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SNBDL Daily Briefing
Report prepared using big data solution Quid
Our take away from the last 72 hours news
Central Banks News:
Busy weekend on all major central banks front. First, the FOMC members has started to prepare the public for some shift in monetary policy in Oct. 28-29 FOMC meeting (next week). On one hand, Bullard urged his colleagues to consider fighting low inflation and postpone ending the QE or perhaps considering undertaking new measures. While such an action is clearly warranted by the current conditions: geopolitical tension, low inflation, plummeting commodity prices and subdued wage inflation pressure, the FOMC would have to answer to the critics that QE and monetary easing fuel asset prices frothiness and as a consequence inequalities (this view is widely shared by GOP and many in the markets). Chair Yellen said she’s concerned by rising economic inequality. But Rosengren came with the most important topic, in our opinion, when it comes to inequality: opportunities (or the American Dream). The recent market functioning has shown, that in many cases, the private sector has relied on easy money rather than taking risks. But at the other hand, technology savvy “entrepreneurs” have picked the slag and are offering different opportunities and the Fed has to enable these entrepreneurs to create the condition to exit from the balance sheet deleveraging phenomenon.
We do believe that the FED will avoid ending QE next October FOMC and will postpone any “new tool or announcement” to December. Because during the next FOMC the Chair will not have the opportunity to explain the FOMC decision in a press conference. The Fed is shifting from “talks about hiking and normalising” to “addition of monetary stimuli”. This major shift would require some explanation and we see these to take place in December.
Second, ECB Coeure has been criticising the government for not doing enough. While we do believe that the trend in reforming is positive, we continue to be concerned by the speed of these. Coeure, a known to be dovish, is starting to shift his narrative to regain more a balanced stands, at a time when Governor Chirstian Noyer, of Banque de France, has shifted more hawkish (in a move to avoid showing too much devision between Banque de France and Bundesbank). We continue to be very supportive to EUR and the recent political events are increasing our confidence.
Third, BoE Chief Economist indicated that market should “keep calm and carry on”. Gilt has reacted to this effect. We have been in the view that neither FED nor BoE will rush normalising. Our call, since December 26th 2013, was more accurate than the market consensus because we had the opportunity to look at more issues that just focusing on the high frequency data, which provide only a partial understanding of the situation facing central banks.
Economics news take away:
In line with our expectations, the BoJ is seen now to stay pat in the face of deteriorating economic high frequency data, inflation stall and global markets “nervousness”. During the JPY depreciation overshooting, we were indicating that the markets were expressing two scenarios which will be proven wrong: 1) BoJ will not embark into a new QQE-II unless they have a high confidence that this would not hurt the JGB markets – one way to increase this confidence if through the adoption of the second hike in VAT -, 2) market was expecting the Fed to normalise its monetary policy as soon as Q1 or Q2 next year – we had the shift in the tone as expected by mid-October-.
Oil prices decrease took the market by “surprise” (though we were discussing this trend since July). Russia continues to battle for stabilising the budget “nightmare” consequences. Markets were surprised because until beginning of October, the chatters were discussing inflation overshoot. We are worry that a couple of Hedge Funds might come under heavy pressure (which could require wind-down) due to the cost of the recent development. Should equity market rebound (as we were expecting), the performance might look even worse for HF which have had a least 2 years of unconvincing returns.
Earning News: The week starting Oct 20 will be very busy in term of earning reporting. It’s likely to set the tone with Tech giants reporting (Apple, IBM, Amazon etc.). Google 3Q earnings were disappointing with stock price dropping 2.4% on the news. However, we remain confidence that while the short term headwinds are numerous, there are medium to long term drivers which will support profit margins sustainability and therefore reduce the risk of a market crash. We are not ruling out some volatility in the short term, but we foresee this volatility as an opportunity to reenter position (buy the dip).
Ebola take away:
We will circulate in the coming hours a specific report on Ebola which analysis the Tweets related to this matter. This analysis provided more support to our initial views but adds some new data points which could convince our readers.
President Obama picked a global coordinator Ron Klain. Many criticised this decision because M. Klain is not a doctor. But both medical and crisis management experts agree that the US needs a global coordinator which will help reduce the bureaucracy cacophony and someone who can communicate with the public to reduce the on-going fear. WHO came under criticism from a UN report. The criticism is mainly directed to the bureaucracy organisation.
From the field, Senegal has been declared Ebola Free by WHO (source here), while Nigeria is expected to get the same tag according to AFP (here). The US health worker currently in a Cruse has been put in quarantine. With the current Conservative supported “paranoia” about Ebola (Senator Rand Paul indicated that the virus could be contracted in a Cocktail – letting the view that the virus could become airborne is a serious possibility), the response seem to lead to result. We are confident that the outbreak could be overcome, should the administration succeed in its communication war.
Gaza: During the last 20years, we have not been as optimistic that Palestine – Israel peace process to move forward as today. Why? Because this time, the global community has to get rid of ISIL – which uses Palestine’s and Assad’s victims as a justification for their hiring of new Jihadists *usually the use the definition of “humanitarian work” to get in contact with their victims*-. British parliament voted on Monday to recognize Palestine as a state, a move that will not alter government policy, but carries symbolic value as Palestinians pursue international recognition. Britain does not classify Palestine as a state, but says it could do so at any time if it believed it would help promote peace between the Palestinians and Israel. These development in addition to the aid decided by donors during the weekend and UN Chief Ban Ki-moon call for peace process to be discussed are bringing all the conditions to move forward. FM Fabius says that recognising Palestine should help ‘2-state-solution’ as French parliament mulls a bill.
Behind the scenes, Muslim brotherhoods are loosing the ideological fight, Hamas is splitting between moderate (which decided to participate to a coalition government) and extremists (which are struggling to look even more barbaric than ISIL to attract “talents”). Iran and Saudi are heading toward a peaceful Sunni-Shia schism etc.
What are the consequences for global markets? Less geopolitical risk premium and lower energy prices (low inflation, and higher profit margins for corporations).
Iraq & Syria take away:
As fight intensifies in Kobani (Syrian-Turkish border), ISIL shifted it focus to Raqa, terrorists plots in Baghdad and intensifies its propaganda that it might take it fight to the sky. Several reports indicate that former Iraqi pilots might be training ISIL fighters to pilot MIG planes. This report is worrying should it be proven right. However, we would like to be cautious here because ISIL objective is to overestimate its abilities and capabilities in the very important communication battle taking place now. By showing strengths ISIL pushes other terrorists group to radicalise even further (the barbaric contest). The global pictures show that Western countries are taking the fight in term own countries by bringing to justice those who facilitate hiring of Jihadists. By winning the communication war and cutting ISIL from attracting young fighters the coalition increases its chances to ultimately defeat ISIL.
We would like to remain our readers that ISIL is three groups: 1) psychopaths – drug addicted fighters who are leading the fight because their illness have reduced any fear of death, 2) Some sunni army groups which have been betrayed by Al-Maliki government (these include Ba’aht party), 3) Some sunni tribes. The “non-psychopaths” are using ISIL as a threat to push the global community to pressure Iraqi government to be more genuinely inclusive and reduce bad governance. We would not be surprised that Iraqi army would spur the information that they would be helping ISIL to take it fight to the sky, but let’s face facts, unless ISIL gets some government support, it’s very difficult to imagine how ISIL could have any chances vis-a-vis US and coalition airforces.
Two factors are important to watch in the coming days: 1) how President Ergodan will change is position when Kobani situation will deteriorate, 2) how the coalition will withstand two events (Iran nuclear negotiation and Saudi decision to let Oil prices stabilise at 70-80$).
Russia – Ukraine tension take away:
Russia and Ukraine reached a tentative gas deal during the Milan talks. But this did not come with less tension, Merkel has been very critical to President Putin. The Chancellor attitude is in line with our view that Angela Merkel is using Putin threat to push EU to undertake more reforms and more integration, while keeping the threat of Russia isolation very high. Meanwhile, Russia economy continues to tank.
Reports out of Sweden relative to underwater activities indicate that Sweden is shifting away from its “neutral” stands and is heading to put some additional pressure on Putin. Should Sweden change stands as the recent evidence are starting to show, Ukraine tension might increase because it will leave President Putin without any example of neutrality Ukraine should be bind by. We continue to see only two possible outcomes: 1) Russia pursue its aggressive attitude and pushed for a separation of Ukraine at the expense of a full-fledge isolation, or 2) Russia opposition start to “challenge” President Putin to return to reforms. The second outcome is unlikely for now because intelligence from the ground is indicating that while the opposition is willing to change the trend, there is a serious lack of appetite to challenge President Putin be in openly or behind the scenes.
We foresee the situation to continue to deteriorate while Oil prices continue to plummet. Russian economy is likely to suffer a lot, while EU narrative is likely to change because the “communication war” which have been spurred by Russia and its supporters in the Western political groups is loosing traction (facts have no religion).
Hong Kong take away:
Hong Kong protests are calming down, as we were expecting, while a recent poll showed that 68% are opposing protests. But Mainland sticks to its view that any political reform should bind by the “basic law”. We do not see HK and Mainland China governments to accept any substantial change in the short term (“Government ready to talk but rejects key concessions”). China wary of HK protests ease pain of Macau Casinos (a pain organised by China to reduce corruption). This is 100% in line with our first comment on HK protests please find below some of what we were saying.
However, unlike with Tian’anmen square protest, we see Chinese leadership being less “harsh” fighting the protests, as we acknowledge Chinese leader fear vis-a-vis social media power. The recent decision to suspend HK police for use of pepper spray on protesters is an indication that the level of tolerance to police action has came down substantially. What’s pepper spray relative to Tian’anmen tanks? Please don’t read this comparison as an acceptance for any police abuse but we might recognise that the tolerance level has shift downward substantially and this is a positive development for the Chinese political stability.
In the medium term, we see China devoting more democratic say in HK. Our forecast is built on the view that the Chinese government is fearing a HK political change to threat its reform agenda. President Xi wants to be seen as the strong man to fight conservatism to reform, specifically ahead of the IV-th Plenum, which will focus on improving governance (which creates an important shift of power from “princelings” to the reformists). After the IV-th Plenum we see President Xi and HK government coming with a middle ground solution, which could take the form of a split designation of leaders. Democracy comes with cost and responsibility. We consider that President Xi long-term objective of political reform to be intact, but he fears that “House of Cards” like politics could jeopardise his aim to avoid the middle-income trap risk should interest groups (Raymond Tusk character in the TV-show) to derail his genuine fight against conservatism and vested interests. China seems willing to open discussion with Tibet. We are not surprised because we were expecting it, but it’s a game changer in China Mainland willingness to improve ; acceptance of others beliefs (President Xi Decision was clear about that), acceptance of democracy… However, this is a very difficult path, we see President Xi willing to undertake the changes but at a speed he considers it can avoid hard landing and apocalyptic scenarios.
Catalonia: referendum called off, Rajoy opened discussion to give more autonomy to Catalonia, Russia’s RT News is pressing Catalonian to revolt. We were expecting it and we add Catalonia to the numerous subjects were big data has proven its accuracy.
We were saying “calls for independence referendum is increasing pressure on both Madrid and EU to move forward to offer better conditions and better narrative to the public. We see PM Rajoy taking constitutional actions to deter Catalonia from conducting the referendum, at a moment where more the referendum is gaining support from the independence forces all over the world. Madrid may accept to open discussion to devote additional autonomy to Catalonia in order to reduce the pressure. This story is likely to push EUR existential threat higher short term, but we consider that EUR is likely to rebound by the end of this year, when these threats will be repriced as less likely.” (daily briefing Sept. 30 2014). Catalonia decision to suspend formal campaign is the first step in our constructive scenario. However, Artur Mas uses the threat of going ahead with the referendum, though the constitutional court has specified that’s un-constitutional. This threat is urging PM Rajoy to act which he did in Saturday by opening discussion of some kind of PM Cameron solution to Scotland independence call (i.e. more fiscal autonomy). Catalonia government will decide by October 15 on whether to hold referendum. We see the most likely scenario to be some deal with Madrid which would : 1) help Artur Mas to claim victory – he would have secured more autonomy – and 2) help PM Rajoy to de-escalade the tension over Catalonia. We see the next region to start a fight for more autonomy to be Bavaria (Germany’s most wealthy region which is pushing Alternative fur Deutschland – AfD – anti-EZ party wants to reduce its contribution to other regions – “lazy” EZ members states, in their parlance -. Business interest (Football Clubs) are starting to indicate the cost of a secession. Novo-Russia continue to support Catalonia, as a secession could help justify Crimea. Many have been talking about war in the East, the War against Russia is also taking place in Catalonia. The relations between populists parties in EU and Russia speaks volume. Czar Putin should make no mistake EU is one and indivisible. Populism is a cancer, EU is recovering from it.
Ferguson – Missouri: replace Catalonia, HK Occupy with Ferguson, keep calm and carry on.
