rises in already high inflation rates and hits corporate profits, affected stock markets in Asia and Europe.
In France the Cac 40 index lost 1.6%, while the UK's FTSE 100 index fell 1.3%.
The Italian stock exchange, based in Milan, was suspended on Tuesday due to "technical problems". The market fell 3.6% on Monday on concerns about Italian companies' exposure to Libya.
Earlier, Japan's Nikkei index closed down 1.7%, South Korea's Kospi ended the day 1.7% lower and Hong Kong's Hang Seng was down 2.1%.
"The market is very nervous over news of violence in Libya, and that's driving prices," said Yinxi Yu of Barclays Capital.
"It looks like the uncertainty in the region is not going to be resolved anytime soon."
Unrest in the region could spark a wider correction in stock markets, analysts said.
"Given the fact that we have seen massive gains in stock markets over the last few months, investors have been nervous about a possible correction for some time," said Michael Hewson at CMC Markets.
"The tensions in the Middle East with Libya imploding and concerns that the unrest could spread to Saudi Arabia could provide a catalyst for [this] correction."
In Asia, market sentiment was also affected by an earthquake in New Zealand.
New Zealand's NZX 50 stock index fell 0.7% on concerns that the damage caused by the earthquake will add further to the country's growing debt.
The New Zealand dollar also weakened by nearly 2% against the US dollar.

Taking flight

Companies that depend on fuel, such as airlines, were among the biggest fallers on Asia's stock markets.
Fuel represents about 40% of operational costs for airlines, and investors are worried that the higher prices will eat into profits.
Shares in Singapore Airlines, the world's second-biggest carrier by market value, declined 1.7%, while Korea Airlines slumped 9% and Cathay Pacific Airways was down 4.5%.
In Taiwan, China Airlines lost 6%, dropping to its lowest value since 30 July. Shares in Australia's national carrier Qantas slipped 1.2%.
In Europe, Germany's Lufthansa was the biggest faller on the country's Dax index, slipping 2.4%, while in the UK, International Consolidated Airlines, formed from the merger of British Airways and Iberia, fell 3.6%.


info
 
 



Asos Sets Up Shop on Facebook

Fashion Retailer Asos Sets Up Shop on Facebook

The U.K. clothing site is the first European fashion retailer to open an e-tailing outpost inside the social network

Sarah Townsend will no longer have to leave her 507 Facebook friends behind to buy the £35 ($55) baggy sweater she's been eyeing from Asos. On Jan. 27, the hip, London-based online clothing site became the first European fashion retailer to open an e-tailing outpost inside Facebook. Competitors such as Gap (GPS) and Inditex's Zara use the networking site largely to communicate with fans. Visitors to Asos's store on Facebook can shop the company's entire stock of 150,000 products without leaving the site. They also can post photos of items to their wall so friends can comment on potential purchases. "It's something I want to do more of," says Townsend, a 25-year-old marketing professional in London.
Asos and other retailers are going after consumers that marketing pros call "moppers"—as in mobile shoppers. Britain's No. 2 online retailer, whose name stands for "as seen on screen" (it has no physical stores), logged a 54 percent revenue increase, to $371 million, in the nine months ended Dec. 31. Analysts estimate pretax profit will reach $44.5 million this year. "Asos is leading the way," says Andrew Wade, a retail analyst at Numis Securities in London, who recommends clients buy Asos shares. "I'd expect to see other people do the same thing."
Moppers already use mobile devices to browse online stores, comparison shop, and get recommendations from friends. Making a purchase on their Android phones or Apple (AAPL) iPads is a natural next step. In the U.K. alone, mobile commerce is forecast to more than double by 2013, to $440 million, according to market researchers Verdict Research and Ovum.
Facebook says about 200 million of its 500 million members worldwide access the site via mobile devices. And these users are twice as active as those who use their home or work computers. The Palo Alto (Calif.)-based company is ramping up efforts in the U.S. to entice companies to sell their wares on its pages. Two that have already worked with developers to set up shop are J.C. Penney (JCP) and Delta Air Lines (DAL). In three to five years, 10 percent to 15 percent of total consumer spending in developed countries may go through social networking sites such as Facebook, says Mike Fauscette, an analyst at research firm IDC in Framingham, Mass. "There's money in this for all of the players involved," he says.
At Asos, which also caters to shoppers in the U.S., Germany, and France, purchases from mobile devices amounted to just $1.5 million in December, or about 3 percent of its sales. The company expects that figure to start ticking up with the opening of its Facebook store last month. "Our [customers] are on Facebook all day, every day," says Chief Executive Officer Nick Robertson. For now the Asos store inside Facebook can only be accessed via a PC or an iPad. The company, which has close to 465,000 "likes" on Facebook, is at work on an app that will allow smartphone users to shop its site.
The owner of the world's largest e-commerce marketplace, EBay (EBAY) forecasts global mobile sales will double this year, to $4 billion. "Fashion is the biggest category for growth, and the U.K. is the fastest-growing market in Europe," says Patrick Munden, head of seller communications at eBay UK. British grocers are also seeing a rise in mobile transactions. Ocado reported that about 6 percent of orders in the first half of last year came through its "Ocado on the Go" smartphone app. Tesco, Britain's top retailer, upgraded its app in October to include a feature that allows shoppers to add products to their virtual shopping basket simply by photographing a product's barcode. Enjoying a good bottle of Chianti at a restaurant? Scan the label and it's yours.
Not all U.K. retailers are rushing headlong into mobile commerce. Jonathon Brown, head of online at department store chain John Lewis, says the retailer uses social network sites such as Facebook and Twitter as more of a "listening and protective tool" to respond to customer complaints and comments. Launching a transactional site on Facebook is something the company would consider, he added. Smartphones and iPads already generate about 5 percent of the traffic on its online store. A smartphone application that will offer fashion advice and buying guides are due to launch sometime in the first half of 2011.
For tech-savvy shoppers such as Townsend, who admits to a $160-a-month Asos habit, the new Facebook store could make it difficult to keep addictions in check. "I look at Asos probably every fortnight," she says. "It's the first place I go."

