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SNBDL Daily Briefing
Report prepared using big data solution Quid
Our take away from the last 24 hours news
US: Mainstream economists (Goldman Sachs for instance) are saying “Not so fast” or there is no point rushing in normalising interest rates (because fiscal budget is getting under control, inflation is softening, wage growth is subdued, etc.). Fed has let the market question (or trash) its credibility during the recent months. Indeed, during the recent 12 months, the consensus have been following Gold Bugs arguments. But the disappointing returns out of these exposures (except in September, when geopolitical noise have push risk premium higher) is putting pressure on investor to reconsider their scenario, while fundamental analysis is not giving any ground to investment strategies which anticipate a Fed mistake.
We have been saying that the Philipps Curve has shifted downward due to a combination of new jobs (mobile device related jobs or Apps jobs), robotics, and less flexibility in the labor market relative to 1980s (please see our report Jackson Hole 2014 which provides more details on these matter).
Consequently, interest rates and USD have reversed the trend which have been developing last month, as a result of the combination of a fear that geopolitical tensions which spur higher commodity prices while the “populists rhetoric” (which have gone mainstream) will spur wage inflation. We have been forecasting that Commodity prices will plummet (please see our note Energy Update where we’ve indicated that our WTI first future objective was $90 before targeting $80).
Our views remained unchanged: interest rates will remain low for longer than market expects, while stocks will recover. This may accelerate going into December because investors have lost money being short fixed income and under-invested in stocks.
Eurozone: No-one liked Draghi recent meeting announcement: 1) he postponed Sovereign QE talks until the current actions (QE ABS, Covered Bonds & T-LTRO) effects are genuinely studied, 2) hawks analysed QE ABS like“sub-prime” or junk bond buying. Both these two views are a complete non-sense to us. We consider that Draghi-nomics is all about finding the Goldilock conditions (not too cold, not too hot): 1) QE ABS, Covered Bonds & T-LTRO intend to reduce the cost of finding for SMEs mainly in Italy and Spain at a moment where banks are ending their asset quality review (AQR) and are willing to restart a new page (this is exactly what US banks did post TARP) while SMEs demand is picking up (many SMEs are considering automation as a way to improve their efficiency issue), 2) Draghi needs to avoid returning moral hazard (a risk should ECB undertake Sovereign QE) while keeping the hawks happy and pressing France and Italy to execute reforms (PM Valls was in London yesterday, as expected, he said “my government is pro-business” which is the correct English translation to “j’aime les entreprises » France has changed and recognising it creates many opportunities). « All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident.” said Arthur Schopenhauer. We consider that markets are still in the first and second stage, We are in the third. The recent weak signals are showing that markets is moving from the first and second stage to the third (this one will quick start a strong rally).
BoJ: Governor Kuroda indicated that the JPY weakness is positive if in sync with fundamentals. This hints that any other genuine stimuli will be delayed until Japan reduces a JGB solvency crisis risk. We have been saying in many occasions that we see the trigger of a new QQE to be a second VAT hike, more indications of 3rd arrow structural reforms and a reduction in investors short Japanese fixed income. Markets consensus is likely to be disappointed again in its January forecast. We see a too close to call decision by January should the 3 triggers not introduced. The recent JPY, EUR, GBP weaknesses seem to be the result of an excessive excitement about monetary divergence. We consider that going to December the market will revise down these expectations, while the economists are penciling down their high growth forecast.
Russia: We have been short RUB since the start of Sochi Olympics. While the markets have been talking of normalisation, escalation, we were saying that President Putin government is unlikely to reverse course without a genuine internal push-back. For now, the opposition has not yet reached the moderate reformists, but the pressure is intensifying. Oligarchs and plutocrats are smoothly recognising that the path taken by President Putin to secure their benefits is achieving the opposite results (they are loosing money due to plummeting commodity prices).
Emerging Market Central Banks 2.0: We have been saying that although we don’t see the Fed normalising quickly, EM have to reform because the “keep calm and carry-trade on” is coming to an end. Australia G-20 meeting is likely to be the single event at which world leaders will embrace good governance and fight against tax evasion. The world leaders are likely to reach an agreement on these events not because it’s nice, but because it’s the only way they can defeat long-term terrorism which have been using mistrust in institutions and dis-information to hire young jihadists.
Goldilock growth: The World Bank revised down its growth forecast for China and East Asia. Meanwhile, Eurozone negative trend is bottoming out: Greece vows to cut taxes and growth in 2015 (5 years after the start of the Greek crisis – PSI etc. -). PM Samaras is heading to become the first Greek prime minister, in modern age, who reformed the country and rebalanced it. EC President Juncker is likely to use the change in narrative to explain that EU is not fighting a war against its public but is doing whatever is necessary to help EU growth and prosper. The same narrative is likely to push Germany to do more as it would have proven that, although it does not come free of pain, EZ countries (and “the most lazy of them” – in the EU-skeptics parlance) can reform and become prosperous. PM Valls said “my government is pro-business” in the City. Coming from a Socialist it’s even more surprising to France-bashing Britain. We have been indicating that France is changing and this is the most single positive even for the Eurozone. Indeed, since May 2014, we have been saying EZ has had 2 wake up calls: Russia invasion of Crimea – and quasi-invasion of Eastern Ukraine – and the results of EU-Skeptics (UKIP, Front National, etc.). These two events did not came as a surprise to us: 1) We have been indicating that Russia will escalate since Feb. 2014 and this will push for more integration (a concept of United States of Europe, though we have not defined it yet from an institutional prospective), 2) We have been indicating since Aug 30th EU Council that “Draghi saved the EUR in June 2012, August 30th EU Council is giving it a reserve currency status”.
Ebola:
CDC estimated to 100 the number of people who might have been affected by Patient 1. This estimate is still accurate. These are called Patients 2 (or the inner circle). This number is likely to increase in the coming day, before it decelerated. This is the Contagion effect as know in Mathematics. In order to avoid the paranoia, the CDC, as we were expecting, have used the power of social media and @twitter, to : improve the information (fight disinformation) and spur the motivation for social media to help reduce the outbreak. The need to get prepared is very important in a period where our institutions are seen as lacking credibility. We have been indicating that having Russia cut gas delivery to Europe could make any non-lethal flu a cause of paranoia and create more economic headwinds (consumer confidence etc.). But unlike many commentators we consider that our institutions – WHO, CDC and others – are up to the task and mankind is more resilient that many think.
The most widely spread FALSE belief is that Ebola can mutate easily. This is possible but highly unlikely. In films and TV-shows, scenarists like to make their stories appealing but the reality is sometimes (fortunately) less scary.
From our Thursday Oct. 1st daily
Days after the WHO and the CDC revised upward their estimates for the development of the outbreak to as high as 1.4 millions by beginning 2015, the First Ebola case has been diagnosed in Texas. The 1st patient (i.e. 1st person known affected in a region – not brought affected from other places -) arrived to the US in September 20th from Liberia. The CDC has started an intensive search for anyone who might have come in contact with the patient while the person was infectious. While the spread of Ebola is less viral than Cat pictures on the internet, the fear is likely to edge up before CDC and WHO will show how capable and efficient are these two institutions. We have been discussing Apps and big data which would help report any symptoms to the public. Japan nationals and internet have been very effective mapping real-time the consequence of March 2011 Fukushima nuclear catastrophe. The same tools can be used today, although a very wide understanding of the symptoms is genuinely and urgently needed to make it succeed. We have been saying that even a non-lethal epidemic can spur fear, confidence collapse and economic headwinds. Unlike in the very good film “Contagion”, the tech tools and social media help can be very effective in reducing the spread of the disease and reporting the infectious agents. Doctors, which have been affected in Africa and brought to the US, have been saved. The experimental vaccine, which has a 100% hit ratio for primates, is likely to limit the casualties. Our only genuine fear, is that one of the affected has a political or ideological agenda and tries to spread the disease more widely. To our readers, there is no need to be stressed but please stay safe.
But more importantly, the first US case is likely to intensify, the global coordinated response which have started during the recent weeks. We have highlighted that the global coordination has been intensifying to: 1) fight disinformation (we were talking about it in our recent daily briefings), 2) provide short term medical assistance (France, US, Israel, etc.) with the help of military expertise – when numerous Western African countries are indicating the lack of medical personnel – , 3) provide financial support (wealthy donors, government funding, NGO help etc.), and 4) fast track the Ebola drug trial (the drug has had a very good result in the experimental tests).
Notwithstanding the on-going difficulties, and the short term negative economic effect, we continue to believe that the fight against Ebola will succeed and will clear the way to the increase in Africa investment and economic support (cf. our note “This time for Africa” which stressed that Africa is heading to experience the same development China had experienced when it joined the WTO in 2001 with positive consequences for both Africa and the world economy). The global coordination triggered by the response to the terrorist risk might help responding to the Ebola risk as well (due to the threat a dirty weapon using Ebola virus constitute). We disagree with the bet of Cocoa upward spiral because many analysis assumes the doom-and-gloom scenario which is unlikely to happen. We see the intensification of the worrying rhetoric as a part of the genuine action to keep the subject high in the leaders to do list.
Israel and Palestine continue to head into the right direction.
PM Netanyahu said it all during his visit: a nuclear Iran should not come with an increase in the existential threat to Israel. While we are heading to a peace process, Israel needs to secure the goldilock conditions of such a scenario. This goes through a genuine commitment by Ayattolah Khamanei that Israel should continue to flourish in peace, leaving the existential threat to ISIL and the Califat-of-Paper Abu Bakr El Baghdadi. Make no mistake : Israel will never be destroyed. Because, Israel is one of the greatest idea, in my opinion, which human brain invented during our common 13.8bn years history in creating institutions and laws to reduce universe entropy. It has nothing to do with religion or ideology, this is just pure rational thinking and science. The idea of Israel remains me that while facing adversity one move on an try to empower himself to bring: prosperity (in our parlance: jobs, growth, adequate inflation, wealth, solvency etc.). This is what, I believe, Moses did: creating the promised land of prosperity and peace. This is why Israel can never be destroyed. Even Hitler failed, Abu Bakr El Baghdadi is doomed and Ayattolah Khamanei have to play his cards well now. He can empower his people, improve Iran economy and growth, by recognising the obvious. In 20years finance careers I’ve never seen an investment as obvious as this one. [Don’t hesitate to ask for details as usual].
Sweden recognition of Palestine constitute a first step into the right direction. External pressure on Israel, comes as a genuine help for the government to fight its hard liners and bring them to a peace solution. We see this process to last one to two years but we are convinced that peace will happen not because it’s a nice thing but because it’s where economic prosperity lies for Iran, Palestine, and Israel.
The likelihood of defeating ISIL continue to increase, though short term ISIL seems winning battles such as Kobani (at the Turkish borders).
Turkey and Canada decided to join the 40 countries coalition to fight ISIL. We were saying that Herve Gourdel beheading (to which we need to add Alan Henning since Friday) and the Philippines militant threat to ham a German were sufficiently evil behaviour in 2014 to create the wake up call that each of us should make something to stop these unacceptable atrocities.
We are surprised by Turkey’s attitude toward Kobani. This attitude could only be explained by the fact that Turkey and Kurdistan have not settle yet on a strategy to defeat Assad without giving too much power to the Kurds (which may ask for an independent Kurdistan).
According to Theresa May, ISIL could acquire a dirty weapon. Saudi’s high cleric ceased the opportunity of Hajj pilgrim to call all muslims – Shia, Sunni, Maliki, Wahabi etc. – to defeat the Murderers In Iraq & Syria (known as ISIL). What we commonly name ISIL is not Islam (not I) and not a state (not S). It would be helpful to replace these two letter by “M” for Murderers. I bet that the Jihadists hiring will collapse after this simple action. The fight against the Murderers will be easy should we decrease the number of their new followers. This work like contagion or viral system. The final fight will come along with the genuine actions G-20 is saying it will undertake in Australia to improve governance. This time there is no way to escape with half-backed solution: G-20 needs to get rid of bad governance to reduce the spread of the view that “institutions are rotten to the core” (a view which helps Jihadists to hire youth on the internet). We discussed it since 2009, we have increase the data to track this bad governance since 2012. This power have moved from states to the public. Fortunately, anecdotal evidences (from UK to China) indicate that lawmakers have the same goal reducing bad governance. This is not because that’s a nice thing to do but because this were profits, shareholders values, pensioners interests, workers interests, consumer interests are. Again, we tend to reduce Entropy, this since our first day 13.8 billions years ago (Oil prices development and the number of violent deaths are an amazing reflect this fact).
Finally, as part of the evidence that data will help fight terror, France 24 broke Sunday that Zabihullah Mujahid (Taliban spokesman) revealed mistakenly his localisation in twitter (here)
Hong-Kong political reforms protest: Events are developing as we were expecting
Pro-democracy protests have decided to change their strategy and open talks. 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.
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. 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 push back to the 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.
We do agree with the view that HK Occupy is not about democracy but about inequality (please see OpEd below). We do see the objective of Occupy to create the conditions to speed up reforms rather derailing them. We have been saying that Tea Party, Oligarchs and Russia have highjacked the movement for which we support the objective but not the actions. But many are fooling themselves when thinking that the populists movements want to change the current trend. Can anyone trust Russia’s Putin and Gold Bugs Tea Party in the fight against corruption?
Catalonia: 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 -.
EU: the glass half empty view is that unemployment rate is still very elevated (23.3% in August) but it’s coming down, even before EU Commission President elected Juncker’s infrastructure plan, digital initiative, EU Council President elected Tusk’s energy union, are not in place. Though this story combined with Catalonia independence can lead, mistakenly, people to believe that “la Bastille” will be taken in days, we disagree with this view, as those who see a bloody revolution are being hired by ISIL and alike, while the overwhelming youth are working genuinely to improve their lives (alike their ancestors, Youth are adapting to the XXI Century to survive). Although PM Valls said out loud “My government is pro-business” (he translated it in English because in literal translation is sound like french lover talk), many media continue to bash France and EU (even Mickey needs a bailout). But the same story about Euro-Disney shows that US corporation are still believing in EU and EZ (let’s face it the 2 – wake up call have pushed leaders to change the course – it’s the EC commission of the last chance -).
UK PM Cameron is expressing his say in the forthcoming negotiation ahead of Br-Exit referendum. Amongst these European Court of Human Rights ruling is considered as an important step. As we were saying, since Aug. 30th EU Council, we consider that the UK will gain some changes in order to give PM Cameron enough political capital to campaign for the Yes. We consider that the EU Commission success will be the best tool to defeat UKIP and EU-Skeptics in the forthcoming ballots. From the economic prospective, the UK housing market is cooling off while the services sector is softening. This supports our view that BoE will not deliver the rates hike priced by markets.
