September 20, 2017

Kaspersky Lab says it does not spy for any government

“Kaspersky Lab is disappointed the US Senate passed the Defense Authorization Act with an amendment regulating the use of the company’s products. Thus, Kaspersky Lab appreciates the opportunity given by the US government to address the Congress on September 27 and publicly refute false accusations against the company” Kaspersky Lab in a statement on Tuesday.

Eugene Kaspersky, co-founder of Moscow-based cyber-security company Kaspersky Lab © Sergey GuneevKaspersky Lab co-founder invited to testify before US Congress over security concerns

On Monday, the Senate passed an amendment against the Russian company, which was proposed by New Hampshire Democrat Jeanne Shaheen. The senator said the prohibition “removes a real vulnerability to our national security.”

The bill would bar the use of Kaspersky Lab in American civilian and military agencies.

Kaspersky Lab has stated it believes that “building assumptions about possible risks based on inaccurate information and the country of origin of the company means to expose everyone to an additional threat since such a decision restricts the choice of cybersecurity products on the market.”

“We very much hope that the Congress will take into account the information provided before discussing further steps,” Kaspersky Lab said.

Earlier, the company co-founder Eugene Kaspersky said he was ready to testify on September 27 before Congress if the United States granted him an accelerated visa.

Kaspersky Lab is a 20-year-old anti-virus company that has 400 million customers globally. The company has fiercely denied it conducts espionage on behalf of the Russian government.

The company says all three existing offices in the United States continue operating, including a subdivision in Washington.

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Syria offers preferential trade to Russian business

© Ministry of Defence of the Russian FederationRussia sends 4,000 tons of pipes, cables machinery in reconstruction aid to Syria – MoD

Syria’s Ambassador to Russia Riyad Haddad explained the new policy at a meeting of the Syrian-Russian business council in Moscow. The meeting was attended by a delegation of Syrian businessmen who hope to establish contacts with Russian counterparts.

“We will always be side by side; our doors will be open to help you cope with all the bureaucracy routine,” Haddad told the Russian businessmen, adding “you can always turn to us, we promise to do our best.”

According to the ambassador, Russia and other countries which helped Syria to fight terrorism “have the right to be at the forefront” of those restoring the country’s economy.

He said Syria has started moving from military operations to reconstruction. The ambassador acknowledged that all areas of the country’s economy and public life have been severely damaged.

The World Bank estimates that apart from the human capital lost in the war, the country will need billions of dollars to support reconstruction. Funding might prove a challenge considering the economic sanctions placed on the Syrian government by the West.

Last year, Moscow and Damascus signed an agreement to create ‘green customs corridor’ for agricultural products. The deal followed a move by Syria to be part of a free trade zone with Russia three years ago.

According to Syrian Prime Minister Wael al-Halqi, the two countries have already signed nearly a billion dollars’ worth of agreements to develop energy, trade, finance and other sectors of the war-torn economy.

Syria has offered Russia a chance to explore and develop oil and gas on land and offshore. In particular, Russia was invited to upgrade the Baniyas refinery and to construct a new refinery with Iran and Venezuela.

Russia and Syria also aim to establish a joint bank to facilitate transfers. The bank would be controlled 50-50 by the countries’ central banks.

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Sub-$50 oil could kill shale

© Marco BelloVenezuela ditches dollar for oil payments to dodge US penalties

As the International Energy Agency (IEA) noted last week, global oil supply fell in August by about 720,000 bpd (barrels per day)—a large contraction after months of sizable gains. Much of that is probably temporary, particularly in the US and Libya, two countries that saw unexpected outages. But the demand story is arguably more important: the IEA upgraded its demand forecast for the year, as consumption has surprised on the upside.

WTI is now back in the vicinity of $50 per barrel, while Brent topped $55 per barrel in recent days—its highest level since the beginning of 2017. But that doesn’t mean that the price gains will continue. There are a few reasons to be skeptical that the momentum will carry crude prices higher than current levels.