Ferguson-Missouri tension resumed during the weekend after a new fatal shooting. The Tea Party caucus is using these events as a way to increase the racial tension, while Sen. Rand Paul wants to use the spread of African-American anger vis-a-vis President Obama administration as a way to bring these voters to the GOP. Sen. Rand Paul has used exactly the same strategy with the youth, which suffers the most from the global financial crisis consequences. The administration needs to increase it rhetoric against disinformation, mistrust and pessimism should it want to avoid that the voters turn to those who are placing the most emphasis on pessimism with the help of donors which interest is to keep status quo (at a moment when the US need urgently to undertake structural reforms – immigration, taxes etc. -). Furthermore, not only Tea Party caucus is using this strategy, the moderate Chris Christie whom have suffered from the Bridge scandal, is using the same strategy to change his image.
Ferguson, HK Occupy, Scotland Independence, Catalonia share the same problem: inequality. Many are considering that Inequality will bring a class struggle and some kind of XIX century like revolution. Notwithstanding that depending on where someone seats, we might think that these mass protests (1000 for Ferguson, much more in Catalonia) are sufficient to start the revolution. But like we were saying in our earlier notes, we genuinely believe that Occupy and Anonymous groups have been hijacked by “commodity interest groups” (it suffice to look at the links between investment portfolio’s advise of those groups – Gold and Commodities – and the consequence of a derailed soft power to move toward better governance).
However, unlike in the old “organised revolutions” in LatAM, this time around the social media is in charge and the overwhelming majority wants to see soft power – and Ferguson is part of that – but the chaos and Apocalypses imagined by the 3G group (the most radical group within libertarians and their name stands for Gold, Guns and God) are unlikely to take place. Of course Ebola, and ISIL are genuine threats but 1) the on-going improvement in governance (cf. Australia G-20), 2) the work to reduce disinformation and skepticism (EU, Gaza), 3) military and medical action against the two deadly diseases ISIL and Ebola, are supportive to the positive scenario. Furthermore, there is a win-win scenario which is taking place and which could help: workers, shareholders and consumer to benefit from.
US midterms elections: US Midterms elections: GOP step up demands for Ebola travel ban. It’s interesting that this is in line with the views expressed by both Front National Marine Le Pen (the daughter of M. Le Pen who said “Saint Ebola would help us to get rid of immigration in 3months”). The economic rational behind this call is to derail globalisation by spurring fear. This obviously can derail the trend we are forecasting for commodity prices. In nutshell, an economic crisis can postpone some of the investment needed to improve energy efficiency transition. But we do believe, it can delay but NOT derail the process.
November 4th midterm elections is coming with many uncertainties. Should GOP win the Senate, the US administration is likely to find itself stuck with a divided government which could make : debt ceiling, budget negotiation, Fed Transparency Bill negotiation, very hard. Some humorists have called the Tea Party caucus to be the “no-negotiators”. Without leaning toward a liberal Tea Party bashing, we would like to remind our readers of October 2013 debt ceiling talk. These period have created too much fear that the US might default that some Sovereign Wealth Funds (SWF) have been considering challenging the USD reserve currency privilege status. The average polls are giving 55% chance to the GOP to secure a win in the Senate. However, these polls do not track the weak signals narrative nor participation variable (a model we’ve built for Scotland Independence and which has proven a very good results). Koch donors story (politico here) is very interesting because it shows that Oil interest groups are busy trying to reduce the speed at which their wealth is evaporating. $1bn is the amount invested, hope that this investment does not include any link to gestures to destabilise the Homeland security. We are confident that private initiative such as Super Pac of Super Pacs (using public donation to cut interest groups campaign financing) would take over in the short term because Pension Funds and Investors will soon recognise that “Greed is NOT good” and better have a functioning democracy.
We continue to side with the consensus. But we consider that as soon as investors will start looking at the consequence of a GOP Senate majority win we might see some change in the dynamics. We have the opportunity to use a new source of big data information. We will be using it to bring the change in the narrative in the coming 3 weeks. Stay tuned and thanks for your support.
US markets continue to behave between repricing downward growth prospect (as we were expecting) and reassign Fed policy going forward. Although VIX has moved up it still below the high stresses period we have experienced during the recent period. The Mid-Term elections prospect is not discussed as one reason which could create more crisis: GOP are likely to tight Fed hands, should they secure the Senate majority, while the recovery is still underway. We see the next two weeks to focus on the narrative on the negative consequences of a GOP Senate win. A strategy the UK has followed to secure the Scotland independence vote. Meanwhile, recent Clinton Presidency document release shows the stress around the impeachment risk (a gesture GOP has been considering until recently and which may resume after mid-term elections). Furthermore, the political mistrust continues to be on focus in DC while policymakers discussing inappropriate conduct during the 2012 prostitution scandal in Colombia
Earnings season kicked started with mixed bags for the moment. However, chatters are starting to pencil down tax benefit (ahead of changes which are expected to take place during the G-20). While lower tax benefit is already in our scenario, we consider that analytics and new technology will help corporate America to keep profit margins high (please see our recent reports on robotics and big data).
EU is suffering from the combination of negative general sentiment (Ebola, ISIL etc.) and the negative press conducted by both populists when Russian media provides very good argument to drive the tensions between creditors and debtors higher. But the trend in EU continue to be supportive and as we were indicating the more markets will recognise the short term risk of US midterms elections, the more constructive they’ll become on EU and EUR. Markets were upset yesterday because Greece may postpone exiting from the program. The glass half full part of this story is that Greece, a country which once was considered to be doomed with the only hope for it is to become 2001 Argentina (according to some Nobel Prize laureates), is considering the idea of normalisation 5 years after its program. That’s in itself a strong argument to look at the glass half full.
Br-exit: Knowing that EU is changing its narrative, UKIP call for an early Br-exit vote doesn’t come as a surprise. Actually, we were expecting it to come earlier because the populist are likely to loose the supports they are having now. Populists parties are using investment advisory businesses to spread their mistrust. A recent study conducted by the AMF (France SEC), showed that 9 web-traders over 10 are loosing money when investing in FX. This is mainly due to the fact that 9 over 10 are investing like they vote: buy Gold, USD and sell EUR because it’s doomed (this is their beliefs not ours). By better regulating the internet retail investment sector, we are likely to see less spread of mistrust. These internet retail websites are widely spreading mistrust and advising ‘moms and pops’ to make easy money when the doom scenario will come. Again our legal have forbidden us from spreading some website adds (because they consider these are non respecting SEC and other regulations). These attract their “victims” by claiming making $8,000 a month by becoming a trader. The 9 over 10 are usually exposed to the next big splash in the markets. This is exactly how our research have found ISIL portfolio to be invested. While the first is betting that our institutions are rotten to the core and are listing to the doom and gloom widely spread, the former is speaking its own books. No one can be held accountable for making wrong investment decisions. However, by stressing the losses many individual investors are likely to change their strategy and diversify their views. This financial market war is likely to leave only those which bet on ISIL success largely exposed to the doom and gloom scenario.
While EU-skeptics groups continue to do well in the polls, EU is heading to a grand bargain which would clear the way to regain public support for the EU project. Germany’s FinMin Schauble indicated that Germany’s response to a “clear weakening” of the economy will be a shift in public spending toward investments and away from government consumption. He said that Germany could be willing to increase EIB capital (a strategy designated Commissioner Moscovici seems to be open to during his weekend interview). Eurogroup has cleared the way to a shift toward growth agenda / pact. Furthermore, China Premier Li visit to Germany has conducted to the release of a guideline for bilateral corporation. Furthermore, EcoMin Macron hinted that France may be considering a change in U/E allowances (a reform we understood to be very high on Chancellor Merkel ask list to move for more EU integration). Furthermore, US and UK are considering joint model to deal with too big to fail (after ISDA agreed on a “big bang” deal to reduce systemic risk arising from derivatives). Finally, according to Reuters, Germany is trying to convince Turkey and Iran to join the fight against Islamic State (IS) militants, Foreign Minister Frank-Walter Steinmeier told a German newspaper. EU developments are in line with our constructive scenario for the region (a view which is not priced yet by markets).
China: On Oct 21, China will publish a new round of high frequency data. We expect the data to continue confirming that the country is soft landing while rebalancing. Labor statistics have been showing that the manufacturers have started to rebalance their activities away from labor intensive (an objective already stressed by the Chinese leadership). These are in line with the objective to rebalance the economy away from credit driven investment. “BHP Billiton has raised the stakes in the ongoing war of attrition in global iron ore with a plan to slash costs and lift production” confirms our view that commodity companies are starting to adapt to the new normal, while China is cutting the road to nowhere and excessive bureaucracy (China removes 160,000 phantom staff on payroll, China Today). Acknowledging that there is “phantom staff” out loud is an event for those who have been following China for years (this could have cost some China Today’s managers their jobs a couple of years ago).
Furthermore, the west is helping China to change it’s “narrative” from being anti-democracy (China has not gone back on its agreements with Britain over the future of Hong Kong, whose autonomy is far greater than what Britain expected three decades ago, a former aide to late British Prime Minister Margaret Thatcher has said.).
Furthermore, Premier Li is undertaking a state visit to EU. This is likely to bring more collaboration with the West, while China will be offering a back-door to Russia energy at a moment when : President Putin is challenged by plummeting oil prices and sanctions are making harder for the energy sector (finance projects and investments).
The government continues to fear that the economic rebalancing has not taken momentum yet although 1) labor intensive manufacturers are relocating in cheaper labor countries, 2) businesses are upgrading their business models [while becoming environmental friendly], 3) President Xi has conducted many trade – investment agreement with Neighbours (after Premier Li did the same in Africa) to secure investment projects which use Chinese manpower – engineers know-how in this domaine, 4) China is gaining more military presence and has fluxed it mussels – e.g. China “Top Gun” intercept by a US fighter jet -, 5) China has signed many RMB agreement which reinforce the currency usage and prepare its full liberalisation – after Free Trade Zones (FTZ) have proven to be a success -, 6) China has undertaken a genuine fight against bad governance and better regulation – many examples in our recent daily briefings of fight against corruption and bad governance-. We see in FinMin Lou Jiwei recent comment an indication that not only China wants to create a reserve currency it does want it to be strong when Chinese leaders perceive the heavy pressure place on USD by a category of investors to avoid debasing the currency through deficit financing – although we consider that this worry is misplaced –
Australia: Australia struggles with the labor statistics glitches. Treasurer Hockey offered the private sector to check the information and help to correct that data. While this information does not change drastically our view that the RBA will stay put (due to the fear of a housing bubble, which the central bank is dealing with through macro prudential tools). However, the glitches reduces the “view” in the market that countries such as China are manipulating their figures. While our work on macro eco data has pushed us to take the economic figures with a pinch of salt (due to the methodology which could create some issues), we do not side with camp mistrusting everything. However, we believe that the big data analytics is likely to help improve the accuracy and the frequency of the high frequency data. However, the statistic office may take time before undertaking the experiment.
Australia continues to be seen, by markets, as a derivative to the old Chinese model (i.e. commodity provider). This view explains the high beta between Australian assets and commodity prices (or China demand for commodities). Banks shares are suffering from the combination of the increase perception of increase in risks and additional macro prudential constants to curb housing prices frothiness. Small business defined the “goldilock range” for AUDUSD to be [.90-.94]. This level is much higher than RBA own assessment (based on PPP models). We have been criticising PPP models because they do not factor any structural changes.
These assume that neither China nor Australia are conducting their rebalancing agenda. We do believe that the current weaknesses offers genuine opportunity to benefit from the other drivers to the Australian economy which are not related to commodities. We see the current Australian Dollar weakness to continue at least until the USD start to weaken again when markets will realise that it has beaten too much on a quick rate normalisation. Meanwhile, from our previous daily briefing, we have gathered sufficient support to the view that the drivers of the Australian GDP are moving toward: 1) education, health and finance services provider to Asian neighbours, 2) innovation and digital sector, 3) energy resources export to Japan (the later contributes to our constructive view that the current negative Japan Energy Trade deficit will rebalance in the medium term – reducing Japanese Government bonds solvency risk – ).
Japan take away: Apart from the BoJ discussed earlier, METI Chief Obuchi is seen to resign over irregularities in the political funds. This put some pressure on PM Abe administration which was seen to be “different” from previous government which have tried to defeat deflation. Furthermore, Mrs. Obuchi was one of the strong female figures in the new cabinet because her participation was intended to prepare Japanese public to embrace a woman as PM. We believe that the recent news have delayed PM Abe objective but have not derailed them. We continue to see Japan undertaking genuine third arrow reforms because other evidences are supportive to this trend. The resignation might open questioning within western investors that whether Japan Abenomics is still working. We consider that whatever pressure or sell-off should be an opportunity to strengthen positioning.
Central Banks News
Central Banks News:
Busy weekend on all major central banks front. First, the FOMC members has started to prepare the public for some shift in monetary policy in Oct. 28-29 FOMC meeting (next week). On one hand, Bullard urged his colleagues to consider fighting low inflation and postpone ending the QE or perhaps considering undertaking new measures. While such an action is clearly warranted by the current conditions: geopolitical tension, low inflation, plummeting commodity prices and subdued wage inflation pressure, the FOMC would have to answer to the critics that QE and monetary easing fuel asset prices frothiness and as a consequence inequalities (this view is widely shared by GOP and many in the markets). Chair Yellen said she’s concerned by rising economic inequality. But Rosengren came with the most important topic, in our opinion, when it comes to inequality: opportunities (or the American Dream). The recent market functioning has shown, that in many cases, the private sector has relied on easy money rather than taking risks. But at the other hand, technology savvy “entrepreneurs” have picked the slag and are offering different opportunities and the Fed has to enable these entrepreneurs to create the condition to exit from the balance sheet deleveraging phenomenon.
