November 13, 2019

Trump says US economy ‘BOOMING’, predicts stock market will set another record

Trump is scheduled to address the audience at noon, and is expected to talk about the ongoing tariff dispute between Washington and Beijing, while the two powers are still in talks over the partial trade agreement. Some reports earlier said that the president may postpone levies on EU automobile imports for six months.

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The potential easing of US tariffs has been one of the main reasons for the market rally. US stock indices were pointing slightly higher on Tuesday after the president’s tweets. 

If Trump gets it right, the Dow Jones Industrial Average may score its 10th record high this year, after it closed slightly higher on Monday thanks to rising Boeing shares. However, the rest of the stock market closed lower with the SP 500 down 0.2 percent and the Nasdaq Composite falling 0.13 percent, amid trade war uncertainties.

Earlier this month, the SP 500 and the Nasdaq closed at all-time highs. The SP reached 3,093 points, while the Nasdaq closed at 8,475 points when markets closed on Friday.

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Putin & Xi to launch strategic natural gas pipeline from Russia to China in December

While the leaders will not be physically present at the event, they will join via a teleconference, Russian presidential aide Yury Ushakov told media on Monday. The Chinese Foreign Ministry confirmed the official ceremony will happen when the pipeline becomes operational in December.

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“The Sino-Russian eastern route was agreed by the leaders of the two states. This is an important strategic project in the field of energy cooperation, and it is very important for both countries,” Foreign Ministry spokesman Geng Shuang said at the daily news conference.

Russia and its biggest trade partner, China, agreed on the gas supplies via the Power of Siberia pipeline in 2014, when Gazprom and the China National Petroleum Corporation (CNPC) signed a 30-year contract. The project will deliver natural gas from the Russian regions of Yakutia and Irkutsk to domestic consumers in the Far East and then to China, a new foreign market for Gazprom. The 3,000-kilometer (1,864 miles) pipeline is set to bring 38 billion cubic meters of the blue fuel to China by 2025.

At the end of October, Gazprom finished filling gas into the Power of Siberia pipeline, making the linear part of the project fully ready to start exports to China.

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China looks to import Russian pork to cover domestic shortages due to African swine fever

Several Chinese companies are interested in Russia supplying pork to the local market and working with Cherkizovo Group, the firm has confirmed to RT.

Russia does not currently export pork to China and the future of the deal is now in the hands of the Chinese authorities, who can greenlight the exports.

“We are waiting for this decision because our pork is competitive in price and quality compared with products from the US,” Cherkizovo’s press department told RT.

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Cherkizovo currently supplies poultry to China and has recently expanded its export product portfolio. Last week the group signed agreements with Cargill China and COFCO Meat on chicken breast supplies, as well as chicken thighs and legs.

Pork exports could help the company expand its presence in foreign markets and in Asia in particular, where China is the largest player. Despite having the largest pork industry in the world, China has been facing a pork crisis since 2018, when African swine fever began rapidly spreading across the country.

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The fatal pig disease has led to an unprecedented drop in the country’s pork production and has halved its pig herd to 200 million, according to Bloomberg. It may take China more than half a decade to recover the herd from the deadly virus and even more time to bring the production back to previous levels.

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China may issue digital currency in the next 2-3 months

That’s according to Jack Lee, managing partner of HCM Capital, who told CNBC: “So, they already have all the system and the network ready. I think you will see it very soon, in the next maybe two to three months.”

He noted that the launch could start as a trial and is not meant to replace physical money completely.

HCM Capital has invested in a number of blockchain start-ups. It is backed by Foxconn Technology Group, one of the top 10 technology companies.

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According to Daniela Stoffel, Switzerland’s state secretary for international finance, the expected launch of China’s digital currency could push authorities around the world to decide on how they want to use and regulate such technology.

She told CNBC: “If the governments now realize that this is now really actually happening, and the question and challenges that are implied in an e-currency are now real, I hope this will lend further momentum to decisions on a global basis.”

