November 20, 2018

Bitcoin falls below $5,000 for 1st time since 2017

Bitcoin fell to as low as $4,960 on Monday, the eighth consecutive day of losses for cryptocurrency token, and the second low-water mark in days. Last Wednesday, the ten-year-old token dropped 11 percent in a single day of trading, dipping below $6,000 to its lowest price in a year.

READ MORE: Cryptocurrency mining may kill Earth faster than coal mining, study finds

After an unprecedented speculation bubble saw bitcoin touch $20,000 in December 2017, the coin’s value has nosedived in volatile trading over the following months. The virtual currency has enjoyed a period of relative stability since early September, hovering between $6,000 and $7,000.

Bitcoin’s decline over the last 24 hours alone saw its market capitalization fall by more than $14 billion.

Some critics see US government regulation as fuelling the mass selloff. The Securities and Exchange Commission (SEC) released a statement on Friday saying that it would require some companies holding ICOs (Initial Coin Offerings) – the cryptocurrency world’s equivalent of an Initial Public Offering – to treat their coins as securities, meaning that investors could sue the companies if the coins then crashed.

Breaking bad: Bitcoin crashes to lowest level in over a year

The agency recently settled with two companies, Paragon, and Carrier EQ, requiring them to pay $250,000 in penalties each, and offer investors a chance to request a refund for their tokens.

The SEC announcement, coupled with bitcoins precipitous decline, sent shockwaves through the crypto world, driving down the value of almost every alternative coin, including Ethereum, Bitcoin Cash, Litecoin, and Ripple.

The SEC’s willingness to crack down on ICOs is not the only factor that could be pushing bitcoin down. As bitcoin plunged below $6,000 last week, it’s possible that stop-loss orders were automatically going into effect and investors were “trying to play the breakout,” eToro Senior Market Analyst Mati Greenspan told CNBC.

He added that another “contributing factor is the selloff in tech stocks, which could be having a spillover effect into crypto markets.”

A ‘hard fork’ that split Bitcoin Cash into two coins – Bitcoin Cash and Bitcoin Cash Satoshi Version – late last week could also be having an effect. The two blockchains are now fighting for dominance, with miners directing power away from bitcoin and into these two warring currencies.

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Gold rush: Iran turns to precious metals as US sanctions bite

The subsidiary of state-owned Iranian Mines and Mining Industries Development and Renovation Organization (IMIDRO) said it has signed a memorandum of understanding with an industry group and a private company on developing of artisanal mines, including six small-scale gold mines.

Iranians changing money for gold ahead of US sanctions

The mines will be set up all across the county, particularly in the central Isfahan province, the eastern South Khorasan province, East and the West Azerbaijan provinces.

Besides boosting mineral production and legalizing some illegal mines, the government’s program is aimed at “increasing employment, creating added value for local communities, and ultimately achieving the goals of a resilient economy.”

According to the Belfer Center for Science and International Affairs, Iran hosts about seven percent of the world’s mineral resource, including ten percent of proven oil and 16 percent of natural gas reserves. The nation’s total gold deposits are estimated at 320 tons. Iran has also massive zinc, copper and iron deposits.

The World Gold Council (WGC) said in its Q2 Gold Demand Trends report that Iran’s demand for gold bars and coins jumped 200 percent year-on-year, reaching 15.2 metric tons, which is the highest level in more than four years.

It explained that as the country’s reaction to the first round of sanctions, which targeted its metals trading and the automotive sector.

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Iranians were lining up in front of banks to place advance orders on Emami gold coins, which are minted by the country’s central bank and are usually priced lower than other gold coins.

READ MORE: ‘Strongest US sanctions ever’ targeting Iran’s oil go into effect… with ‘temporary’ concessions

“Iran’s weakening economy, growing sense of insecurity and a currency which has almost halved in value, boosted bar and coin demand,” WGC explained.

The second round of US sanctions targeting Iran’s oil and financial sectors took effect earlier this month.

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Ditching dollars: China seals currency swap deal with Indonesia

According to the People’s Bank of China (PBOC), the three-year deal is aimed at facilitating bilateral trade, boosting mutual investments, and maintaining financial market stability. It will reportedly allow the partners to swap a total of 200 billion yuan for 440 trillion Indonesian rupiah, and vice versa.

The deal, signed at the annual meeting of leaders of Asia-Pacific Economic Cooperation (APEC), comes as an extension of the previously sealed agreement and doubles the amount of local currency exchanged between the central banks of the two countries.