info

 

Wednesday, February 16, 2011

World's biggest miner BHP posts record $10.5bn profits

 The world's biggest mining firm BHP Billiton has made record half-year profits thanks to strong demand and high prices.

Net profit jumped 72% to $10.52bn (£6.5bn) in the six months to the end of December, BHP said.
It also unveiled plans to spend $80bn on new projects worldwide, and buy back $10bn of shares from investors.
BHP said it saw demand growth slowing in 2011, but added that economic conditions should help earnings.
"While we expect a slowdown in the growth rate of global commodity demand in calendar year 2011, the economic environment still underpins a robust near-term outlook for our products," the company's chief executive Marius Kloppers said.
Global demand for metals is being driven by China and other emerging economies
'Biggest surprise'

The company said it plans to spend the $80bn over the next five years as it looks to develop new projects.
Mining and commodity companies are having mixed results when it comes to identifying and accessing new deposits.
Analysts said that the supply constraints are one of the reasons commodity prices have climbed so high.
BHP said that it would use the money to develop projects in Australia, Chile and Canada.
"The biggest surprise is the commitment to spend $80bn over the next five years," said Mes Bruce, a portfolio manager at Perpetual Investments.
"We think that this demonstrates the challenges that the industry is having satisfying rising demand, while replacing declining production from mature operations."

No friends?

BHP was recently forced to call off a merger with Canada's giant Potash Corp, and it was the company's latest significant takeover attempt to run into trouble in the past three years.
With virtually no debt, and with no obvious target for a tie-up the company has a large cash pile and decided to accelerate a share buy-back scheme.
Such a move reduces the number of shares in issue, meaning there are fewer pieces of the company, which then attract a bigger share of any profits.
A similar move has been announced by BHP's rival, Rio Tinto.
BHP shares fell by 1% on the earnings news, with analysts saying it was in line with market expectations.

