Archives for November 2016

Spot gold was down 0.4 percent at $1,178 per ounce by 6:04am GMT. US gold futures dropped 1.4 percent to $1,172, after touching its lowest point since the beginning of February at $1,170 per ounce.

US dollar hits 13-yr high on Trump economy boost expectations

Lifted by American bond yields, the dollar rose to an eight-month high against the yen.

“The dollar has been really strong this morning and is pushing high. The Shanghai arbitrage is trading a $25 dollar premium, which seems to be suggesting that there is selling from Asia rather than buying,” said an investment bank trader commenting on the dollar run, as quoted by Reuters.

The precious metal crashed in November due to investor concerns over President-elect Donald Trump’s promises to boost infrastructure spending and revive the economy.

The move pushed US equities to record highs. The prospect of tightening monetary policy by the US Federal Reserve is also strengthening the US currency.

“After Trump won the presidential election, the market sentiment has been changing dramatically. Gold is being pushed down by the stronger dollar and an interest rate rise. Investors are looking to buy more risky assets rather than gold as a safe haven,” said Tetsu Emori, president of Emori Capital Management as quoted by Bloomberg.

The 10-year Treasury yield gained about 3 basis points to 2.382 percent from the previous close on Wednesday.

READ MORE: Markets recover after early losses as Trump elected 45th US President

“The dollar is firm and triggering some selling. There were some stops around $1,180, and they were all taken,” said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong, stressing that there had been some physical buying, but it didn’t help the precious metal.

Spot gold is expected to drop to $1,172 an ounce, as the support at $1,184 does not look to hold, according to Reuter’s technical analyst Wang Tao.

Article source: https://www.rt.com/business/368142-gold-hit-low-strong-dollar/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

“Globally, Russia is part of a group of large exporters of washing machines and ranked eighth, ahead of Spain, the US and South Korea,” said a report from the Russian export center, quoted by Lenta.ru.

‘Made in Russia’ could be coming to a store near you

In January-September 2016, Russian exports of household washing machines jumped by 220 percent to a record 934,000 units worth $155 million.

The previous record was seen in 2013 when Russia exported 661,000 machines for $144 million. At that time 75 percent of production was sold to CIS countries (mainly to Ukraine, Belarus, and Kazakhstan), this year 55 percent was delivered to countries outside the CIS.

The main buyers of Russian washing machines are Poland (21 percent of total exports), Romania (10.6 percent), Italy (10.2 percent), Germany, Serbia, Latvia, Hungary (1.5-2 percent each). In the CIS, the primary markets are still Kazakhstan (18.7 percent), Ukraine (13.5 percent) and Belarus (7.1 percent).

This week, Bloomberg reported that Western corporations are pouring billions of dollars into factories and stores in Russia because of cheaper production costs due to a weaker ruble.

French retailer Leroy Merlin will reportedly invest €2 billion to double the number of outlets in Russia, while American food corporation Mars has already expanded to produce chewing gum and pet food locally. Sweden’s IKEA is said to invest $1.6 billion into new stores over the next five years.

Since 2014, the ruble has lost half its value against the US dollar due to the collapse in global oil prices and international sanctions following the conflict in Ukraine. In January 2014 you could buy a dollar for 32 rubles, compared to the current exchange of 64.

The Russian economy is expected to see the first year of growth after a prolonged recession next year if oil prices don’t fall below $40 per barrel for Russian crude benchmark Urals blend.

Article source: https://www.rt.com/business/368138-russia-washing-machine-exports/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

“According to our plans, oil output is going up next year. If we keep production at the current level we are making our contribution, for us that essentially means a cut of 200,000-300,000 barrels per day,” he told journalists at the Fifth International Energy Efficiency and Energy Development Forum held in Moscow.

Putin optimistic about OPEC deal to cap oil output

With all-time high production in recent months, Russian oil companies plan to put new oilfields into operation and therefore boost production next year.

“As a matter of fact we will cut production on the brown fields,” Novak said, referring to fields that have already been producing oil for some years.

Novak didn’t say if the Organization of the Petroleum Exporting Countries (OPEC) embraces the view. However, the negotiations with the cartel’s members are going well, and Russia will hold talks with several non-OPEC nations, including Kazakhstan and Mexico, according to the minister. He stressed that Saudi Arabia had not demanded Russia limit its oil production.

“I am positive-minded. I believe that we have quite good chances,” the minister said, stressing that no contacts were made with the US, while consultations with Norway showed that Oslo wouldn’t participate in the deal.