We do believe that the FED will avoid ending QE next October FOMC and will postpone any “new tool or announcement” to December. Because during the next FOMC the Chair will not have the opportunity to explain the FOMC decision in a press conference. The Fed is shifting from “talks about hiking and normalising” to “addition of monetary stimuli”. This major shift would require some explanation and we see these to take place in December.
Second, ECB Coeure has been criticising the government for not doing enough. While we do believe that the trend in reforming is positive, we continue to be concerned by the speed of these. Coeure, a known to be dovish, is starting to shift his narrative to regain more a balanced stands, at a time when Governor Chirstian Noyer, of Banque de France, has shifted more hawkish (in a move to avoid showing too much devision between Banque de France and Bundesbank). We continue to be very supportive to EUR and the recent political events are increasing our confidence.
Third, BoE Chief Economist indicated that market should “keep calm and carry on”. Gilt has reacted to this effect. We have been in the view that neither FED nor BoE will rush normalising. Our call, since December 26th 2013, was more accurate than the market consensus because we had the opportunity to look at more issues that just focusing on the high frequency data, which provide only a partial understanding of the situation facing central banks.
Fed’s Yellen says she’s concerned by rising economic inequality
In a speech, Fed chief says Americans should ask whether it is compatible with their values.
Federal Reserve Chair Janet Yellen said on Friday the growth of economic inequality in the United States “greatly” concerns her, and suggested in a detailed speech on the politically charged issue that Americans should ask whether it was compatible with their values.
“The extent of and continuing increase in inequality in the United States greatly concern me,” Yellen told a conference on inequality at the Boston branch of the central bank.
“It is no secret that the past few decades of widening inequality can be summed up as significant income and wealth gains for those at the very top and stagnant living standards for the majority,” she told economists, professors and community workers.
“I think it is appropriate to ask whether this trend is compatible with values rooted in our nation’s history, among them the high value Americans have traditionally placed on equality of opportunity.”
The speech, heavy on data compiled by the Fed and by other sources, continued Yellen’s focus on the trials of America’s unemployed and underemployed.
With global financial markets rebounding from days of frenzied selling, Yellen did not comment on the volatility or on monetary policy.
Income disparity between the richest Americans and the rest has risen in the wake of the 2007-2009 recession. An extensive Fed study published last month suggests wealth and income is concentrated not just within the top 1 percent, as some analyses have suggested, but actually among a slightly broader slice of the ultra-rich: the top 3 percent.
Equality of opportunity a worthy goal: Fed’s Rosengren
(Reuters) – A top Federal Reserve official said on Saturday that equality of opportunity is a worthy social goal that has not yet been achieved in the United States.
Boston Fed President Eric Rosengren did not comment on monetary policy or the economic forecast in prepared remarks to a conference here on inequality.
Bullard Challenges Fed to Respond To Weakening Inflation
Federal Reserve Bank of St. Louis President James Bullard challenged his fellow central bankers to honor pledges to adjust bond purchases in response to incoming economic reports and to keep inflation stable.
Bullard said the Fed should consider delaying plans to end its bond-buying program at the end of this month to halt a decline in expected inflation. The Fed has tapered purchases to $15 billion a month from $85 billion in December 2012.
“We said the taper was data dependent,” he said in an interview today in Washington. The Fed’s message should be that “we are watching and we’re ready and we are willing to do things to defend our inflation target.”
ECB Says Too-Slow Governments a Threat to Europe Revival
European Central Bank policy makers said governments must accelerate plans to strengthen their economies or risk derailing the region’s recovery.
“Talking vaguely about structural reforms, but not doing them, is the worst of all worlds,” Executive Board member Benoit Coeure said today in Riga. “It creates uncertainty over the path of real interest rates, without in tandem raising expectations of future growth.”
While Coeure said a program to purchase covered bonds will start within days, pressure is mounting on the ECB to also buy sovereign bonds as the 18-nation euro area struggles to recover from a debt crisis and recession. That’s opening fractures in the Governing Council as officials argue that monetary measures will fail unless governments, who submitted their draft budgets to the European Commission this week, play their part.
Greece does not see « big surprises » in ECB stress tests – paper
(Reuters) – Greek Finance Minister Gikas Hardouvelis said in an interview published on Saturday he did not expect the European Central Bank’s health checks to show major surprises for Greek banks.
Violent swings on financial markets in the past week have deepened investors’ anxiety about what Europe’s review of the health of its banks will reveal later this month.
The European Central Bank’s Asset Quality Review (AQR) of 130 leading banks and stress tests of their ability to withstand a future crisis are supposed to shore up confidence by drawing a line under the euro zone crisis.
« I cannot know the results, but I believe that there won’t be any big surprises, » Hardouvelis told weekly Realnews.
« Should they need additional capital, I think that they will be able to raise it rather easily from the market. »
The ECB will release the results of its EU-wide bank stress tests on Oct. 26.
Bank of England may keep rates low for longer, says chief economist
(Reuters) – Britain’s economic recovery might stall if interest rates rise too soon, the Bank of England’s chief economist said on Friday as he offered the strongest signal yet that the bank is prepared to delay increases in borrowing costs.
Andrew Haldane said he was more downbeat about the outlook for the economy, given weaker global growth, greater financial and political risks and the danger that wages and productivity in Britain might continue to fail to recover as forecast.
« Put in rather plainer English, I am gloomier, » Haldane said in a speech to businesses in central England. « This implies interest rates could remain lower for longer, certainly than I had expected three months ago. »
Haldane, who took over as chief economist at the BoE in June, gave an unusually specific steer to financial markets on when the BoE might start to raise interest rates.
In an interview with ITV television, he said market expectations that rates might rise « somewhere in the middle of next year » were possibly « not a bad bet » although the economic outlook could change a lot before then.
Sterling fell by around half a cent against the dollar after Haldane’s speech was released. It also dipped against the euro.
UPDATE 1-Rouble pressure unrelenting as central bank support tops $11 bln in Oct
MOSCOW, Oct 17 (Reuters) – The rouble slipped against both the dollar and the euro on Friday, extending heavy losses since the start of the month which have forced Russia’s central bank to spend over $11 billion defending the currency.
The rouble has been pummelled by risk aversion to Russian assets because of the Ukraine crisis, a dramatic slump in oil prices to multi-year lows and Western sanctions, which have restricted Russian firms’ access to international capital.
At 0805 GMT, the rouble was 0.44 percent weaker against the dollar at 41.04 and lost 0.5 percent to trade at 52.51 versus the euro.
Economics News
Economics news take away:
In line with our expectations, the BoJ is seen now to stay pat in the face of deteriorating economic high frequency data, inflation stall and global markets “nervousness”. During the JPY depreciation overshooting, we were indicating that the markets were expressing two scenarios which will be proven wrong: 1) BoJ will not embark into a new QQE-II unless they have a high confidence that this would not hurt the JGB markets – one way to increase this confidence if through the adoption of the second hike in VAT -, 2) market was expecting the Fed to normalise its monetary policy as soon as Q1 or Q2 next year – we had the shift in the tone as expected by mid-October-.
Oil prices decrease took the market by “surprise” (though we were discussing this trend since July). Russia continues to battle for stabilising the budget “nightmare” consequences. Markets were surprised because until beginning of October, the chatters were discussing inflation overshoot. We are worry that a couple of Hedge Funds might come under heavy pressure (which could require wind-down) due to the cost of the recent development. Should equity market rebound (as we were expecting), the performance might look even worse for HF which have had a least 2 years of unconvincing returns.
BOJ bill-buy offer fails to attract sellers, shows limits of easing strategy
(Reuters) – The Bank of Japan’s offer to buy over $28 billion of government bills on Friday fell short of enticing enough sellers, the first failure since the BOJ began the current stimulus last year and a sign of the receding potency of its easing program.
The failure underscores growing difficulties of force-feeding banks with liquidity as they become less eager to take cash from the BOJ in a faltering economy. Commercial banks are often struggling to find ways to expand their own lending.
The BOJ’s offer to buy 3.0 trillion yen ($28.23 billion) of discount government bills attracted offers of only 2.622 trillion yen, the first time since May 2012 it hasn’t been able to buy bills in the amount it has sought.
It suggests banks are now not willing, or possibly just do not have government bills, to sell to the BOJ even at a negative yield level.
« This just shows the limit of the BOJ’s buying, » said a trader at a Japanese bank.
The failure set another unwanted milestone in the BOJ’s strategy to flood the financial system with money to revive a long-stagnant economy, and comes as analysts warn of increasing operational difficulties in sustaining the central bank’s aggressive easing.
BOJ to stand pat even as inflation stalls, global markets tumble: Sources
Even as growth and deflation fears roil global markets and weak data casts a shadow over Japan’s economy, the Bank of Japan appears set to resist pressure for more stimulus measures or to accept that its inflation target is unrealistically high.
People familiar with its deliberations said the BOJ, which has failed for two decades to drag Japan’s economy from the grip of no or zero inflation, is preparing to roughly halve its 1 percent economic growth forecast for this fiscal year, but stand pat on policy and its prediction that inflation will hit its 2 percent target in the year from next April.
Private economists think inflation has peaked at barely half the bank’s forecast rate, however, and financial markets had been expecting the central bank to add to its massive monetary easing, with speculation growing it could act at its policy meeting on Oct. 31.
« We think the BOJ’s view on consumer prices is overly optimistic, » said Hiroshi Shiraishi, senior economist at BNP Paribas Securities. BNP’s current expectations for inflation are around 1.8 percent at the end of 2015, but Shiraishi said global conditions could render that time frame optimistic, too.
G20 host Australia stumbling block to global climate change action
(Reuters) – Business and political leaders around the world, most notably in the powerhouses of the United States and China, are pressing for action to avert the potentially huge financial repercussions of climate change.
But this year there’s a major stumbling block to concerted global action. The most vocal climate change skeptic in the Group of 20 leading industrialized nations is its current host, Australia.
Prime Minister Tony Abbott has tempered his public rhetoric since 2009 when he said the science behind climate change was « crap ». But he has left the issue off the agenda for the G20 Leaders’ Summit in Brisbane on Nov. 15-16.
Abbott has dismayed environmentalists, renewable energy companies and countries with a string of decisions since his conservative government came to power last year, including scrapping a carbon tax introduced by the previous Labor government.
His treasurer, Joe Hockey, drew derision earlier this week when he told a reporter that claims Australia is one of the dirtiest countries were « absolutely ridiculous ». Yet data shows Australia is the developed world’s highest carbon emitter per capita.
« The problem for Australia is that the rest of the world is now moving forward, » Mark Butler, member of parliament and environment spokesman for the opposition Labor Party, told the Reuters Global Climate Change Summit.
Australia’s stance, particularly attempts by the government to cut the country’s renewable energy target, would have a « devastating impact » on investment in Australia’s sustainable power generation industry, he said.
UPDATE 3-Canada inflation hits target but how much is temporary?
OTTAWA, Oct 17 (Reuters) – Canadian inflation settled exactly at the Bank of Canada’s target of 2.0 percent in September, with the core rate staying at 2.1 percent, according to Statistics Canada data released on Friday.
Bank of Canada Governor Stephen Poloz has said some recent price increases were temporary and so should be ignored, suggesting a lower underlying rate, but for now inflation is at the midpoint of the target range of 1 to 3 percent.
« Mr. Poloz has been pretty consistent about brushing aside the recent upswing in inflation, and I don’t think this will change his tune too much, » said BMO Capital Markets chief economist Doug Porter.
« But I do think it is notable that core inflation is sticking above two percent. »
Month on month, consumer prices rose 0.1 percent in September and core prices, which strip out volatile items such as natural gas, increased 0.2 percent.
The annual and monthly rates for total and core inflation came in exactly as forecast in a Reuters survey of analysts.
Shelter costs were 2.7 percent higher in the year to September, with natural gas 16.2 percent more expensive.
UPDATE 1-European car sales jump 6.1 pct in September
* Sept. deliveries helped by extra selling day -analysts
* Sales up only 1.3 pct if adjusted for selling days -analyst
* Q4 sales may slow on strong year-ago period -analyst (Adds comments from analysts and background)
BERLIN, Oct 17 (Reuters) – European car sales rose 6.1 percent year on year in September, benefiting from an extra selling day compared with 2013 and with brands like Volkswagen and Ford enjoying stronger sales in Germany, France and Italy.
Europe’s car market bottomed out last year, the end of a six-year slump, and has posted growth for 13 straight months. But the recovery is still threatened by weak consumer confidence and geopolitical uncertainties in Russia and elsewhere and analysts cautioned that growth could slow in the fourth quarter.
Adjusted for the extra selling day this year, European deliveries were up a more modest 1.3 percent compared with September 2013, and may decline slightly in the fourth quarter, compared with a strong year-ago period, said Arndt Ellinghorst, a London-based analyst with ISI Group.
« We urge investors to react with caution, » Ellinghorst said. « The situation is still difficult, there are only gentle impulses » driving auto market growth.
In August, growth was 1.8 percent year on year.