Russia China preparing to ditch dollar for national currencies in trade – top official

“The agreement reflects the strengthening of the monetary cooperation between Bank Indonesia and the PBOC, while also showing the two central banks’ commitment to safeguard financial stability amid ongoing uncertainty in the global financial market,” Bank Indonesia Governor Perry Warjiyo said in a statement.

A currency swap is an economic tool that allows two institutions to exchange payments or loans with the partners borrowing the same amount in each other’s currencies and conducting trade using those currencies.

The measure may help the parties curb pressure of the Indonesian exchange rate against the US dollar, and potentially get rid of it. Last month, China’s central bank signed the similar deal with the Bank of Japan. The ongoing trade spat with Washington is forcing Beijing to turn its back on the greenback in recent months.

Eliminating the dollar’s role in trade has become a common trend across the world over the past year. In August, Qatar and Turkey inked a currency swap agreement to boost liquidity and provide financial stability due to hostile US rhetoric towards Ankara, and the economic blockade Doha faced from its Gulf neighbors led by Saudi Arabia.

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Russia and Vietnam aim to triple trade turnover by 2020

Medvedev is currently on an official visit to Vietnam where he has already met with the Vietnamese Prime Minister Nguyen Xuan Phuc.

“We have agreed to cooperate more closely and effectively implement a free trade agreement Vietnam has signed with the (Russia-led) Eurasian Economic Union,” Phuc told reporters Monday after meeting with Medvedev.

He explained the two countries are looking to facilitate bilateral trade in farm produce and seafood and will have measures to support joint energy investment projects.

Vietnam joins Russia-led free trade zone

The volume of Russia-Vietnam trade amounted to $3.37 billion in January-August 2018. Last year, trade turnover increased by 36.2 percent to $5.23 billion. Russia’s exports to Vietnam include machinery and equipment, grain crops, food products, mineral raw materials, metals, etc. Imports included electrical engineering and components, mobile phones, textiles, food, and agricultural raw materials.

READ MORE: Putin calls for development of digital economy within Eurasian Economic Union

Vietnam was the fourth largest buyer of Russian wheat after Egypt, Turkey and Bangladesh in the previous marketing season. The Southeast Asian country has imported 1.2 million tons of Russian wheat since the start of the current 2018/19 marketing season on July 1.

According to Medvedev, the sides will expand their cooperation in the oil and gas industries and transportation. Russia currently invests in over a hundred projects in Vietnam worth almost $1 billion, including oil and gas exploration.

Three years ago, Vietnam joined the Russia-led Eurasian Economic Union (EEU), becoming the first non-regional country to enter the bloc. The free trade zone agreement allows Russian car manufacturers to produce vehicles in Vietnam.

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China just dumped the biggest load of US Treasuries in 8 months

Still the biggest foreign holder of the US foreign debt, China slashed it’s share by nearly $14 billion, with the country’s holdings falling to $1.15 trillion from nearly $1.17 trillion in August, according to the latest data from the Treasury Department. The fall marks the fourth straight month of declines. China is followed by Japan, whose share of US Treasuries fell to $1.03 trillion, the lowest since October 2011.

The great dollar dump: Russia liquidates US Treasury holdings

Washington has accelerated the Treasury issuance to avoid potential growth in the federal deficit due to the massive tax cut pushed by President Donald Trump, as well the federal spending deal approved by the government in February.

Chinese purchases of US state debt have been decreasing over recent months. The latest drop comes on top of the escalating trade conflict between Beijing and Washington over trade imbalance, market access and alleged stealing of US technology secrets by Chinese corporations. So far, the US has imposed tariffs on $200 billion of Chinese goods and Beijing retaliated with tariffs on $60 billion of US goods and stopped buying American crude.

The parties are reportedly set to resume trade talks at the G-20 meeting of the world’s developed economies that will begin in Argentina on November 30. So far, Beijing has presented a list of possible concessions. On Friday, the US president said he would leave out “four or five” of the big items the US wants.

“China wants to make a deal. They sent a list of things they are willing to do, which is a large list and it is just not acceptable to me yet. But at some point I think that we are doing extremely well with respect to China,” Trump told reporters.

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Full stream ahead! Russia & Turkey officially complete construction of joint gas pipeline

The offshore section of the pipeline, which is 930km (578 miles) and runs along the bottom of the Black Sea, is designed to deliver Russian gas to the Turkish market. Russia’s Gazprom began construction of the section in May 2017.

It will be continued by a 180km (112 miles) land transit line for gas supply to the countries of south and southeast Europe. The first deliveries are scheduled for the end of 2019.

The pipeline, which has two parts, is expected to carry 31.4 billion cubic meters of natural gas per year from Russia to Turkey. It is a major joint project between the two countries.

