May 26, 2017

OPEC & other oil producers confirm 9-month extension to output cuts

The cuts were extended by OPEC and a dozen independent oil exporters, including Russia. The agreement between 24 oil-producing countries is expected to stabilize the markets and reduce the global oil stock by the first quarter of 2018, top officials said at a press conference in Vienna on Thursday.

A nine-month extension period is believed to be optimal by the producers, according to Saudi Minister of Energy, Industry and Mineral Resources Khalil al-Falih. A further extension might not be needed, as OPEC and independent producers expect to be “at the target at the year’s end,” the minister said.

© David Frazier / Global Look PressUS drillers likely to undermine Russia-OPEC plan to boost crude prices

That doesn’t mean, though, that the countries won’t extend the cuts in March 2018 but it will be decided “closer to the date,” the minister explained.

OPEC and independent producers are working on institutionalizing the cooperation between them, but there is still a lot of work to be done in order to achieve this goal, according to al-Faleh. He also said it is expected that Egypt and Turkmenistan will later join the agreement.

OPEC does not have plans to impose restrictions on oil extraction in Libya and Nigeria in the nearest future, al-Falih stated, as the two countries’ production does not affect the plan to reduce global oil stocks.

The current level of consolidation between OPEC and non-OPEC countries is a historic achievement, according to Russian Minister of Energy Aleksandr Novak, who believes that the cooperation will continue.

The decision to maintain the production cuts for nine months was unanimously approved by the Vienna agreement signees, Novak stressed.

“We all have undoubtedly a positive effect [from the agreement] – both country-producers and county-consumers alike,” Novak said.

“Our goal is to balance the market, ensure an investment flow into the industry, make the future more predictable for development of the oil industry. These are the main goals we chose for ourselves.”

A joint committee of ministers from OPEC and non-OPEC oil producers will continue to gather every two months in order to monitor the markets, the Russian minister said, adding that the intergovernmental body can meet even more frequently if needed. The next meeting of the committee is scheduled to take place in Russia on July 23-25.

The agreement between OPEC and non-OPEC countries would be impossible without Russia, al-Falih told reporters after the press conference. 

The oil-producing countries discussed a possible mechanism to smoothly transition out of the production cuts agreement, according to Novak, who added it was too early for agreement to be reached on the issue.

READ MORE: Oil prices hiccup as OPEC, Russia extend production cuts by nine months

The first agreement to cut production was achieved last December during an OPEC summit in Vienna. The Organization, Russia, and other major oil producers agreed to curb production by 1.8 million barrels per day (bpd) for six months from January 1 to support the market and push prices to $60 per barrel.

The agreement proved to be partially successful, as it managed to keep the prices oil prices above $50 per barrel, giving a fiscal boost to major producers. The joint OPEC-Russia efforts, however, were somewhat undermined by growth in the shale industry of the US, which did not take part in the deal.

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Russia & Iran sign oil-for-goods trade agreement

View shows Tehran's skyline at night with the Milad tower © Marius Bosch Russian trade with Iran up 80 percent

While sanctions against Iran have been lifted, banking restrictions on trade in US dollars remain, making it difficult to sell oil on the open market.

“The deal has been concluded. We are just waiting for the implementation from the Russian side. We have no difficulties; we signed the contract, everything is coordinated between the parties. We are waiting for Russian oil companies to send tankers,” he said, as quoted by Russian news agencies RIA and TASS.

The agreement was initially reached in 2014 when Iran was under Western sanctions over its nuclear program.

Russian traders were to participate in the selling of Iranian oil. In exchange, Iran wanted essential goods and technology from Russia.

Russia and Iran discussed energy, electricity, nuclear energy, gas and oil, as well as cooperation in the field of railways, industry, and agriculture.

When the sanctions against Tehran were lifted in 2016, Russian Energy Minister Aleksandr Novak said the deal was no longer necessary.

© Christian Ohde / Global Look PressRussia to build 2 nuclear power plants in Iran

However, in March 2017, Novak said it was back on the table with Russia buying 100,000 barrels per day from Iran and selling the country $45 billion worth of goods.