China: World Bank new forecast confirmed that China 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).
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, 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 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 – ).
New Zealand: Fontera payout cuts fuel concerns over NZ economic prospects. This increases the pressure on new PM Key Cabinet to accelerate rebalancing the economy and reforms. We have been indicating that NZ has already started a genuine shift toward new Tech agriculture, health (please see below recent promising advance in Asthma treatment) and education services directed to Asian neighbours. The fact that PM Key secured another term supports our constructive scenario on NZ.. This constructive scenario narrative is currently overshadowed by the “search for yield” (or interest rates differential) and RBNZ fight against excessive carry trade effects.
Japan: inflation softening along with economic downgrade was widely expected as a result of the 1st VAT hike (cf our strategic note Dec 26th 2013). We see BoJ to keep the bazooka of QQE-2 un-tested until the JPY excessive depreciation and JGB solvency risk came down * investors are still short JGB expecting a Japan crisis *. The 2nd VAT hike will require some stabilisation at the current levels, though we expect that PM Abe will undertake the 2nd hike in steps, because BoJ is unlikely to be sufficiently confident to move ahead with more QQE while JPY is accelerating its depreciation. PM Abe voiced concerned over the JPY rapid depreciation, as he pointed (rightly in our opinion) to the increase in energy cost, which deteriorate further the energy trade deficit – and increase the risk of JGB solvency -. The Prime Minister confirmed in his Diet address to pursue Abenomics 3rd arrow.
However, BoJ might do some adjustment to its monetary program but nothing excessive. The news flow out of this weekend G20 meeting shows that the global community is gently pressing the government and the BoJ to pursue structural reforms, economic rebalancing, solvency improvement (through VAT 2nd hike commitment) and adequate monetary policy (not too hot – to avoid a crisis – not too cool – to avoid derailing the on-going portfolio rebalancing approach -). Japan continues to face heavy public pressure to rebalance its energy reliance to nuclear. While we believe that Japan will continue to press for reopening nuclear plants (when Nuclear Watchdog gives his green light), the medium to long term trend is that Japan will use Trade negotiation with neighbours to secure new energy sources while using this pressure to deregulate and move forward with Abenomics 3rd arrow (please see our Japan update for more on our views). We are not surprise by the fact that Russian news media are reporting the pushback to reopening nuclear plans, ahead of Japan-Russian talks (about sanctions, energy agreement, and disputed territories).
As China, Japan, and South Korea heads toward a constructive talks (as we were reporting in our previous daily briefings) and Japan and North Korea are heading toward a solution on Japanese civilians abduction, North Korea leaders close to Kim Jong Un held last weekend high level talks with South Korea minister of reunification. This indicates that the scenario of an unified Korea is advancing. We have been considering that the reunification will ultimately take place but it requires normalised relation amongst the 3 important players: China, Japan, South Korea.
Central banks News
US: Mainstream economists (Goldman Sachs for instance) are saying “Not so fast” or there is no point rushing in normalising interest rates (because fiscal budget is getting under control, inflation is softening, wage growth is subdued, etc.). Fed has let the market question (or trash) its credibility during the recent months. Indeed, during the recent 12 months, the consensus have been following Gold Bugs arguments. But the disappointing returns out of these exposures (except in September, when geopolitical noise have push risk premium higher) is putting pressure on investor to reconsider their scenario, while fundamental analysis is not giving any ground to investment strategies which anticipate a Fed mistake.
We have been saying that the Philipps Curve has shifted downward due to a combination of new jobs (mobile device related jobs or Apps jobs), robotics, and less flexibility in the labor market relative to 1980s (please see our report Jackson Hole 2014 which provides more details on these matter).
Consequently, interest rates and USD have reversed the trend which have been developing last month, as a result of the combination of a fear that geopolitical tensions which spur higher commodity prices while the “populists rhetoric” (which have gone mainstream) will spur wage inflation. We have been forecasting that Commodity prices will plummet (please see our note Energy Update where we’ve indicated that our WTI first future objective was $90 before targeting $80).
Our views remained unchanged: interest rates will remain low for longer than market expects, while stocks will recover. This may accelerate going into December because investors have lost money being short fixed income and under-invested in stocks.
Eurozone: No-one liked Draghi recent meeting announcement: 1) he postponed Sovereign QE talks until the current actions (QE ABS, Covered Bonds & T-LTRO) effects are genuinely studied, 2) hawks analysed QE ABS like“sub-prime” or junk bond buying. Both these two views are a complete non-sense to us. We consider that Draghi-nomics is all about finding the Goldilock conditions (not too cold, not too hot): 1) QE ABS, Covered Bonds & T-LTRO intend to reduce the cost of finding for SMEs mainly in Italy and Spain at a moment where banks are ending their asset quality review (AQR) and are willing to restart a new page (this is exactly what US banks did post TARP) while SMEs demand is picking up (many SMEs are considering automation as a way to improve their efficiency issue), 2) Draghi needs to avoid returning moral hazard (a risk should ECB undertake Sovereign QE) while keeping the hawks happy and pressing France and Italy to execute reforms (PM Valls was in London yesterday, as expected, he said “my government is pro-business” which is the correct English translation to “j’aime les entreprises » France has changed and recognising it creates many opportunities). « All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident.” said Arthur Schopenhauer. We consider that markets are still in the first and second stage, We are in the third. The recent weak signals are showing that markets is moving from the first and second stage to the third (this one will quick start a strong rally).
BoJ: Governor Kuroda indicated that the JPY weakness is positive if in sync with fundamentals. This hints that any other genuine stimuli will be delayed until Japan reduces a JGB solvency crisis risk. We have been saying in many occasions that we see the trigger of a new QQE to be a second VAT hike, more indications of 3rd arrow structural reforms and a reduction in investors short Japanese fixed income. Markets consensus is likely to be disappointed again in its January forecast. We see a too close to call decision by January should the 3 triggers not introduced. The recent JPY, EUR, GBP weaknesses seem to be the result of an excessive excitement about monetary divergence. We consider that going to December the market will revise down these expectations, while the economists are penciling down their high growth forecast.
Russia: We have been short RUB since the start of Sochi Olympics. While the markets have been talking of normalisation, escalation, we were saying that President Putin government is unlikely to reverse course without a genuine internal push-back. For now, the opposition has not yet reached the moderate reformists, but the pressure is intensifying. Oligarchs and plutocrats are smoothly recognising that the path taken by President Putin to secure their benefits is achieving the opposite results (they are loosing money due to plummeting commodity prices).
Emerging Market Central Banks 2.0: We have been saying that although we don’t see the Fed normalising quickly, EM have to reform because the “keep calm and carry-trade on” is coming to an end. Australia G-20 meeting is likely to be the single event at which world leaders will embrace good governance and fight against tax evasion. The world leaders are likely to reach an agreement on these events not because it’s nice, but because it’s the only way they can defeat long-term terrorism which have been using mistrust in institutions and dis-information to hire young jihadists.
Goldman Says Not So Fast as BlackRock Sees Earlier Fed Increase
Goldman Sachs Group Inc. says investors shouldn’t rush to anticipate a rate increase from the Federal Reserve after jobs gains beat economist forecasts. BlackRock Inc. said it’ll happen sooner than expected.
“Not so fast,” Jan Hatzius, the chief economist at Goldman Sachs in New York wrote in a report dated yesterday. Labor-market slack will help keep the Fed from raising borrowing costs until the third quarter of next year, according to Hatzius. Goldman, which gets the largest share of revenue from trading among U.S. banks, is one of the 22 primary dealers that trade directly with the central bank.
“The Fed’s going to move faster than people think,” BlackRock’s chief investment officer for fundamental fixed income Rick Rieder said Oct. 3, reiterating an earlier view. “We have an economy today that’s going, we think, quite strong,” he said on Bloomberg Television’s “Market Makers” with Erik Schatzker and Stephanie Ruhle. The company’s $4.32 trillion in assets make it the world’s biggest money manager.
The Fed Just Updated Its Jobs ‘Dashboard.’ Here’s What It Shows
The Federal Reserve has a new tool for tracking the job market that’s known informally as “the dashboard” and formally as the Labor Market Conditions Index. Fed staff economists updated the dashboard today and announced that from now on they will try to issue updates on Mondays following the Friday release of the Bureau of Labor Statistics’ monthly employment report.
The updated Labor Market Conditions Index dampens a bit of the enthusiasm generated by the BLS report that showed the unemployment rate fell to 5.9 percent in September, the lowest in six years. The Fed said its index for September was 2.5, which was a bit stronger than the 2.0 in August but weaker than that of any other month since July 2012.
The index is composed of 19 indicators of the labor market, including the unemployment rate, of course, and less familiar measures such as “job losers unemployed less than 5 weeks” and “jobs plentiful vs. jobs hard to get.”
Kganyago Pledges Continuity at South African Central Bank
Lesetja Kganyago, appointed as South Africa’s 10th Reserve Bank governor, has pledged to continue the policy path of predecessor Gill Marcus and pursue price and financial stability.
“It is a continuum that we have seen since Ms. Marcus arrived at the bank in 2009 and I do not have to reinvent anything, I just have to carry from where she had left,” Kganyago told reporters today in the capital, Pretoria, after President Jacob Zuma said he would replace Marcus.
Kganyago, who turns 49 tomorrow, will take office on Nov. 9, Zuma told reporters. Marcus, 65, said on Sept. 18 she wouldn’t renew her contract after her five-year term expires. Zuma’s pick was one of two favored candidates, along with Deputy Governor Daniel Mminele.
“Kganyago has been a member of the Monetary Policy Committee, so there will be no significant break or change in the policy,” Peter Worthington, an economist at Barclays Plc’s Johannesburg-based investment banking unit, said by phone from Cape Town. “He will be facing the same challenges that Marcus faced. We have very slow growth and persistent inflation, either above or at the upper end of the target range.”
ECB Policymakers At Odds Over ABS Purchase Plan
FRANKFURT/PARIS (Reuters) – The European Central Bank’s unprecedented decision to use outside help for new asset purchases is stirring conflict among policymakers, highlighting the difficulty for the ECB of considering even more extreme policy action.
ECB President Mario Draghi outlined last week new programs under which the euro zone’s central bank will buy asset-backed securities, which repackage bank loans, and covered bonds, secured on solid assets such as property, starting within weeks.
Concerned that individual central banks lack the required expertise, the ECB plans to employ an external bank or professional asset manager to buy the securities on its behalf, at least initially.
But within the ECB’s Governing Council there are clashing views over how far it should go to revive lending in the euro zone and how these debt purchases should be carried out.
Such friction over a key tool at a time of stagnating growth and worryingly weak price pressures in the euro zone risks weakening the ECB’s resolve in the fight against deflation and poses questions as to how easily it could take further steps.
Germany says will monitor ECB’s new asset-buying plan
BERLIN, Oct 6 (Reuters) – Germany plans to wait and see how the European Central Bank’s controversial new asset-purchase plan unfolds and to monitor the programme, a Finance Ministry spokesman said on Monday.
The ECB’s plans to buy rebundled packages of debt have drawn sharp criticism from officials in Germany, including the head of the Bundesbank, the ECB’s former chief economist and allies of Chancellor Angela Merkel.
Last Thursday, the ECB laid out its plans to buy so-called asset-backed securities (ABS), which are created by banks pooling mortgages and corporate, auto or credit card loans and selling them to insurers, pension funds or now the ECB.
« We will wait for that, we will definitely observe it, » Finance Ministry spokesman Martin Jaeger said of the plan.
The ECB will begin the ABS purchases before the end of the year and will cast its net widely to include debt from Greece and Cyprus with a credit rating of junk, on condition that such countries are under a formal international financial programme.
Bundesbank chief Jens Weidmann warned in German magazine Focus on Sunday that there was a danger the ECB would buy « low-quality loan securitisations » at inflated prices as part of its programme to buy ABS.
Russia’s ruble breaches central bank trading band, stocks recover
(Reuters) – Russia’s ruble RUB= hit a new all-time low versus the dollar early on Monday and breached the central bank’s trading band, implying the bank intervened once more to defend the currency.
The ruble touched a new low of 40.05 against the greenback, the first time it has breached the 40 level, and hit a low of 44.59 against a dollar-euro basket RUS=MCX the central bank uses to gauge the ruble’s exchange rate.
The bank said on Monday it had shifted its target exchange-rate corridor for the ruble by 10 kopecks, to 35.50 to 44.50 rubles against the basket, following market interventions to curb the pace of the currency’s decline on Friday.
Bank of Japan to stand pat on policy, warn of weak factory output
(Reuters) – The Bank of Japan is likely to maintain its massive monetary stimulus on Tuesday and offer a bleaker view on factory output, following signs that the world’s third largest economy was hit harder than expected by a sales tax increase six months ago.
Central bank policymakers are seen sticking to their view that the economy will pass through a temporary soft patch to resume a moderate recovery and achieve the bank’s 2 percent inflation target next year without additional monetary stimulus.
An intense burst of monetary and fiscal stimulus, which were the first two arrows of Prime Minister Shinzo Abe’s strategy to end 15 years of deflation, has helped boost business sentiment by lifting share prices and weakening the yen.
Still reasons to be bullish on stocks: Managers
Investors trying to find value in equities may be better served looking to a group of global macro, tactical bettors referred to as ETF strategists rather than trying to track the so-called « smart money » of hedge fund managers.
In August, Soros Fund Management loaded up on bearish bets against the U.S. stock market. Meanwhile, the smart money that continued to show conviction on U.S. equities was doing so with their finger on the « sell » trigger, making short-term bets on exchange-traded funds rather than historically longer-term commitments to mutual funds.