Oil Drop Outpacing Ruble Strains Russia Budget: Chart of the Day
Russia’s budget deficit plans are increasingly strained as the drop in oil prices outpaces the concurrent ruble slide stoked by U.S. and European sanctions.
The Chart of the Day shows the price of Brent oil, expressed in rubles, dropping below the level envisaged in the government’s 2015 budget. Even as crude tumbled, Russia’s budget has been shielded by the ruble, whose depreciation increases the local-currency value of exported oil and gas.
Penalties imposed by the U.S. and EU, who accuse President Vladimir Putin of fomenting the Ukrainian crisis by aiding separatists, limit the country’s access to market funding and make deficit-financing more difficult. A weaker ruble may be needed for Russia to keep next year’s deficit at the planned 0.6 percent of gross domestic product, according to ING Groep NV.
“The Russian government either accepts more ruble weakening or a higher budget deficit,” Dmitry Polevoy, the chief economist for Russia at ING in Moscow, said by phone Oct. 17. “Russia can manage a bigger shortfall by dipping into its sovereign wealth fund, but it may also need to reduce spending.”
The ruble weakened 17 percent since June, the most among almost 170 currencies tracked by Bloomberg. The central bank spent at least $13 billion on currency interventions this month in an attempt to make this decline orderly, Polevoy said.
Greek PM says he can ride out market turbulence and quit bailout
(Reuters) – Prime Minister Antonis Samaras said on Friday Greece would ride out market doubts about whether it can survive without international support, telling Reuters he can lead his country out of a four-year bailout and not call early elections.
Samaras said Athens was talking with its lenders about what should happen if Greece succeeds in leaving its bailout programme by the end of December, a year ahead of schedule, as Greek officials hope.
He sees one option as a credit line that Athens could tap post-bailout should it fall prey to future market turmoil.
« We can now stand on our feet; we have the resources to come out of the programme, and we are preparing … in constructive cooperation with lenders for ‘the next day’, after we exit the programme, » Samaras said in an interview.
Falling oil prices shaking up global economies
NEW YORK – A sudden plunge in the price of oil is sending economic and political shockwaves around the world. Oil exporting countries are bracing for potentially crippling budget shortfalls and importing nations are benefiting from the lowest prices in four years.
The global price of oil is near $84 per barrel, down about $31, or 27 percent, from its high point for the year. Oil consumption globally is 91 million barrels per day. That means the world’s oil producing countries and companies are bringing in as much as $2.8 billion less in revenue every day — and consumers, shippers and airlines are saving a comparable amount on gasoline, diesel and jet fuel.
“The problem is that countries get accustomed to a certain level of income, and then spend,” says Edward Chow, a senior fellow at the Center for Strategic and International Studies. “It seems like a windfall at first but when it lasts long enough you get used to it.”
Earning News
Earning News: The week starting Oct 20 will be very busy in term of earning reporting. It’s likely to set the tone with Tech giants reporting (Apple, IBM, Amazon etc.). Google 3Q earnings were disappointing with stock price dropping 2.4% on the news. However, we remain confidence that while the short term headwinds are numerous, there are medium to long term drivers which will support profit margins sustainability and therefore reduce the risk of a market crash. We are not ruling out some volatility in the short term, but we foresee this volatility as an opportunity to reenter position (buy the dip).
Google’s 3Q Earnings Fall as Expenses Climb 30 Pct
Google’s third-quarter earnings slipped as the Internet search leader hired nearly 3,000 more employees while pouring more money into its zest for innovation and quest for new markets.
The results announced Thursday fell below analyst estimates, causing Google’s stock to drop by $12.92, or 2.4 percent, to $524 in extended trading. The shares had already declined by 4 percent so far this year.
The report helps explain why Wall Street has had mixed emotions about Google Inc. for years.
Powered by its dominant search engine, Google’s digital ad network consistently delivers the kind of steady financial growth that endears investors.
But Google Inc. could be making even more money if not for CEO Larry Page’s belief that some short-term gains should be sacrificed so that the company can invest in projects and other research that could take years to pay off.
Week Ahead: Apple Earnings, Inflation and Housing Data
Tech giants Apple (AAPL) and Amazon.com (AMZN) lead an array of bellwether companies reporting earnings next week, the highlight of an economic calendar that also includes housing and inflation data.
Hard off the release of its latest iPhones, Cupertino, Calif.-based will report after markets close on Monday. Analysts and investors will be looking to see if the firm’s latest gadgets have revived some of the momentum that seemed to have been lost after Apple founder and guiding force Steve Jobs died in 2011.
Analysts will be looking to see if Amazon, which reports Thursday, can tighten its losses as some investors are growing impatient with founder and CEO Jeff Bezos’ sprawling plans to dominate the online retail business.
Car makers General Motors (GM) and Ford (F) report Wednesday and Friday, respectively.
BNC Bancorp Announces Earnings for Third Quarter 2014
HIGH POINT, N.C., Oct. 17, 2014 /PRNewswire/ — BNC Bancorp (NASDAQ: BNCN) (« Company »), parent company for Bank of North Carolina (« Bank »), today reported financial results for the three and nine months ended September 30, 2014.
Ebola
Ebola take away:
We will circulate in the coming hours a specific report on Ebola which analysis the Tweets related to this matter. This analysis provided more support to our initial views but adds some new data points which could convince our readers.
President Obama picked a global coordinator Ron Klain. Many criticised this decision because M. Klain is not a doctor. But both medical and crisis management experts agree that the US needs a global coordinator which will help reduce the bureaucracy cacophony and someone who can communicate with the public to reduce the on-going fear. WHO came under criticism from a UN report. The criticism is mainly directed to the bureaucracy organisation.
From the field, Senegal has been declared Ebola Free by WHO (source here), while Nigeria is expected to get the same tag according to AFP (here). The US health worker currently in a Cruse has been put in quarantine. With the current Conservative supported “paranoia” about Ebola (Senator Rand Paul indicated that the virus could be contracted in a Cocktail – letting the view that the virus could become airborne is a serious possibility), the response seem to lead to result. We are confident that the outbreak could be overcome, should the administration succeed in its communication war.
Obama’s Pick for Ebola Coordinator Draws Criticism
President Barack Obama’s choice of a long-time Democratic political operative as the nation’s Ebola response coordinator drew scorn from administration critics who said someone with a medical background is needed.
Ron Klain, 53, a lawyer and former chief of staff to Vice President Joe Biden and to former Vice President Al Gore, was appointed amid rising alarm from lawmakers and the public about the government’s handling of the first three cases of the Ebola to emerge in the U.S.
Representative Tim Murphy, a Pennsylvania Republican who led a hearing this week where lawmakers grilled federal officials about the Ebola response, called Klain’s selection “shocking and frankly tone deaf to what the American people are concerned about.”
Congress scrutinizes handling of Ebola cases in Texas
WASHINGTON — At a congressional hearing Thursday in which they faced sharp questioning about the flawed handling of Ebola cases in the United States, federal health officials said a nurse infected with Ebola at a Dallas hospital will be transferred to a specialized unit at the National Institutes of Health in Maryland.
The hospital is straining in its efforts to monitor dozens of other health care workers who might have been exposed to the virus, the officials said.
The nurse, Nina Pham, was part of the medical team at Texas Health Presbyterian Hospital that cared for Thomas Eric Duncan, a Liberian who died of Ebola last week. She will be moved to the NIH facility in Bethesda, Md., at the request of the hospital, officials said.
Pham is in stable condition. A second nurse infected at Texas Presbyterian was moved Wednesday to Emory University Hospital in Atlanta, which has successfully treated two American Ebola patients.
Dr. Thomas R. Frieden, the director of the Centers for Disease Control and Prevention in Atlanta, told members of the House Energy and Commerce Committee on Thursday that the Dallas hospital was consumed with monitoring dozens of employees for signs of illness.
“Texas Presbyterian is dealing with a difficult situation,” Frieden said. “They are now dealing with at least 50 health care workers who may potentially have been exposed. That makes it quite challenging to operate, and we felt it would be more prudent to focus on caring for any patients who come in with symptoms.”
WHO report admits incompetent staff failed to combat Ebola outbreak
In leaked internal report, UN agency blames its own bureaucracy and wrong containment methods, as critic says it acted far too slowly
The World Health Organisation has admitted it botched attempts to stop the now-spiralling Ebola outbreak in West Africa, blaming factors including incompetent staff and a lack of information.
In a draft internal document, the agency wrote that experts should have realised that traditional infectious disease containment methods wouldn’t work in a region with porous borders and broken health systems.
« Nearly everyone involved in the outbreak response failed to see some fairly plain writing on the wall, » WHO said in the leaked document.
The UN health agency acknowledged that, at times, even its own bureaucracy was a problem. It noted the heads of WHO country offices in Africa were « politically motivated appointments » made by the WHO regional director for Africa, Dr Luis Sambo, who does not answer to the agency’s chief in Geneva, Dr Margaret Chan Fung Fu-chun.
U.S. to issue new Ebola care guidelines, watch lists to shrink
GALVESTON Texas (Reuters) – The United States will issue strict new guidelines telling American health workers to cover their skin and hair when dealing with Ebola patients, a top health official said on Sunday, while some of the dozens of people being watched for possible exposure to the virus are expected to be cleared.
In Texas, a lab worker who spent much of a Caribbean holiday cruise in isolation tested negative for the deadly virus and left the Carnival Magic liner with other passengers after it docked at Galveston early on Sunday morning.
The new guidelines for healthcare workers and the precautions taken for the cruise passenger reflected widespread anxiety over Ebola in the United States, including calls from some lawmakers for a travel ban on West Africa.
The worst outbreak on record of the virus has killed more than 4,500 people, mostly in Liberia, Sierra Leone and Guinea.
World fears mount that Ebola battle being lost
GENEVA: The World Bank warned Friday the fight to stop Ebola was being lost, as the UN pleaded for more money to combat the escalating epidemic and global travel fears mounted.
As the death toll from the world’s worst-ever outbreak of the virus shot past 4,500, a glimmer of hope came from Senegal, which was declared Ebola-free by the World Health Organization.
Gaza
Gaza: During the last 20years, we have not been as optimistic that Palestine – Israel peace process to move forward as today. Why? Because this time, the global community has to get rid of ISIL – which uses Palestine’s and Assad’s victims as a justification for their hiring of new Jihadists *usually the use the definition of “humanitarian work” to get in contact with their victims*-. British parliament voted on Monday to recognize Palestine as a state, a move that will not alter government policy, but carries symbolic value as Palestinians pursue international recognition. Britain does not classify Palestine as a state, but says it could do so at any time if it believed it would help promote peace between the Palestinians and Israel. These development in addition to the aid decided by donors during the weekend and UN Chief Ban Ki-moon call for peace process to be discussed are bringing all the conditions to move forward. FM Fabius says that recognising Palestine should help ‘2-state-solution’ as French parliament mulls a bill.
Behind the scenes, Muslim brotherhoods are loosing the ideological fight, Hamas is splitting between moderate (which decided to participate to a coalition government) and extremists (which are struggling to look even more barbaric than ISIL to attract “talents”). Iran and Saudi are heading toward a peaceful Sunni-Shia schism etc.
What are the consequences for global markets? Less geopolitical risk premium and lower energy prices (low inflation, and higher profit margins for corporations).
Kerry: Lack of Israel-Palestine peace fueling Mideast extremism
The struggle to reach a peaceful resolution to the Palestinian-Israeli conflict, said Kerry, should be viewed within the context of the fight against extremism such as is personified by the Islamic State group.
U.S. Secretary of State John Kerry on Thursday drew a line between the need for a resolution of the Israeli-Palestinian conflict with the fight against extremism in the Middle East, and urged for the realization of the two-state solution while speaking at a State Department ceremony marking the Muslim festival of Eid al-Adha.
The struggle to reach a peaceful resolution to the Palestinian-Israeli conflict, said Kerry, should be viewed within the context of the fight against extremism such as is personified by the Islamic State group.
« As I went around and met with people in the course of our discussions about the [anti-Islamic State] coalition […] there wasn’t a leader I met with in the region who didn’t raise with me spontaneously the need to try to get peace between Israel and the Palestinians, because it was a cause of recruitment and of street anger and agitation that they felt – and I see a lot of heads nodding – they had to respond to, » said Kerry.
In his opening speech at this week’s Gaza Reconstruction Conference, UN Secretary-General Ban Ki-moon said that “the cycle of building and destroying must end. Donors may be fatigued, but the people of Gaza are bruised and bloody. Enough is enough.”
Expressing his hope that Sunday’s conference would be the last needed for Gaza, he added that it was supposed to “chart a course to a just and final peace between Israelis and Palestinians.”
Other participants reiterated the same hope by emphasising that the reconstruction of Gaza could not be carried out in isolation from efforts to revive the Israeli-Palestinian talks in search of a comprehensive and lasting peace agreement.
Adel Al-Adawi, a former assistant to the Egyptian foreign minister, said the conference was the right moment for transformational change in order to establish a Palestinian state with East Jerusalem as its capital.
Palestinians want UN Security Council to vote on Israel pullout this year
UN envoy says that if draft resolution is defeated, Palestinians will join ICC, international treaties.