CNBC notes that over the past three years, whenever WTI rose above $50 per barrel, a ton of pressure quickly derailed the upward trend. CNBC found that WTI exceeded $50 per barrel 18 times since December 2014, but after it crossed that threshold, the next week’s price movement was positive only 28 percent of the time. Or, put another way, over the past three years, whenever WTI jumped above $50 per barrel, three out of four times the price dropped a week later. Meanwhile, The United States Short Oil Fund, an exchange-traded fund that shorts WTI, was positive 67 percent of the time in the week following a $50 price breach.

In other words, major investors quickly made bearish bets whenever it seemed that WTI was getting too high, and in many cases $50 per barrel was the threshold around which bullishness and bearishness pivoted.

That makes sense because $50 also seems to be an important marker for the starting and stopping of US shale. Drilling activity ramped up at the end of last year and earlier this year after the initial OPEC agreement pushed prices above $50. But drilling activity came to a screeching halt and the rig count flat-lined a few months ago when WTI sank to the low $40s.

Now, a few months after shale drillers dialed back their ambitions, the oil market seems much improved and WTI is back at $50. While breakeven prices vary widely from driller to driller, $50 per barrel appears to be a rough rule of thumb for an industry-wide average breakeven price. While imprecise, the past year or so has seen shale ramp up and down depending on which side of $50 per barrel WTI finds itself on.

The next steps are important but also uncertain. If WTI does post some gains, it seems reasonable to expect US shale companies to accelerate drilling activity.

© Jim WestRosneft boss predicts oil slump next year

But even if drillers feel confident with $50 oil, not everyone thinks the industry is on sound financial footing. Jim Chanos, a short-seller with Kynikos Associates, spoke at a CNBC investor’s conference last week and laid out his case for shorting the shale industry.

“In our view, people have been looking at this industry through the rose-colored glasses of Wall Street,” he said. “And this is the inherent problem with the North American shale business.”

Chanos argued that shale drillers are using up all of their revenues to reinvest in capex, leaving them with little to nothing left over to pay off debt. Because companies have to keep drilling in order to maintain production, they find themselves stuck on a spending treadmill.

“The way to think about it is that unlike other businesses, your assets literally get burned up,” he stated. One of the companies Chanos singled out during his speech: Continental Resources, the North Dakota and Oklahoma shale driller.

Continental’s CEO Harold Hamm was testy in a follow-up CNBC interview, responding to Chanos’ claims.

“Well, first of all, I can say almost, who is this guy? A short-seller,” Hamm declared. He also suggested that Chanos might be getting burned as oil prices rise, and he is simply trying to talk down oil prices.

The exchange is fitting because Hamm has previously said that $50 per barrel was the price needed to keep shale sustainable. If WTI stays at current levels or moves up from here, we’ll find out if he is right over the next few quarters.

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Youth to propel India’s rise to become global economic superpower

© Rupak De ChowdhuriIndia targets $300bn investment goal for its ambitious energy program

According to the report, Asia’s population is rapidly aging, and by 2042 there will be more over-65s in Asia than people in the eurozone and North America combined.

“There are already more over-65s in Asia than there are people in the United States,” said Deloitte, adding the number of individuals aged 65 and over in Asia will climb from 365 million today to more than half a billion in 2027.

India’s potential workforce will grow from 885 million to 1.08 billion people in the next 20 years and hold above that for half a century. The country will drive the third great wave of Asian growth, following the rise of Japan and then China in the past decades.

“India will account for more than half of the increase in Asia’s workforce in the coming decade, but this isn’t just a story of more workers: these new workers will be much better trained and educated than the existing Indian workforce,” said Anis Chakravarty, an economist at Deloitte India.

He added that “there will be rising economic potential coming alongside that, thanks to an increased share of women in the workforce, as well as an increased ability and interest in working for longer.”