bbc

SocGen Fourth-Quarter Net Jumps on Investment Bank


                                                     February 16, 2011, 4:26 AM EST
By Fabio Benedetti-Valentini
(Adds deputy CEO comment in 16th paragraph.)
Feb. 16 (Bloomberg) -- Societe Generale SA, France’s second-largest lender, said fourth-quarter profit quadrupled, helped by a turnaround at its Russian unit and on fewer writedowns at the corporate and investment bank.
Societe Generale, based in Paris, rose as much as 4.2 percent after saying today that net income climbed to 874 million euros ($1.18 billion) from 221 million euros a year earlier, That beat the 865 million-euro average estimate of 12 analysts surveyed by Bloomberg.
Chief Executive Officer Frederic Oudea is counting on the revival of earnings at the Russian retail unit, which has been unprofitable since at least 2009, to help the bank reach a goal of 6 billion euros of annual profit by 2012. That plan is being buoyed as the company posts lower writedowns after recording losses of more than 11 billion euros during the credit crisis.
“SocGen hasn’t disappointed and it’s a cheap share,” said Simon Maughan, the co-head of European equities at London-based MF Global Ltd. “It’s a leading indicator for all of the banking industry.”
Societe Generale rose as much as 2.04 euros to 50.90 euros, its highest price in a year, and traded at 50.88 euros at 9:57 a.m. in Paris trading. That gives the bank a market value of 37.6 billion euros.
The company in 2010 “embarked on a far-reaching transformation of the group,” Oudea, 47, said in a statement. “We are determined to continue” with the plan and meet next year’s profit target, he said. Full-year earnings surged almost sixfold to 3.92 billion euros.
Writedowns
The lender had gross losses of 164 million euros in the quarter from risky assets including asset-backed securities and debt backed by U.S. bond insurers, down from about 1.6 billion euros a year earlier, according to company data. For the full year, the bank booked 625 million euros in writedowns and provisions for risky assets, less than its forecast of as little as 700 million euros.
The Russian consumer-banking business had a 13 million-euro profit in the quarter compared with a loss of 58 million euros a year earlier, according to a presentation on the bank’s website. Russia, the lender’s second-largest market by employees, should become the biggest contributor to international-retail earnings in 2015, it said on June 15.
Societe Generale plans to pay a 2010 dividend of 1.75 euros a share compared with 25 cents a year earlier. The company reiterated it doesn’t need to sell new shares to comply with new capital requirements as the bank can reach a core Tier 1 ratio, a key measure of financial strength, of about 8.5 percent at the end of 2013.
Share Rally
The Russian turnaround and the drop in writedowns are helping the company, which had a record trading loss in 2008 from unauthorized bets by Jerome Kerviel, regain favor with investors as it narrows the earnings gap with larger French competitor BNP Paribas SA.
Societe Generale, whose shares trailed those of BNP Paribas every year from the start of the credit crisis in 2007 through 2010, has gained 45 percent since June 15, when Oudea announced the 2012 profit target. That’s more than the 23 percent advance of BNP Paribas, which is slated to report earnings tomorrow.
BNP Paribas’s market value, at about 70 billion euros, is 85 percent larger than Societe Generale’s. In May 2007, before the financial crisis took hold, the gap was as small as 12 percent.
Risky Assets
That comes as investors bet Oudea’s plan to balance earnings from corporate- and investment-banking with higher revenue from consumer lending in countries such as Russia will pay off.
The corporate- and investment-banking unit had a 311 million-euro fourth-quarter profit compared with a 562 million- euro deficit last year as Societe Generale trimmed losses from risky assets it’s winding down.
Corporate- and investment-banking revenue more than doubled to 2 billion euros, beating analysts’ estimates of 1.84 billion euros. Societe Generale had said it expected the unit to have about 2 billion euros of quarterly revenue last year.
Sales at the capital-markets division rose 20 percent to 1.14 billion euros in the fourth quarter. The markets business had a “rather good” start in 2011, Deputy Chief Executive Officer Severin Cabannes said in an interview with Bloomberg Television.
French Boost
Profit at the French retail networks rose 53 percent to 302 million euros, in line with analysts’ estimates for 306 million euros. Societe Generale posted a profit of 94 million euros from its insurance and financial-services division from a loss of 37 million euros a year earlier.
Overall earnings at the bank’s international-retail networks gained 4 percent to 104 million euros, helped by the Russian business returning to profit, while the Romanian and Greek subsidiaries “suffered the effects of the recession,” Societe Generale said.
The company last year probably made more than a quarter of its total revenue from emerging countries, mostly in central and eastern Europe, where economic growth is higher than in France, Keefe, Bruyette & Woods Ltd. analyst Jean Pierre Lambert said in a note to investors last month. That compares with 15 percent at BNP Paribas and 9 percent at Credit Agricole SA, France’s third- biggest lender, according to KBW.
Egyptian Business
The French lender, owner of Egypt’s second-largest listed bank, has probably the most at risk among European banks in the Arab world’s most populous country, analysts and economists have said. The Egyptian army said this week it will rule for six months or until general elections are held after a popular uprising led to the toppling of President Hosni Mubarak’s 30- year-old-long regime.
Overall, French banks have the most at stake among international lenders in Northern Africa.
They had a combined $52.3 billion of loans in Algeria, Egypt, Libya, Morocco and Tunisia at the end of September, according to data from the Bank for International Settlements. That’s 65 percent of the total claims European banks have on borrowers from these five countries.
Even so, French banks’ exposure to Northern Africa is smaller than the $59.4 billion on Greece, where both Societe Generale and Credit Agricole operate unprofitable consumer- banking networks.
Societe Generale owns 88 percent of Greece’s Geniki Bank SA, which has been unprofitable each year since 2003. The French lender posted a loss of 66 million euros in the fourth quarter for the Greek business, compared with a 26 million-euro deficit a year earlier.
Societe Generale had a combined net risk of 9.3 billion euros tied to the sovereign debt of Greece, Ireland, Italy, Portugal and Spain at the end of December.