AP – The Palestinian UN ambassador said Friday his government wants the UN Security Council to vote on a resolution before the end of the year that would set November 2016 as the deadline for Israeli troops to withdraw from all Palestinian territories.
Riyad Mansour said Friday that if the resolution is defeated — which is almost certain because of opposition from Israel’s closest ally the United States and others — the Palestinians have other options.
« This is not going to be an open-ended exercise, » he said. « The main option is to go with a vote. »
Palestinian officials said Thursday they have seven « yes » votes in the 15-member Security Council and are seeking additional support. A minimum of nine votes is needed for approval, and then the measure can be vetoed by one of the five permanent members, including the United States.
At least three Egyptian troops killed in collapse of tunnel to Gaza
A military official in Egypt says at least three troops have been killed in the collapse of a smuggling tunnel that runs along the border with the Gaza Strip.
Rescuers recovered the bodies of an officer and two soldiers, and were looking for a fourth body in the rubble. Another soldier was injured in the collapse, said the official, who spoke on condition of anonymity because he was not authorized to brief journalists.
Egypt’s military has been sealing hundreds of smuggling tunnels under the Gaza border because authorities believe they are used to smuggle weapons into the restive Sinai Peninsula, where Islamic militants routinely carry out attacks on soldiers and police.
The interior ministry said Saturday that security forces have arrested 52 suspected militants who operated in eight different cells with the aim of targeting Egypt’s infrastructure, including power stations, railroads, water plants and other services.
Iraq & Syria
Iraq & Syria take away:
As fight intensifies in Kobani (Syrian-Turkish border), ISIL shifted it focus to Raqa, terrorists plots in Baghdad and intensifies its propaganda that it might take it fight to the sky. Several reports indicate that former Iraqi pilots might be training ISIL fighters to pilot MIG planes. This report is worrying should it be proven right. However, we would like to be cautious here because ISIL objective is to overestimate its abilities and capabilities in the very important communication battle taking place now. By showing strengths ISIL pushes other terrorists group to radicalise even further (the barbaric contest). The global pictures show that Western countries are taking the fight in term own countries by bringing to justice those who facilitate hiring of Jihadists. By winning the communication war and cutting ISIL from attracting young fighters the coalition increases its chances to ultimately defeat ISIL.
We would like to remain our readers that ISIL is three groups: 1) psychopaths – drug addicted fighters who are leading the fight because their illness have reduced any fear of death, 2) Some sunni army groups which have been betrayed by Al-Maliki government (these include Ba’aht party), 3) Some sunni tribes. The “non-psychopaths” are using ISIL as a threat to push the global community to pressure Iraqi government to be more genuinely inclusive and reduce bad governance. We would not be surprised that Iraqi army would spur the information that they would be helping ISIL to take it fight to the sky, but let’s face facts, unless ISIL gets some government support, it’s very difficult to imagine how ISIL could have any chances vis-a-vis US and coalition airforces.
Two factors are important to watch in the coming days: 1) how President Ergodan will change is position when Kobani situation will deteriorate, 2) how the coalition will withstand two events (Iran nuclear negotiation and Saudi decision to let Oil prices stabilise at 70-80$).
Former Iraqi pilots training ISIS fighters to fly captured Syrian jets, rights group says
ISIS could be soon taking its terror fight to the sky, after a report that former Iraqi pilots are training Islamic militants to fly captured Syrian war planes.
The Britain-based Syrian Observatory for Human Rights group says some ex-Iraqi air force pilots are training members of ISIS to fly three warplanes—believed to be MiG-21 and MiG-23 jets– captured from air bases in Syria.
The rights group reported the planes flying over the Jarrah air base in the eastern countryside of the Syrian town of Aleppo this week.
Rami Abdurrahman, director of the Observatory, said the planes have been flying at a low altitude, apparently to avoid being detected by Syrian military radar in the area.
« People saw the flights, they went up many times from the airport and they are flying in the skies outside the airport and coming back, » the BBC reported Abdurrahman said.
UPDATE 3-Oil steady at $86 as investors see market oversold
* Oil prices down for fourth consecutive week
* Covering of short sales and Middle East risk lend support
* U.S. crude inventories surge, gasoline stocks down – EIA
LONDON, Oct 17 (Reuters) – Brent crude steadied around $86 a barrel on Friday after bouncing from near four-year lows as investors bought back into a market they saw as oversold in the short term.
Oil has lost more than a fifth of its value since June on heavy oversupply, signs of weak demand growth and indications that key oil producers, particularly Saudi Arabia, have a limited appetite to intervene on prices.
« Prices have likely overshot to the downside, » said Jeffrey Currie, head of oil analysis at Goldman Sachs. « This leaves us near-term constructive despite being bearish as we look further out. »
The oil sell-off had been driven by « expected fundamental shifts as opposed to currently observable shifts », Currie and his colleagues said in a note to clients.
Activists say Islamic State group may have fighter jets; offensives continue in Iraq, Syria
BAGHDAD – Syrian activists say the Islamic State militant group has captured some MiG fighter jets and is test-flying the warplanes in Syria with the help of former Iraqi air force pilots.
Friday’s account by the Britain-based Syrian Observatory for Human Rights could not be independently confirmed, and U.S. officials said they had no reports of the militants flying jets in support of their fighters in Iraq and Syria.
The Observatory said the planes, seen flying over the Jarrah air base in the eastern countryside of Syria’s Aleppo province this week, are believed to be of the MiG-21 and MiG-23 variety. Rami Abdurrahman, director of the Observatory, said the planes have been flying at a low altitude, « apparently to avoid being detected by Syrian military radar in the area. »
Four men appear in court to face London terror plot charges
Four men charged yesterday over an alleged terror plot had scoped out a police station and army barracks in London, pledged allegiance to the Islamic State group and obtained a handgun and ammunition, police claimed.
The four, all dressed in grey sweatshirts, were brought to court under heavy security as a helicopter flew overhead. They appeared in the dock flanked by 10 officers, most of whom wore stab-proof vests.
Scotland Yard said the four, one of whom was tasered during his arrest this month, had conducted « hostile reconnaissance » of a police station and an army reservist barracks in west London.
Fiercest fighting in days hits Syrian border town
(Reuters) – The fiercest fighting in days shook the Syrian border town of Kobani overnight as Islamic State fighters attacked Kurdish defenders with mortars and car bombs, sources in the town and a monitoring group said on Sunday.
Islamic State, which controls much of Syria and Iraq, fired 44 mortars at Kurdish parts of the town on Saturday and some of the shells fell inside nearby Turkey, according to the British-based Syrian Observatory for Human Rights. It said four more mortars were fired on Sunday.
The month-long battle for Kobani has ebbed and flowed. A week ago, Kurds said the town would soon fall. The United States and its coalition partners then stepped up air strikes on Islamic State, which wants to take Kobani in order to strengthen its position in northern Syria.
The coalition has been bombing Islamic State targets in Iraq since August and extended the campaign to Syria in September after Islamic State, a group that espouses a rigid interpretation of Islam and initially fought Syrian President Bashar al-Assad’s forces, made huge territorial gains.
Iraq PM to visit Iran for talks on fight against IS
Iraqi Prime Minister Haidar al-Abadi is to visit Iran on Monday for talks on Baghdad’s battle against the Islamic State group, which holds swathes of the country, his office said.
The one-day trip is part of Abadi’s bid « to unite the efforts of the region and the world to help Iraq in its war against the terrorist group, » it said in a statement issued on Sunday.
The visit also aims to strengthen cooperation between the two neighbours « in the fields of energy, and housing and construction, » among other areas.
Russia
Russia – Ukraine tension take away:
Russia and Ukraine reached a tentative gas deal during the Milan talks. But this did not come with less tension, Merkel has been very critical to President Putin. The Chancellor attitude is in line with our view that Angela Merkel is using Putin threat to push EU to undertake more reforms and more integration, while keeping the threat of Russia isolation very high. Meanwhile, Russia economy continues to tank.
Reports out of Sweden relative to underwater activities indicate that Sweden is shifting away from its “neutral” stands and is heading to put some additional pressure on Putin. Should Sweden change stands as the recent evidence are starting to show, Ukraine tension might increase because it will leave President Putin without any example of neutrality Ukraine should be bind by. We continue to see only two possible outcomes: 1) Russia pursue its aggressive attitude and pushed for a separation of Ukraine at the expense of a full-fledge isolation, or 2) Russia opposition start to “challenge” President Putin to return to reforms. The second outcome is unlikely for now because intelligence from the ground is indicating that while the opposition is willing to change the trend, there is a serious lack of appetite to challenge President Putin be in openly or behind the scenes.
We foresee the situation to continue to deteriorate while Oil prices continue to plummet. Russian economy is likely to suffer a lot, while EU narrative is likely to change because the “communication war” which have been spurred by Russia and its supporters in the Western political groups is loosing traction (facts have no religion).
UPDATE 5-Russia and Ukraine reach tentative gas deal in tough Milan talks
* Putin says accord should ensure gas supplies over winter months
* Further talks needed to bolster east Ukraine ceasefire
* Merkel reprimands Putin at EU-Asia summit
* Britain says Russia must do more to get sanctions lifted (Updates after final meeting between Putin and Poroshenko)
By Andreas Rinke and Alexei Anishchuk
MILAN, Oct 17 (Reuters) – Russia and Ukraine made progress on Friday towards resolving a dispute over gas supplies in time for winter, but European leaders said Moscow still had to do much more to prop up a fragile ceasefire and end fighting in eastern Ukraine.
The mooted deal could re-open Russian gas to Ukraine cut off since June, and ensure supply to European buyers further west before demand surges in the cold months and stocks run down. It came as something of a surprise after talks in Milan that the Kremlin said were « full of misunderstandings and disagreements ».
Ukraine says winter gas price deal agreed with Russia
Kiev (AFP) – Ukraine President Petro Poroshenko confirmed that an agreement has been reached with Russia on a provisional price for gas deliveries during the coming winter months.
Poroshenko said the deal was agreed at talks with his Russian counterpart Vladimir Putin in Milan on Friday, and he hoped it would end the gas dispute between the two countries.
« On the basis of consultations, I can say that Ukraine will have the gas, will have heating, » Poroshenko said in an interview broadcast on Ukrainian television late Saturday.
Progress towards settling the gas row has raised hopes of an EU-backed resolution of the broader conflict embroiling Moscow and Kiev over the insurgency in eastern Ukraine.
Gazprom cut deliveries to Ukraine in June after Kiev disputed a price increase set by Moscow.
But Poroshenko said Saturday that a price had now been agreed by both sides and that Russia had « accepted » the Ukrainian position.
Russian container ship towed away from Canadian coast after drifting again in rough seas
PRINCE RUPERT, British Columbia (AP) — A large tug boat was pulling a disabled Russian cargo ship along British Columbia’s coast, ending fears that the vessel carrying hundreds of tons of fuel would drift ashore, hit rocks and spill.
Lt. Paul Pendergast of the Canadian Forces’ Joint Rescue Co-ordination Centre said the Barbara Foss arrived Saturday evening and the tow of the Simushir was going well.
Pendergast said authorities will wait until the Simushir is comfortably north of Haida Gwaii before they make a decision on where it will be towed. Prince Rupert is the nearest container ship port, 93 nautical miles away.
Moody’s downgrades Russia’s debt
Oil, war and sanctions are weighing on Russia’s credit ratings.
Moody’s downgraded the country’s debt by one notch Friday, citing the ongoing conflict in Ukraine, capital flight and falling oil prices. The debt rating is now Baa2, just two notches above « junk » status.
Ongoing tensions with Ukraine led to international sanctions against Russia earlier this year. That has reduced foreign investment and further slowed economic growth, spurring inflation and higher interest rates.
Russian ADRs Sink as Merkel Rekindles Sanctions Concern
Russian stocks sank to a four-year low in the U.S. after German Chancellor Angela Merkel blamed the Kremlin for continuing to stir up the Ukraine conflict, damping optimism that international sanctions will be lifted.
OAO Sberbank (SBRCY:US), the country’s biggest bank, tumbled to a record low, leading a 1.2 percent decline in the Bloomberg Russia-US Equity Index in New York yesterday. The Market Vectors Russia ETF (RSX:US), the biggest U.S. exchange-traded fund that tracks the nation’s stocks, fell 1.9 percent to $21.12.
“People are beginning to realize that the sanctions will remain in place until real progress has been achieved in the Ukraine crisis,” Chris Weafer, a senior partner at Moscow-based consulting firm Macro Advisory, said by phone. “Oil is collapsing, the ruble is falling and the economy is slowing. All of those factors combined will have a negative impact on the corporate earnings outlook.”
Sweden says credible reports of foreign submarine in its waters
STOCKHOLM (Reuters) – Sweden released on Sunday a grainy photo of a mysterious vessel in Stockholm’s archipelago, as the military hunted for a foreign submarine or divers in the country’s biggest such mobilisation since the Cold War.
The search in the Baltic Sea less than 30 miles (50 km) from Stockholm began on Friday and reawakened memories of the final years of the Cold War when Sweden repeatedly sought out suspected Soviet submarines along its coast with depth charges.
The military showed one picture of what appeared to be a craft surrounded by white ripples. The witness who took the photograph said the vessel then submerged — one of three sightings that the military said were credible reports.