“The consequences for businesses are huge,” the economist concluded.

The report suggested other Asian economies such as Indonesia and the Philippines, which have relatively young populations, will experience similar growth.

Meanwhile, the economies of China, Hong Kong, Taiwan, Korea, Singapore, Thailand and New Zealand will strongly feel the impact of their aging populations, the study forecast.

“As China’s population is ten times that of Japan, and given that China doesn’t yet have a sound social security system, there’s a chance that aging could lead to a lower saving rate and a higher inflation rate, declining growth, a worsening government budget deficit, and pressure on its property and financial markets,” said Sitao Xu, Deloitte China Economist.

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Trade between Russia & China booming – Chinese ambassador to Russia

© Carlos BarriaChinese investments in Russia grow as ties get closer

“The bilateral trade turnover has significantly increased in the first seven months of this year and reached $46.62 billion. It is 24.96 percent more compared to the same period last year,” said Chinese Ambassador to Russia Li Hui speaking at the Rossiya Segodnya news agency on Monday.

According to the ambassador, China has been Russia’s largest trading partner for seven years.

Li Hui also said there has been an increase in energy cooperation.

“China and Russia have launched a joint construction of the Amur gas processing plant, the first phase of the Yamal liquefied natural gas project, which will be implemented this year,” the ambassador said.

In September, Russian Direct Investment Fund (RDIF) CEO Kirill Dmitriev said in an interview with the Xinhua news agency that 2016 saw a 12 percent growth in Chinese direct investment in Russia.

One of the recent business successes was the agreement on a Russian-Chinese investment fund worth 68 billion yuan ($10 billion) to bolster trade in the ruble and yuan, he said.

The countries are also working closely on projects in transport and logistic infrastructure, especially under the Belt Road Initiative, also known as the New Silk Road, and projects of the Eurasian Economic Union.

Russian state-owned industrial giant Rostec has proposed working with China on developing engines for long-haul passenger jets. The countries are both working to create civil aircraft to compete with Boeing and Airbus.

Moscow has strengthened ties with Beijing in recent years after the US, the EU and their allies imposed sanctions against Russia over the conflict in Ukraine and the Crimea reunification.

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Dropping the dollar: Venezuela lists oil price in Chinese yuan

On Friday, the weekly Oil Ministry bulletin published its prices for September in yuan, rather than the US dollar. The price-per-barrel posted on Friday was 306.26 yuan, or $46.76 on the more commonly-used exchange rate, up from last week’s price of 300.91 yuan, or $46.15.

© Jason LeePetrodollar end looming as China allies dump it in oil trading – Jim Rogers

“This format is the result of the announcement made on September 7th by the President [Nicolas Maduro]… that Venezuela will implement new strategies to free the country from the tyranny of the dollar,” the Venezuelan Oil Ministry said in a statement.

The decision to move to Chinese currency was made last week as a way to get around the sanctions imposed on Venezuela by the US government in August, which froze some Venezuelan assets and prohibited American citizens from doing business with the country.

This has hurt Venezuela’s oil exports at a time when the country is facing a severe economic crisis. At the time, the White House said the sanctions were “carefully calibrated to deny the Maduro dictatorship a critical source of financing”.

“The market is dominated by transactions with the US dollar, and we must develop other ways to conduct international transactions,” Finance Minister Ramon Lobo told VTV earlier.

© Mihail MetzelThe BRICS strike back

Venezuela’s decision follows plans announced by China to start a crude oil futures contract priced in yuan and convertible into gold, which could lead to the emergence of a new Asia-based crude oil benchmark.

As China is the world’s biggest crude buyer, the new contract may allow exporters to bypass American sanctions by trading oil in yuan, something that has interested countries such as Russia and Iran.

“In 2012, Iran began to accept yuan for its oil and gas payments, followed by Russia in 2015,” political writer Dan Glazebrook wrote in a column for RT in June.