OPEC members are going to meet in Vienna on November 30 to finalize a pact on supply cuts with non-OPEC states, including Russia. In September, the members reached a preliminary agreement to set the oil output ceiling at 32.5-33 million barrels per day for the cartel.

A downturn in prices sent crude from $115 per barrel in June 2014 to less than $30 per barrel in January 2016. Since then prices have rebounded to about $45-50.

Article source: https://www.rt.com/business/368071-novak-oil-freeze-volume-opec/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Beijing threatens retaliation against US companies if Trump starts trade war

According to Federal Reserve economist Justin Pierce and Peter Schott of Yale University, a significant shift in the structure of the US economy may have become fatal for many workers in the country.

The study shows a “statistically significant relative increase in suicide and poisoning …concentrated among white males” from 2000 when President Clinton and Republican lawmakers allowed a major increase in imports from China.

Statistics showed that since then Chinese imports to the US have surged around five-fold to $483 billion last year.

The government’s change in policy led to competition with Chinese manufacturing which forced US factories to close. Many of those who had been laid off fell into depression or addiction.

“I’m in favor of free trade, but I’m also someone who believes that we should be honest about the consequences,” Schott said. “It doesn’t benefit everyone equally.”

Pierce and Schott examined records of deaths compiled by the Centers for Disease Control and Prevention. They found that even the areas with average levels of trade competition with China saw suicide increases of 3.5 percent and a 24 percent growth in the numbers of overdoses.

“Suicides could lead to more suicides or new economic consequences could take time to push people over the edge,” Schott told the Wall Street Journal.

He, however, did not recommend ceasing to liberalize global trade, claiming such a move “hurts everyone. We want the increases in productivity and reductions in prices that trade brings.”

The economist instead recommended more training for disenfranchised workers to help them move into growing areas of the economy.

Article source: https://www.rt.com/business/368070-trade-china-death-americans/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

The greenback reached $1.0523 against the euro before retreating to $1.0551. The Japanese yen fell to an eight-month low, while China’s yuan dropped to an eight and a half year low.

Dollar to catch up with euro by time France elects president – Soc Gen

“There doesn’t seem to be anything stopping US yields going higher in the near-term so I think people are going to stay on the dollar trend,” State Street Global Markets’ head of global macro strategy, Michael Metcalfe told Reuters.

“The only risk to this are that the dislocations in markets outside of the US, particularly in emerging markets, get to a point where they start to feed back into concerns (for the Federal Reserve as it looks to raise interest rates),” he added.

On Wednesday, French investment bank Societe Generale predicted euro-dollar parity by March 2017 over the bigger-than-predicted rate hike by the US Federal Reserve following Donald Trump’s presidential election victory. Soc Gen now predicts a 1.75-2.0 percent raise in rates rather than previously expected 1.25-1.50 percent. A higher US key rate means a stronger dollar.

However, not everyone is so bullish about the dollar. As Bloomberg reports, Amundi SA, which oversees about $1.2 trillion, said the greenback is unlikely to see sustainable growth in future over higher commodity prices and instability in the yuan.

A similar opinion was expressed by $119 billion asset manager from Australia, AMP Capital Investors.

“I don’t think the broad-based nature of the dollar rally is sustainable. From here the dollar rally is likely to become more selective,” said Nader Naeimi from AMP.

Article source: https://www.rt.com/business/368064-dollar-hovers-around-14yr-high/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

The 2015 deal between the P5+1 nations (U.S., France, the UK, Russia, China and Germany) and Iran was one of the signature achievements of the Obama administration, one that produced multiple benefits. First, it ratcheted down tensions between Iran and the U.S., a relationship that had become so hostile in the preceding years that the drumbeats of war were audible in Washington. Second, the agreement put restraints on Iran’s nuclear program. From Iran’s perspective, the deal also paved the way for a return to international markets, and allowed them to ramp up oil production and exports. All told, Iranian oil exports had dropped from 2.4 million barrels per day (mb/d) in 2011 to just 1 mb/d by 2013. Iran has since restored much of that lost output.

However, the historic thaw in relations became a lot more complicated with the election of Donald Trump, who has vowed to take a hardline with Tehran. It is not clear that the mercurial President-elect will follow through on his threat (or a long list of other campaign promises), or back off once he sits in the Oval Office and takes a harder look at the agreement.