Economic News
Goldilock growth: The World Bank revised down its growth forecast for China and East Asia. Meanwhile, Eurozone negative trend is bottoming out: Greece vows to cut taxes and growth in 2015 (5 years after the start of the Greek crisis – PSI etc. -). PM Samaras is heading to become the first Greek prime minister, in modern age, who reformed the country and rebalanced it. EC President Juncker is likely to use the change in narrative to explain that EU is not fighting a war against its public but is doing whatever is necessary to help EU growth and prosper. The same narrative is likely to push Germany to do more as it would have proven that, although it does not come free of pain, EZ countries (and “the most lazy of them” – in the EU-skeptics parlance) can reform and become prosperous. PM Valls said “my government is pro-business” in the City. Coming from a Socialist it’s even more surprising to France-bashing Britain. We have been indicating that France is changing and this is the most single positive even for the Eurozone. Indeed, since May 2014, we have been saying EZ has had 2 wake up calls: Russia invasion of Crimea – and quasi-invasion of Eastern Ukraine – and the results of EU-Skeptics (UKIP, Front National, etc.). These two events did not came as a surprise to us: 1) We have been indicating that Russia will escalate since Feb. 2014 and this will push for more integration (a concept of United States of Europe, though we have not defined it yet from an institutional prospective), 2) We have been indicating since Aug 30th EU Council that “Draghi saved the EUR in June 2012, August 30th EU Council is giving it a reserve currency status”.
World Bank lowers China 2014 growth forecast to 7.4 pct
SINGAPORE, Oct. 6 (Xinhua) — The World Bank said on Monday in Singapore that it has cut the growth target forecasts for China to 7.4 percent in 2014 and 7.2 percent in 2015, as China pushes forward structural reforms to address financial vulnerabilities and structural constraints.
« Measures to contain local government debt, curb shadow banking, and tackle excess capacity, high energy demand, and high pollution will reduce investment and manufacturing output, » it said so regarding China’s outlook.
But « China’s slowdown in economy would be gradual; it’s not the bottom falling out of China’s growth. » Stressed Sudhir Shetty, World Bank’s Chief Economist in East Asia and Pacific Region, who added that the slowdown in economic growth of China will not have a dramatic impact on other countries.
However, it pointed out that if China experiences a sharp slowdown, which is unlikely to happen, it would hit commodity producers in the region, such as metal exporters in Mongolia and coal exporters in Indonesia, especially hard.
Overall, developing countries in East Asia Pacific will grow by 6.9 percent in 2014 and in 2015, down from the 7.1 percent rate the bank had previously forecast, and also a slowdown from 2013’s 7.2 percent.
BOJ Majority Said to Favor Ditching 2-Year Price Timeline
A majority of the Bank of Japan’s board members think it should drop the two-year timeframe for meeting its inflation target, according to people familiar with discussions inside the BOJ.
Board members are concerned that investors may view April 2015 as a binding deadline, fueling speculation that the bank will boost stimulus to meet the goal, said the people, who asked not to be named because talks are private. Any revision will probably come before April and could be as early as this quarter, some of the people said.
Repeated pronouncements by Governor Haruhiko Kuroda that inflation is likely to reach the 2 percent target sometime around the fiscal year starting in April leave room for debate on both the price gains and the time line. Twenty-nine of 33 economists surveyed by Bloomberg News say consumer prices won’t meet the central bank’s forecast and almost half of them expect it to loosen monetary policy further before April.
“The BOJ has communication problems,” said Yuichi Kodama, chief economist at Meiji Yasuda Life Insurance Co. in Tokyo. “It may be inviting confusion as the two-year timeframe approaches.”
Australia inflation gauge shows broad slowdown in Sept-TDMI
SYDNEY: A private gauge of Australian price pressures showed inflation at its slowest in almost a year in September amid a broad moderation in goods and services costs.
The TD Securities-Melbourne Institute’s monthly measure of consumer prices edged up 0.1 per cent in September, following an unchanged outcome in August. TD said July’s increase of 0.2 per cent was revised to a flat reading due to the abolition of a carbon tax.
The annual pace of inflation slowed to 2.2 percent, compared to 2.5 per cent in August and a marked deceleration from a peak of 3.0 per cent in June.
IMF: Time has come for big changes in banker pay
Banker compensation may get more complicated and have fewer zeroes if the International Monetary Fund has a say.
The IMF’s most recent Global Financial Stability Report evaluates executive pay, corporate governance and risk-taking in some of the largest banks around the world and recommends policy measures to ensure only prudent risk-taking is rewarded.
While a number of quantitative and qualitative factors contributed to the global financial crisis, the report argues that structure of executive compensation encouraged bankers to take shortsighted risks with lasting negative impacts:
UK new car sales hit 10-year high in September
New UK car sales had their strongest September in ten years, boosted by confidence in the economic recovery, the Society of Motor Manufacturers and Traders has said.
Sales reached 425,861, up 5.6% on the same time last year, and represented the 31st consecutive monthly increase.
Almost two million new cars have been sold so far this year – 9.1% up on the same period last year.
September is usually a busy month because of the new registration plate.
SMMT chief executive Mike Hawes said: « September’s strong performance underlined the continuing robustness of the UK new car market, particularly in the context of last September’s bumper volumes.
« Demand for the new 64-plate has been boosted by intensifying confidence in the UK economy, with consumers attracted by a wide range of exciting, increasingly fuel-efficient, new cars. »
However, he warned that the market was coming off the boil.
« In the months since March – which saw an 18% jump in registrations – the growth has shown signs of levelling off as the market starts to find its natural running rate, » Mr Hawes said.
RBI Should Raise Rates to Contain Inflation: IMF
The Reserve Bank may consider raising interest rates to bring down the persistently high inflation on a durable basis, suggested IMF working paper.
« Given elevated and persistent inflation,… The RBI may also need to raise rates to tackle inflation durably, particularly if faced with a persistent and sizable supply- side food price shock putting pressure on broad-based inflation, » said the paper titled — ‘Food inflation in India: The role for monetary policy’.
Food and fuel inflation in India has remained high for several years, the paper said adding to durably reduce the current high inflation, the monetary policy stance needs to remain tight for a considerable length of time.
It suggested that the government should pursue structural reforms to push growth to potential levels instead of relying fully on monetary policy to promote growth.
RBI Governor Raghuram Rajan has been pursuing hawkish monetary policy stance to keep inflation under check. It has not reduced rates in four consecutive policies despite pressure from the industry and the Finance Ministry to cut rates to boost growth.
The government is in touch with the RBI to set up a new structure to deal with monetary policy issues, including targeting of inflation, in line with the recommendations of the Urjit Patel committee.
Finance Minister Arun Jaitley had said in his Budget speech on July 10: « It is also essential to have a modern monetary policy framework to meet the challenge of an increasingly complex economy. Government will, in close consultation with the RBI, put in place such a framework ».
New NATO Chief Praises Poland’s 2% GDP Uptick in Defense Spending
WARSAW, October 6 (RIA Novosti) – New NATO Secretary General Jens Stoltenberg has thanked Poland for boosting its defense spending, a RIA Novosti correspondent said Monday.
Speaking at a joint press meeting in Warsaw, Polish Prime Minister Ewa Kopacz said that her government gave priority to matters of defense. Kopacz pledged to increase the defense spending by 2 percent of the country’s GDP, adding the expenses had already been budgeted.
Jens Stoltenberg, who is in Poland on his first foreign visit since he stepped in last week, praised Poland’s resolve to make a bigger contribution to the US-led military alliance, saying it was a good example for the rest of the 28-member bloc to follow.
Later in the day, Stoltenberg is to meet Poland’s Deputy Prime Minister and Defense Minister Tomasz Siemoniak, and Foreign Minister Grzegorz Schetyna. He will also travel to NATO’s Lask air base.
Here’s The Glass-Half-Full Case For The Global Economy
In his newest ‘Sunday Start’ note, Morgan Stanley economist Joachim Fels lays out his argument that the global economy might be stronger than people realize.
First he starts by noting that conversations with investors have turned negative on the economy, as gloom sets in regarding Europe, Japan, China, and the rest of the emerging world. There’s a huge disconnect (something that Dan Greenhaus also talked about) between what’s happening in the world, and what seems to be happening in the US (solid growth, and a return to normalcy).
Anyway, here’s Fels’ optimistic analysis:
Mu sense is that the published consensus has now come down to or maybe below our own numbers, and the mood among investors on growth is even more negative. Which begs the question: is it time to revise our own outlook lower yet again? Not so. On the contrary, given how fast and far market sentiment has sunk, I think it is time to bang the drums and emphasise my ‘the glass is half-full’ story. For starters, the US economy keeps humming along nicely as illustrated by a better-than-expected labour market report on Friday. Following this week’s data, our US team sees 3Q GDP growth tracking at 3.3%, up from 2.9% last week. Second, the drop in oil prices is a boon for consumers around the globe. Third, lower risk-free bond yields buy more time for EM deficit countries to reduce their external imbalances. Fourth, a stronger dollar is exactly what the doctor ordered for the ailing European and Japanese economies, who are keen to export some of their deflationary pressures back to the US. This in turn will also make early rate hikes in the US less likely as lower import prices combined with a lack of wage pressures will keep US inflation at bay. In this context, note that our FX Strategy team led by our in-house ‘dollar bull’ Hans Redeker has revised up its trajectory for the dollar yet again and is now targeting EUR/USD dollar at 1.12 by the end of 2015. And fifth but not least, keep in mind that subdued and uneven global growth should help to prolong this expansion, which could actually become the longest one on record – the main theme of our ‘Lower but Longer’ Back-to-School Outlook last month. In summary, don’t despair, but believe!
GREECE VOWS TAX CUTS, ECONOMIC GROWTH IN 2015
ATHENS, Greece (AP) — Greece’s economy is on track to emerge from a six-year recession this year and grow by 2.9 percent in 2015, though unemployment in the bailed-out country is likely to remain high, the finance ministry said Monday.
The government — facing the threat of an early general election — submitted a draft of the 2015 budget to parliament that sees tax cuts and a return to modest growth of 0.6 percent in 2014, ending the depression that erased roughly a quarter of national output.
« The country is entering a long period of sustained economic growth rates and primary surpluses that will bring growth in employment, reducing unemployment and improving living standards for all citizens, » said Deputy Finance Minister Christos Staikouras.
« This is the result of unprecedented sacrifices made by Greek society, households and businesses. These sacrifices must not be wasted. »
Prime Minister Antonis Samaras’ conservative coalition is hoping to begin easing austerity measures demanded by bailout creditors who provided 240 billion euros ($303 billion) in emergency loans. The bulk of funding from eurozone countries ends this year, while loans from the International Monetary Fund will continue through 2016.
Staikouras said the government is committed to reducing emergency taxes, including a deeply unpopular bailout tax known as the solidarity charge.
German Bonds Rise as Factory-Orders Plunge Highlights ECB Task
Germany’s government bonds advanced as a report showing factory orders plunged the most since 2009 prompted concern that Europe’s largest economy is slowing.
German 10-year yields approached the lowest level in a month as the data underlined the challenge European Central Bank President Mario Draghi faces in reviving growth. The ECB last week kept interest rates at record lows while failing to provide details on the size of purchases of asset-backed securities and covered bonds Draghi pledged in the latest round of stimulus. Greek bonds fell as the nation said it plans to sell seven- and 10-year debt in 2015.
“The central bank should be increasingly worried that it cannot count on even modest growth to keep inflation stable,” said Jan von Gerich, a fixed-income analyst at Nordea Bank AB in Helsinki. “It’s clear the weakness is touching Germany as well. These numbers suggest that worse is to come.”
Ebola
Ebola:
CDC estimated to 100 the number of people who might have been affected by Patient 1. This estimate is still accurate. These are called Patients 2 (or the inner circle). This number is likely to increase in the coming day, before it decelerated. This is the Contagion effect as know in Mathematics. In order to avoid the paranoia, the CDC, as we were expecting, have used the power of social media and @twitter, to : improve the information (fight disinformation) and spur the motivation for social media to help reduce the outbreak. The need to get prepared is very important in a period where our institutions are seen as lacking credibility. We have been indicating that having Russia cut gas delivery to Europe could make any non-lethal flu a cause of paranoia and create more economic headwinds (consumer confidence etc.). But unlike many commentators we consider that our institutions – WHO, CDC and others – are up to the task and mankind is more resilient that many think.
The most widely spread FALSE belief is that Ebola can mutate easily. This is possible but highly unlikely. In films and TV-shows, scenarists like to make their stories appealing but the reality is sometimes (fortunately) less scary.
From our Thursday Oct. 1st daily
Days after the WHO and the CDC revised upward their estimates for the development of the outbreak to as high as 1.4 millions by beginning 2015, the First Ebola case has been diagnosed in Texas. The 1st patient (i.e. 1st person known affected in a region – not brought affected from other places -) arrived to the US in September 20th from Liberia. The CDC has started an intensive search for anyone who might have come in contact with the patient while the person was infectious. While the spread of Ebola is less viral than Cat pictures on the internet, the fear is likely to edge up before CDC and WHO will show how capable and efficient are these two institutions. We have been discussing Apps and big data which would help report any symptoms to the public. Japan nationals and internet have been very effective mapping real-time the consequence of March 2011 Fukushima nuclear catastrophe. The same tools can be used today, although a very wide understanding of the symptoms is genuinely and urgently needed to make it succeed. We have been saying that even a non-lethal epidemic can spur fear, confidence collapse and economic headwinds. Unlike in the very good film “Contagion”, the tech tools and social media help can be very effective in reducing the spread of the disease and reporting the infectious agents. Doctors, which have been affected in Africa and brought to the US, have been saved. The experimental vaccine, which has a 100% hit ratio for primates, is likely to limit the casualties. Our only genuine fear, is that one of the affected has a political or ideological agenda and tries to spread the disease more widely. To our readers, there is no need to be stressed but please stay safe.
But more importantly, the first US case is likely to intensify, the global coordinated response which have started during the recent weeks. We have highlighted that the global coordination has been intensifying to: 1) fight disinformation (we were talking about it in our recent daily briefings), 2) provide short term medical assistance (France, US, Israel, etc.) with the help of military expertise – when numerous Western African countries are indicating the lack of medical personnel – , 3) provide financial support (wealthy donors, government funding, NGO help etc.), and 4) fast track the Ebola drug trial (the drug has had a very good result in the experimental tests).
Notwithstanding the on-going difficulties, and the short term negative economic effect, we continue to believe that the fight against Ebola will succeed and will clear the way to the increase in Africa investment and economic support (cf. our note “This time for Africa” which stressed that Africa is heading to experience the same development China had experienced when it joined the WTO in 2001 with positive consequences for both Africa and the world economy). The global coordination triggered by the response to the terrorist risk might help responding to the Ebola risk as well (due to the threat a dirty weapon using Ebola virus constitute). We disagree with the bet of Cocoa upward spiral because many analysis assumes the doom-and-gloom scenario which is unlikely to happen. We see the intensification of the worrying rhetoric as a part of the genuine action to keep the subject high in the leaders to do list.