Despite the lifting of sanctions, Tehran is still facing problems in re-connecting Iranian banks with global financial markets.

A February report by the International Monetary Fund said that while Iran has been reconnected to SWIFT, significant challenges prevent Iranian banks fully-reconnecting to global banks still exist mostly due to remaining US sanctions.

“US primary sanctions apply to US financial institutions and companies, including their non-US branches (but not their subsidiaries). Moreover, with very limited exceptions, businesses and individuals related to the US continue to be generally prohibited from dealing with Iran, including with the government,” the IMF said.

“US dollar clearing restrictions have not been lifted and pose a significant challenge for non-US banks who may do business with Iran, but may not be paid in US dollars,” it added.

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Oil prices hiccup as OPEC, Russia extend production cuts by nine months

© Cesar MansoOPEC set to extend oil production cuts by 9 months

The main crude benchmarks were trading almost a dollar lower before prices recovered. As of 2:40pm GMT, Brent crude was down 16 cents at $53.80, while US West Texas Intermediate was 23 cents lower at $51.13. 

The cartel and non-member exporters are meeting in Vienna to discuss whether to extend the deal reached in December to jointly slash oil output by 1.8 million barrels per day in the first half of the year.

The extension is likely to be nine months instead of the originally planned six months. The biggest non-OPEC producer asked for 12 months, according to Reuters.

“I think nine months is most likely,” one OPEC delegate said, as quoted by the agency. Four other delegates agreed it was the most probable outcome.

Saudi Arabia and Russia have agreed the extension of the cuts is needed to help the market continue rebalancing and prevent prices from falling below $50 per barrel again.

However, not everyone in Russia is backing the extended accord. The Russian Finance Ministry has issued a warning that cutting production could provoke the second wave of shale oil revolution in the United States, Vedomosti daily reports.

The deal will temporarily reduce what is on offer to the market, but the difference will be compensated by US shale oil, which will only lead to oversupply in the future. As a result, oil prices would drop to $30 per barrel, warns the Finance Ministry in an article called Zugzwang.

Zugzwang is a situation found in chess and other games where one player is put at a disadvantage because they must make a move when they would prefer to pass and not move.

According to the ministry, oil prices slightly above $40 per barrel but without US shale would help the market to rebalance faster.

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Arizona ends taxation on purchase & exchange of gold and silver coins

© Leonhard FoegerGold prices will continue to climb due to geopolitical tensions – analysts

When people buy gold or silver to protect themselves against the devaluation of America’s paper currency, they frequently end up with a “gain” when exchanging the metal back into dollars.

However, this is not necessarily a real gain, regarding purchasing power. This “gain” is often nominal because of the slow but steady devaluation of the dollar. The government nevertheless assesses it as a gain for tax purposes.

The bill, called House Bill 2014, was introduced by Republican Mark Finchem who insisted that taxing exchanges of “legal tender” like gold coins is a tax on money.

© Bobby YipChina claims discovery of its largest gold mine with $22 billion potential

“As transmitted the bill provides for the tax-neutral treatment of a very limited class of collectibles, using narrowly defined language,” Ducey said in a written statement. He and his predecessor Jan Brewer have vetoed three similar bills.

It is a major win, say gold proponents.

“Every supporter of free markets should cheer Arizona’s passage of HB 2014. There is no more justification for forcing individuals to use government created money than there is for forcing them to drive government manufactured cars. In fact, as the Federal Reserve’s 114 years of failure shows, giving monopoly control over our money supply to a secretive central bank is the most dangerous form of government intervention,” said Ron Paul, former Congressman from Texas and Campaign for Liberty Chairman.

“By allowing the people of Arizona to use an alternative to Federal Reserve-created fiat currency, HB 2014 will help the people of Arizona survive the next Federal Reserve-created recessions. Passage of this bill will also help make Arizona more attractive to the growing number of people seeking alternatives to fiat money in order to protect themselves, their families, and their business from the effects of Federal Reserve policy. Thus, this bill will help attract new investments and jobs to Arizona,” he said.

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Samsung & Apple still world’s top smartphone makers but are losing market share

© Kim Hong-JiSamsung heads for best quarterly profit in over 3 yrs, up 48%

A total of 380 million smartphones were shipped worldwide between January and March, compared with 348.2 million during the same period in 2016.