The Swedish armed forces have consistently labelled the their hunt one of investigating « foreign underwater activity » but elaborated on what that might entail on Sunday.
Hong Kong
Hong Kong take away:
Hong Kong protests are calming down, as we were expecting, while a recent poll showed that 68% are opposing protests. But Mainland sticks to its view that any political reform should bind by the “basic law”. We do not see HK and Mainland China governments to accept any substantial change in the short term (“Government ready to talk but rejects key concessions”). China wary of HK protests ease pain of Macau Casinos (a pain organised by China to reduce corruption). This is 100% in line with our first comment on HK protests please find below some of what we were saying.
However, unlike with Tian’anmen square protest, we see Chinese leadership being less “harsh” fighting the protests, as we acknowledge Chinese leader fear vis-a-vis social media power. The recent decision to suspend HK police for use of pepper spray on protesters is an indication that the level of tolerance to police action has came down substantially. What’s pepper spray relative to Tian’anmen tanks? Please don’t read this comparison as an acceptance for any police abuse but we might recognise that the tolerance level has shift downward substantially and this is a positive development for the Chinese political stability.
In the medium term, we see China devoting more democratic say in HK. Our forecast is built on the view that the Chinese government is fearing a HK political change to threat its reform agenda. President Xi wants to be seen as the strong man to fight conservatism to reform, specifically ahead of the IV-th Plenum, which will focus on improving governance (which creates an important shift of power from “princelings” to the reformists). After the IV-th Plenum we see President Xi and HK government coming with a middle ground solution, which could take the form of a split designation of leaders. Democracy comes with cost and responsibility. We consider that President Xi long-term objective of political reform to be intact, but he fears that “House of Cards” like politics could jeopardise his aim to avoid the middle-income trap risk should interest groups (Raymond Tusk character in the TV-show) to derail his genuine fight against conservatism and vested interests. China seems willing to open discussion with Tibet. We are not surprised because we were expecting it, but it’s a game changer in China Mainland willingness to improve ; acceptance of others beliefs (President Xi Decision was clear about that), acceptance of democracy… However, this is a very difficult path, we see President Xi willing to undertake the changes but at a speed he considers it can avoid hard landing and apocalyptic scenarios.
Hong Kong protests: Fresh violence erupts as pro-democracy protesters make bid to reclaim hotspot
Riot police have clashed with unarmed pro-democracy demonstrators who made a daring early morning charge to reclaim one of Hong Kong’s protest hotspots.
The clashes erupted in the densely populated Mong Kok district, where police managed to earlier repel protesters from a major intersection but faced a significant pushback.
In the early hours of Sunday, demonstrators launched their fresh assault, suddenly putting on helmets and goggles to ready themselves before surging forward to grab a line of metal barricades.
Amid screams and cursing, hundreds of officers began whacking the protesters who raised a wall of umbrellas.
Pepper spray was used intermittently amid violent scuffles. The police then surged forward with riot shields, forcing protesters back.
Crowds shouted at police while one protester in a white T-shirt and goggles was beaten by a flurry of batons leaving him bleeding from a gash in the head.
Several protesters were taken away.
Support dwindling for Hong Kong protesters
A tracking poll showed 68 percent of Hong Kong people are against the illegal assemblies that halted traffic on thoroughfares, and approval for authorities and police is rising as protesters are losing sympathy with the wider public.
More than 1,160 adults responded to the Hong Kong Research Association’s poll on the protests between Tuesday and Thursday, after some barricades at two locations on Hong Kong Island were torn down and before new clashes broke out in Mong Kok.
The majority’s disapproval of the occupation campaign had consolidated since the first poll conducted in the first week of October. Sixty-eight percent of respondents opposed the « Occupy Central » protests, while support slipped by 2 percentage points to 27 percent.
Geo Cheng was walking quickly in Mong Kok to catch the cross-border bus to Guangzhou.
« This should end. The occupation caused traffic jams. Bus routes were switched to inconvenient places that made it hard for me to get to my destination, » the 24-year-old said. « As it continues, the situation is really making me sick. »
US, CHINA VOW TO MANAGE RIFTS AHEAD OF OBAMA VISIT
BOSTON (AP) — The U.S. and China pledged Saturday to overcome mistrust, manage their differences and cooperate on key issues like combatting terrorism and the spread of the Ebola virus as President Barack Obama prepares to travel to the Chinese capital next month.
Meeting in Boston, Secretary of State John Kerry and Chinese State Councillor Yang Jiechi said the relationship between the two countries is mature enough to discuss disagreements while building on areas of shared interest.
« There are many issues that China and the United States are cooperating on, even as we have some differences that we try to manage effectively, » Kerry told reporters as he began a second day of talks with Yang.
Yang, noting that Obama and Chinese President Xi Jinping had made improved relations a priority, agreed.
« We believe that we should continue to work together to deepen our mutual trust and to put our efforts to major areas of cooperation while, on the basis of mutual respect, we can properly handle many kinds of difference between us, » he said.
Both sides in Hong Kong warn of crisis as clashes continue
After a flare-up of violence between Hong Kong police and pro-democracy demonstrators Saturday, government officials and protest leaders alike warned that the situation was heading toward a breaking point.
Demonstrators remained encamped around government headquarters in the Admiralty district and had reoccupied streets in the dense commercial Mong Kok area. Police had cleared the Mong Kok sit-in early Friday, but demonstrators returned later in the day and took back control of several key streets, clashing with officers throughout the night.
Speaking out after 26 people were arrested and dozens injured in Mong Kok early Saturday, Hong Kong Police Commissioner Andy Tsang Wai-hung said police had been « extremely tolerant » and that protesters’ increasingly « illegal acts are undermining the rule of law. »
Police armed with bolt cutters, chainsaws and sledgehammers made a renewed attempt to remove barricades along a stretch of the main protest site held by pro-democracy demonstrators in Hong Kong on October 14, 2014.
Police dismantle barricades on Queensway in the Admiralty business district of Hong Kong, China, on October 14, 2014.
« These violations are … destroying Hong Kong, » he said, adding that schools, businesses and hospitals had been disrupted. If police fail to « uphold the law … who is there to benefit? What is there to gain? » Tsang said. If police fail to carry out their duties, he added, the entire society would suffer.
Catalonia
Catalonia: referendum called off, Rajoy opened discussion to give more autonomy to Catalonia, Russia’s RT News is pressing Catalonian to revolt. We were expecting it and we add Catalonia to the numerous subjects were big data has proven its accuracy.
We were saying “calls for independence referendum is increasing pressure on both Madrid and EU to move forward to offer better conditions and better narrative to the public. We see PM Rajoy taking constitutional actions to deter Catalonia from conducting the referendum, at a moment where more the referendum is gaining support from the independence forces all over the world. Madrid may accept to open discussion to devote additional autonomy to Catalonia in order to reduce the pressure. This story is likely to push EUR existential threat higher short term, but we consider that EUR is likely to rebound by the end of this year, when these threats will be repriced as less likely.” (daily briefing Sept. 30 2014). Catalonia decision to suspend formal campaign is the first step in our constructive scenario. However, Artur Mas uses the threat of going ahead with the referendum, though the constitutional court has specified that’s un-constitutional. This threat is urging PM Rajoy to act which he did in Saturday by opening discussion of some kind of PM Cameron solution to Scotland independence call (i.e. more fiscal autonomy). Catalonia government will decide by October 15 on whether to hold referendum. We see the most likely scenario to be some deal with Madrid which would : 1) help Artur Mas to claim victory – he would have secured more autonomy – and 2) help PM Rajoy to de-escalade the tension over Catalonia. We see the next region to start a fight for more autonomy to be Bavaria (Germany’s most wealthy region which is pushing Alternative fur Deutschland – AfD – anti-EZ party wants to reduce its contribution to other regions – “lazy” EZ members states, in their parlance -. Business interest (Football Clubs) are starting to indicate the cost of a secession. Novo-Russia continue to support Catalonia, as a secession could help justify Crimea. Many have been talking about war in the East, the War against Russia is also taking place in Catalonia. The relations between populists parties in EU and Russia speaks volume. Czar Putin should make no mistake EU is one and indivisible. Populism is a cancer, EU is recovering from it.
Spain’s Rajoy says ‘chapter of dialogue’ is opened with Catalonia
MADRID (Reuters) – Spanish Prime Minister Mariano Rajoy said on Wednesday that a new « chapter of dialogue » was being opened with Catalonia after the northeastern region dropped plans to hold a referendum on independence from Spain next month.
But Rajoy also threatened to block a non-binding « consultation » ballot which Catalonia says it will hold instead, if it were found to be illegal.
Nor was it clear if the Catalan authorities wanted to start discussions with the central government. Regional president Artur Mas said on Tuesday the Spanish state was « the enemy ».
Mas said that a referendum on independence – strongly opposed by the Madrid government – would not now go ahead as planned on Nov.9 but instead a non-binding « consultation » ballot would take place.
Rajoy, who had welcomed the decision, told reporters at parliament on Wednesday: « A chapter of dialogue is now being opened. »
But he also said he would seek to block the consultation vote if there was any indication it was against the law.
‘No compromise possible: Catalonia demands self-determination vote’
Catalans see no possible compromise except a proper vote for self-determination, and are willing to decide their political future without Madrid, Elisenda Paluzie, Dean of the Faculty of Economics and Business at the University of Barcelona, told RT.
While Britain rolled the dice to let Scotland vote on its independence, Spain is not keen on letting Catalonia decide its own future.
According to Elisenda Paluzie, “Spain has never recognized Catalonia as a nation,” and it neither wants to let the region decide, nor to “recognize us as a nation.” Madrid fears a majority would vote in favor of Catalan independence, she told RT.
“Polls in Catalonia show stronger support for independence than in Scotland,” Paluzie said.
Catalonia “is not by far the richest area in Spain,” the autonomous region is the fourth by GDP per capita. However, she went on, “it is a rich territory and could be by itself perfectly well by collecting its own taxes and having its own policies in the context of level markets and openness.”
Ferguson
Ferguson – Missouri: replace Catalonia, HK Occupy with Ferguson, keep calm and carry on.
Ferguson-Missouri tension resumed during the weekend after a new fatal shooting. The Tea Party caucus is using these events as a way to increase the racial tension, while Sen. Rand Paul wants to use the spread of African-American anger vis-a-vis President Obama administration as a way to bring these voters to the GOP. Sen. Rand Paul has used exactly the same strategy with the youth, which suffers the most from the global financial crisis consequences. The administration needs to increase it rhetoric against disinformation, mistrust and pessimism should it want to avoid that the voters turn to those who are placing the most emphasis on pessimism with the help of donors which interest is to keep status quo (at a moment when the US need urgently to undertake structural reforms – immigration, taxes etc. -). Furthermore, not only Tea Party caucus is using this strategy, the moderate Chris Christie whom have suffered from the Bridge scandal, is using the same strategy to change his image.
Ferguson, HK Occupy, Scotland Independence, Catalonia share the same problem: inequality. Many are considering that Inequality will bring a class struggle and some kind of XIX century like revolution. Notwithstanding that depending on where someone seats, we might think that these mass protests (1000 for Ferguson, much more in Catalonia) are sufficient to start the revolution. But like we were saying in our earlier notes, we genuinely believe that Occupy and Anonymous groups have been hijacked by “commodity interest groups” (it suffice to look at the links between investment portfolio’s advise of those groups – Gold and Commodities – and the consequence of a derailed soft power to move toward better governance).
However, unlike in the old “organised revolutions” in LatAM, this time around the social media is in charge and the overwhelming majority wants to see soft power – and Ferguson is part of that – but the chaos and Apocalypses imagined by the 3G group (the most radical group within libertarians and their name stands for Gold, Guns and God) are unlikely to take place. Of course Ebola, and ISIL are genuine threats but 1) the on-going improvement in governance (cf. Australia G-20), 2) the work to reduce disinformation and skepticism (EU, Gaza), 3) military and medical action against the two deadly diseases ISIL and Ebola, are supportive to the positive scenario. Furthermore, there is a win-win scenario which is taking place and which could help: workers, shareholders and consumer to benefit from.
Ferguson officer feared for life, report says
WASHINGTON – The police officer who fatally shot an unarmed 18-year-old in a St. Louis suburb last summer has told investigators that he was pinned in his vehicle and in fear for his life as they struggled over his gun, The New York Times reported.
Ferguson, Missouri, police officer Darren Wilson has told authorities that Michael Brown reached for the gun during a scuffle, the Times reported in a story posted on its website Friday night. The officer’s account to authorities did not explain why he fired at Brown multiple times after emerging from his vehicle, according to the newspaper.
The Times reported that the account of Wilson’s version of events came from government officials briefed on the federal civil rights investigation into the Aug. 9 shooting that sparked racial unrest and weeks of protests, some of which turned violent. Wilson is white and Brown black.
Wilson confronted Brown and a friend while they were walking back to Brown’s home from a convenience store. After the shooting, Brown died at the scene. Some witnesses have told authorities and news media that Brown had his hands raised when Wilson approached with his weapon and fired repeatedly. An independent autopsy commissioned by the family says that Brown was shot at least six times, including twice in the head.