No ban on travelers from West Africa, but additional screenings are coming
President Obama said Monday the U.S. government would increase passenger screenings in both the United States and Africa to detect the Ebola virus, though he resisted calls to impose a total travel ban on those traveling from the three West African countries most affected by the outbreak.
Neither the president nor White House officials elaborated on what those new screenings would entail. At the moment, passengers leaving the three nations riven by the virus — Liberia, Guinea and Sierra Leone — are screened for symptoms at the airport.
“The ability of people who are infected who could carry that across borders is something that we have to take extremely seriously,” Obama said Monday afternoon after a meeting with top advisers to discuss Ebola.
The range of new screening possibilities under consideration include everything from taking the temperature of travelers from impacted countries upon their arrival at major U.S. airports to conducting more stringent travel histories for international travelers arriving in the U.S., said a federal official familiar with the discussions, who asked to remain anonymous because plans have not been finalized.
Dallas Ebola patient receives experimental treatment
The Ebola patient struggling to survive in a Dallas hospital has begun receiving an experimental treatment for the deadly disease.
Thomas Eric Duncan, who traveled to Dallas from Liberia more than a week ago after having close contact with Ebola in the West African country, is receiving an investigational drug known as brincidofovir, Texas Health Presbyterian Hospital Dallas disclosed Monday afternoon.
The medication is produced by Chimerix, a North Carolina-based biotech firm that describes itself as a developer of “novel, oral antivirals in areas of high unmet medical need.”
On Monday, the company announced that it had made the drug available for emergency use in Ebola patients after requests from treating physicians and after receiving approval from the Food and Drug Administration. The FDA must sign off on the experimental use of unapproved drugs; there currently are no approved treatments or vaccines for Ebola.
“Chimerix is committed to working with global health organizations and government agencies in the fight against the Ebola virus outbreak,” Chimerix’s president, M. Michelle Berrey, said in a statement.
Obama: We « learned some lessons » from Dallas Ebola patient
President Obama reiterated again Monday that the chances of an Ebola outbreak in the United States are « extremely low, » but that the case of a Liberian man who began exhibiting symptoms of disease after arriving in Dallas shows how vigilant U.S. health workers must be.
« We have learned some lessons…in terms of what happened in Dallas. We don’t have a lot of margin for error. The procedures and protocols that are put in place must be followed, » the president said.
Texas hospital originally sent Ebola patient home
It was revealed last week that Thomas Eric Duncan, the patient, was released from the Texas Health Presbyterian Hospital on Sept. 26 when he came in complaining of a fever and abdominal pains. Even though a nurse learned he had recently traveled to the U.S. from West Africa, he was not tested for Ebola until he returned two days later.
A key focus of the meeting Monday was how to best spread the word about the signs of the disease among hospitals, clinics and any place a patient might come in place with a medical worker, the president said. The federal government will be reaching out to governors, mayors and public health officials across the country.
WHY NATION’S TOP DOCS SAY EBOLA WON’T SPREAD IN US
WASHINGTON (AP) — Ebola has arrived in the United States and people are frightened.
The nation’s top infectious diseases expert says it’s perfectly normal to feel anxious about a virus that kills so fast and is ravaging parts of West Africa.
« People who are scared, I say, ‘We don’t take lightly your fear. We respect it. We understand it,' » said Dr. Anthony Fauci of the National Institutes of Health.
But Fauci emphasizes that the United States is different from African nations where fragile health care systems have been overwhelmed by Ebola. Scientists know how to stop the virus from spreading with adequate resources, he says.
In the U.S., Fauci maintains, « We won’t have an outbreak. »
That’s not to say the first Ebola case diagnosed within the United States — a traveler from Liberia who began feeling the effects after arriving in Dallas — will be the only one.
The government took measures this past week to ensure hospitals are ready and is considering what more should be done.
Despite some initial missteps in Dallas, tried-and-true methods are underway: tracking everyone who came into contact with the infected man and isolating anyone who shows symptoms.
Obama: Other nations need to ‘step up’ against Ebola
WASHINGTON — While urging other countries to do more to help contain the deadly Ebola virus in West Africa, President Obama said Monday his team is looking at tighter screenings of airline passengers coming into the United States.
« We have not seen other countries step up as aggressively as they need to, » Obama said following the meeting that came a week after the first U.S. case of Ebola surfaced in Dallas.
The president pledged more « pressure » on fellow foreign leaders to « make sure that they are doing everything that they can to join us in this effort. »
He did not specify which leaders and which countries.
Nor did he specify additional security measures, except to say « we’re also going to be working on protocols to do additional passenger screening, both at the source (in West Africa) and here in the United States. »
Saudi Health Minister Confirms Hajj Free of Ebola
As the global toll rises on the number of people affected by the Ebola outbreak, authorities in Saudi Arabia sighed in peace as the Hajj pilgrimage came to a closure without any casualties reported.
“I am pleased to announce the Hajj was free of all epidemic diseases.”
– Adel Fakieh, Saudi Arabia’s acting health minister
Saudi Arabia’s acting health minister, Adel Fakieh, confirmed the news on Monday saying, « I am pleased to announce the hajj was free of all epidemic diseases. »
Thousands of health workers were called upon before the annual union of pilgrims from across the world in an effort to ensure that pilgrims weren’t victims to the global Ebola outbreak and the Middle East Respiratory Syndrome coronavirus (MERS-CoV).
Spanish Health Ministry Begins Investigating Ebola Contamination Case
MADRID, October 7 (RIA Novosti) – Spanish Health Minister Ana Mato has confirmed that the nurse, who treated a victim of Ebola in Madrid, has been diagnosed with this disease, adding that the health professionals are currently investigating how exactly the contamination occurred.
« All the precautions are being made, » Mato said on Monday, adding that the authorities are currently trying to determine how exactly the nurse has contracted Ebola and whether the medical team observed proper medical protocol, while taking care of the infected priest.
Antonio Alemany, Spain’s senior health official, added that all the people, who had come into contact with the nurse are being monitored.
Earlier on Monday, EFE news agency reported that a nurse at a hospital in Madrid tested positive after taking part in a treatment of Spanish priest Manuel García Viejo, who became infected with the Ebola virus, while serving at a Sierra Leone hospital and died in a Madrid hospital on September 25.
The name of the nurse, diagnosed with symptoms of the deadly virus infection is not being revealed. It is known, however, that she is 44, married and has no children. The employees of the Alcorcon hospital, where the nurse is currently being treated, say that her husband shows no signs of infection.
France able to treat eventual Ebola cases: Hollande
PARIS, Oct. 6 (Xinhua) — France is able to treat any eventual cases of the deadly Ebola virus in its territory, French President Francois Hollande said Monday, urging more efforts to seek for an efficient vaccine.
In a joint speech with the head of African Union Commission Nkosazana Dlamini-Zuma, Hollande stressed the French government « is in position to treat (people affected with Ebola) if cases would be reported in France. »
On Sept. 19, a French nurse with the volunteer organization Medecins Sans Frontieres (MSF) returned home after being infected with Ebola virus during a mission in Liberia.
The nurse, the first case reported in France, left hospital last Saturday. She had been hospitalized in Begin Military Hospital near Paris where she received « experimental treatment. »
« It cannot be the case in Africa. So we must accelerate and extend the research to a vaccine can be found. The Ebola outbreak is a major threat, not just for the African countries, but for the whole world, » the president said.
Last month, Hollande announced the creation of a military hospital in the forests of Guinea, « in the heart of the outbreak », « as part of Frances’ responsibilities towards Africa. »
Gaza
Israel and Palestine continue to head into the right direction.
PM Netanyahu said it all during his visit: a nuclear Iran should not come with an increase in the existential threat to Israel. While we are heading to a peace process, Israel needs to secure the goldilock conditions of such a scenario. This goes through a genuine commitment by Ayattolah Khamanei that Israel should continue to flourish in peace, leaving the existential threat to ISIL and the Califat-of-Paper Abu Bakr El Baghdadi. Make no mistake : Israel will never be destroyed. Because, Israel is one of the greatest idea, in my opinion, which human brain invented during our common 13.8bn years history in creating institutions and laws to reduce universe entropy. It has nothing to do with religion or ideology, this is just pure rational thinking and science. The idea of Israel remains me that while facing adversity one move on an try to empower himself to bring: prosperity (in our parlance: jobs, growth, adequate inflation, wealth, solvency etc.). This is what, I believe, Moses did: creating the promised land of prosperity and peace. This is why Israel can never be destroyed. Even Hitler failed, Abu Bakr El Baghdadi is doomed and Ayattolah Khamanei have to play his cards well now. He can empower his people, improve Iran economy and growth, by recognising the obvious. In 20years finance careers I’ve never seen an investment as obvious as this one. [Don’t hesitate to ask for details as usual].
Sweden recognition of Palestine constitute a first step into the right direction. External pressure on Israel, comes as a genuine help for the government to fight its hard liners and bring them to a peace solution. We see this process to last one to two years but we are convinced that peace will happen not because it’s a nice thing but because it’s where economic prosperity lies for Iran, Palestine, and Israel.
British parliament to hold symbolic vote on Palestine status
(Reuters) – British lawmakers will next week hold a symbolic parliamentary vote on whether the government should recognise Palestine as a state, a move unlikely to shift official policy but designed to raise the political profile of the issue.
Britain does not class it as a state, but says it could do so at any time if it believed it would help the peace process between the Palestinians and Israel.
The motion due for debate in Britain’s lower house of parliament on Oct. 13 will ask lawmakers whether they believe the government should recognise the state of Palestine.
It is unlikely to win approval through the British parliament because it is at odds with official policy, but even if it did pass, it is non-binding and would not force the government to changes its diplomatic stance.
Palestinians call for American pressure on Israel
Former Palestinian envoy to the US accuses Americans of always siding with Israel; ‘Pressuring Israel is not a formula that kills Israel but rather gives birth to Palestine,’ says Fatah member.
As Palestinian Authority President Mahmoud Abbas prepares to ask the United Nations Security Council to set a November 2016 deadline for Israel to withdraw from the West Bank, Gaza Strip and East Jerusalem, Palestinian officials say the time has come for the US to stand up to Israel for the first time.
PALESTINIAN UNITY CABINET TO MEET IN GAZA
RAMALLAH, West Bank (AP) — The Palestinian unity government will hold its first Cabinet meeting in Gaza this week, a key step toward taking charge of reconstruction efforts in the war-battered territory, a senior official said Monday.
The Cabinet will convene Thursday, said Deputy Prime Minister Mohammed Mustafa, three days before an international pledging conference where the Palestinian government will seek $4 billion in aid for Gaza, hit hard in a 50-day war this summer between Israel and the Islamic militant group Hamas.
Donor countries view the unity government of independent experts, led by Western-backed Palestinian President Mahmoud Abbas, as key to any reconstruction plans. Hamas, which is shunned as a terrorist group by the international community, has governed Gaza for the past seven years.
The purpose of the Gaza meeting is to « see the situation on the ground and to send a message to the donors’ conference that the government is ready to start reconstruction soon, » Mustafa told The Associated Press.
Hamas seized Gaza from Abbas in 2007, prompting a border closure of Gaza by Israel and Egypt, enforced to varying degrees over the past seven years. After Egypt tightened the closure last year and stepped up its destruction of cross-border smuggling tunnels, Hamas began experiencing severe financial difficulties that made it increasingly difficult for the group to govern.
RAMALLAH, West Bank — The latest speech by Mahmoud Abbas, the Palestinian president, before the United Nations General Assembly represented a significant departure in his thinking. Until last week, Mr. Abbas had been the firmest believer in and most loyal champion of direct negotiations with Israel under the exclusive sponsorship of the United States. He insisted constantly that these negotiations were the only way to reach a political settlement to the conflict.
Over the years, he was extremely conciliatory toward Israel, and offered up one concession after another on several key issues, presuming that that would enable him to appease Israel and convince it to end its occupation and work with him to achieve a political settlement, which would finally allow for the creation of the long-awaited Palestinian state.
None of Mr. Abbas’s conciliations or concessions to Israel ever bore fruit. In fact, over time, the country tilted increasingly rightward and its stubbornness and intractability toward the Palestinians grew. There has not been the slightest indication that Israel may change its stance. Yet Mr. Abbas was expected, both by Israel and by the United States, to continue to accept the status quo, hidden by useless and fruitless negotiations.
Iraq & Syria
The likelihood of defeating ISIL continue to increase, though short term ISIL seems winning battles such as Kobani (at the Turkish borders).
Turkey and Canada decided to join the 40 countries coalition to fight ISIL. We were saying that Herve Gourdel beheading (to which we need to add Alan Henning since Friday) and the Philippines militant threat to ham a German were sufficiently evil behaviour in 2014 to create the wake up call that each of us should make something to stop these unacceptable atrocities.
We are surprised by Turkey’s attitude toward Kobani. This attitude could only be explained by the fact that Turkey and Kurdistan have not settle yet on a strategy to defeat Assad without giving too much power to the Kurds (which may ask for an independent Kurdistan). Furthermore, Turkey continues to turn a blind eye to Oil smuggling within its own borders. This helps ISIL to finance terror.
According to Theresa May, ISIL could acquire a dirty weapon. Saudi’s high cleric ceased the opportunity of Hajj pilgrim to call all muslims – Shia, Sunni, Maliki, Wahabi etc. – to defeat the Murderers In Iraq & Syria (known as ISIL). What we commonly name ISIL is not Islam (not I) and not a state (not S). It would be helpful to replace these two letter by “M” for Murderers. I bet that the Jihadists hiring will collapse after this simple action. The fight against the Murderers will be easy should we decrease the number of their new followers. This work like contagion or viral system. The final fight will come along with the genuine actions G-20 is saying it will undertake in Australia to improve governance. This time there is no way to escape with half-backed solution: G-20 needs to get rid of bad governance to reduce the spread of the view that “institutions are rotten to the core” (a view which helps Jihadists to hire youth on the internet). We discussed it since 2009, we have increase the data to track this bad governance since 2012. This power have moved from states to the public. Fortunately, anecdotal evidences (from UK to China) indicate that lawmakers have the same goal reducing bad governance. This is not because that’s a nice thing to do but because this were profits, shareholders values, pensioners interests, workers interests, consumer interests are. Again, we tend to reduce Entropy, this since our first day 13.8 billions years ago (Oil prices development and the number of violent deaths are an amazing reflect this fact).