Chinese President Xi Jinping has recently called for greater levels of research and investment in blockchain. China must make a “greater effort” to develop and apply blockchain technologies and gain an “edge over other major countries,” he said.

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Why 2020 could be a crisis year for refiners

The refining industry around the world has carefully planned to boost compliant fuel production in the back end of the year, expecting windfall from the IMO-effect in the months immediately preceding the shipping rules change.

But as January 1, 2020, is fast approaching, the previously expected refining margins bonanza could turn to bust as the disruption is now expected to be much less dramatic than previously thought.

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According to the new rules by the International Maritime Organization (IMO), only 0.5-percent or lower sulfur fuel oil should be used on ships beginning January 1, 2020, unless said ships have installed the so-called scrubbers – systems that remove sulfur from exhaust gas emitted by bunkers – so they can continue to use high-sulfur fuel oil (HSFO).

To be sure, the new fuel specifications are set to send shockwaves through the entire supply chain in the shipping industry – from crude oil producers, to refiners, to traders, to shippers, to end-consumers of everything traded on ships.

However, supply of compliant low-sulfur fuel could be just as sufficient, while demand may be subdued, due to the global economic and trade growth slowdown and at least some non-compliance from shippers, which analysts at Wood Mackenzie put at around 10 percent for 2020.

Russia is one of the countries set to delay the IMO rules implementation, but only in its territorial waters including rivers, Energy Minister Alexander Novak said, responding to questions sent by Bloomberg. Russia will still comply with the rules in international waters. Due to its predominantly high-sulfur oil, Russia is set to be one of the biggest losers in the new marine fuel rules.

The new regulation will lead to low-sulfur fuel oil (LSFO) displacing HSFO demand, but the change looks less dramatic now than it did several months ago.

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The shipping industry consumes 3.5 million bpd of HSFO, while refiners around the world are set to provide 1.5 million bpd of IMO-compliant very-low sulfur fuel oil (VLSFO), according to WoodMac’s Head of Oils Analysis Alan Gelder. There will still be demand for HSFO – from the ships with scrubbers installed, and from some non-compliance, including shippers prepared to cheat in markets with limited controls, and non-compatibility of VLSFO. Around 1 million bpd of marine fuel demand would be for marine gasoil (MGO), a middle distillate similar to diesel, WoodMac reckons.

VLSFO is cheaper than marine gasoil, but some conservative customers could still prefer MGO, Sharon Weintraub, Chief Executive Officer for Supply and Trading, Eastern Hemisphere, at BP, told Reuters in September.

FILE PHOTO: An oil facility in the Khark Island, on the shore of the Gulf © AFP / Atta Kenare Iran discovers massive oilfield that can boost its national reserves by third

Supply of VLSFO looks to be greater than initially thought, Matt Stanley, an oil broker with StarFuels in Dubai, told Reuters.

With relatively adequate supply of compliant fuel, refiners may not see the refining margins boom they were expecting earlier this year.

As 2020 is drawing nearer, LSFO storage around the world’s key bunkering port, Singapore, is piling up. As at end-October, 7.3-7.5 million tons of LSFO and blendstocks were sitting in floating storage on board 29 supertankers offshore Singapore, up from 7 million tons at the start of October, according to Refinitiv analysts quoted by Reuters.

Japanese refiners are ready to supply LFSO but they will keep up HSFO production and supply because Japan hasn’t banned discharging of water from open-loop scrubbers at ports, according to SP Global Platts.

Regardless of the marine fuel that the shipping industry will use, demand for each of those could be much lower than expected in view of the global economic slowdown and seaborne trade growth slowdown.

In its September Oil Market Report, the International Energy Agency (IEA) said that the trade slowdown weighs on fuel oil demand and allows for a less disruptive switch to IMO-compliant fuel. In March, the IEA expected gasoil shortage of 200,000-300,000 bpd in 2020.