businessweek

Thursday, February 10, 2011

Indecision day for the MPC

10/02/11
Will the indecisive MPC finally bite the bullet and raise rates today?  Statistically, the chances are certainly higher this month. During the MPC’s history, exactly half of all rate changes have occurred in inflation report months, the next one due to be published on Wednesday. Inflation report months are an opportunity for the Bank to re-assess the longer-term inflation outlook, so it is not surprising that it can result in changes of views within the committee. In recent weeks, both the currency and interest rate markets have priced-in a higher probability of a rate hike over coming months, in response to both the much higher-than-expected December inflation outcome and the fact that two MPC members voted for a rate increase at the January meeting.  Looking at the forward market in overnight rates, in early January a 20% probability was attached to a 25bp rate hike at the May meeting. By yesterday, this had adjusted to being fully factored in. The pound's sensitivity to interest rate expectations has certainly increased so far this year, with the correlation between cable and two-year interest rate spreads (between the US and the UK) having increased to around 0.55 from 0.40.
Although surveys of economists are not showing any officially going for a rate hike, the market has definitely priced in some risk of a move. As such, given this heightened sensitivity to interest rate spreads, the pound may suffer in the near term if there is a no-change decision today. Thereafter, it is the inflation report next week that will serve to solidify or undermine market expectations for a tightening in May. Sterling will need a relatively hawkish report to keep its place as one of the better-performing currencies of the year so far.

Commentary

Julius and Besley argue for a rate hike. Ex-MPC members De-Anne Julius and Tim Besley both suggested yesterday that they would vote for a rate hike today if they were still on the Committee. They opined that a 25bp rate rise would send a useful signal to both markets and consumers that the Bank was concerned about rising inflation.  Julius was particularly scathing of Mervyn King's recent attempts to separate the external inflation pressures from the domestically-generated, suggesting that such an exercise was 'fanciful'.
Some Fed officials are getting more concerned about inflation. Richmond Fed President Lacker and Dallas Fed Chief Fisher have both expressed some reluctance about QE2 over recent days, suggesting that there is a growing risk of accelerating inflation. Fisher, who is a voter on the FOMC this year, has described QE2 as "pushing the envelope", while Lacker claimed that inflation is capable of accelerating "even if the level of economic activity has not yet returned to pre-recession trend". In our view, Lacker makes a strong point. There is a very real danger in advanced economies that central bankers rely too heavily on simplified models of excess capacity as intellectual ammunition for policy inaction.
Euro still looks well-bid. On a day when fx markets were generally becalmed, it was the continuing buying interest in the euro that again caught the eye. Having tested the 1.35 level earlier this week, it appears that shorts have scrambled for cover as hedge funds and sovereign wealth funds emerged from the shadows. The recovery in the euro has been gentle, and on relatively light volume, but still visible nonetheless. Helping the euro to climb above the 1.37 level has been a marginal improvement in interest rate differentials. EUR/GBP has drifted up above 0.85, and EUR/CHF reached 1.3170.
Pound unaffected by disappointing trade figures. Last month the excuse was higher oil imports and this month it was a surge in aircraft imports. Whichever way you cut and slice the latest UK trade figures, they are an unmitigated disappointment. In short, there is still absolutely no sign that the (supposedly) competitive exchange rate is triggering a decisive switch away from imports towards domestically produced goods, although there has certainly been some encouraging growth in exports. Indeed, December's goods trade gap of £9.25bn was a record monthly shortfall. In 2010, the goods trade deficit rose to £97.2bn, up from £82.4bn in the previous year. Imports of oil and basic materials alone rose by over 30% last year. The Bank would be aware that these figures imply that net exports actually subtracted from growth very slightly in the last quarter. Hopes that the trade side would contribute to growth at some point are looking increasingly forlorn.