Finally, as part of the evidence that data will help fight terror, France 24 broke Sunday that Zabihullah Mujahid (Taliban spokesman) revealed mistakenly his localisation in twitter (here). When it comes to ideological fight, the Kurdish Female suicide bomber which attacks ISIL is a game changer. As we were indicating, ISIL fighters believe that “should they got killed by a woman they’re unlikely to go to heaven”. This make women the most important armed forces against fighter which are leaving in the XVI century.
ISIS militants attack Syrian town near Turkey border
BEIRUT – Islamic State of Iraq and Syria (ISIS) militants on Sunday shelled a beleaguered Syrian Kurdish town near the border with Turkey, sending smoke billowing into the sky as Kurdish militiamen scrambled to repel the extremists’ offensive, activists said.
ISIS has pushed to the outskirts of the town of Kobani, also known as Ayn Arab, as it presses its weeks-long offensive against the town and its surrounding villages. The assault has forced some 160,000 people to flee across the frontier in one of the biggest single exoduses of Syria’s civil war.
ISIS has continued to advance despite airstrikes against its fighters by the U.S. and its Arab allies.
Overnight, coalition strikes targeted militant positions around Kobani, according to the Britain-based Syrian Observatory for Human Rights, an activist group.
The U.S. military said fighter aircraft conducted two strikes northwest of the city of Raqqa, hitting a large Islamic State group unit and destroying six militant firing positions. The statement did not specify the location, but Kobani is northwest of Raqqa.
Vice President Joe Biden apologizes to Turkey, UAE
(CNN) — U.S. Vice President Joe Biden has apologized to the United Arab Emirates and Turkey for comments he made last week that Middle Eastern allies are partly to blame for the strengthening of ISIS.
The latest apology came in phone call from Biden to the Crown Prince of Abu Dhabi, Mohammed bin Zayed Al Nahyan, representatives from both countries said Sunday. The vice president issued an apology to Turkey earlier during the weekend.
Biden regrets saying allies helped ISIS Will Turkey face ISIS on the ground? Cam catches ISIS shelling Syrian city
The problem appears to have originated during an appearance last week at the John F. Kennedy School of Government at Harvard University when Biden spoke about Turkey, the UAE, other Middle Eastern allies, and the threat posed by the so-called Islamic State terror group, also known as ISIS or ISIL.
Joe Biden explains how Ebola is like ISIS
(CNN) — Vice President Joe Biden argued that the Ebola virus is on par with ISIS in Iraq and Syria when it comes to global security threats.
Speaking in Boston Thursday at the Harvard Institute of Politics, Biden warned that « threats as diverse as terrorism and pandemic disease » are crossing borders « at blinding speeds, » and they demand a global response involving more players « than ever before. »
« This has all led to a number of immediate crises that demand our attention from ISIL to Ebola to Ukraine — just to name a few that are on our front door — as someone said to me earlier this week, the wolves closest to the door, » he said.
Iraq approves Aussie special forces on the ground
Australian special forces have been cleared to start work on the ground in Iraq, helping local troops as they face the grinding task of driving Islamic State fighters out of their stronghold towns and cities.
Prime Minister Tony Abbott is expected to announce on Tuesday that the final legal hurdles with the Iraqi government have been cleared, meaning the Australian commandos can begin their « advise and assist » work with the Iraqis.
A female Kurdish fighter carried out a suicide bomb attack against jihadists from the Islamic State group outside the embattled Syrian border town of Kobane on Sunday, a monitoring group said.
The Syrian Observatory for Human Rights said the woman blew herself up at an Islamic State position east of the city, killing a number of jihadists who have surrounded Kobane and are battling to seize it.
« The operation caused deaths, but there is no confirmed number, » Observatory director Rami Abdel Rahman said.
Islamic State is trying to seize the predominantly Kurdish border town and has ramped up its offensive in recent days despite being targeted by US-led coalition air strikes aimed at halting its progress.
The fighting has prompted a mass exodus of residents from the area, with some 186,000 fleeing across the border into Turkey.
Britain wants ‘Jihadi John’, dead or alive
LONDON: Prime Minister David Cameron is pressing for British special forces to launch a raid on the ISIS rebles who murdered Alan Henning, according to reports.
Cameron ordered his spy chiefs, heads of MI5, MI6 and GCHQ, to provide him with targets for a special forces raid on the ISIS kidnappers. Cameron summoned his spy chiefs to his Chequers country retreat on Saturday soon after the beheading video of Alan Henning was released.
The PM is keen to get his hands on Henning’s murderer and wants to send the SAS to capture or kill the man known as « Jihadi John ». Cameron recently confirmed to the UN General Assembly that ISIS « was recruiting new fighters from all over the world. Around 500 have gone there from my country Britain, and one of them almost certainly brutally murdered two American journalists and a British aid worker. »
Self-funded and deep-rooted: How ISIS makes its millions
Besaslan, Turkey (CNN) — On the southern edge of Turkey, rolling brown pastoral hills slope gently to the Syrian border, with small towns like this one dotting the horizon. The calm on this side of the border, however, belies the scene on the other side.
Just across the border in northern Syria, the Islamic extremist group known as ISIS is fighting a full-tilt battle in its effort to capture and control new territory, part of its push to create a sprawling Islamic caliphate, or separate Islamic state, modeled on the first caliphate that spread across the region in the centuries following the death of the Prophet Muhammad around 640 AD.
As ISIS fighters expand their control, it is in the border region, in villages like Besaslan, where the Islamic State group can make some of the money it needs to finance its wars. Oil-smuggling operations involving millions of barrels have recently been uncovered.
The oil comes from wells and refineries that ISIS has taken over inside northern Iraq and northern Syria, and until very recently it was easy to smuggle it into this quiet part of southern Turkey. One reason is that cheap, smuggled oil is a much-prized commodity in Turkey, where oil is so expensive that it almost doesn’t matter who is selling it, even if it’s your enemy.
In Hatay, Turkey, just a half hour’s drive away, gasoline costs roughly $7.50 per gallon.
Russia
Oil prices plummeting continue to constitute an existential threat to President Putin administration. A policy document of the Islamic State discovered at one of the raids brings forth some alarmingly ambitious plots of the jihadist outfit. The plan includes bribing Russia with access to oilfields in exchange for Iran’s nuclear technology. This document confirmed that ISIL is looking to Russia to increase it force. We have been worry that vested interests would align their force with those of the barbaric. Should they do so, they would be no place to hide. Make no mistake, if ISIL got the technology Putin and Russia (with interest groups which have been supporting them) will be held accountable.
While Russia continue to prepare its isolation (VTB’s says consider that capital control is not the end of the world), Putin stays put and keep his narrative: the cost will be more harsher for EU than for Russia. Unfortunately, for President Putin, facts have no political bias or religion. Russia economy is collapsing and the Saudi oil prices cut, Iran negotiation amongst other thing are pushing oil prices to a free fall spiral and threatening the stability of the government (an Oil price at $75 will push Putin out). In our Energy Update (our call that oil might go as low as $80 for WTI) we’ve highlighted the trends we observe now. These are not only providing a boost to EU (currently mistakenly analysed by many XX Century economists as a deflationary risk) but also increasing the current Russian administration existential threat. We forecasted last February that Russia will have to go through a period of isolation, will create Eurasia by annexing Eastern Europe (we still unsure where the division will take place). We stick to this scenario. However, we are working on an alternative scenario, where the speed of oil prices collapse may over through Putin administration and oligarchs before President Putin reached his messianic goal (many economists agree with the view that some of Russian President speeches are messianic – 2007 Munich is a very telling speech-).
Ukraine President is taking the “good governance bill” to the floor. This on one hand increase the likelihood of our scenario that Ukraine – West will become a new Poland but it increases short term the risk of more actions of “bad governance agents: the self designated Eastern Republics”). I wonder what kind of economic prospect will have these Russian federation satellite. Old USSR satellite (Latvia and Bulgaria) are fighting political crisis spur by the widely spread mistrust in their government. Like during the Cold War, Russia continue to use the spread of disinformation (in the internet). But we see these posturing likely to fail, should EU Commission President pursue his genuine plan to change EU narrative (more jobs, more investment – specially in digital -). The emergence of new media companies helped by big data is likely to be another leap in defeating the disinformation and mistrust spread.
Brent crude oil hits new 28-month low
LONDON: Brent crude oil hit a new 28-month low point on Monday against a backdrop of weak demand growth and solid supplies.
In afternoon London deals, Brent North Sea crude for delivery in November dropped to $91.25 a barrel – the lowest point since June 2012.
It went on to trade at $91.61 a barrel, down 70 cents compared with Friday’s close.
US benchmark West Texas Intermediate (WTI) for November was down 27 cents at $89.47 a barrel in Monday deals.
WTI had last week fallen to $88.18 a barrel, a level last recorded in April 2013.
Russian Prime Minister Medvedev Urges Compromise on Gas Dispute With Ukraine
MOSCOW, October 6 (RIA Novosti) – Russian Prime Minister Dmitry Medvedev said Monday that the terms of a deal on supplies of Russian natural gas to Ukraine should be acceptable for Kiev, but Ukraine still needs to pay its debts to Russia’s energy giant Gazprom.
« There is no doubt that we have to continue searching for compromises, we should maintain contacts keeping in mind that the debts must be paid off, but the conditions for Ukraine in this situation must be sufficiently acceptable, » Medvedev said at a meeting with Russian Energy Minister Alexander Novak.
Russia, Ukraine and the European Commission are currently involved in trilateral talks on resolving the standing issues over Russian gas deliveries to Ukraine.
According to preliminary arrangements, Russia and Ukraine are expected to sign the so-called « winter package » on Russian gas supplies to Ukraine that envisions supply of five billion cubic meters of gas within half a year and with a possible increase in volume. The temporary price for 1,000 cubic meters of gas would be $385 for this period.
U.S. Sanctions Cloud Oil Discovery In The Russian Arctic With Uncertainty
Exxon Mobil’s joint venture partner in the Arctic exploration program, Rosneft, recently confirmed the discovery of oil in Kara Sea (a part of the Arctic Ocean north of Siberia). The commercial viability of producing this oil under current market conditions is yet to be determined but the size of the find (estimated at around 750 million barrels of oil) seems to be huge. While this is great news for both Exxon and Rosneft, the current geopolitical scenario, where the U.S. and European companies are being increasingly banned from cooperating with Russian peers, clouds the development prospects of these reserves with uncertainty.
Exxon Mobil is the world’s largest publicly traded international Oil and Gas Company. It generates annual sales revenue of more than $420 billion with a consolidated adjusted EBITDA margin of ~14.7% by our estimates. We currently have a $107/share price estimate for Exxon Mobil, which values it at around 13.4x our 2014 GAAP diluted EPS estimate of $7.96 for the company.
Citigroup Said to Delay Plan to Open Flagship Branch in Moscow
Jason CorcoranOct 06, 2014 12:04 pm ET
Oct. 6 (Bloomberg) — Citigroup Inc. is delaying plans to open a flagship branch on Moscow’s main street to the Kremlin, according to a person with knowledge of the matter.
The U.S. lender, which has about 50 branches in 12 Russian cities, was unable to secure the location it was seeking on Moscow’s Tverskaya street due to a dispute over pricing, said the person, who asked not to be named because the information is private.
New York-based Citigroup is still seeking an alternative location and hasn’t accelerated the search as sanctions against Russia depress economic growth, said the person.
“Citi continues to optimize its retail branch network around the world to focus on top cities,” the bank said in an e-mailed statement. The bank “will continue to open branches when the right locations are identified.”
Citigroup, which returned to Russia in 1992 after a 72-year hiatus, is one of a handful of foreign banks that have prospered in consumer banking following the collapse of the Soviet Union. It ranks fourth among foreign retail banks, with more than 1 million clients. The bank has scaled back its exposure to Russia this year as U.S. and European Union sanctions over Russia’s involvement in the Ukrainian conflict have pushed the economy to the brink of recession.
What’s on ISIS’ Russia Manifesto? Iran’s Nuclear Secrets
A policy document of the Islamic State discovered at one of the raids brings forth some alarmingly ambitious plots of the jihadist outfit. The plan includes bribing Russia with access to oilfields in exchange for Iran’s nuclear technology.
The Islamic State wants Russia to hand over Iran’s nuclear weapons and its secrets to them, in exchange for which ISIS would give away oil and gas fields in Iraq that are under the jihadist outfit’s control.
The Islamic State’s intentions were revealed in a document found by Iraqi Special Forces unit while they carried out a raid at one of the ISIS commanders’ homes in March. The document, with several such ambitions listed on it, was allegedly written by one of the ISIS members, Abdullah Ahmed al-Meshedani.
Hong Kong
Hong-Kong political reforms protest: Events are developing as we were expecting
Pro-democracy protests have decided to change their strategy and open talks. 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.
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. 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 push back to the 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.
We do agree with the view that HK Occupy is not about democracy but about inequality (please see OpEd below). We do see the objective of Occupy to create the conditions to speed up reforms rather derailing them. We have been saying that Tea Party, Oligarchs and Russia have highjacked the movement for which we support the objective but not the actions. But many are fooling themselves when thinking that the populists movements want to change the current trend. Can anyone trust Russia’s Putin and Gold Bugs Tea Party in the fight against corruption?
H.K. Government Agrees to Hold Formal Talks With Protesters
Oct. 7 (Bloomberg) — Hong Kong’s government and pro- democracy protesters agreed to start formal talks as demonstrations that shut roads and offices in the city showed signs of winding down.
A second preparatory meeting late yesterday resulted in agreement on three key principles, representatives of the government and students told reporters. There will be several rounds of talks, they will be held on an equal footing, and the government must confirm and implement the outcome of the negotiations, the representatives said. Both sides said they hope to start formal talks before Oct. 12.
While the number of protesters on the streets picked up in the evening it remained well below the peak of the demonstrations, which started almost two weeks ago. Student leaders urged their supporters to stay in place and said no agreement will be possible if the government forcibly clears the main protest sites.
We “have a clear stance,” Lester Shum, the vice secretary of the Hong Kong Federation of Students, told reporters after yesterday’s talks. “Before we’ve arrived at outcomes from meetings, the government is requested not to use any violence to clear the three protest areas.”
The government’s representative, Lau Kong-wah, said the discussions were “very, very good.” Both sides said the formal talks will be held in public. The agenda and location must still be decided upon and more informal talks may be held today.
‘Not Optimistic’
Alex Chow, secretary-general of the Hong Kong Federation of Students, said by text message today that he’s “not very optimistic” about the chances of the two sides resolving the issue via talks.