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“With fewer than four months left before the rule kicks in, we believe that the oil market is likely to be better supplied than we thought,” the IEA said in September.

Refining capacity has increased globally, while bunker demand is now lower due to the ongoing contraction in global trade, the agency noted. In addition, US light oil supply has increased, and US grades are in demand with refiners who process them into VLSFO fuels. These recent developments “now point at the likelihood of an even smoother start to the implementation,” the IEA said.

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Don’t believe the hype: Hong Kong says it’s business as usual for banks & stock exchange despite protests

Messages circulating on social media platforms on Monday claimed that schools and some offices as well as the Hong Kong stock exchange could be closed later this week as violence grips the city.

“Such rumours are absolutely untrue,” the local government said in a statement on its website, warning against believing them as it “can lead to unnecessary chaos and fear.”

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While others claimed that local lenders can impose daily restrictions on cash withdrawals, Hong Kong’s financial regulator and de facto central bank, called the messages “totally fake and unfounded.” “The Hong Kong banking system is robust and sound, with ample liquidity to meet the needs of the public,” the Hong Kong Monetary Authority (HKMA) said.

Months of social unrest have plunged Hong Kong’s economy into recession as it faced two successive quarters of contraction. The city may even face its first annual economic contraction in ten years, according to its financial secretary.

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But banks are trying to keep operations running as normal, even though some branches have came under protesters’ attacks. Several lenders had to close their branches due to the situation in the city. On Monday, branch services were suspended in 15 major banks, including those from mainland China such as Industrial and Commercial Bank of China and China Construction Bank, according to the Hong Kong Association of Banks.

The city has come through the 24th straight weekend of anti-government unrest, with protesters vandalizing a train station and other city infrastructure on Sunday. As masked rioters rampaged through the city on Monday, one protester was injured after he was shot by police. Another man was set on fire following a heated argument with the rioters.

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Russia & Iran launch construction of new reactor at Bushehr nuclear power plant

“Nuclear power provides reliable electricity…and each power plant saves us 11 million barrels of oil or $660 million per year,” said Ali Akbar Salehi, head of the Atomic Energy Organization of Iran.

“In a long term vision until 2027-2028, when these projects are finished, we will have 3,000 MW [megawatts] of nuclear plant-generated electricity,” he added.

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The new reactor is one of two officially under construction since 2017 and is located about 750 kilometers south of Tehran.

Russia’s state atomic energy corporation Rosatom is carrying out the construction project for the second stage of the NPP, building the second and third power units. Last year, Rosatom began preparations for pouring concrete at the site.

The Bushehr plant is the first nuclear power facility in the Middle East. Tehran estimates that each 1,000 MW reactor will save Iran 11 million barrels of crude annually. It is eyeing several ways to spend the additional megawatts, including powering a water desalination plant in Bushehr province.

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Russia and Iran signed a contract for the expansion of Bushehr in 2014, a year after Russian specialists commissioned the plant’s first reactor. The contract includes an option for six more reactors, which could be built at other sites sometime in the future.

The Bushehr project was launched in 1975 under the Shah Mohammad Reza Pahlavi government, but it ground to a halt after the Islamic Revolution of 1979 when German contractors withdrew. Russia’s nuclear construction company Atomstroyexport took over the project in the 1990s.

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Fukushima’s radioactive farmland to become clean-energy hub, powering the region & Tokyo metropolitan area

The $2.7 billion clean-energy project includes plans for 11 solar farms and 10 wind farms with a total capacity of 600 megawatts and is scheduled for completion by March 2024.

Building wind and solar farms on agricultural land tainted by radiation from the 2011 Daiichi plant meltdown will help rejuvenate the area, which also suffered earthquake and tsunami damage, Masashi Takeuchi, the head of the energy division at the Fukushima prefectural government, said.

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According to Takeuchi, who was cited by Bloomberg, the first solar farm will probably be a 20 megawatt project in Minamisoma city in the northern part of Fukushima prefecture.