Samsung was the world’s top smartphone maker with a 23 percent market share. Its shipments fell 2.5 million units to 78.7 million.

Apple’s unit shipments were up during the period, reaching 52 million. However, its market share shrank from 14.8 percent to 13.7 percent.

According to the research, Apple is increasingly facing fierce competition from Chinese brands. Its performance in the market is “under attack,” said Gartner.

China-based smartphone makers Huawei, Oppo, and Vivo, which rounded out the top five, all saw double-digit growth, collectively carving out almost a quarter of global sales.

Huawei’s shipments grew from 28.9 million last year to 34.2 million in 2017 while the company’s market share rose from 8.3 percent to nine percent. The Chinese company is also under pressure from domestic upstarts, the report said.

Lei Jun, founder and CEO of China's mobile company Xiaomi © Stringer Chinese tech firm to take on leading global smartphone makers

The Chinese smartphone maker Oppo had the strongest year-over-year growth, with shipments nearly doubling from 15.9 million last year to 30.9 million this year. Its market share grew to 8.1 percent in the first quarter.

Another Chinese brand, Vivo, holds fifth place with a 6.8 percent market share and 25.8 million smartphone shipments. Last year, Vivo’s market share stood at four percent on 14 million unit shipments.

“Vivo saw growing demand for its smartphones from the emerging markets in Asia/Pacific, including India, where sales grew over 220 percent thanks to its increased brand appeal,” said Gartner.

The research firm found that smartphone buyers willingly spend more to get a better device, which is pushing up the average selling price.

It said Android continues to be the dominant mobile operating system with an 86.1 percent market share, up from an 84.1 percent share in the first quarter of 2016.

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Jack Ma teaches tai chi to entrepreneurs for $15,000

Alibaba founder teaches six classes over three days a year with the course reportedly costing 100,000 yuan ($14.500).

Founder and Executive Chairman of Alibaba Group Jack Ma © Bobby YipAlibaba’s Jack Ma reclaims title as China’s richest man

Ma, a former English teacher has been a long-time fan of martial arts. The billionaire has reportedly been practicing tai chi quan since 1988.

Earlier this month, Jack Ma joined the debate on a defeat of a tai chi master by a mixed martial arts (MMA) fighter.

The two styles cannot be compared as they operate by different rules, according to the billionaire. Ma stressed that most tai chi practitioners perform the art for exercise, not for real combat.

“Tai chi was invented neither for attack nor defense, but as a movement to illustrate its philosophy. Attack and defense are part of tai chi, but definitely not all of it,” Ma wrote on his account on Sina Weibo, a Chinese microblogging website.

In 2013, Alibaba CEO in cooperation with a Chinese actor Jet Li launched Taiji Zen Online Academy to promote the martial art and associated meditation techniques.

Jack Ma says that tai chi and tai chi quan are different, as the former represents a philosophy and the latter is the martial art itself.

“Tai chi is about how you balance and how you work,” he previously said in an interview with Bloomberg.

“Tai chi is like ‘you fight there and I’ll go over here. You’re at the top, and I’ll go down’. It’s a balance. You are heavy and I’m small. When I’m small, I can jump. You’re heavy. You cannot jump. Tai chi is about a philosophy. I use tai chi philosophy in the business. Calm down. There’s always a way out and keep yourself balanced,” Ma said.

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China rejects Moody’s credit downgrade as ‘absolutely groundless’

A man rides a tricycle, Beijing © Thomas PeterChina’s economy grows 6.9% in Q1, strongest since late 2015

It estimated that while the government budget deficit in 2016 was “moderate” at around three percent of gross domestic product (GDP), the debt burden would rise toward 40 percent of GDP by 2018 and 45 percent by the end of the decade.

Senior vice president for Moody’s sovereign rating group, Marie Diron told CNBC the catalyst for the downgrade was a combination of factors, including expectations that potential growth would fall to five percent by the end of the decade.

“Official growth targets are also moving down, but probably more slowly. So the economy is increasingly reliant on policy stimulus,” she said.