Looking Ahead



Thursday: EC: ECB Monthly Report; IT: Industrial Production, December (expect 0.3%, previous 1.1%); UK: Industrial Production, December (expect 0.5%, previous 0.4%); MPC Meeting (no change); US: Initial Claims (previous 410K); Monthly Budget Statement, January (expect -$59bn).
Friday: GER: CPI, January f (expect -0.5% MoM and 2.0% YoY, preliminary estimate was 1.9% YoY); FR: Non-farm payrolls, Q4 (previous 0.1%); UK: PPI Output Prices, January (expect 0.5% MoM and 4.4% YoY, previous 0.5% and 4.2%); PPI Input Prices, January (expect 1.4% MoM and 12.7% YoY, previous 3.4% and 12.5%); US: Trade Balance, December (expect -$40.5bn, previous -$38.3bn); University of Michigan Consumer Confidence, February p (expect 74.5, previous 74.2).

GBP/USD wave analysis for February 10, 2011


The GBP/USD pair has been trading in the range of a sloping correction structure and has formed a series of waves abc. At the same time, if the price of the currency pair manages to mark current triangular correction, the pound will have an opportunity to continue the uptrend and test again the before reached high near the 1.6275 level.

Performed by Alexander Dneprovskiy, Analytical expert
InstaForex Companies Group © 2007-2011

Hong Kong's stock exchange open to alliances





The Hong Kong stock exchange has said it is open to international alliances, suggesting there is likely to be more consolidation among exchanges.



HKEx has so far not looked to merge but now faces more competition from other trading pools.

On Wednesday, the London Stock Exchange confirmed a tie-up with TMX of Canada, while Deutsche Boerse and NYSE Euronext said they were in advanced talks.
News of the talks boosted shares in the exchanges in early Thursday trade.
Deutsche Boerse jumped 6% on Thursday, while NYSE Euronext's Paris-listed shares rose 8%.
However, shares in Hong Kong Exchanges and Clearing (HKEx) dropped 4.9% - its biggest fall since May 2009 - on fears the mergers elsewhere would increase competition.
"Due to changes in the financial market landscape, HKEx will consider international opportunities for alliances, partnerships and other relationships that present strategically compelling benefits consistent with its focus on markets in China," the exchange said in a statement.
HKEx has so far not seen the need to merge because of its strong pipeline of international public offerings (IPOs) from China, while other Asian exchanges have been reluctant to seek tie-ups due to tight ownership and political obstacles.
'Strategic sense'
But analysts say that the situation is now changing.

"The competitive threat from alternative trading pools makes strategic sense for traditional exchanges to combine resources so they can compete better," said ABN Amro's Neo Chiu Yen.
This week's takeover talks come as the Singapore stock exchange (SGX) is still seeking clearance for its takeover of the Australian Stock Exchange (ASX).
SGX made its bid in October but has faced political and regulatory hurdles in Australia.
The BBC's business editor Robert Peston said that 30 years ago, national stock exchanges like the LSE were protected monopolies regarded as vital to the functioning of national economies.
But the LSE is not the only operation providing these essential financial services in the UK any longer, because of globalisation, deregulation and technological change, he said.
Derivatives growth New trading venues have eaten into the market shares of traditional exchanges, and those such as the LSE have had to invest heavily in new trading technology and look to higher-margin areas to grow.
One such area is trading in derivatives - contracts whose value is linked to expected future price movements of an underlying asset.
Traders can bet on the future prices of things such as currencies and commodities - including oil, food and metals - as well as stocks.
Increased regulation has reduced margins for stocks at NYSE Euronext to 35%, compared with 55% for derivatives, according to Bloomberg.
And exchanges have cottoned on to this as can be seen by trading volumes. In 2010, equity-trading sales at NYSE Euronext fell 10%, while the options and futures unit gained 14%, Bloomberg said.
Deutsche Boerse and NYSE Euronext have been keen to stress that their proposed merger would create a group that is a world leader in derivatives.
Consolidation among exchanges may raise concern amongst its customers - both companies listing shares and those who wish to trade - about new global monopolies being created and prices being driven up.
But Robert Peston says that while this may be a concern in the short term, any attempt by the newly merged operators to extract too much profit would probably lead to new trading networks springing up.


bbc.co




Rolls Royce reports 4% rise in profits


Rolls Royce, the world's second-largest aircraft-engine maker, has reported a 4% rise in profits, beating analysts expectations.
It also raised its dividend. Retiring CEO Sir John Rose said the bulk of provisions for compensation to Qantas following disruptions to A380 services late last year was included in the 2010 results.
It is estimated that figure could be as high as £50m but some analysts reckon it could go higher, particularly if Airbus gets into the action.
Julia Caesar reports.


