Eichel: Deficit too high, expect tax hikes
Celebrate that tax cut on gasoline while you can. The government's deficit in March was the highest for any March since 2000, says Ron Eichel, chief economist at Meitav. That, plus deficit estimates for the year indicate that the government will need to raise taxes, and never mind popularity contests such as national elections, which will be a year off at most. For March the government posted a deficit of NIS 4.3 billion, excluding net credit. It's true that the first-quarter deficit was just a billion shekels, but that's because of nonrecurring income. Nor is 2012 the Finance Ministry's only problem. For 2013 there's a law in place that the deficit can't exceed 1.5% of GDP, and for 2014 the number is 1%. In short, based on projected tax revenues and projected economic growth and projected everything else for this year and 2013, Eichel estimates a shortfall of NIS 17 billion for 2012-2014. Of course, with or without tax breaks, the government could try to persuade the Knesset to let it raise the deficit ceiling. (Oren Freund )
Leumi giving workers half-month salary as bonuses for 2011
Bank Leumi is giving 10,000 employees in Israel bonuses worth half their monthly salaries. This is a reward for their work in 2011, when the bank posted dismal results. The bank's return on equity was among the lowest in the sector at just 8.3%; only Israel Discount Bank did worse at 8.2%. Leumi's net profit shrank 19% to NIS 1.9 billion. The bonus will be paid on May 1, the day long-serving CEO Galia Maor steps down and hands the reins to Rakefet Russak-Aminoach. It's true the bank didn't reach Maor's goal for 2011, notes Miri Rubino, head of the Leumi labor committee. That goal was return on equity of 9%. "But this year return on equity wasn't dependent on employees but on other things," she says. "In our core operations we meet all goals and the employees worked very hard." (Sivan Aizescu )
Givot Olam fined over disclosure difficulties
The Israel Securities Authority has fined oil exploration firm Givot Olam NIS 188,000, which it has a month to pay. Givot, which found oil at its Meged 5 site near Rosh Ha'ayin and which has been wondering how to extract it from Mother Earth in a way that would pay, was fined for two offenses. One: It didn't make an orderly announcement on starting long-term production tests in July 2011; investors learned of this development from a single sentence in another announcement. Givot should have published a full statement in a timely manner, says the ISA. Two: (and more egregiously ), a week later, Givot said the production rate from the 8b section in production tests was 800 barrels a day. Furiously, the ISA ordered it to clarify that the reported production pace was based on a very short production test and might not be indicative of the well's actual commercial production capacity. (Lior Zeno )
Clal Finance: Europe is chronically ill, live with it
For all you out there hoping the world's economic ills are just a dream or passing storm, chief economist Amir Kahanovich of Clal Finance has bad news. "Europe has a chronic disease. Learn to live with it," he says in his weekly report sent out on Monday. "Economic crises are often called a 'disease,'" Kahanovich writes. "If so, then the crisis in Europe is a chronic disease. Europe has undergone a number of surgeries - bypasses - but it really has not healed. The doctors say it won't be able to fly for the foreseeable future." The indicators are awful, he adds. Official unemployment in Spain is 23%. Yet yields on Spanish (and Italian ) government 10-year bonds are at livable levels of less than 6%. What could make the disease worse again and send their yields climbing into unsustainable territory? A global slowdown, perhaps, but mainly oil prices. In short, oil prices are at present the greatest danger to the world economy, Kahanovich says. (TheMarker )
Clal to Americans: Don't stop looking for work, you have to eat
Continuing his holiday cheer, Clal Finance's Amir Kahanovich asks: "Did the labor market data from the U.S. ruin your holiday?" Job creation in the United States has been slowing, Kahanovich writes, which is what depressed the stock market. In March only 120,000 new jobs were created versus a forecast of 205,000. Unemployment dropped from 8.3% to 8.2%, but not because of new jobs. It's because more people gave up the search for work and dropped from the official roster of unemployed. "Why should anybody give up looking for work?" Kahanovich asks. "It isn't a privilege. It's like somebody giving up on eating." Moreover, he points out, while giving up is understandable in dire market conditions, and while things could change, the American labor market has been looking relatively alive of late. This isn't the time to give up finding a job, Kahanovich sums up. (TheMarker )
Allot wins first order from S. American firm
Allot Communications stock jumped 8% on Sunday and another 0.4% on Monday after the company reported its first order, worth $4 million: from a Latin American fixed-line and mobile communications company. Perhaps more pertinent is that the Latin American company belongs to one of the world's five biggest telecom groups. (Yoram Gabison )