READ MORE: Saudi Arabia warns Trump against stopping imports of its oil

If he does follow through on killing the accord, the fallout could be significant. It is unclear how effective it will be to unilaterally re-impose sanctions on Iran. Considering the size of the U.S. economy, threatening to close off access to the American market to anyone purchasing Iranian oil could be persuasive. That could potentially cut off some Iranian oil exports once again, which would have the effect of taking global supplies off the market, thus pushing up prices.

On the other hand, as a new report from Columbia University’s Center on Global Energy Policy details, the restoration of sanctions might have a more nuanced outcome. It would likely be met with dismay across the globe, including from U.S. allies that worked hard to reach an accord. Some countries, including American allies in Europe and Asia could reject the Trump administration’s demands. As such, oil flows would be rerouted from countries that comply with Washington’s demands and put sanctions back in place to countries that refuse to comply. If a large oil purchaser, such as China, decides not to cooperate with President Trump, the U.S. effort to contain Iran will likely fail.

More on Oilprice.com: Is Iraq Coming Back To The OPEC Deal?

The Columbia University report also offers some interesting theories on Iran’s calculus regarding cooperation with OPEC if the U.S. tears up the nuclear accord. On the one hand, Iran might decide to cooperate with OPEC in order to boost oil prices now, thus making it more painful for the international community to restore sanctions because it would have the effect of further pushing up oil prices. The flip side is that Iran might try to produce as much as possible today for fear of seeing output curtailed by international sanctions in the future.

For oil prices, the effect of a more confrontational approach would be bullish, to say the least. The potential for supply outages would rise. But the geopolitical risk premium would arguably be more important. Tearing up the nuclear accord would leave moderate Iranian officials in the lurch, many of whom took a great deal of risk to support negotiations with the U.S. Hardliners would thus be strengthened, and conflict between Washington and Tehran would be hard to undo.

Of course, for many in the Trump administration, there is plenty of upside from this. Donald Trump has tried to curry domestic political support by taking an aggressive position towards Iran. Meanwhile, several rumored appointments in the Trump administration have a long history of advocating for a hostile approach towards Iran.

More on Oilprice.com: U.S. LNG Is Changing The Global Gas Game

Congressman Mike Pompeo has been appointed to lead the CIA promised to “roll back” the nuclear deal as recently as last week. The hawkish National Security Advisor Retired Army Lt. General Michael Flynn is also a critic of the deal. Most important of all is probably the potential selection of John Bolton to lead the State Department. Bolton is one of the most extreme critics of the Iranian nuclear deal and Iran in general, and he openly called for regime change in Tehran just a few days ago. Should he be selected to lead the State Department, Trump will likely have telegraphed his intentions to scrap the landmark deal.

Then there are the top executives from the oil industry that have the President-elect’s ear. They would stand to benefit from the spike in oil prices if Iranian oil was forced out of the market. The Columbia University report estimates that U.S. shale would see an increase in output of 300,000 to 900,000 barrels per day in the next few years if oil prices rise to $60 per barrel. It is not hard to imagine oil prices rising that high if the U.S. openly tries to isolate OPEC’s third largest producer.

Of course, when dealing with Donald Trump, it is impossible to make accurate predictions. We may have to wait until January to find out what he will do.

This article was originally published on Oilprice.com

Article source: https://www.rt.com/business/368038-trump-iran-deal-oilprice/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

The search engine will be fined one million rubles (roughly $15,000) if it does not comply with the ruling by November 28. This will become the second penalty against the US corporation.

Google gets $6.75mn slap on the wrist for Android monopoly in Russia

“State authorities have a broad range of opportunities to make companies comply with court decisions, and the state will never put up with ignoring them,” said FAS chief Igor Artemyev, stressing that the watchdog would find scores of measures against Google.

Litigation between FAS and Google started over a year ago after the watchdog accused the US firm of violating Russia’s antitrust regulations for pre-installed mobile applications.

According to FAS, Google abused its dominant position in the market by bundling its own applications with the Android operating system and pushing out third parties like search engine Yandex, Google’s local rival. The case started after Yandex filed a complaint.

In August, the antitrust watchdog ordered Google to end the practice and ordered the company to pay a 438 million ruble ($6.8 million) fine.

Google challenged the ruling in court but lost the case.

READ MORE: Google to face another European monopoly charge

The $15,000 fine is an administrative penalty for failing to pay the initial fine on time.

Russian courts are currently reviewing three Google appeals challenging the fines. Its next appeal will be heard in December.

READ MORE: Russian court rejects Google appeal against antitrust fine

FAS have warned that if Google fails to pay the fines, the watchdog will seek a court order to seize company assets in Russia.