Air France-KLM shares hit by profit warning

Shares in Air France-KLM have fallen 10% after the airline issued a profits warning and its chief said there was excess capacity on some routes.

The carrier said that in the past few months it had been hit by industrial action, snow and the disruption in Egypt and Tunisia.
As a result it said it would miss its full-year operating profit target of 300m euros ($408m; £255m).
The news also hit shares in other airlines across Europe.
Shares in International Consolidated Airlines Group, formed last month when British Airways merged with Spain's Iberia, fell 5.3%, while stocks in Flybe and Easyjet were also hit.
Air France-KLM chief executive Pierre-Henri Gourgeon said that there had been an increase in capacity on routes between Europe and the US, adding that some airlines had put seats back onto the market more quickly than the economy could justify.

"The increased capacity we are seeing in this winter season is very high and much higher than it should be," Mr Gourgeon told analysts.
Earlier this week, the airline had reported a 4.8% rise in January passenger numbers - faster growth than the 3.3% rise in seats on offer.
However, Air France-KLM said it had lost 46m euros between October and December - a period when it was forced to cancel about 6,900 flights because of air traffic control strikes in France and disruption caused by heavy snowfall.
  price       change       %
12.63        -0.99     -7.24




bbc.co




The Fallacy of Facebook Diplomacy

In Tunisia, social networks had a role in the fall of Zine al-Abidine Ben Ali CAPUCINE BAILLY/REDUX

By Brendan Greeley

Why "21st Century Statecraft"—the idea that America can use the Internet to influence global events—is more dream than reality.