“If this takes off, this could literally spell the beginning of the end of US global power. The dollar is the world’s leading reserve currency, in the main, only because oil is currently traded in dollars. Countries seeking foreign exchange reserves as insurance against crises within their own currencies tend to look to the dollar precisely because it is effectively ‘convertible’ into oil, the world’s number one commodity.”

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Petrodollar end looming as China & allies dump it in oil trading

© Marco BelloVenezuela ditches dollar for oil payments to dodge US penalties

RT talked to investing guru and financial commentator Jim Rogers to understand how much of a game changer this could be for an industry dominated by the dollar.

“This is just another step in that direction. Many people do not like using US dollars because if the US gets angry at you, they just set enormous pressure on you that can even get you out of business. China, Russia, and other countries understand this, and they are trying to move world trade and world finance away from that,” said the Jim Rogers.

As China is the world’s biggest crude buyer, the new contract may allow exporters to avoid US sanctions by trading oil in yuan. Such countries as Russia, Iran, Pakistan, Vietnam, China and many other Asian countries are interested in that, according to the expert.

The futures contract will allow participants to pay with gold or to convert yuan into gold without the necessity to keep money in Chinese assets or turn it into US dollars.

“The world has been moving that way. Iran will accept renminbi (yuan) from China now. The world is moving that way. China and Russia have currently swaps in rubles and renminbis. It is happening. But it is happening slowly. It takes a lot of time,” Rogers said.

The investor stressed the shift is not going to happen swiftly.

“In this case, there are so many people that actively want it, I would suspect that in less than ten years you will see a major shift into the trading of oil to Asia,” he said.

“When US dollar replaced the pound sterling, there was no one really going around trying to do it quickly. But now you have major economies: Russia, China, Iran and others – very much want this to happen. So, it will happen faster,” Rogers added.

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Gazprom’s partners look to bypass US sanctions to finance Nord Stream 2

© Tobias SchwarzUS sanctions won’t stop Russia’s pipeline project to Europe – analysts

“We will definitely have to revise the financing system of Nord Stream 2, but the contractual obligations to implement the project are preserved,” Seele said at the news conference devoted to the impacts of US sanctions on German businesses in Russia.

He stressed the company would estimate the impact of US sanctions on the project, as well as check possible ways to meet the requirements through agencies for export financing.

Gazprom’s partners are considering attracting Asian and Russian lenders, according to the CEO.

“In case of the worst scenario, when no bank gives us a euro, we might finance 100 percent of the project by our own funds,” he stressed.

The Nord Stream 2 pipeline plans to double the delivery capacity of Russian natural gas to Europe from the current 55 billion cubic meters per year.

Seele, who heads the German-Russian Foreign Trade Chamber, also urged German authorities and the European Commission to take counter steps in response to anti-Russian penalties.

“To provide a secure environment we need to take positive steps for both the German and European economies – for secure energy supplies to the European Union,” he said.

Last month, Washington introduced a new round of restrictions on the Russian banking and energy sectors. The ban targets already sanctioned Russian firms, limiting the financing period for them to 14 and 60 days.

READ MORE: German business lobby urges EU action against new US sanctions on Russia

The law will punish individuals for investing more than $5 million a year or $1 million at a time in Russian energy export pipeline projects or providing such enterprises with services, technology or information support.

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Qatar’s wealth fund sells $417mn stake in Tiffany & Co

Doha, Qatar © Naseem ZeitoonQatar’s wealth enough to outlast boycott by Arab neighbors – Central Bank

According to Bloomberg citing a statement from Morgan Stanley, the Qatar Investment Authority (QIA) sold 4.4 million shares in a block sale via the US bank. The shares were offered at $94.4 – $94.75, sources said.

The fund will still hold a 9.5 percent stake after the sale through subsidiary Qatar Holding USA LLC.