The deputy chairman of Gazprom’s board of directors, Alexander Medvedev, said earlier that in the near future the company would finally determine the route of the second line. According to him, two main options are being discussed in accordance with the procedures in the European Union and the European Commission. Medvedev cited Greece, Italy, Bulgaria, Serbia, and Hungary as potential markets.

Turkey is Gazprom’s second largest export market. Russian energy is currently supplied to the country through the Blue Stream pipeline and the Trans-Balkan gas pipeline. In 2017, Gazprom exported a record 29 billion cubic meters of gas to the Turkish market which is 17.3 percent more than in 2016.

READ MORE: Hungary wants Russia’s Turkish Stream pipeline to be extended into Europe – Orban

In June, President Putin said an extension of the Turkish Stream pipeline (aka TurkStream) to Bulgaria had been agreed. Hungarian Prime Minister Viktor Orban has asked Russia to extend the Turkish Stream natural gas pipeline to his country and further into Europe.

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Canada’s crude crisis is accelerating

All of this is simple and predictable economics, but now Canadian oil has hit a massive roadblock. Producers have the supply, and they have more than enough demand, but they don’t have the means to make the connection. Canadian export pipelines simply don’t have the capacity to keep up with either the supply or the demand.

© Reuters / David M. ParrottWhy is Canadian crude selling for $20?

Canadian oil producers have now maxed out their storage capacity, and the Canadian glut continues to grow while they wait for a solution to the pipeline problem to materialize. As pipeline space is at a premium and storage has hit maximum capacity, oil prices have fallen dramatically, and the differentials that had previously been hitting heavy oil hard in Canada (now at below $18 a barrel for the first time since 2016) have now spread to light oil and upgraded synthetic oil sands crude as well, leaving overall Canadian oil prices at record lows.

Now, adding to the problem, growth in oil demand has begun to slow in the wake of skyrocketing United States production and the weakening of US-imposed sanctions on Iranian oil. First, the US granted waivers to eight nations to continue buying Iranian oil despite strong rhetoric, and now the European Union has undermined the sanctions even further.

In an effort to correct the pricing drop, some Canadian drillers have been cutting production levels, turning to more expensive forms of transportation like railways to ship their oil, and in some cases even using trucks to move their product. One of Canada’s major producers, Cenovus Energy, has gone so far as to implore the government to impose production caps until the oil glut and inversely corresponding, free falling prices are under control. Some oil sands producers, including Canadian Natural Resource, Devon Energy, Athabasca Oil, and the aforementioned Cenovus Energy, have taken the issue of over-production into their own hands by announcing curtailments that could total 140,000 barrels a day or more.

READ MORE: Crude mood: Oil enters bear market, plunging most since 2015

The massive Keystone XL pipeline project from TransCanada Corp. was going to be a major move in the right direction for the Canadian oil industry, adding much-needed capacity to the network. Keystone XL would add 830,000 barrels of daily shipping capacity — approximately 4.2 percent of total US oil demand — by 2021. Now, in yet another bit of bad news, it looks like Canada won’t be able to count on Keystone XL as a saving grace after all, as a Montana federal judge recently ruled to further delay the pipeline at what is easily the worst possible time for the industry.

 © Larry MacdougalCanadian oil crisis continues as prices plunge

Last Thursday’s ruling for an additional environmental review is just the latest setback in a decade-long legacy full of roadblocks for the controversial Keystone XL pipeline. The huge project would construct a 1,179-mile long pipeline for the purpose of delivering Canadian crude from Alberta’s oil sands to a Nebraska junction, from where it would continue its transnational journey all the way to refineries near the Gulf of Mexico. The pipeline was plagued with lawsuits since its inception and has recently seen new waves of litigation since President Donald Trump announced his approval for Keystone XL to cross the US-Canada border in early 2017. At that time, two separate lawsuits challenging the project were filed by the Indigenous Environmental Network, River Alliance and Northern Plains Resource Council, which resulted in last week’s ruling that prohibits both TransCanada and the US government from “from engaging in any activity in furtherance of the construction or operation of Keystone and associated facilities” until the US State Department carries out a supplemental review.

As the options for Canadian oil become more limited, the industry is growing more and more dependent on even fewer projects, including Enbridge Inc.’s Line 3 expansion and the federal government’s Trans Mountain expansion project, leaving dangerously little margin for error. Could Brazil’s Oil Sector Trigger An Economic Miracle?

This article was originally published on Oilprice.com

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Moscow makes top 10 list of the world’s best cities

The study rated cities in accordance with the six key “pillars of place equity,” such as infrastructure, economy, education and online rankings, including data from social networking services TripAdvisor and Instagram.