Mediocre ideas survive longest in government. In business, at least, competition tends to cull the lame and the halt. But in the public sector, theories, particularly when enlivened by events, can linger for decades. All of which explains why, now that Tunisia's dictator has left his country and Egypt's is weighing his options, we may be stuck for a good long while with what the State Dept. calls "21st Century Statecraft."
In January 2010, Secretary of State Hillary Clinton delivered an address in Washington that laid out a way to use the Internet to serve America's foreign policy goals. Protesters in Iran the summer before had gotten news out to the world using the microblogging site Twitter, and Clinton told the story of a seven-year-old girl in Haiti, freed that week from earthquake rubble with the help of a text message. "New technologies do not take sides in the struggle for freedom and progress," she said, "but the United States does."
America would take sides by building tools to route around censorship. A country that would deprive its citizens of information, the Secretary of State argued, would deprive them of a market advantage. And she called on U.S. companies to act on principle, to make access to information part of America's national brand.
Clinton was right that the Internet has a profound effect on the struggle for democracy, and there is a great deal of valuable local work being done online. But the Web is not a uniformly positive force. The dissident who organizes on Facebook, for example, leaves behind a map for security forces to follow. The real question at the heart of 21st Century Statecraft is this: Is America remotely capable of using the Internet to direct events in its favor?
Activists in Tunisia organized on Face­book, and the country's now-deposed dictator, Zine al-Abidine Ben Ali, saw the site as a threat; Al Jazeera has published evidence that the government had been using its domestic control of the Internet to pocket its citizens' Facebook passwords. Last year, however, Sami Ben Gharbia, a Tunisian blogger and activist, questioned the support, through travel and training, that American foundations and companies had begun offering to local activists. He called it "the kiss of death" and wrote that it would erode local relevance and legitimacy, and would replace domestic ties among groups with bridges abroad. He worried that America would favor activists in sexy countries such as China and Iran. And he predicted something that today, watching the Obama Administration's daily hedge on Egypt, seems obvious: "This Internet freedom policy won't be applied in a vacuum," he wrote. "It will continue projecting the same Western priorities." America's instinctive support for the right to speak and assemble can be hard to square with its need for stability. That's as true online as it is in the street.
This is difficult for Americans to hear. We like to make the world a better place, to mold it in our image. (As the British author Graham Greene pointed out more than a half-century ago in The Quiet American, this makes Americans abroad both charming and enraging.) Now, Tunisia has a transitional government and Egypt has a teetering one, owing to upheavals aided by Face­book and Twitter. This is a victory for American ideas and American entrepreneurs. It is a victory for the resilient network America designed. But it is not necessarily a victory for the American government.
There's no telling whether successor regimes will be to Washington's liking. Nor can it be said that all American companies are on the right side of the barricades. According to a 2009 study by Harvard University's Berkman Center, the technology for Tunisia's network filtering—that is, its censorship—was provided by Secure Computing, a U.S. company that has since been acquired by McAfee (MFE) (which is now to be purchased by Intel (INTC)). This is not unusual; many governments in the Middle East use American tools to filter. An American company makes Egypt's tear gas, so it seems unfair to single out Secure Computing for undemocratic behavior. But it certainly makes Clinton's job more complicated.
Facebook hasn't completely adhered to the Secretary's national branding guidelines, either. Jillian York, an Internet freedom researcher at Berkman, tells the story of one of Egypt's more popular Face­book protest groups, We Are All Khaled Said, named for a young Egyptian allegedly killed by police in Alexandria last year. Before parliamentary elections in December, Face­book disabled the group. When asked to explain its decision, the company pointed out that the group's administrators were using pseudonyms, which can keep an activist safe but violates Face­book's terms of service. Face­book restored the group when a new administrator volunteered a real name. The same thing happened to a group that supported Mohamed ElBaradei, the opposition leader. York has similar stories from Hong Kong, Tunisia, Syria, and Morocco.
The problem is not that Face­book bows to autocrats, but that it's not staffed up to fulfill its new accidental mission. People in crisis don't find new platforms; they reach out on the ones they have, the ones they already use to share pictures of babies and picnics. Face­book was designed for the pursuit of happiness; it's not vital despite its frivolity but because of it. Its decisions on so-called takedowns (removing a group or an account) follow an opaque process, with no consistent way to appeal for redress. The company often lacks even the language skills to make moral and political judgments in other countries. Nor does it offer basic constitutional protections such as habeas corpus or the right to face your accuser. Brett Solomon, the executive director of Access, a nonprofit that focuses on Internet freedom, suggests Facebook provide a "concierge service" for activists, a single point of access to help resolve tricky takedown issues. Google's (GOOG) YouTube, according to several activists, is already exemplary in this regard.
To its credit, Facebook has begun offering an encryption method called "https" to users in Tunisia and now Sudan. Gmail offers this, too, worldwide; Yahoo! (YHOO) has dragged its feet. This is a classic problem in diplomacy, as old as the East India Company: States and businesses have different goals. It has never been easy to compel a CEO to spend money in pursuit of state policy, and 21st Century Statecraft hasn't made any of it easier.
As Indira Lakshmanan of Bloomberg News reported on Jan. 27, it's hard to tell whether Clinton's Internet policy is working, because to work it must happen in secret. The State Dept. says diplomats are pressing for free speech behind closed doors, but it's hard to prove this is making a difference. Such is the unfortunate nature of diplomacy. On one point, however, Clinton was demonstrably wrong: Censorship can be very, very good for business.
Last year the China social media team at Ogilvy & Mather, the advertising firm, created a graphic that compared social media services in the U.S. and China. There was little overlap. One could argue that different cultures ask different things of their social media, but Facebook has seen success in Indonesia and Brazil; it is growing in South Korea. Japan has taken to Twitter. It's far more likely that China's blocks on Twitter, Facebook, and Blogger (and its restrictions on Google) have acted as a kind of import tariff, creating space for domestic companies to thrive. As Bloomberg has also reported, the CEO of Baidu (BIDU), China's premier search engine, sees commercial value in social media. Baidu has expanded since Google's departure. Clinton might do better taking her concerns about Internet freedom to the World Trade Organization.
It has been stirring to watch ever more Egyptians pour into Tahrir Square. And it's genuinely inspiring to think that the Internet helped a little, right up until Hosni Mubarak turned it off. The Internet is American in origin and spirit; it is one of the best expressions of what the nation's economy—and, yes, its government—can accomplish. But events in other countries, online or off, are largely beyond U.S. control. Evgeny Morozov, a Belarussian academic, had the bad timing to publish a book this month on the futility of Web-based protest. In The Net Delusion: The Dark Side of Internet Freedom, he lays out America's obsession with Radio Free Europe and samizdat—information that, we would like to believe, led to revolution. This dream, like 21st Century Statecraft, springs from the fond belief that Americans can be the authors of world history. As revolution spreads, it's worth remembering that even if we're reading about it on Face­book, we're still just reading.


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Wireless: Overstating Smartphone Data Hogs?