Obama the invisible man ahead of US mid-term elections
Washington: It was an act of rejection of almost biblical proportions. Asked three times whether she had voted for Barack Obama, the Democratic candidate in one of the crucial races of the upcoming midterm elections three times ducked the question.
Political novice Alison Lundergan Grimes is seeking to unseat the Republican Senate minority leader Mitch McConnell. The race could not be more important to the Democratic Party – if it is to maintain its control of the US Senate in the November 4 elections it needs every winnable seat, and this one is in its sights. And besides, McConnell is one of the foremost faces of the intractable Republican obstruction that Democrats believe has derailed Obama’s presidency.
At present the Real Clear Politics poll average puts Grimes three points behind McConnell.
Uneasy feeling: The administration’s apparent impotence on foreign policy has left some US voters feeling pity for Barack Obama.
Uneasy feeling: The administration’s apparent impotence on foreign policy has left some US voters feeling pity for Barack Obama. Photo: AP
« Did you vote for President Obama in 2008 and 2012? » she is asked by the editorial board of the Louisville Courier-Journal.
« You know this election isn’t about President Obama, it is about putting Kentuckians back to work, » she replies.
US midterms elections
US midterms elections: US Midterms elections: GOP step up demands for Ebola travel ban. It’s interesting that this is in line with the views expressed by both Front National Marine Le Pen (the daughter of M. Le Pen who said “Saint Ebola would help us to get rid of immigration in 3months”). The economic rational behind this call is to derail globalisation by spurring fear. This obviously can derail the trend we are forecasting for commodity prices. In nutshell, an economic crisis can postpone some of the investment needed to improve energy efficiency transition. But we do believe, it can delay but NOT derail the process.
November 4th midterm elections is coming with many uncertainties. Should GOP win the Senate, the US administration is likely to find itself stuck with a divided government which could make : debt ceiling, budget negotiation, Fed Transparency Bill negotiation, very hard. Some humorists have called the Tea Party caucus to be the “no-negotiators”. Without leaning toward a liberal Tea Party bashing, we would like to remind our readers of October 2013 debt ceiling talk. These period have created too much fear that the US might default that some Sovereign Wealth Funds (SWF) have been considering challenging the USD reserve currency privilege status. The average polls are giving 55% chance to the GOP to secure a win in the Senate. However, these polls do not track the weak signals narrative nor participation variable (a model we’ve built for Scotland Independence and which has proven a very good results). Koch donors story (politico here) is very interesting because it shows that Oil interest groups are busy trying to reduce the speed at which their wealth is evaporating. $1bn is the amount invested, hope that this investment does not include any link to gestures to destabilise the Homeland security. We are confident that private initiative such as Super Pac of Super Pacs (using public donation to cut interest groups campaign financing) would take over in the short term because Pension Funds and Investors will soon recognise that “Greed is NOT good” and better have a functioning democracy.
We continue to side with the consensus. But we consider that as soon as investors will start looking at the consequence of a GOP Senate majority win we might see some change in the dynamics. We have the opportunity to use a new source of big data information. We will be using it to bring the change in the narrative in the coming 3 weeks. Stay tuned and thanks for your support.
Romney Leads Scattered 2016 GOP Field, Clinton Still Dominates the Democratic Race
Hillary Clinton continues to hold a commanding lead in the potential Democratic field for president in 2016, while the GOP frontrunner in the latest ABC News/Washington Post poll is a familiar figure – but one not favored by eight in 10 potential Republican voters.
That would be Mitt Romney, supported for the GOP nomination by 21 percent of Republicans and Republican-leaning independents. That’s double the support of his closest potential rival, but it also leaves 79 percent who prefer one of 13 other possible candidates tested, or none of them.
When Romney is excluded from the race, his supporters scatter, adding no clarity to the GOP free-for-all. In that scenario former Florida Gov. Jeb Bush, former Arkansas Gov. Mike Huckabee and Kentucky Sen. Rand Paul have 12 or 13 percent support from leaned Republicans who are registered to vote. All others have support in the single digits.
Were Romney to run again, he’d likely face some of the same challenges that dragged out the 2012 GOP contest. He’s supported by only half as many “strong” conservatives as those who are “somewhat” conservative, 15 vs. 30 percent in this poll, produced for ABC by Langer Research Associates.
Biden’s son discharged from Navy after drug test
WASHINGTON – The son of Vice President Joe Biden was discharged from the US Navy reserve earlier this year after testing positive for cocaine, sources familiar with the matter said on Thursday.
The sources, who were not authorized to speak on the record, said Hunter Biden tested positive for cocaine in a drug test administered in June 2013.
Navy spokesman Commander Ryan Perry confirmed that Biden was discharged from the Navy reserve in February 2014 but said privacy laws prevented him from releasing any details.
Perry said Biden was selected for a direct commission in the Navy Reserve as a part-time ensign in 2012 and was assigned to a public affairs unit in Norfolk, Virginia in May 2013.
Biden, 44, a partner at an investment firm, said he regretted the incident.
GOP turns to Ebola fears in campaign drive
WASHINGTON (AP) — Republicans are tapping into Americans’ fears about Ebola in their latest attacks on the competence of the Obama administration, adding a darker and more emotional edge to their main argument of the 2014 elections.
Friday’s appointment of an « Ebola czar » did nothing to slow the criticism. GOP candidates see more opportunities in public alarm over the disease than in continuing to bash President Barack Obama’s signature health care law in the campaign’s final two weeks.
A chief question for Obama is whether to restrict travel from three West Africa countries bearing Ebola’s brunt. Scores of GOP candidates are demanding such restrictions. Several Democrats — citing polls showing wide public support — are joining them.
US News
US markets continue to behave between repricing downward growth prospect (as we were expecting) and reassign Fed policy going forward. Although VIX has moved up it still below the high stresses period we have experienced during the recent period. The Mid-Term elections prospect is not discussed as one reason which could create more crisis: GOP are likely to tight Fed hands, should they secure the Senate majority, while the recovery is still underway. We see the next two weeks to focus on the narrative on the negative consequences of a GOP Senate win. A strategy the UK has followed to secure the Scotland independence vote. Meanwhile, recent Clinton Presidency document release shows the stress around the impeachment risk (a gesture GOP has been considering until recently and which may resume after mid-term elections). Furthermore, the political mistrust continues to be on focus in DC while policymakers discussing inappropriate conduct during the 2012 prostitution scandal in Colombia
Earnings season kicked started with mixed bags for the moment. However, chatters are starting to pencil down tax benefit (ahead of changes which are expected to take place during the G-20). While lower tax benefit is already in our scenario, we consider that analytics and new technology will help corporate America to keep profit margins high (please see our recent reports on robotics and big data).
Obama says Ebola travel ban could make things worse
(Reuters) – President Barack Obama on Saturday urged Americans to avoid hysteria over Ebola, and played down the idea of travel bans from Ebola-ravaged countries in West Africa, explaining that restrictions could make things worse.
Lawmakers this week urged Obama to bar people from Liberia, Sierra Leone and Guinea from entering the United States. Obama has said he is not philosophically opposed to travel bans, but in his weekly address made it clear that he is not leaning toward them.
« We can’t just cut ourselves off from West Africa, » Obama said, explaining it would make it harder to move health workers and supplies into the region, and would motivate people trying to get out the region to evade screening, making it harder to track cases.
« Trying to seal off an entire region of the world – if that were even possible – could actually make the situation worse, » he said.
Europe News
EU is suffering from the combination of negative general sentiment (Ebola, ISIL etc.) and the negative press conducted by both populists when Russian media provides very good argument to drive the tensions between creditors and debtors higher. But the trend in EU continue to be supportive and as we were indicating the more markets will recognise the short term risk of US midterms elections, the more constructive they’ll become on EU and EUR. Markets were upset yesterday because Greece may postpone exiting from the program. The glass half full part of this story is that Greece, a country which once was considered to be doomed with the only hope for it is to become 2001 Argentina (according to some Nobel Prize laureates), is considering the idea of normalisation 5 years after its program. That’s in itself a strong argument to look at the glass half full.
Br-exit: Knowing that EU is changing its narrative, UKIP call for an early Br-exit vote doesn’t come as a surprise. Actually, we were expecting it to come earlier because the populist are likely to loose the supports they are having now. Populists parties are using investment advisory businesses to spread their mistrust. A recent study conducted by the AMF (France SEC), showed that 9 web-traders over 10 are loosing money when investing in FX. This is mainly due to the fact that 9 over 10 are investing like they vote: buy Gold, USD and sell EUR because it’s doomed (this is their beliefs not ours). By better regulating the internet retail investment sector, we are likely to see less spread of mistrust. These internet retail websites are widely spreading mistrust and advising ‘moms and pops’ to make easy money when the doom scenario will come. Again our legal have forbidden us from spreading some website adds (because they consider these are non respecting SEC and other regulations). These attract their “victims” by claiming making $8,000 a month by becoming a trader. The 9 over 10 are usually exposed to the next big splash in the markets. This is exactly how our research have found ISIL portfolio to be invested. While the first is betting that our institutions are rotten to the core and are listing to the doom and gloom widely spread, the former is speaking its own books. No one can be held accountable for making wrong investment decisions. However, by stressing the losses many individual investors are likely to change their strategy and diversify their views. This financial market war is likely to leave only those which bet on ISIL success largely exposed to the doom and gloom scenario.
While EU-skeptics groups continue to do well in the polls, EU is heading to a grand bargain which would clear the way to regain public support for the EU project. Germany’s FinMin Schauble indicated that Germany’s response to a “clear weakening” of the economy will be a shift in public spending toward investments and away from government consumption. He said that Germany could be willing to increase EIB capital (a strategy designated Commissioner Moscovici seems to be open to during his weekend interview). Eurogroup has cleared the way to a shift toward growth agenda / pact. Furthermore, China Premier Li visit to Germany has conducted to the release of a guideline for bilateral corporation. Furthermore, EcoMin Macron hinted that France may be considering a change in U/E allowances (a reform we understood to be very high on Chancellor Merkel ask list to move for more EU integration). Furthermore, US and UK are considering joint model to deal with too big to fail (after ISDA agreed on a “big bang” deal to reduce systemic risk arising from derivatives). Finally, according to Reuters, Germany is trying to convince Turkey and Iran to join the fight against Islamic State (IS) militants, Foreign Minister Frank-Walter Steinmeier told a German newspaper. EU developments are in line with our constructive scenario for the region (a view which is not priced yet by markets).
METALS-London copper recovers as U.S. jobs data calms growth fears
SYDNEY Oct 17 (Reuters) – London copper bounced off six-month lows on Friday after the U.S. economy showed signs of strength, but lingering global growth concerns kept a recovery in check as markets await China economic data next week.
FUNDAMENTALS
* Three-month copper on the London Metal Exchange climbed 0.5 percent to $6,581.25 a tonne by 0117 GMT, after losing 1.4 percent in the previous session. Copper prices slid to their weakest since April 15 at $6,535 a tonne on Thursday.
* The most-traded December copper contract on the Shanghai Futures Exchange fell 1.1 percent at 47,180 yuan ($7,705) a tonne.
* Other LME contracts bounced between half to 1 percent after a series of fresh lows on Thursday. LME zinc fell to its weakest in more than three months, LME nickel hit a 7-month trough, and lead and tin hit 17- and 15-month troughs respectively.
* The number of Americans filing new claims for jobless benefits fell to a 14-year low last week and industrial output rose sharply in September, positive signals that helped ease fears over the economic outlook.
* After a two-year siesta, the euro zone is back in the financial markets’ firing line due to stagnating growth, low inflation, budget problems in France and Italy and rising political risk in Greece, where the bloc’s debt crisis began in 2009.
* China’s economy likely grew at its weakest pace in more than five years in the third quarter as a property downturn weighed on demand, a Reuters poll showed, raising the chances of more aggressive policy steps that may include cutting interest rates. China will publish GDP data on Oct. 21.
‘Pudding Man’ who left Israel for Germany reveals his identity
BERLIN — Pudding Man is unmasked! He is none other than 25-year-old mobile app designer Naor Narkis.
And if you don’t know who pudding man is, you clearly don’t live in Israel or Germany.
Narkis – whose revealed his name for the first time to The Washington Post – sparked an uproar over the past three weeks after taking to the Internet to share his decision to leave behind the high cost of Tel Aviv and follow a host of young Israelis emigrating to cheap and shabby-chic Berlin. Despite the shadow of the Holocaust here, he encouraged more of his countrymen to do the same — anonymously mounting a Facebook page on Sept. 29 titled Olim Le Berlin. Even the name itself — playing on a Hebrew word commonly used to encourage immigration to Israel — stirred passions.
But his page really went viral – and became part of the national debate – after he posted a shopping receipt, including a local version of a beloved Israeli chocolate dessert known as Milky. He bragged of buying a far more ample portion than the typical serving size in Israel for roughly one-third the price. Soon, talk began of a “Milky Revolution” – or an outflow of young Israelis who could find economic solace in the symbolically important, and undeniably cheap, former capital of Nazi Germany.
