Mongolia Seeks IMF Cash to Revive Economy as Investment Dries Up

Five years ago Mongolia’s 17 percent growth rate, vast coal and copper resources and strategic location next to China made it an emerging-market darling. Today its financial leaders are headed for Washington to meet with the International Monetary Fund to seek assistance to deal with an economic crisis.

Newly elected Prime Minister Erdenebat Jargaltulga is making the request for funds as his country is reeling from the downturn in mining following a peak in commodity prices in 2011. Disputes with investors including Rio Tinto Group haven’t helped, leading to a collapse in foreign investment and leaving the government with a growing budget deficit.

“The Mongolian authorities have made a request for financial assistance from the IMF to support their economic program, which is intended to address balance of payments pressures and stabilize the economy,’’ IMF spokesman Gerry Rice said in an e-mailed statement Friday.

Discussions with the IMF will begin next week when Mongolian authorities are in Washington to attend the annual meetings of the IMF and the World Bank, according to the statement. An IMF team led by Mission Chief for Mongolia Koshy Mathai is scheduled to visit the capital Ulaanbaatar in late October to continue discussions.

New Government

Mongolia had $19.2 million of foreign direct investment inflow in August, down from $34.6 million in July, according to data released by the Bank of Mongolia on Friday. In 2012 Mongolia recorded $4.45 billion in FDI, mainly due to the construction of the first phase of the Oyu Tolgoi copper mine, operated by Rio Tinto, the world’s second-largest mining company.

Frustrated voters swept the Democratic Party from power in June, giving the Mongolian People’s Party an overwhelming mandate to address the deterioration of the economy. One of Erdenebat’s first objectives has been to consolidate several budgets to enhance transparency after the previous government had pushed millions of expenditures off the central budget. It also hiked the benchmark interest rate by 4.5 percentage points to 15 percent to prop up the currency.

Budget Deficit

Erdenebat is facing more than $1 billion in debt repayments in 2017 and early 2018 after the government borrowed heavily to finance road and infrastructure projects. The spending hasn’t helped the economy, which expanded 1.4 percent in the first half of 2016 and 2.3 percent last year, according to the National Statistical Office. Growth will probably slow to 0.3 percent this year before rising to 1.4 percent next year, the Asian Development Bank said in a statement Friday.

The budget deficit doubled this year to $826 million in the first eight months and expenditures were up 24 percent while revenue remained flat, the National Statistical Office said. The central bank has $1.28 billion in foreign currency reserves after it burned cash to defend the tugrik, which has fallen more than 10 percent this year and is one of the worst performing exotic currencies tracked by Bloomberg.

In August, the finance minister said the economy is in crisis and the government pitched a series of austerity measures and taxes that were later overturned by parliament. The government is now drafting an “Economic Stabilization Plan” which will include several large-scale infrastructure projects including the development of the Tavan Tolgoi coking coal mine and a network of railways to connect the mines to China.

Erdenebat has also announced measures to ease red tape and improve ties with the business community through a Council for Protecting Investors’ Rights. Within this council, a working group will be established to research and report cases of misconduct, bureaucracy or unlawful investigations against investors.

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“Freedom, Freedom!”

“Freedom, Freedom!”


Documentary footage on the refugee crisis in Greece, as Syrian refugees wait in purgatory in camps in Athens and Lesvos.

Tommy Flavin writes:

Thought you might be interested in this music video directed by me and a friend, we go under the name The Reelists. It’s for a Galway band called Rofi James. We shot the video out in Greece in several refugee camps, and it’s a documentary about the current state of the crisis.

The Reelists

September 30, 2016 at 10:11AM

Ofgem Plans Fifth Offshore Wind Grid Tender Round for Oct. 10

U.K. energy markets regulator Ofgem will start a tender round to sell five links to the power grid for offshore wind farms on Oct. 10, which have a total value of 2 billion pounds ($2.6 billion).

Companies will bid to become offshore transmission owners, or OFTOs, for wind farms including Dudgeon, which is being developed by a consortium of Statoil ASA, Statkraft AS and Masdar Abu Dhabi Future Energy Co., according to an e-mailed statement by Office of Gas & Electricity Markets.

“Since the launch of the OFTO regime, the first three tendering rounds have delivered 700 million pounds in savings and have attracted over 3 billion pounds in investment value,” said Jonathan Brearley, senior partner of networks at Ofgem, according to the statement.

The tender round will also award OFTO contracts for the Galloper, Race Bank, Rampion and Walney Extension wind farms. The five offshore wind farms have a combined capacity of 2.3 gigawatts.

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Deutsche Bank Rebounds as Cryan Moves to Shore Up Confidence

Deutsche Bank AG jumped in Frankfurt trading after a media report that the lender is nearing a $5.4 billion settlement with the U.S. Department of Justice in a probe tied to residential mortgage-backed securities, less than half an initial request.

The shares surged as much as 6.8 percent and traded up 5.1 percent at 11.42 euros at 5:19 p.m. after Agence France-Presse reported that the lender is nearing a settlement with the DOJ, citing an unidentified person familiar. A spokesman for the Frankfurt-based lender declined to comment, when contacted by Bloomberg News.

Deutsche Bank’s stock and debt have been under pressure after the DOJ earlier this month requested $14 billion to settle an investigation into residential mortgage-backed securities. In a memo to staff earlier on Friday, Chief Executive Officer John Cryan said he is taking DOJ settlements with other banks “as a benchmark,” echoing previous remarks that he expects U.S. authorities to scale back their request.