“If they have proposal, they would have given (it) out already,” Chow said in response to questions. He said that the struggle over 2017 elections will move to city’s legislature if talks fail. The city’s students may take further action, he said, declining disclose the plans as something to be made public after the dialog.
The protests were triggered by China’s decision that candidates for chief executive in the 2017 elections be vetted by a committee. Pro-democracy groups say that will guarantee the candidates’ obedience to China. They’re seeking a more open system, as well as the resignation of Chief Executive Leung Chun-ying.
Student leaders had an initial meeting with government officials on Oct. 5 to map out further talks with the city’s second-highest ranking official, Chief Secretary Carrie Lam.
World Bank weighs protest’s economic impact
Protests in Hong Kong could hurt the city’s economy – as well as the Chinese mainland’s – but the impact will depend on how long the « uncertainty » lasts, the World Bank’s chief economist for Asia said on Monday.
Sudhir Shetty said the bank was closely monitoring events in Hong Kong, where thousands of protesters have paralyzed major streets for more than a week in a tense standoff with the government.
« Obviously we are looking very closely at the situation and following it and looking at its impact, » he told reporters in Singapore.
« The impacts will be both on the Hong Kong Special Administrative Region itself – their economy – but also in terms of the broader impact on the Chinese economy.
« As of now, what we anticipate is obviously a greater impact on Hong Kong SAR – so slower growth in 2014 than was being anticipated earlier. »
Shetty added that « at this stage, our best estimates … are that there isn’t as yet significant spillover to the broader Chinese economy ».
The World Bank does not provide a forecast for Hong Kong’s economic growth because it covers only developing economies.
« The only point I would make is that both the short-term impacts on growth, as well as the more medium-term impact on its role as a financial center, will depend, obviously, very much on how the current uncertainty plays out, » Shetty said. « Uncertainty is not a good thing for economic activity. »
The umbrella revolution won’t give Hong Kong democracy. Protesters should stop calling for it.
This is about inequality, not politics, so democracy can’t fix the problem.
HONG KONG — The prevailing media narrative about the Hong Kong protest — namely that the citizens are politically dissatisfied and are fighting for democracy against the tyranny of Beijing — is false. What’s actually happening is this: A fringe of radical (or sometimes, more charitably, merely naive) ideologues are recasting the real and legitimate economic grievances of people here as a fight about Hong Kong’s autonomy. The movement is part of a global trend you might call maidancracy (rule of the square, from the infamous Maidan in central Kiev where the Ukrainian protests began). If carried out to its full extent, it will not end well for Hong Kong.
Maidancracy is an increasingly common post-Cold-War phenomenon. From the former Soviet Union to Southeast Asia, from the Arab world to Ukraine, it has affected the lives and futures of hundreds of millions of people. Hong Kong’s iteration shares certain characteristics with the ones in Cairo and Kiev: First, there is general popular discontent over the prevailing state of affairs and the region’s probable future. Second, while the foot soldiers are largely well-intentioned people with genuine concerns for their own welfare and that of the Hong Kong society, they are led by activists with a strong ideological agenda. As a result, their aim becomes the overthrow of the government or sometimes the entire political system. Third, the press relentlessly cheers them on and thereby amplifies the movement and turns it into a self-fulfilling prophecy. Fourth, democracy is always the banner.
These movements generally fail when they are put down violently, with tragic loss of life (think of Syria). In the rare cases in which they succeed, they lead to long periods of suffering and destruction (think of Ukraine, where more than a decade of continuous color revolutions have torn the country apart and now threaten the nation’s very survival). Some maidan movements seem to run on a perpetual cycle: get on the square to remove a government, only to return to the square to remove the next one (think of Egypt). In the meantime, paralysis, chaos and even violence reign.
‘Another Tiananmen Square in Hong Kong – would be victory for US’
The US would love to break Hong Kong away from mainland China or to goad Beijing into overreacting to the demonstrations, and that is what it actively seeks to achieve through NGOs, Dr. Conn Hallinan, from Foreign Policy in Focus, told RT.
Catalonia
Catalonia: 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 -.
Catalonia govt to decide by Oct 15 whether to hold referendum
Oct 6 (Reuters) – The government of the northeastern Spanish region of Catalonia will decide by Oct. 15 whether to push ahead with a contested referendum on separation from the rest of Spain, a spokesman said on Monday.
Catalonia, with a population of 7.5 million people, its own language and accounting for a fifth of Spain’s economy, has long sought independence and was buoyed by the close result of last month’s referendum in Scotland.
But Spain’s central government says the referendum called for Nov. 9 is illegal and the country’s Constitutional Court has suspended it while it deliberates on its legality, a process that could take months or years.
« We can’t decide on this… on Nov. 7 or 8, » said Francesc Homs, spokesman for the Catalan government, in a radio interview.
Artur Mas, the leader of Catalonia, is under pressure from more radical pro-independence supporters to defy Madrid and the Constitutional Court and push ahead with the referendum.
Although his administration initially temporarily suspended campaigning for the referendum after the court ruling, it later changed its tone and said it would push on.
US News
President Obama gave a speech on the Economy to help Democrats to keep the Senate majority. The speech did not come with any new news. However, the agenda presented could be derailed and even create a doom scenario should GOP won the Senate majority. It would jeopardise reforms (when China and EU are reforming) such as immigration, education, infrastructure etc. The doom scenario would take place should they resumed their aim to impeach the US President. We are not siding here against GOP from any ideological prospect. We do believe that it’s in GOP interest to loose, to focus on it’s internal civil war against the Tea Party. The GOP without Tea Party can be a very important driver to bi-partisan reforms agenda. With the Tea Party, not only GOP threatens the US economy but it does also threaten its own future. Remember : GOP abolished slavery. It’s now seen as in a War against Women. We disagree with Mohamed El-Erian view that mid-term elections are a non-even for markets. Mr. El-Erian explains in a private communication that he does not see GOP dragging its feet into a non-sense economic politics (gridlocks). We disagree with this because Tea Party is far from being rational and its objective is to help its own financial supporters interests: Commodities (through Koch industries which has “invested” $125m in this mid-term ads so far) and Gold bugs (ask if you disagree with this we can share with you tens of thousands of website and evidences).
US Tax inversion: Salix Pharmaceuticals Ltd , citing a « changed political environment, » said on Friday it had scrapped a deal with Italy’s Cosmo Pharmaceuticals SpA that would have allowed it to shift its tax base from the United States to Europe.
From Sept 26th Daily Briefing: As we were expecting since the announcement of Burger King deal (which has been widely reported as being solely pursuing tax inversion objective) we’ve indicated that this would sign the end of the system. US Treasury took actions to make it harder to execute such deals, while the tax reform seems in limbo due to DC gridlock. Administrative actions taken by Treasury Secretary Lew makes it harder to execute tax inversion but does not derail it entirely. We consider that G-20 initiative to undertake OECD proposal to reform the rule of “double non-taxation” (see our previous daily briefing) will help improve the tax governance (and incidentally the rise in the mistrust in the public institutions – which are seen to be colluding with businesses -). Markets have reacted negatively to the actions taken against tax loopholes, because these are seen to be the only remaining way for Corporations to improve their EPS (while demand continue to be subdued). We disagree with this view because G-20 initiatives to tackle “tax optimisation” will come along with more investments and fiscal stimuli which would help spur more economic demand.
ASIAN STOCKS MIXED AFTER GROWTH FORECAST CUT
BANGKOK (AP) — Asian stocks were mixed Tuesday after Wall Street edged down and the World Bank trimmed its forecast of the region’s economic growth.
KEEPING SCORE: Tokyo’s Nikkei 225 declined 0.2 percent to 15,855.47 while Hong Kong’s Hang Seng gained 0.5 percent to 23,433.49. Seoul’s Kospi was up 0.3 percent at 1,973.39. Jakarta rose while Sydney and Singapore fell.
WALL STREET: Stocks fell despite corporate news including Hewlett Packard Co.’s announcement it will split into two companies. The U.S. Federal Reserve was due to release notes on its latest meeting, and investors were looking for signs of when the Fed might raise rates — a move that for now is not expected until mid-2015. The Standard & Poor’s 500 index fell 0.2 percent and the Dow Jones industrial average lost 0.1. The Nasdaq composite fell 0.5 percent.
WORLD BANK: The World Bank trimmed its growth forecast for developing East Asian economies to 6.9 percent from an outlook of 7.1 percent in April. The bank said China, the region’s biggest economy, should grow by 7.2 percent, declining to 7.5 percent next year, as the government tries to shift from reliance on trade and investment to growth driven by domestic consumption.
ANALYST’S VIEW: « Investors are also weighing improving fundamentals in the U.S. versus deteriorating conditions in Asia, especially after the World Bank downgraded growth forecasts in China and developing East Asia yesterday, » said Desmond Chua of CMC Markets in a report.
EUROPE: Germany was due to report factory data that were expected to show a contraction in activity in August for the first time in 15 months. Analysts blame weak demand in other Eurozone markets and tensions with Russia that have weighed on trade. Earlier data showed auto production fell sharply in August while business confidence surveys also showed a decline in manufacturing.
ENERGY: Benchmark U.S. crude shed 11 cents to $90.23 per barrel in electronic trading on the New York Mercantile Exchange. The contract gained 60 cents on Monday to close at $90.34.
Wall St. falls in choppy day; traders wary before earnings
(Reuters) – U.S. stocks fell in choppy trading on Monday, with traders nervously eyeing the start of earnings season, while the S&P 500 failed to remain above a key technical level.
With top economic indicators, including payrolls, out of the way, equities had little in the way of catalysts. The recent strength in the U.S. dollar and continued weakness in the European economy cast a shadow over the earnings season that is about to begin.
« Markets are reflecting nervousness around third-quarter earnings given the strong dollar and a very weak macro environment in Europe, » said Jim Russell, senior equity strategist for U.S. Bank Wealth Management, which manages $120 billion in assets out of in Cincinnati.
Netanyahu’s U.S. visit marred by memories of Gaza and lingering bad blood
Israeli PM assumed that the magic of his ‘Hamas=ISIS’ equation would nullify Gaza resentment, sour relations with Obama and record of ill-timed announcements of building in the territories.
The Israeli sociologist Edna Lomsky-Feder published a book several years ago on the effects of the Yom Kippur War on lives of the soldiers who fought in it. The book’s main finding was encapsulated in its title: “As If There Was No War.” This headline can be borrowed to describe Israel’s rapid return to normalcy”
Chevron sells stake in Alberta Duvernay shale for $1.5B US
Chevron Canada Ltd. is selling 30 per cent of its interest in Alberta’s Duvernay Shale to Kuwait Foreign Petroleum Exploration Co. (KUFPEC) for $1.5 billion US.
Chevron Canada, a wholly owned unit of U.S.-based Chevron, has drilled 16 wells since it began exploring in the Duvernay area, about 200 km northeast of Edmonton.
It bought an expanded stake in the area just last August.
Chevron plans to partner with KUFPEC Canada Inc. to develop its properties in the area and will continue to manage the joint venture.
It said the deal with KUFPEC was a way to strategically manage its growth.
Oil prices are in decline, with WTI futures falling from about $104 US a barrel in June to below $90 US today.
Companies throughout the oilpatch have been putting developments on hold and slowing projects as it becomes increasingly difficult to make them commercially viable.
American teenager charged with trying to fly overseas to join Islamic State
A suburban Chicago 19-year-old has been charged by federal prosecutors for trying to travel overseas to join the Islamic State.
Authorities arrested Mohammed Hamzah Khan, a U.S. citizen, Saturday night at Chicago O’Hare Airport as he was about to depart to Vienna en route to Istanbul, according to the U.S. Attorney’s Office for the Northern District of Illinois. He was charged Monday morning in federal court with one count of attempting to provide material support to a foreign terrorist organization.
While law enforcement saw Khan go through security in the airport, federal agents found notes in Khan’s home that were written by Khan and possibly others expressing support for the Islamic State, the criminal complaint said.
One such note, written in Arabic, read, “Islamic State in Iraq and Levant. Here to stay. We are the lions of the war… My nation, the dawn has emerged,” the criminal complaint said.
Middle East Updates / Pentagon: Costs of Iraq, Syria campaign $1.1 billion
Senator: Congress should debate terrorist threat; White House defends Biden after gaffes, apologies to allies; Kurds in Netherlands storm parliament in protest against Islamic State.
Europe News
EU: the glass half empty view is that unemployment rate is still very elevated (23.3% in August) but it’s coming down, even before EU Commission President elected Juncker’s infrastructure plan, digital initiative, EU Council President elected Tusk’s energy union, are not in place. Though this story combined with Catalonia independence can lead, mistakenly, people to believe that “la Bastille” will be taken in days, we disagree with this view, as those who see a bloody revolution are being hired by ISIL and alike, while the overwhelming youth are working genuinely to improve their lives (alike their ancestors, Youth are adapting to the XXI Century to survive). Although PM Valls said out loud “My government is pro-business” (he translated it in English because in literal translation is sound like a french lover talk), many media continue to bash France and EU (even Mickey needs a bailout). But the same story about Euro-Disney shows that US corporation are still believing in EU and EZ (let’s face it the 2 – wake up call have pushed leaders to change the course – it’s the EC commission of the last chance -).
UK PM Cameron is expressing his say in the forthcoming negotiation ahead of Br-Exit referendum. Amongst these European Court of Human Rights ruling is considered as an important step. As we were saying, since Aug. 30th EU Council, we consider that the UK will gain some changes in order to give PM Cameron enough political capital to campaign for the Yes. We consider that the EU Commission success will be the best tool to defeat UKIP and EU-Skeptics in the forthcoming ballots.
From the economic prospective, the UK housing market is cooling off while the services sector is softening. This supports our view that BoE will not deliver the rates hike priced by markets.
German Factory Orders Slump Most Since 2009: Economy
German factory orders (GRIORTMM) plunged the most since 2009, underlining the risk of a slowdown in Europe’s largest economy.
Orders, adjusted for seasonal swings and inflation, fell 5.7 percent in August, the Economy Ministry in Berlin said today. Economists predicted a 2.5 percent decline, according to the median estimate in a Bloomberg News survey. The data are volatile, and the drop followed a 4.9 percent increase in July that was the most in more than a year. Orders fell 1.3 percent from a year earlier.
Deteriorating confidence is undermining a rebound in Germany’s economy from a second-quarter slump. The 18-nation euro region is struggling to sustain its recovery amid rising political tension with Russia over its support of separatists in Ukraine and inflation that’s running at a fraction of the European Central Bank’s definition of price stability.