The government plans to power the entire region with 100 percent renewable energy by 2040.

A new 80-km (50-mile) grid which is also in the works will feed the power into the metropolitan area of Tokyo. The Fukushima government expects renewables to provide 13-14 percent of Japan’s national energy mix by 2030.

“Fukushima is the third largest prefecture in Japan and has diverse resources (solar, wind power, geothermal power, water resources, forest resources, etc.) and has great potential for introducing renewable energy,” the Fukushima prefecture government said.

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The accident at the Fukushima nuclear power plant occurred in March 2011 when a massive tsunami triggered by a 9.0-magnitude earthquake, overwhelming the reactor cooling systems. It caused reactor meltdowns, releasing radiation in the most dangerous nuclear accident since Chernobyl in 1986.

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‘Apple Card is sexist’: Goldman Sachs faces probe after claims of gender biased credit limits

The Wall Street bank behind Apple Card found itself in hot water after tech entrepreneur David Heinemeier Hansson lambasted the service’s “black box algorithm” for giving him 20 times the credit limit that his wife got. The thread, which was started on Thursday, has gone viral since then, gaining more than 5,000 retweets.

Some users and couples said they found themselves in the same situation. Tech legend Steve Wozniak also appeared in the comments section, revealing that he got a 10-times higher limit than his spouse, despite having no separate bank accounts or any separate assets.

The viral tweets have drawn the attention of the New York Department of Financial Services (NYDFS). Now the regulator wants to check if Apple Card’s algorithms on credit limits violate NY anti-discrimination laws, the deputy superintendent and special counsel at the NYDFS wrote on Saturday.

“Financial services companies are responsible for ensuring the algorithms they use do not even unintentionally discriminate against protected groups,” department superintendent Linda Lacewell said.  

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Goldman Sachs said in a statement to Bloomberg that its credit decisions are based solely on “creditworthiness” and have nothing to do with gender, ethnicity, age, or sexual orientation. However, the bank failed to explain why Hanson’s wife was eventually granted a stronger credit score without providing any additional documentation after the story became “a PR issue.”

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Iran discovers massive oilfield that can boost its national reserves by third

“I inform the White House that, in the days that you have imposed sanctions on Iran’s oil exports, workers and engineers of the country have discovered 53 billion barrels of in-place oil reserves,” President Hassan Rouhani announced on Sunday, as cited by Fars news agency.

He said that it took the National Iranian Oil Company three years to discover the giant oil field located in the oil-rich Khuzestan province. The field stretches from Bostan to Omidiyeh and covers an area of 24,000 square km (9266 square miles).

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The Islamic Republic’s proven crude reserves stood at 155.6 billion barrels in 2018, and the newly discovered site would boost that figure by a third. However, it is not clear how much will be economically feasible to extract.

Iran holds some of the world’s largest deposits of proved oil and natural gas reserves, ranking as the world’s fourth-largest and second-largest reserve holder of oil and natural gas, respectively. The country’s largest oil field in Ahvaz, located in the same region as the newly-discovered one, is considered one of the three largest oil fields in the world in terms of production and has initial oil deposits of over 65 billion barrels.

Tehran’s oil sector has been hit hard by US sanctions since Washington decided to withdraw from the landmark 2015 nuclear deal in 2018. Among other punitive measures, the US has sought to bring Iranian crude exports to zero and recently ended exemptions granted to buyers of Iranian oil, meaning those who continue to purchase it may face secondary sanctions.

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As part of the efforts to save the nuclear accord, the European Union has been working on a financial channel called INSTEX to help companies to skirt the restrictions. Despite assertions from Brussels, however, Tehran has said that the launch of the mechanism lacks progress.

Iran has been gradually scaling back its nuclear commitments under the deal, although it remained in full compliance for some time after the US abandoned it. The Islamic Republic has vowed to further reduce its obligation-fulfilment if other signatories, and Europe in particular, fail to do enough to salvage the treaty.

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