Article source: https://www.rt.com/business/368037-russia-warn-google-million-fine/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

The deal is mainly cash and is expected to close before the end of this year. The sides have confirmed that Skyscanner will continue managing its operations independently.

“Ctrip is the clear market leader in China and a company we can learn a huge amount from,” Skyscanner CEO Gareth Williams said, adding the acquisition by Ctrip took Skyscanner “one step closer to our goal of making travel search as simple as possible for travelers around the world.”

The deal would “strengthen long-term growth drivers for both companies,” said James Jianzhang Liang, co-founder and executive chairman of Ctrip.

“Skyscanner will complement our positioning at a global scale, and Ctrip will leverage our experience, technology and booking capabilities to Skyscanner’s,” he added.

Greece’s largest port taken over by Chinese firm

The sale comes less than a year after Skyscanner announced a fresh round of investment to expand worldwide. The company was valued at $1.6 billion, when it raised almost $160 million in funding from a group of investors that included Malaysia’s sovereign fund, Yahoo Japan, and fund manager Artemis.

Skyscanner was set up in the UK in 2003. Users can compare prices from different travel sites while searching for plane tickets, hotels, and rental cars.The website serves 60 million monthly active users and is available in more than 30 languages.

Ctrip is one of China’s best-known travel businesses providing online booking for airline and railway tickets as well as hotels. It was founded in 1999 and is partly owned by the Chinese search company Baidu.

The company became China’s biggest internet travel service after last year’s merger with a similar business Qunar.

Ctrip generated more than $50 billion (350 billion yuan) in gross merchandize value in 2015.

Article source: https://www.rt.com/business/368028-china-buys-travel-skyscanner/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

“The only way for the deliverance of this country is to remove it from the clutches of the few people who hold the power and money,” Duterte told a news conference.

Philippines turns back on US and pivots to Asia

“I do not owe you anything, that’s precisely why I was avoiding you during the last election. I am not trying to destroy you. You have the advantage, you’re here already, be content with that. But let us open everything.”

Foreign businesses have complained they can’t get access to some sectors like telecoms and utilities in the 100 million Filipino market due to red tape or obstruction from local monopolies.

It is high time Filipino tycoons shared their wealth, according to Duterte.

“You can count on your fingers the power players of this country. I would not say that they are the elite,” he said.

“I would like just to send this strong message: it’s about time that we share the money of the entire country and to move faster, make competition open to all. You stymie competition, and we will always be at the mercy of the corrupt people,” added Duterte.

The Philippines has 21 billionaires, according to Forbes Magazine, with the richest worth $12 billion.

Despite some analysts’ fears that Duterte’s presidency would be followed by an economic slowdown, the economy expanded 7.1 percent in the July-September period, the first three months of his administration.

From 2012 to 2015, the country’s economy grew on average 6.47 percent annually, based on a surge in investment and strong consumption.

WATCH MORE:

Article source: https://www.rt.com/business/368022-duterte-business-corruption-philippines/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

China bans online news organizations from reporting original stories

According to the New York Times which cited unnamed Facebook employees, the software suppresses posts from appearing in people’s news feeds in particular geographic areas. It was developed with the support of company CEO Mark Zuckerberg who has made several visits to China, meeting with the country’s top internet executives.

“We have long said that we are interested in China, and are spending time understanding and learning more about the country,” Facebook spokeswoman Arielle Aryah told Reuters.

“However, we have not made any decision on our approach to China. Our focus right now is on helping Chinese businesses and developers expand to new markets outside of China by using our ad platform,” she added.

The censorship software will enable a Chinese partner company to monitor popular stories and decide whether the posts should appear in users’ news feeds.

Like other social networks such as Twitter, Facebook was blocked in mainland China seven years ago due to the government’s strict rules on user content. Google is currently operating in the country via its Chinese-language subsidiary. The professional social networking service LinkedIn has agreed to censor some content on its platforms in China. The country has its own social network Weibo.

Analysts warn a new censorship tool could lead to more requests from other countries to block content on Facebook. The social media company has reportedly blocked 55,000 pieces of content in around 20 countries between July and December 2015.

According to the press, there is no evidence Facebook has already offered the software to Chinese authorities. It may be one of Facebook’s initiatives as the company is desperate to gain access to China’s market of 1.4 billion people.

Article source: https://www.rt.com/business/367944-facebook-china-censorship-tool/?utm_source=rss&utm_medium=rss&utm_campaign=RSS