“Geopolitical risks, especially the crisis in Eastern Ukraine, have made companies cautious about their investment plans, despite very favorable fundamental and funding conditions,” said Christian Schulz, senior economist at Berenberg Bank in London. “Once these uncertainties fade confidence and thus investment should rebound.”
The euro was up 0.4 percent today and traded at $1.2563 at 1:53 p.m. Frankfurt time. The yield on German 10-year bonds was down 2 basis points at 0.91 percent.
French PM Manuel Valls bids to restore pro-business stance in London
French Prime Minister Manuel Valls was on a mission in London on Monday to defend his government’ economic reforms and pro-business stance in the face of a stream of criticism known as « French-bashing ».
Valls met counterpart David Cameron and French investors in the City, and was due to give a speech to British business leaders in the heart of London’s financial district.
Relations have improved between London and Paris since 2012, when Cameron said Britain would « roll out the red carpet » for French executives following the election of President Francois Hollande, who had declared the finance sector « his enemy ».
As part of a « clarification » of France’s economic line, Valls made a speech in August, well-received on the other side of the Channel, in which he said: « I love business ».
The French prime minister, who arrived in London late on Sunday, began his trip by meeting the French business community in London, home to more than 350,000 French people.
France and Germany to Jointly Monitor Ukrainian Cease-Fire
PARIS — France expects to launch a joint operation with Germany « in the coming days » to monitor a cease-fire between the Ukrainian army and separatists in the east of the country, the French defense minister has said.
Last month, France and Germany offered to deploy drones as part of efforts by the Organization for Security and Cooperation in Europe (OSCE) to reinforce monitoring of the cease-fire in Ukraine, and a German government source said Saturday that Berlin was considering deploying soldiers.
« We are studying with Germany how we can together reinforce monitoring of the cease-fire and the buffer zone, » Jean-Yves Le Drian said Sunday in an interview with RTL radio and news channel LCI.
He confirmed that France and Germany, which are in discussions with the OSCE, would offer drones but did not mention the deployment of soldiers or give further details.
Ukraine’s military accused Russian-backed separatists of again violating the month-old cease-fire on Sunday, saying their forces came under attack in several parts of the east including the airport at the big city of Donetsk.
Le Drian reiterated that the delivery of the first of two French helicopter carriers sold to Russia would depend on the situation in Ukraine in the coming weeks.
France has been under pressure from allies to back out of the deal, which is seen as strengthening Russia militarily at a time when it is accused by the West of supporting the rebels in eastern Ukraine. The first of the two Mistral ships is due to be delivered on Nov. 1.
EURO DISNEY SHARES DIVE AS IT NEEDS BAILOUT
PARIS (AP) — In Europe, even Mickey Mouse is getting a bailout.
The Disney resort on the outskirts of Paris is getting a financial lifeline from owner The Walt Disney Company to handle rising debt and a decline in visitors at a time of economic uncertainty in Europe.
The 1 billion-euro ($1.3 billion) lifeline will see the park’s California masters take control of Euro Disney, which runs Disneyland Paris and Walt Disney Studios Park. Until now, the U.S. company owned only 40 percent of the theme park operator, alongside Saudi prince Al-Waleed Bin Talal and a host of small European investors who originally paid 11 euros a share for their piece of the Disney dream.
The shares have traded under five euros for most of the last year, and Monday’s announcement sent them lower still. By midday in Paris, the stock had plunged 7.2 percent at 3.20 euros.
The fiasco reflects not just a chronically disappointing performance by the company, but also the weak economic environment in Europe over the past six years, which has seen families across the region cut down on spending.
In digital push, Bertelsmann buys rest of G+J
FRANKFURT (Reuters) – Bertelsmann (BTGGg.F: Quote) is taking full ownership of Gruner + Jahr, publisher of magazines including Stern, Brigitte and National Geographic in Germany, as Europe’s largest media group looks to make up ground after being slow to expand online.
The German company, which also controls broadcaster RTL AUDK.LU and co-owns book publisher Penguin Random House (PSON.L: Quote), said on Monday it would buy the 25.1 percent stake from the Jahr family for an undisclosed cash sum.
Privately owned Bertelsmann has held a 74.9 percent stake in the Hamburg-based publisher since 1976, with the Jahr family retaining the remaining shares and veto rights over major decisions such as acquisitions and disposals.
« Taking full ownership of Gruner + Jahr gives us the opportunity to act fast and respond to rapid developments in the publishing market. It will also be easier to decide on investments, » Chief Executive Thomas Rabe said on a press call.
Isis Terrorists Disguised as Refugees in Trojan Horse Plot Against Europe
Isis (now known as the Islamic State) is plotting to smuggle its fighters into Western Europe disguised as Middle Eastern refugees, according to US intelligence sources.
German newspaper Bild reported that American intelligence authorities had unravelled encrypted talks between the leadership of IS.
The sources told the outlet IS was moving away from plans to conduct aircraft hijackings and attacks for fear of tight security and was looking to land a new strategy.
It is seeking to move militants across borders disguised as refugees in a « trojan horse » tactic that would see the fighters use fake passports once in Turkey to reach Western European countries in the hope of carrying out terror attacks.
« In view of the chaotic conditions on the Syria-Turkey border, it is nearly impossible to catch Isis terrorists in the wave of refugees, » wrote Bild.
The porous nature of the Syrian-Turkish border has seen thousands of refugees from the Syrian civil war cross into the Nato member’s territory.
The lax border controls allow IS militants to merge with genuine refugees seeking safety away from the war-weary country.
The discovery by US intelligence comes as the Syrian border city of Kobani continues to to bear the brunt of an IS offensive.
IS has raised two flags over the city’s eastern district and is in control of Mistenur, the strategic hill overlooking the town.
A SPANISH nurse’s assistant has become the first known person to contract Ebola outside of Africa, as an American cameraman with the disease arrived at a Nebraska hospital for treatment.
The female nurse was part of the medical team that treated a 69-year-old Spanish priest who died in a hospital last month after being flown back from Sierra Leone, where he was posted, Spain’s Health Minister Ana Mato said.
The woman went to the Alcorcon hospital in the Madrid suburbs with a fever and was placed in isolation. Mato said the infection was confirmed by two tests and that the nurse was admitted to a hospital on Sunday.
U.K. Big 6 Energy Suppliers to Halve Switching Time
The six largest U.K. energy utilities are on track to cut in half the time it takes for them to transfer customers to a new supplier, Energy Secretary Ed Davey will say today.
Centrica Plc, SSE Plc, Electricite de France SA, RWE AG, Iberdrola SA and EON SE will all be able to swap over client accounts within 2 1/2 weeks, meeting Davey’s challenge to speed up the pace at which dissatisfied customers are able to switch suppliers, according to e-mailed extracts of a speech he will make today at the Liberal Democrat conference in Glasgow.
“Every major energy firm is on schedule to deliver the faster switching I have demanded,” Davey will say. “ I am delivering on my promise to halve switching times this year.”
Former German chancellor Helmut Kohl takes dim view of Gorbachev, Merkel
Angela Merkel could barely hold a knife and fork properly, while Mikhail Gorbachev left behind a pretty forgettable legacy.
Such are the musings of Helmut Kohl according to a new book, which also shows the formidable former German chancellor in a less than charitable mood towards the East German civil rights activists who helped bring down the Berlin Wall 25 years ago.
In Legacy: the Kohl Transcripts, a series of interview transcripts to be published without Kohl’s consent this week, the longest-serving German chancellor cautions against overestimating the role of the civil rights movement, which sprung up in cities like Dresden and Leipzig in the late 1980s, in bringing about German reunification.
« It would be wrong to pretend that the Holy Ghost has suddenly descended over Leipzig and changed the world, » Kohl said in reference to the 1989 protests that saw hundreds of thousands of citizens take to the street against the East German regime.
Instead, he said the fall of the wall was above all the result of the Soviet Union’s struggling economy. « Gorbachev went through the books and had to concede that his game was up, and that he could not prop up the regime. »
The former German chancellor’s verdict on his Soviet counterpart is surprisingly reserved. « Gorbachev’s legacy is that he called time on communism, partially against his will, but de facto he finished it off. Without violence. Without bloodshed. Beyond that I am struggling to think of much else in terms of real legacy. »
The current chancellor Angela Merkel, whom Kohl promoted but turned against after an expenses scandal in 1999, is described in even less flattering terms: « Ms Merkel couldn’t even hold her fork and knife properly. She loitered at state dinners so that I had to repeatedly tell her to pull herself together. »
The frank tone of the 84-year-old’s comments suggests that he probably never expected them to be published in his lifetime.
UPDATE 1-UK banks have three months to detail protection for high street clients
* Banks must submit ‘ring-fence’ plans by Jan 6 2015
* Deposits must move in 24 hrs to another bank if one fails
* No detail yet on what capital separate unit must hold
LONDON, Oct 6 (Reuters) – Britain has given its banks three months to show how they plan to protect their retail customers from riskier parts of their operations.
The Bank of England is forcing lenders to set up a boundary around their high street operations in an effort to protect taxpayers from any repetition of the multi-billion pound bailouts of investment banking operations that occurred under the financial crisis.
The changes, which will come into effect by 2019, mean that banks must submit preliminary plans by Jan. 6, 2015, the Bank of England said on Monday.
But it did not specify a point that banks have been worrying about – whether they need to hold more capital in the ring-fenced domestic bank, or whether leverage ratios will be different. Those details will come later, it said.
The BoE, whose Prudential Regulation Authority arm regulates banks and insurers, also published consultation papers for other safeguards that are stricter than European Union rules in some cases.
China News
China: World Bank new forecast confirmed that China 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).
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, 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 -.
BHP Billiton to cut costs of Australian iron ore operations
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.
The world’s biggest miner is going head to head with arch rival Rio Tinto for global domination that in recent months has seen prices plummet, threatening to send smaller, higher cost suppliers to the wall.
BHP Billiton Iron Ore president Jimmy Wilson this morning announced the company planned to add a further 65 million tonnes of annual production to an already flooded market, with ambitions to become the lowest cost producer.
« Our confidence [in] this approach will enable us to drive unit costs, including freight and royalties, below $US20 a tonne in the medium term, » he told an analyst briefing this morning.
« And our aim is to become the lowest all-in cash cost supplier of iron ore to China.”
UPDATE 3-Rio Tinto rejects Glencore merger approach amid iron ore slump
* Glencore approached Rio Tinto about a merger in July
* A tie-up would have created the world’s biggest miner
* No further talks with Glencore after rejecting bid-Rio
* China’s blessing would be key to any merger
* Rio Tinto shares jump 4.7 pct, Glencore up 3.9 pct
MELBOURNE, Oct 7 (Reuters) – Rio Tinto rejected a merger approach from smaller rival Glencore Plc to create a $160 billion mining and trading giant in August just as the price of its most profitable product, iron ore, slid toward a five-year low.
The miner said on Tuesday Glencore had contacted it about a potential merger in July, adding that it turned Glencore down in August and there had been no further contact between the companies on a deal.
A merger would have created the world’s biggest miner, supplanting BHP Billiton.
« The Rio Tinto board, after consultation with its financial and legal advisers, concluded unanimously that a combination was not in the best interests of Rio Tinto’s shareholders, » Rio Tinto said in a statement to the Australian stock exchange.
UPDATE 1-China to cut steel exports in 2015 – CISA
* Export stimulating measures stopped from July
* China to produce 830 mln T this year, around the same in 2015
MOSCOW, Oct 6 (Reuters) – China will likely decrease steel exports in 2015 following the cancellation this year of export incentives such as tax rebates, a China Iron Ore and Steel Association (CISA) official told Reuters on Monday.
« China does not plan to expand steel exports significantly. Next year we forecast that the Chinese exports will decrease compared with this year, » Chi Jingdong, deputy secretary general of CISA told Reuters at the Worldsteel conference in Moscow.
China, capable of producing 1.1 billion tonnes of steel a year, boosted steel exports significantly in 2014, mainly due to the government’s preferential policies, including tax rebates for some steel products, Chi said.
China will produce around 830 million tonnes of steel this year and around the same amount next year, Chi added.
China removes 160,000 phantom staff on payroll
BEIJING – A total of 162,629 phantom staff on the government payroll have been removed since a national campaign targeting corruption and bureaucracy was launched last year.
China removes 160,000 phantom staff on payroll
Removing ghost employees
Hebei province saw the largest number of such officials, with 55,793 found to be getting paid even though they never worked, the Communist Party of China flagship newspaper People’s Daily reported on Monday.
Sichuan province removed 28,466 such ghost staff and another 15,022 were exposed in Henan.
No such official employees have been uncovered in Shanghai and Tibet, said the report, adding 531 redundant people were found in Beijing and 327 of them have been removed.
According to the report, China also scrapped 114,418 vehicles for use in regular government affairs and keep only those for special services, in an effort to cut hefty spending amid mounting public complaints over the misuse of public money.
The « mass-line » campaign began in June last year to improve the flagging relationship between Party officials and the general public, by cleaning up undesirable work styles such as formalism, bureaucracy, hedonism and extravagance.
Australia News
Australia: 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 – ).
RBA’s warnings take some heat out of property market, say real estate agents
Attempts by the Reserve Bank of Australia to talk down what it sees as overpriced housing markets in Sydney and Melbourne have had some impact, according to real estate agents.
A growing number of property agents around the country are reporting declining numbers at auctions in the two capital cities and less bidding pressure after year-on-year price growth of more than 14 per cent in Sydney and around 8 per cent in Melbourne.
The RBA has recently stepped up its warnings about house prices falling as well as rising in an effort to take some heat out of the property market.
Prime Minister Tony Abbott has ruled out asking Australians to pay more tax to pay for the nation’s military commitment in Iraq.
Australian fighter jets have begun flying combat missions as part of the international effort to fight Islamic State (IS) insurgents.
The Government has estimated the contribution – of up to 10 aircraft and 600 personnel – will cost $500 million a year.
Last week, Treasurer Joe Hockey said new budget cuts would have to be found to cover the cost of the military campaign and $630 million in additional funding for security agencies. Finance Minister Mathias Cormann on Sunday appeared to leave open the possibility of increasing taxes to cover the added pressure on the budget.
Search for MH370 resumes in Indian Ocean
Australia-led mission to find plane carrying 279 passengers missing since March under way after hiatus to map seabed.