At the same time, the ranking, which is based on a survey of more than 1,000 people, considered 24 factors that influence the perception of cities today, including housing affordability and job opportunities, quality of the natural and built environments, diversity of people, quality of the arts, culture, restaurants and nightlife and some other.

According to Resonance, Moscow’s sixth-place showing was propped up by topping the list of cities with the best institutions, attractions, and infrastructure.

“Once you’re on the ground, the recently renovated Moscow subway is increasingly the envy of many Western capitals, as much for its improved efficiency and reach as for its regally art-stuffed stations,” the study reads.

The consultancy stressed that this summer’s football World Cup hosted by Moscow and other Russian cities had significantly contributed to the city’s high rating.

“Whatever brings you to the city, you’re in for an experience at stark odds with the West’s continuously dismaying news about Russia,” the firm said, adding that the city came third in the Airport Connectivity category.

Paris, New York, Tokyo and Barcelona closed the top-5, while Chicago, Singapore, Dubai, and San Francisco rounded out the top-10.

Russia’s Northern capital of St. Petersburg was named 54th in the ranking but was rated ninth in the institutions, attractions, and infrastructure category.

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Russia isn’t interested in joining new OPEC-led oil output cuts

Russia—which together with Saudi Arabia and some Arab Gulf producers has been raising production since June to offset Iranian losses—saw its oil production set a new post-Soviet record high of 11.41 million bpd in October, up from 11.36 million bpd in September.

However, Russia’s key partner in the production cut deal, Saudi Arabia, has expressed concern over the oil price slump in the past month. Saudi Energy Minister Khalid al-Falih said on Monday that based on the OPEC+ group technical analysis, “there will need to be a reduction of supply from October levels approaching a million barrels.”

While al-Falih reiterated that “we need to do whatever it takes to balance the market,” Russia’s official position is ‘wait and see’ and not to rush into hasty decisions. There is no need to take any action to halt the decline of oil prices that started a month ago, Russia’s Energy Minister Alexander Novak said earlier this week.

Speaking to Russian reporters about the OPEC+ deal during a visit to Singapore, Russia’s President Vladimir Putin said, as provided by the Kremlin:

No plans to break up OPEC oil cartel, says Saudi energy minister – state media

“As for the need to limit production or not, I will not say anything about this for the time being. We must be very careful in this respect because every word is important and affects the federal budget revenues. However, it is obvious that we should cooperate and we will cooperate.”

“About $70 per barrel suits us perfectly well considering that the expenditure side of our budget is based on $40 per barrel,” Putin said.

A senior Russian government source told Reuters that production in Russia shouldn’t be reduced, as Moscow has been growing its output and will continue to do so in the future.

A second Reuters source familiar with Russian thinking said that Russia was likely to support smaller cuts than 1.4 million bpd proposed, but likely by other producers. A small cut from the record-high October level could be a ‘win-win’ for Russia, according to the source, or Moscow could offer not to boost production further.

Russian oil companies are unlikely to be on board with a U-turn and cuts, either. Vagit Alekperov, CEO at Russia’s second-biggest oil producer Lukoil, said this week that he doesn’t see any need of cuts in 2019. 

This article was originally published on Oilprice.com

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Artificial intelligence to contribute $16 trillion to global GDP by 2030

“Expansion of artificial Intelligence in the coming years is likely to only grow. According to forecasts of a number of companies, if today AI contributes $1 trillion to global GDP, then according to forecasts of consulting companies, this figure will increase 16-fold over the next 12 years, until 2030,” he said.

The number of specialists in demand in the area will also increase significantly, he added, explaining that in 10 years the need will reach ten million people.

A recent study by McKinsey Global Institute suggested that AI could boost annual GDP growth by 1.2 percent for at least the next decade. About 70 percent of the world’s companies will adopt at least one form of AI by 2030, according to the institute’s simulation model. McKinsey said the impact of AI could be comparable to the growth brought on by the steam engine.

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A report by accountancy firm PwC earlier suggested AI and related technologies will generate as many jobs as they displace over the next 20 years. The research, which focused mainly on the United Kingdom, found that while AI could displace roughly seven million jobs in the country, it could also create 7.2 million roles, resulting in a modest net boost of around 200,000 jobs.

It also estimated that about 20 percent of jobs would be automated over the next 20 years and no sector would be unaffected.

READ MORE: Artificial intelligence could spur global growth as much as steam engine did – report

Technologies such as robotics, drones and driverless vehicles would replace human workers in some areas, but also create many additional jobs as productivity and real incomes rise and new and better products are developed.

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