China News
China: On Oct 21, China will publish a new round of high frequency data. We expect the data to continue confirming that the country is soft landing while rebalancing. Labor statistics have been showing that the manufacturers have started to rebalance their activities away from labor intensive (an objective already stressed by the Chinese leadership). These are in line with the objective to rebalance the economy away from credit driven investment. “BHP Billiton has raised the stakes in the ongoing war of attrition in global iron ore with a plan to slash costs and lift production” confirms our view that commodity companies are starting to adapt to the new normal, while China is cutting the road to nowhere and excessive bureaucracy (China removes 160,000 phantom staff on payroll, China Today). Acknowledging that there is “phantom staff” out loud is an event for those who have been following China for years (this could have cost some China Today’s managers their jobs a couple of years ago).
Furthermore, the west is helping China to change it’s “narrative” from being anti-democracy (China has not gone back on its agreements with Britain over the future of Hong Kong, whose autonomy is far greater than what Britain expected three decades ago, a former aide to late British Prime Minister Margaret Thatcher has said.).
Furthermore, Premier Li is undertaking a state visit to EU. This is likely to bring more collaboration with the West, while China will be offering a back-door to Russia energy at a moment when : President Putin is challenged by plummeting oil prices and sanctions are making harder for the energy sector (finance projects and investments).
The government continues to fear that the economic rebalancing has not taken momentum yet although 1) labor intensive manufacturers are relocating in cheaper labor countries, 2) businesses are upgrading their business models [while becoming environmental friendly], 3) President Xi has conducted many trade – investment agreement with Neighbours (after Premier Li did the same in Africa) to secure investment projects which use Chinese manpower – engineers know-how in this domaine, 4) China is gaining more military presence and has fluxed it mussels – e.g. China “Top Gun” intercept by a US fighter jet -, 5) China has signed many RMB agreement which reinforce the currency usage and prepare its full liberalisation – after Free Trade Zones (FTZ) have proven to be a success -, 6) China has undertaken a genuine fight against bad governance and better regulation – many examples in our recent daily briefings of fight against corruption and bad governance-. We see in FinMin Lou Jiwei recent comment an indication that not only China wants to create a reserve currency it does want it to be strong when Chinese leaders perceive the heavy pressure place on USD by a category of investors to avoid debasing the currency through deficit financing – although we consider that this worry is misplaced –
China, Vietnam agree to properly address disputes
BEIJING – China and Vietnam agreed to properly address and control their disputes on Saturday, a fresh pledge made during a meeting between Vice chairman of China’s Central Military Commission Fan Changlong and visiting Vietnamese Defense Minister Phung Quang Thanh.
« A neighboring country cannot be moved away, » Fan said. « It is in the common interest of China and Vietnam to live in amity, handle disputes properly and promote common development. »
Bilateral relations have been strained since earlier this year due to Vietnam continuously and illegally disturbing a Chinese company’s normal oil drilling activities in waters near the Xisha Islands in the South China Sea.
In mid-May, a series of riots began at foreign companies in southern and central Vietnam, leaving five Chinese nationals dead, around 20 foreign factories burned down, and some 1,100 foreign companies affected.
Chinese premier, French president meet on deepening ties
MILAN, Italy, Oct. 16 (Xinhua) — Visiting Chinese Premier Li Keqiang and French President Francois Hollande met here Thursday and pledged to further deepen bilateral ties and expand cooperation.
China and France have maintained good political mutual trust, and bilateral relations are entering a new stage of accelerated overall development, Li said in the meeting, which took place on the sidelines of the 10th Asia-Europe Meeting (ASEM) Summit.
China, he said, stands ready to work with France to further consolidate mutual trust and boost bilateral cooperation by giving full play to bilateral high-level dialogue mechanisms in such fields as economy, finance and people-to-people exchanges.
The Chinese premier urged the French side to further relax high-tech exports to China and encourage companies of the two countries to advance joint research and development, joint investment, joint production and joint exploration of third-party markets, so as to provide the world with more China-and-France-made products.
China and France hold similar positions on many international and regional affairs, and are both committed to multi-polarization and democratization of international relations, Li said.
Chinese premier eyes closer ties with Singapore
MILAN, Oct. 17 (Xinhua) — Chinese Premier Li Keqiang on Friday called on joint efforts with Singapore to boost ties with the southeastern Asian country and the Association of Southeast Asian Nations (ASEAN) as a whole.
Li made the remarks while meeting with Singaporean Prime Minister Lee Hsien Loong on the sidelines of the two-day 10th Asia Europe Meeting (ASEM) summit.
China attaches great importance to its ties with Singapore, Li said, adding bilateral relations face important opportunities and broad prospects, as the two countries will celebrate the 25th anniversary of the founding of diplomatic ties next year.
China hopes to maintain the unique ties with Singapore, enhance substantial cooperation, expand common interests, seek new pivotal projects and cultivate new cooperation highlights, he said.
Li expected a fruitful annual meeting of China-Singapore bilateral cooperation mechanism to be held later this month, saying he welcomes Singapore to participate in the development of China’s western regions.
China’s strategic partnership with ASEAN have entered the second decade, and China always attaches great importance to its ties with ASEAN, he said.
Chinese, Vietnamese armies agree on proper settlement of maritime row
BEIJING, Oct. 17 (Xinhua) — China and Vietnam reached consensus issues for developing bilateral military relations on Friday, pledging to properly handle their maritime disputes.
The discussion took place between Chinese Defense Minister Chang Wanquan and his Vietnamese counterpart Phung Quang Thanh in Beijing.
During the talks, both sides decided to gradually resume and promote the healthy and stable development of bilateral military ties.
Both armed forces should enhance solidarity and provide a strong guarantee for the governing status of the communist party of the two countries and the cause of socialist construction, a statement said.
The two sides agreed to abide by the consensus reached by both leaders and play a positive role in properly dealing with their maritime disputes and safeguarding a peaceful and stable situation.
Mini-stimulus moves lift yuan loans
New local-currency loans rose for the third consecutive month in September to 857.2 billion yuan ($140 billion), up 70.2 billion yuan from a year earlier, and analysts said the increase shows that the economy has stabilized with the help of mini-stimulus measures.
M2, the broadest measure of money supply, expanded 12.9 percent year-on-year, the People’s Bank of China said on Thursday. Foreign reserves were $3.89 trillion as of Sept 30.
Sheng Songcheng, head of the statistics and analysis department of the PBOC, said that M2 money supply will keep increasing steadily and its growth will stabilize at a target range of about 13 percent.
But he warned that credit growth will slip in general because potential growth is slowing down, and people should view this trend objectively.
Lian Ping, chief economist with the Bank of Communications Co, said: « Previous policies have taken effect and maintained the stability of financial markets and economic operations. China will continue to follow a prudent monetary policy and give priority to fine-tuning measures.
Australia News
Australia: Australia struggles with the labor statistics glitches. Treasurer Hockey offered the private sector to check the information and help to correct that data. While this information does not change drastically our view that the RBA will stay put (due to the fear of a housing bubble, which the central bank is dealing with through macro prudential tools). However, the glitches reduces the “view” in the market that countries such as China are manipulating their figures. While our work on macro eco data has pushed us to take the economic figures with a pinch of salt (due to the methodology which could create some issues), we do not side with camp mistrusting everything. However, we believe that the big data analytics is likely to help improve the accuracy and the frequency of the high frequency data. However, the statistic office may take time before undertaking the experiment.
Australia continues to be seen, by markets, as a derivative to the old Chinese model (i.e. commodity provider). This view explains the high beta between Australian assets and commodity prices (or China demand for commodities). Banks shares are suffering from the combination of the increase perception of increase in risks and additional macro prudential constants to curb housing prices frothiness. Small business defined the “goldilock range” for AUDUSD to be [.90-.94]. This level is much higher than RBA own assessment (based on PPP models). We have been criticising PPP models because they do not factor any structural changes.
These assume that neither China nor Australia are conducting their rebalancing agenda. We do believe that the current weaknesses offers genuine opportunity to benefit from the other drivers to the Australian economy which are not related to commodities. We see the current Australian Dollar weakness to continue at least until the USD start to weaken again when markets will realise that it has beaten too much on a quick rate normalisation. Meanwhile, from our previous daily briefing, we have gathered sufficient support to the view that the drivers of the Australian GDP are moving toward: 1) education, health and finance services provider to Asian neighbours, 2) innovation and digital sector, 3) energy resources export to Japan (the later contributes to our constructive view that the current negative Japan Energy Trade deficit will rebalance in the medium term – reducing Japanese Government bonds solvency risk – ).
An American cruise ship has been refused permission to dock at the Mexican island of Cozumel due to fears one of its passengers could have been infected with Ebola.
The ship, Carnival Magic, left from Galveston in Texas with a Dallas health worker who may have had contact with specimens from the first patient diagnosed with Ebola in the United States.
A Mexican port official said they decided against the ship’s docking as a preventive measure against Ebola.
Earlier the ship had sailed to Belize but authorities there had refused to allow the health worker to leave the ship, although other passengers were allowed to disembark.
The woman and her husband have been isolated on a cruise ship, but are showing no symptoms of the disease, the US state department said.
The Texas Health Presbyterian Hospital worker, who did not have direct contact with now-deceased Liberian patient Thomas Eric Duncan but could have processed his bodily fluids, left Sunday on a cruise from Galveston, state department spokeswoman Jen Psaki said in a statement.
Japan News
Japan take away: Apart from the BoJ discussed earlier, METI Chief Obuchi is seen to resign over irregularities in the political funds. This put some pressure on PM Abe administration which was seen to be “different” from previous government which have tried to defeat deflation. Furthermore, Mrs. Obuchi was one of the strong female figures in the new cabinet because her participation was intended to prepare Japanese public to embrace a woman as PM. We believe that the recent news have delayed PM Abe objective but have not derailed them. We continue to see Japan undertaking genuine third arrow reforms because other evidences are supportive to this trend. The resignation might open questioning within western investors that whether Japan Abenomics is still working. We consider that whatever pressure or sell-off should be an opportunity to strengthen positioning.
METI chief Obuchi to resign over funds scandal
Economy, Trade and Industry minister Yuko Obuchi intends to resign over shady irregularities in the political funds reports of her support groups, a government source said.
The loss of Obuchi, a rising star in the LDP who was being groomed as a possible future prime minister, would deal a huge blow to the government of Prime Minister Shinzo Abe at a time when it is promoting women’s empowerment as a pillar of its policy initiatives.
Obuchi, a 40-year-old mother of two and the daughter of a former prime minister, became chief of the powerful Ministry of Economy, Trade and Industry as one of five women appointed in the Sept. 3 Cabinet reshuffle.
She would be the first minister to step down over a scandal since Abe took office in December 2012.
The source said Obuchi intended to take responsibility for the scandal and finalize her course of action in a meeting with Abe as early as Saturday.
She has told people close to Abe that she plans to quit and would discuss the matter when Abe returned from the Asia-Europe Meeting summit in Italy, the Nikkei newspaper said.
Japan METI minister expected to resign in blow to PM Abe – media
(Reuters) – Japan’s new trade and industry minister was expected to resign on Monday, domestic media said, over allegations that her support groups misused political funds, dealing a blow to Prime Minister Shinzo Abe as he faces tough policy decisions including whether to raise an already unpopular sales tax.
Yuko Obuchi, 40, the daughter of a prime minister and tipped as a future contender to become Japan’s first female premier, was one of five women appointed by Abe in a cabinet reshuffle less than two months ago. The appointments were intended to boost his popularity and show his commitment to promoting women as part of his « Abenomics » strategy to revive the economy.
Japan rolls out « long-held dream » with first commercial jet in 50 years
Oct 18 (Reuters) – To the sound of drums and a children’s choir, Mitsubishi Aircraft on Saturday rolled out Japan’s first commercial jet in half a century, amid doubts it can attain an ambition to sell more than 2,000 aircraft in a competitive market segment.
Developed by a subsidiary of Mitsubishi Heavy Industries that includes Toyota Corp as a shareholder, the $42-million regional jet, with just under 100 seats, is Japan’s second bid to break into the commercial aircraft market.
« This has been a long-held dream of ours, and one that all of Japan has waited for, » Hideaki Omiya, chairman of Mitsubishi Heavy, said at a factory in Nagoya in central Japan, which was also the site of the roll-out, 75 years ago, of the prototype of the World War Two-era Zero fighter plane.
The ceremony, attended by about 500 people, kicks off a sprint to complete flight tests before the first delivery of the aircraft in June 2017 to ANA Holdings Inc.
« Utilities urged to decide soon on scrapping of aging reactors »
TOKYO, Oct. 17 (Kyodo) −− The government called on Friday for utilities to swiftly decide whether to scrap aging reactors that would be particularly vulnerable in the event of a natural disaster.
The pro−nuclear government, which is seeking to reactivate idled reactors as soon as possible, is pushing the operators to decide quickly in the hope that shutting down old facilities will help mitigate public concern over nuclear safety and make it easier to secure local consent for reactor restarts.
Under new, tighter safety standards adopted following the 2011 Fukushima Daiichi meltdowns, utilities are not allowed to operate nuclear reactors more than 40 years in principle. The nuclear safety regulator can grant one−time extensions of up to 20 years, but that would require power companies to spend massive amounts on upgrading equipment and boosting plant
safety.
During a meeting with Makoto Yagi, head of the Federation of Electric Power Companies of Japan, industry minister Yuko Obuchi said the government wants power companies to decide on the issue « at an early date. »
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