The search for Malaysia Airlines Flight 370 has resumed in a desolate stretch of the Indian Ocean, more than six months after the passenger jet vanished.
The Malaysian-contracted GO Phoenix vessel arrived in the area on Monday to begin its underwater search, scanning the ocean floor for the plane, the Australian Transport Safety Bureau (ATSB) said.
The search has been on hold for four months so crews could map the seabed in the search zone, about 1,800km west of Australia.
Given the unknown nature of the ocean floor in that area, since found to include extinct volcanoes, sheer ridges and deep trenches, a bathymetric survey to map the seabed was considered vital before an underwater search could start.
Australia has been spearheading the hunt for the plane which is believed to have hit the ocean after mysteriously diverting off-course from Kuala Lumpur to Beijing and running out of fuel.
The Boeing 777 went missing on March 8 with 239 people on board.
Selling kidneys to buy drones: the economy according to Google autocomplete
Autocomplete, the Google function that suggests full search questions based on a few words, has long served as a humorous (or harrowing) window into the global collective conscience. But could it have a more practical use?
At least one American market strategist is using autocomplete as a tool to better understand the buying and selling intentions of the public, and the results he has collected are somewhat surprising.
« Every quarter we take a break from all the standard economic indicators to look at a range of alternative data. The purpose here is to pose the question: Does the consensus view of the economy square with what real people do in their daily lives? », wrote ConvergEx’s Nicholas Colas in a note to clients, as reported by The New York Times.
New Zealand News
New Zealand: Fontera payout cuts fuel concerns over NZ economic prospects. This increases the pressure on new PM Key Cabinet to accelerate rebalancing the economy and reforms. We have been indicating that NZ has already started a genuine shift toward new Tech agriculture, health (please see below recent promising advance in Asthma treatment) and education services directed to Asian neighbours. The fact that PM Key secured another term supports our constructive scenario on NZ.. This constructive scenario narrative is currently overshadowed by the “search for yield” (or interest rates differential) and RBNZ fight against excessive carry trade effects.
New Zealand stocks rose, led by the Warehouse, following Friday’s rally on Wall Street as jobs data boosted confidence in the United States recovery.
The NZX 50 Index edged up 4.32 points, or 0.08 per cent, to 5241.314. Within the index, 26 stocks rose, 13 fell and 11 were unchanged.
Turnover was a lighter-than-usual $69 million as Australia’s largest state, New South Wales, had a public holiday, while markets in India, the Philippines and Malaysia were also closed.
Stocks on Wall Street rose on Friday after the US reported better than expected jobs, pushing the jobless rate down to 5.9 per cent, the lowest level since July 2008.
Investors are watching data out of the US closely, as the Federal Reserve looks to wrap up its bond buying programme this month, which has brought money into the markets in a bid to stimulate growth and give markets confidence after the global financial crisis.
« Investors are still being relatively cautious. The market has taken a wait and see attitude to see what happens offshore as the week progresses, » said Grant Williamson, director at Hamilton Hindin Greene.
Drilling of New Zealand fault to help global understanding of earthquakes
WELLINGTON, Oct. 6 (Xinhua) — An international team of scientists has begun drilling a 1.3-km-deep hole into the Alpine Fault in New Zealand’s South Island in a pioneering project to understand the fault and the earthquakes it produces.
The ambitious project, north of Franz Josef Glacier, is expected to take about two months to complete, according to the New Zealand government’s Institute of Geological and Nuclear Sciences (GNS Science).
It will enable scientists to install monitoring equipment deep inside the fault to record small earthquakes and measure temperature, pressure and chemical conditions close to where earthquakes are generated.
The goal was to improve understanding of earthquake processes by sampling and analyzing rock and fluid materials retrieved from what scientists referred to as « the earthquake machine, » said a statement from GNS Science Monday.
Other major faults around the world had been drilled in this way after a big earthquake, but this was the first time a major fault had been drilled before it ruptured.
Vaccine breakthrough key to controlling asthma: New Zealand researchers
WELLINGTON, Oct. 6 (Xinhua) — New Zealand researchers said Monday they have discovered new vaccine technology for the treatment of asthma and other allergic diseases.
The discovery in the field of immunotherapy, which harnesses the body’s own ability to fight diseases, was an extension of work to develop cancer vaccines at Wellington’s Victoria University.
« Cancer and asthma both involve the immune system, but in cancer we are trying to get the body to take notice of tumor proteins, while in asthma, we want to stop it over-reacting to an allergen, » researcher Dr Ian Hermans said in a statement.
« Allergy is the wrong sort of immune response. Using the vaccine, we have initiated a more appropriate immune response and prevented the allergy from taking hold. »
Vaccines worked by presenting the body with an antigen, which provoked the immune system to activate T cells to protect from the disease in the future.
To strengthen the immune response, a chemical called an adjuvant was administered along with the antigen, to make the vaccine more effective.
In the asthma vaccine, the antigen and the adjuvant were chemically linked, rather than simply delivered together, ensuring the essential components reached the target cells together and created the most powerful but highly specific immune response to target the disease.
Japan News
Japan: inflation softening along with economic downgrade was widely expected as a result of the 1st VAT hike (cf our strategic note Dec 26th 2013). We see BoJ to keep the bazooka of QQE-2 un-tested until the JPY excessive depreciation and JGB solvency risk came down * investors are still short JGB expecting a Japan crisis *. The 2nd VAT hike will require some stabilisation at the current levels, though we expect that PM Abe will undertake the 2nd hike in steps, because BoJ is unlikely to be sufficiently confident to move ahead with more QQE while JPY is accelerating its depreciation. PM Abe voiced concerned over the JPY rapid depreciation, as he pointed (rightly in our opinion) to the increase in energy cost, which deteriorate further the energy trade deficit – and increase the risk of JGB solvency -. The Prime Minister confirmed in his Diet address to pursue Abenomics 3rd arrow.
However, BoJ might do some adjustment to its monetary program but nothing excessive. The news flow out of this weekend G20 meeting shows that the global community is gently pressing the government and the BoJ to pursue structural reforms, economic rebalancing, solvency improvement (through VAT 2nd hike commitment) and adequate monetary policy (not too hot – to avoid a crisis – not too cool – to avoid derailing the on-going portfolio rebalancing approach -). Japan continues to face heavy public pressure to rebalance its energy reliance to nuclear. While we believe that Japan will continue to press for reopening nuclear plants (when Nuclear Watchdog gives his green light), the medium to long term trend is that Japan will use Trade negotiation with neighbours to secure new energy sources while using this pressure to deregulate and move forward with Abenomics 3rd arrow (please see our Japan update for more on our views). We are not surprise by the fact that Russian news media are reporting the pushback to reopening nuclear plans, ahead of Japan-Russian talks (about sanctions, energy agreement, and disputed territories).
As China, Japan, and South Korea heads toward a constructive talks (as we were reporting in our previous daily briefings) and Japan and North Korea are heading toward a solution on Japanese civilians abduction, North Korea leaders close to Kim Jong Un held last weekend high level talks with South Korea minister of reunification. This indicates that the scenario of an unified Korea is advancing. We have been considering that the reunification will ultimately take place but it requires normalised relation amongst the 3 important players: China, Japan, South Korea.
Dollar Gains as Investors Weigh Fed Rate Move Timing; Euro Falls
The dollar advanced against major peers, following its biggest decline in more than 12 months yesterday, as investors weighed the timing of the Federal Reserve’s first interest-rate increase since 2006.
The euro weakened after a report showed German industrial production fell. Australia’s dollar held its biggest gain in seven months after the Reserve Bank pointed to an improvement in private demand after keeping policy settings steady. The yen gained versus the euro before Bank of Japan Governor Haruhiko Kuroda gives a news conference today following the central bank’s decision to leave stimulus unchanged.
“The main story is the U.S. dollar strength,” said Joseph Capurso, a Sydney-based currency strategist at Commonwealth Bank of Australia. “It would be quite logical if the BOJ adds stimulus at the end of the month.”
The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major currencies, gained 0.1 percent to 1,069.62 at 7:03 a.m. in London from yesterday, when it slumped 0.9 percent, the most since September 2013. It closed at 1,078.65 on Oct. 3, the highest since June 2010.
The greenback added 0.4 percent to $1.2610 per euro. It declined 0.2 percent 108.58 yen, following a 0.9 percent drop yesterday, the most since April 8.
The U.S. Fed, which meets Oct. 28-29, is on track to end a program of stimulatory bond purchases this month. Kansas City Fed President Esther George said it’s important to start normalizing rates sooner than later.
Powerful typhoon heads for Tokyo
TOKYO (Kyodo) — A powerful typhoon is on track to hit the Tokyo metropolitan area Monday after making landfall in central Japan earlier in the day, bringing heavy rain and strong winds across wide areas of the country, leaving at least one dead and three missing.
Typhoon Phanfone moved inland from the Pacific near Hamamatsu, Shizuoka Prefecture shortly after 8 a.m. and is expected to head northeast, hitting Tokyo, before traveling off Japan’s northern Pacific coast in the early evening, the Japan Meteorological Agency said.
Three U.S. servicepersons were swept away by high waves in Okinawa. One was later confirmed dead while the other two are missing, according to local police. A 21-year-old man from Tokyo also went missing while surfing at Shonan beach in Kanagawa Prefecture. Ten other people were reported to be injured.
About 667,000 people in Shizuoka Prefecture were advised to evacuate. Rainfall brought by the typhoon reached 84.5 millimeters per hour in the city of Shizuoka, a record-high for the area, and 74.5 mm in the city of Owase, Mie Prefecture.
Heavy rains forced the cancellation of a search for victims of Mt. Ontake in central Japan, where 12 people remain missing following a deadly volcanic eruption on Sept. 27. People living below the mountain were instructed to evacuate as the downpour could wash away volcanic ash, causing mudslides.
Japan’s Topix Swings Between Gains and Losses After BOJ Decision
Anna KitanakaOct 07, 2014 1:20 am ET
Oct. 7 (Bloomberg) — Japan’s Topix index of stocks swung between gains and losses as the Bank of Japan maintained record stimulus today.
The Topix Nonferrous Metals Index fell the most among the broader gauge’s 33 industry groups, while insurers led gains. Mitsumi Electric Co., which makes parts for computers, slid after a 4.4 percent advance yesterday. Fujifilm Holdings Corp. rose 3.2 percent, climbing for a second day after a French Ebola patient, who was given its Avigan drug with another experimental treatment, was sent home from hospital.
The Topix was little changed at 1,295.98 as of 2:11 p.m. in Tokyo after falling as much as 0.2 percent and rising 0.6 percent. Volume on the measure was in line with the 30-day intraday average. The Nikkei 225 Stock Average lost 0.4 percent to 15,827.96. The yen was little changed at 108.78 per dollar after gaining 0.9 percent yesterday.
“There’s a lot of profit-taking going on in Japanese stocks,” said Naoki Fujiwara, Tokyo-based chief fund manager at Shinkin Asset Management Co. “Until recently, there was still hope for additional easing from the BOJ, but that’s gone now. However, the trend for the yen weakening hasn’t changed. The focus will be on earnings, and how much companies revise upwards.”
The BOJ kept its pledge to increase the monetary base at an annual pace of 60 to 70 trillion yen ($643 billion). All 33 economists surveyed by Bloomberg News between Sept. 26 and Oct. 2 forecast no change to the bank’s policy at this meeting.
Betting on massive central bank puts
Here is a bet based on the latest episode in a long-running policy dispute.
Last Thursday (October 2), the meeting of the governing council of the European Central Bank (ECB) in the splendors of the Capodimonte (« top of the hill ») Palace in Naples, Italy, reaffirmed with overwhelming majority the zero (0.05 percent) interest rate policy and a program of security purchases that could expand the bank’s balance sheet by an estimated €1 trillion.
Policy deliberations at this regal venue were greeted by some 2,000 protesters clashing with police and braving waves of teargas in a city (Naples) whose unemployment rate of 25 percent is exactly double Italy’s average, and whose per capita economic output is more than 30 percent below that of the country as a whole.
True to form, Germany continued to strongly oppose this ECB policy. The German member of the ECB’s governing council maintains that the euro area banks don’t need virtually free loanable funds and security purchases that will, in his view, again lead to banks’ mischief requiring bailouts with taxpayers’ money. His position was supported by his Austrian colleague (16:2, in case you want to keep the score).
Sovereign Bonds Approach Lowest Level in 2014 on Fed Outlook
An index of sovereign bonds approached the lowest level this year after a bigger-than-expected U.S. employment gain boosted speculation that the Federal Reserve will raise interest rates in 2015.
The Bloomberg Global Developed Sovereign Bond Index (BGSV) slid to 110.41 at the end of last week, a level not seen since January. The gauge has dropped 2.6 percent in the past month, trimming 2014’s gain to 1.1 percent. The U.S. is scheduled to sell $61 billion of notes and bonds over three days starting tomorrow.
“Riskier assets like equities are more favorable than bonds,” said Hiroki Shimazu, the senior market economist in Tokyo at SMBC Nikko Securities Inc., a unit of Japan’s second-largest publicly traded bank. “The U.S. economy continues to recover.”
The benchmark U.S. 10-year yield was little changed at 2.45 percent at 11:20 a.m. in Tokyo, according to Bloomberg Bond Trader data. The price of the 2.375 percent note due in August 2024 was 99 12/32.
Treasuries (BUSY) are little changed in the past month, for a gain of 4.2 percent this year, based on the Bloomberg indexes.
The MSCI All-Country World Index of equities has declined 4.7 percent over a month, leaving it up 3 percent in 2014 including reinvested interest.
Australia’s 10-year yield fell two basis points today to 3.43 percent, while Japan’s was little changed at 0.515 percent. A basis point is 0.01 percentage point.
Seoul shares details of NK visit with Washington
The government has explained « considerable details » of the high-level talks between South and North Korean officials, Saturday, to senior U.S. diplomats who were visiting Seoul, Monday, according to the Ministry of Foreign Affairs.
« We’ve been working closely with the U.S. regarding the inter-Korean issues and it was also the case this time, » a ministry official said Monday on condition of anonymity.
Earlier on the day, U.S. Assistant Secretary of State Daniel Russel told reporters that Washington supports inter-Korean efforts to mend their strained ties.
« I made clear that as is consistent element of U.S. policy, the U.S. supports the efforts on the part of the Republic of Korea to promote and enhance inter-Korean relations, » he said. « As always we found the consultations in Seoul to be very direct, very useful, and very collaborative. »
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