In a statement on its website, China’s Finance Ministry said the downgrade was “absolutely groundless” and based on an “inappropriate method.” It added Moody’s was overestimating the difficulties China’s economy faces while underestimating the government’s efforts to tackle structural reforms and overcapacity.

A view of the city skyline from the Zhongfu Building at night in Beijing  © Jason Lee Moody’s cuts China’s credit rating outlook to negative

Despite the downgrade, Moody’s shifted to a stable outlook for China, from negative, citing balanced risks. Last year it lowered the outlook to negative from stable, pointing to rising debt, falling currency reserves and uncertainty over the authorities’ ability to carry out reforms.

“The stable outlook reflects our assessment that, at the A1 rating level, risks are balanced,” Moody’s said in the statement Wednesday. “The erosion in China’s credit profile will be gradual and, we expect, eventually contained as reforms deepen…”

It added the government’s control of much of the economy, the financial system and cross-border capital flows offer the ability to maintain stability in the near term.

SP currently rates China’s foreign and local currency long-term debt at AA- with a negative outlook. Fitch places an A+ rating on both foreign and local currency long-term debt with a stable outlook.

In contrast, China’s Dagong Global Credit Rating puts an AA+ level on China’s sovereign debt in local currency terms and AAA in foreign currency terms, which is the highest level.

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‘Financial terrorist’: Former bank boss acquitted of all charges despite blowing up Irish economy

Fitzpatrick served as chief executive of the now-defunct Anglo Irish Bank for almost 20 years before taking up the position of chairman from 2005 until 2008. He resigned amid emerging details of secret loans he had taken out with the bank.

On Tuesday Judge John Aylmer at Dublin Circuit Court in Ireland acquitted Fitzpatrick of 27 charges of misleading the bank’s auditors and furnishing false information about multi-million euro loans to him and to people connected to him between 2002 and 2007.

© RTDigital Dublin‘Leprechaun’ Max Keiser trolls ‘gold-stealing’ Irish banker (VIDEO)

The judge strongly criticized the investigation by the Office of the Director of Corporate Enforcement (ODCE) in his ruling, the Irish Times reports.

Aylmer said the ODCE fell short of the “impartial, unbiased investigation that an accused is entitled to,” he was cited as saying by RTE. He added that key witnesses had been coached and the ODCE had failed to seek out evidence of innocence as well as guilt.

He accused the office, which has the mandate to investigate allegations of breaches of company law, of making assumptions about Fitzpatrick.

The judge also expressed concern that material shredded by the ODCE’s chief investigator during Mr Fitzpatrick’s first trial may have been material that could have assisted the defense.

During the trial the prosecution argued that multi-million euro loans taken out by Fitzpatrick and his family were “artificially reduced” by short term loans from other sources for a period of two weeks around the bank’s financial end-of-year statement.

The prosecution alleged that he failed to disclose the extent of these loans to the bank’s auditors in the years 2002 to 2007. FitzPatrick denied all charges.

In 2014, he was found not guilty of 10 counts of providing unlawful financial assistance to a group of investors dubbed the ‘Maple 10’ to buy shares in the bank in July 2008.

Judge Aylmer’s decision was made on the 126th day of the trial – making it the longest criminal trial in the history of the Irish state. The jury is due to return to court tomorrow morning but will be directed by the judge to acquit Fitzpatrick.

Speaking outside court, Fitzpatrick told RTE “it was a long and tiring and difficult time” for him and his family. He thanked his legal team and expressed appreciation to the “media’s restraint in this current trial.”

In 2008 the Irish state issued a blanket €440 billion guarantee of all liabilities in the crippled  banking system. Fitzpatrick refused to apologize to the Irish taxpayer who was forced to foot the bailout bill, blaming the global recession for the circumstances. Anglo Irish was nationalized in 2009.

Max Keiser, host of the ‘Keiser Report,’ previously dubbed Fitzpatrick along with other key figures in the Irish banking collapse “financial terrorists.”

“The people in Ireland are getting hammered by these financial terrorists,” he said.

“We have to expand the Patriot Act, and other financial statutes around the world, to cover financial terrorism.