Smartphone power users may not be the problem the wireless industry would have you believe


Thirty dollars for unlimited data: This is how Verizon Wireless beckoned AT&T (T) customers as it took orders for iPhone contracts on its network. Poor AT&T capped its data plans last year at $25 for two gigabytes; one gig is about the size of an episode of Glee in standard definition.
Verizon then said in a two-paragraph notice buried on its website that its network was a "shared resource" among its customers. It further sighed that it would have to slow data speeds for the top 5 percent of its users to save its customers from the "inordinate data consumption of just a few users."
In other words, the bandwidth hogs are ruining it for everyone. It's a curious phrase, "bandwidth hogs." Executives at Comcast (CMCSA) used it earlier this decade to justify limiting traffic on file-sharing sites. This week several newspapers, writing about Verizon's decision, used the phrase "data hogs" in headlines. The phrase suggests a moral failing: the sin of gluttony.
Wireless data is a finite resource. Data moves from a tower to a cell phone over electromagnetic spectrum, which carriers buy at auction from the federal government. Each carrier has a limited amount of spectrum, yet that limited amount renews itself, moment after moment. Think of electricity: The power plant runs all the time, but on hot days everyone turns on an air conditioner, straining the plant's capacity. Utilities are experimenting with smart meters that encourage customers to move their power use off-peak.
Wireless carriers, responding to a similar challenge, have chosen not to treat data like a commodity. Rather, they've carved off 5 percent of their heaviest users and stigmatized them. This is a business choice, not a natural economic consequence. Imagine that a power company, to prevent blackouts, has informed its customers that its heaviest users will be penalized with unpredictable brownouts two months running. Why do wireless customers tolerate this from carriers?
Some people do use a lot of data. This month, Cisco Systems (CSCO) reported that the top 1 percent of wireless data customers account for 20 percent of traffic. In any other industry, this market segment would be called "loyal customers." Casinos call them "whales" and give them free hotel rooms and special tables with high limits. Wireless carriers punish their whales.
Verizon has hinted that, like AT&T, it plans to move to tiered pricing later this year. Meanwhile, according to analyst Craig Moffett of AllianceBernstein (AB), AT&T is quietly letting some customers who used to have unlimited plans return to them. Carriers are playing two games of chicken simultaneously. First, among themselves: Each wants to earn more per customer by charging extra above a certain data limit, but none wants to be the first to do so. Second, with the rest of us: How low can they cap data without offending too many customers?
It's hard to tell how much carriers pay wholesale to provide bandwidth to customers. According to John Hodulik, an analyst for UBS (UBS), "It's just not something the telcos discuss." A paper last year by Merrill Lynch (BAC) calculated $3 per gig and falling. (Verizon and AT&T declined to provide figures.)
Assuming that estimate is correct, almost every customer is buying data at a painful markup. AT&T's basic plan is 0.2 gigs for $15 a month, which equals $75 per gig. That's a 2,500 percent markup over the cost of goods for, according to Cisco, almost three-quarters of all mobile users. For AT&T's next tier, the markup drops to about 400 percent. Ostensibly, AT&T is worried about running out of spectrum, but its tiered structure, which provides little incentive for minimizing data use, doesn't seem engineered to save bandwidth.
One time-honored way of allocating a scarce resource is to agree on a unit—a barrel of oil, a kilowatt-hour, a Glee of data—and let the price of that unit fluctuate according to demand. Some refer to this mechanism as a "free market." But if the wireless carriers were to charge by the gig, even if the market arrived at a generous 1,000 percent markup, they'd lose money over the tiered setup AT&T has in place now. No wonder wireless carriers prefer the language of tiers, caps, and hogs to a simple per-gig price.
Analysts and shareholders prefer the current pricing structure, too. Let's be clear, though: Tiered data prices are not in place to save bandwidth. Data hogs aren't the problem the carriers would have us believe (Cisco has 0.4 percent of customers using more than 5 gigs a month), and the other customers are very profitable. Dave Burstein, an analyst for DSL Prime, estimates that if capacity were the only factor, no carrier would need to introduce a limit under 10 gigabytes. The carriers are like sadistic Italian grandmothers: "Eat, eat," they say, but then, "You're too fat."
The era of unlimited plans does have to end. The best way to allocate finite goods is through transparent, efficient markets. As traffic increases on mobile networks—it nearly tripled this year, and Cisco expects it to grow twenty-sixfold by 2015—consumers will be forced to make smarter choices about how they use mobile data. Perhaps parents will be forced to download the toddler-pacifying Elmo videos at home rather than on-demand in the car. That's not a tragedy, it's what markets do. So the next time you hear a wireless executive complaining about data hogs, ask yourself: What's my reward for being a data piglet?



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