Qatar’s $335 billion wealth fund was founded in 2005 to diversify beyond the country’s domestic positioning in natural resources. QIA ranks as the ninth largest globally, according to the Sovereign Wealth Fund Institute. It has an impressive portfolio of assets, ranging from stakes in Volkswagen, Harrods department store, Barclays, Royal Dutch Shell, and LVMH.

In 2012, the fund made its first significant investment in a US public company by acquiring a 5.2 percent stake in Tiffany. The jewelry retailer known for its diamond rings and blue, ribboned boxes said the investment was a surprise, announcing later it would expand its presence in the Middle East.

The sale of Tiffany shares comes weeks after QIA reduced stakes in acquired in December in Credit Suisse and Rosneft.

The fund’s chief executive Sheikh Abdullah bin Mohamed bin Saud Al-Thani said on Wednesday there was “no problem” for the fund despite the crisis going on for more three months.

© Naseem ZeitoonQatar banks under Arab boycott seek Asian European funding

“We are still open for business and business as usual,” Sheikh Abdullah said as cited by Channel News Asia. “We are fine,” he added.

According to Moody’s Investors Service, QIA has injected almost $40 billion to support the country’s economy and financial system during the first two months of the crisis.

The standoff with the Saudi-led coalition has resulted in capital outflows from Qatari banks of about $30 billion in June and July, it said.

Saudi Arabia, the United Arab Emirates, Bahrain, and Egypt suspended diplomatic relations with the country in June, accusing it of supporting terrorism.

Doha has denied the accusation, calling the blockade by its neighbors illegal.

In August Doha requested banks tap international investors to raise financing, instead of mainly relying on government funding as the impact of the boycott put pressure on liquidity.

The Qatari central bank said the crisis has led to an outflow of around $7.5 billion in foreign customer deposits and a further $15 billion in foreign interbank deposits and borrowings.

Experts forecast a further $3 to $4 billion could leave in the coming months.

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Max Keiser: Why JPMorgan is in a bubble and not bitcoin

© Science Picture Co / Getty ImagesBitcoin is fraud and will blow up – JP Morgan CEO

“JP Morgan, along with the entire finance sector, has been subsidized by the Federal Reserve’s corrupt practice of ‘financial repression’ that moves hundreds of billions from savers and pensioners, and workers, into JP Morgan and Jamie Dimon’s pocket. Jamie’s compensation is tied directly to manipulating JP Morgan’s stock and option prices, thanks to the Fed’s conflicted, corrupt, cozy malfeasance,” he told RT.

Financial repression is a term describing measures used by governments to channel funds to themselves as a form of debt reduction. These actions include the deliberate attempt to hold down interest rates to below inflation. In this system, benefits are transferred from lenders to borrowers. JPMorgan Chase stock has surged about 260 percent since June 2012.

According to Keiser, it is wrong to say bitcoin is a bubble or a fraud.

“The US dollar, bond markets, and many property markets are in bubbles. Bitcoin and gold are the only financial assets not in bubbles. To say bitcoin is fraudulent would be like saying gold is fraudulent. Some might say this, but no rational person would agree,” he said.

“As the bubbles in fiat money, bonds and stocks pop, capital will flow into bitcoin, gold, and silver. At some point, when his customers start leaving JPMorgan and move to more bitcoin-focused options, Jamie will be forced to capitulate, or get replaced,” Keiser added.

Keiser also explained why traditional bankers dislike cryptocurrencies.

“Bitcoin makes banks, essentially price gouging intermediaries and socially unacceptable leeches, obsolete. Bankers rightfully fear for their jobs as bitcoin replaces them,” he said.

JPMorgan Chase has a long history of paying high fines for violations of banking regulations. Since 2010, the bank has paid $28.7 billion for financial misconduct.

The list includes $13 billion paid for toxic securities abuses in 2013, as the bank overstated the quality of mortgages it was selling to investors in the run-up to the financial crisis.

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