“To cover Seán Fitzpatrick, because clearly he qualifies. Ireland should recognise that they’ve been victimised by a terrorist attack, and need to respond accordingly,” he told The Journal ahead of a visit to Ireland in 2011.

Jonathan Sugarman, the former Unicredit bank executive who reported liquidity breaches during his first few weeks at Unicredit Ireland, has led criticism of the court decision Tuesday. Sugarman says he repeatedly warned the Financial Regulator that the Irish banking system was facing a liquidity crisis before the financial crash.

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CEOs of America’s top corporations got their biggest pay raise since 2013

© Toby MelvilleFat cats awarded £5.5mn pay rise in 2015… while average UK pay languishes at £26.5k

According to the research, over the last five years, median CEO pay has jumped by 19.6 percent, not accounting for inflation. That’s nearly double the 10.9 percent rise in the average weekly paycheck for full-time employees across the country.

It also found compensation dropped for nine of the ten companies scoring the lowest on “Say on Pay” votes, where shareholders have the right to vote on the remuneration of executives.

“It’s all out of whack right now,” Heather Slavkin Corzo, director of the AFL-CIO Office of Investment told AP, adding CEOs for major US companies make 347 times more than the average worker.

Compensation experts say boards of directors know they have to pay CEOs similar to what their rivals are making, if not more.

The highest paid executive, according to the survey, was Thomas Rutledge of Charter Communications whose compensation totaled $98 million. The company absorbed Time Warner Cable and Bright House Networks last year to become the second-largest cable operator in the US.

Leslie Moonves at television network CBS was the second highest paid CEO. He made $68.6 million, including $63.9 million in bonus and stock awards.

AFP Photo / Yoshikazu Tsuno​Median US CEO Pay tops $10 Million in 2013 – study

Number three was Walt Disney’s Robert Iger who made $41 million. His payment was six percent less than the year before, as slowing growth resulted in a bonus cut.

The fourth highest paid executive was David Zaslav of Discovery Communications, whose networks include TLC and Animal Planet. Zaslav’s compensation was $37.2 million while roughly 70 percent of that was from stock and option awards.

The compensation of Robert Kotick from Activision Blizzard surged 358 percent to $33.1 million in 2016. The pay jump came almost entirely due to $24.9 million in stock awards he received as part of a new five-year employment agreement. This year his salary was cut by 26 percent to $1.8 million after many shareholders said they were upset about how much Activision Blizzard executives were making.

The study included pay data for 346 executives at SP 500 companies who have served two full consecutive fiscal years at their respective companies.

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OPEC set to extend oil production cuts by 9 months

Private security contractors patrol the US Department of Energy's Strategic Petroleum Reserve in Bryan Mound, Texas © Donna CarsonTrump wants to sell US oil reserves drill in Alaska

On Monday, OPEC’s de-facto leader Saudi Arabia gained support from the second largest producer in the cartel, Iraq. Saudi Energy Minister Khalid al-Falih said he expects no objection from other members.

“The Saudi oil minister’s view seems accurate and no serious objection is expected if at all,” one delegate told Reuters, asking not to be identified as he is not allowed to speak to the media.

“No surprises,” said a second delegate.

The updated agreement can see new countries, including major non-OPEC producer Norway.

”Falih has talked to several countries including Norway, including Turkmenistan, including Egypt, and they have made signs of their willingness to join the collaboration,” Kuwait’s oil minister Essam al-Marzouq said on Tuesday.

Last December, OPEC, Russia and other major producers agreed to curb production by 1.8 million barrels per day (bpd) for six months from January 1 to support the market and push prices to $60 per barrel.

The deal helped to prop up oil prices above $50 per barrel, giving a fiscal boost to major producers. However, the efforts by OPEC and Russia were undermined by growth in the US shale industry, which is not taking part in the deal.

Oil prices were slightly down on Tuesday, as US President Donald Trump proposed to sell half of the United States’ Strategic Petroleum Reserve (SPR) in the next 10 years and begin drilling in the Arctic.

Brent crude was trading at $53.83 per barrel, while the US Texas Intermediate was trading at $51.11, both losing three cents, but close to their monthly highs.

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