Deutsche Bank has long struggled to adapt to an era of tougher capital requirements and diminished trading revenue. Cryan has already said that the lender may fail to be profitable this year, calling it a peak restructuring year, as he eliminates thousands of jobs and cuts risky assets.

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Ghosn Sees Slower Growth in Renault-Nissan’s Daimler Partnership

The Renault-Nissan alliance and Daimler AG, which cooperate on the German company’s Smart city cars and planned Mercedes-Benz pickup truck, see limited scope for adding to their partnership as most obvious projects are already under way.

“When you start working together, most of the low-hanging fruit comes easily and very fast,” Carlos Ghosn, chief executive officer of both Renault and Nissan, said Friday at a press conference with Daimler CEO Dieter Zetsche at the Paris Motor Show. “From now on maybe the number of additional projects may take a longer time. It’s the law of physics.”

For more Paris Motor Show news, click here

Carmakers have increasingly joined forces to share the high costs of developing electrically powered, shared and autonomous vehicles. Daimler, French counterpart Renault SA and its Japanese partner Nissan Motor Co. agreed in 2010 to create and build some vehicles together, including electric versions of Smart’s line-up being displayed in Paris.

The industry’s focus for cooperation is shifting to more high-tech areas from manufacturing as established companies fight new entrants such as Tesla Motors Inc. Daimler’s Mercedes-Benz luxury brand, its main division, introduced the planned EQ all-electric line at the show on Thursday.

Daimler, Renault and Nissan acquired 3.1 percent stakes in each other when they started cooperating. The German company shifted the holdings into its pension fund in mid-2016 to plug a deficit. There’s no need for the partners to add to the stakes, Ghosn said Friday.

Tie-Up Question

That may signal that the carmakers’ tie-up is weakening, said Stuart Pearson, an analyst at Exane BNP Paribas.

“It looks more likely that they will drift apart rather than get closer” following Daimler’s shift of its partners’ holdings, Pearson said. “There is no strategic drive behind that stake anymore.”

Zetsche said he and Ghosn are discussing ways to expand their cooperation on electric vehicles, but haven’t made any decisions on new projects. Renault already supplies electric engines for the Smart that are also used in the French manufacturer’s battery-powered Zoe.

“We started this collaboration based on three projects where we saw benefits for both partners, and now we have 13 or 14 or 15 projects already producing a lot of benefits,” Zetsche said. “That’s a strong foundation for our partnership. If it stays at that number that’s perfect, or if it expands that’s fine too. ”

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Here Are The Three Best College Football Games This Weekend


This weekend is once again full of great college football games that fans everywhere are already arguing about.

No need to worry about which games you should fight over the remote for because The Daily Caller has the three best games for the fifth weekend of college football.

1) 3 Louisville vs. Clemson (+2):

This game is going to be incredible for one simple reason: both teams have quarterbacks that could likely be the top pick in the NFL draft. Clemson’s quarterback DeShaun Watson is a superstar and an enigma for defenses everywhere. Louisville gunslinger Lamar Jackson is like a video game character and has 25 total touchdowns so far this season. There will be almost no defense played in this game. The score combined could easily hit over 100. Clemson has the home field advantage which ultimately could be the difference maker. The Tigers will be ready to play and expect them to win a close game.

(Photo by Andy Lyons/Getty Images)

LOUISVILLE, KY – SEPTEMBER 17: Lamar Jackson of the Louisville Cardinals runs for a touchdown against the Florida State Seminoles at Papa John’s Cardinal Stadium on September 17, 2016 in Louisville, Kentucky. (Photo by Andy Lyons/Getty Images)

2) 4 Michigan vs. 8 Wisconsin (+10.5):

Two of the best teams in the country and Big Ten going head to head in the Big House in Ann Arbor. It doesn’t get much better for college football fans than that. The Badgers have recently been decimated by injuries, and superstar linebacker Vince Biegel will miss major time after a foot injury on Thursday. Don’t expect that to slow down the ferocious Badgers from Madison. Coach Paul Chryst’s “next man up” mentality has already led the Badgers to two top-ten victories, which is more than any other team in America. I’m convinced he could just pull a random guy off of the street and coach him to a win. Michigan has talent across the board and unlike the Badgers they aren’t missing several star players to injury. Jabrill Peppers will need to have a big game if Michigan wants to win. This would be the biggest win for Jim Harbaugh in his short career at Michigan if he finds a way to get it done. Buckle up because this could get wild.

EAST LANSING, MI - SEPTEMBER 24: Corey Clement 6 of the Wisconsin Badgers holds up a finger to the crowd after running for a touchdown during the game against the Michigan State Spartans at Spartan Stadium on September 24, 2016 in East Lansing, Michigan. (Photo by Bobby Ellis/Getty Images)

EAST LANSING, MI – SEPTEMBER 24: Corey Clement of the Wisconsin Badgers holds up a finger to the crowd after running for a touchdown during the game against the Michigan State Spartans at Spartan Stadium on September 24, 2016 in East Lansing, Michigan. (Photo by Bobby Ellis/Getty Images)

3) 7 Stanford (+3.5) vs. 10 Washington:

This game is actually late Friday night, but we’ll still count it as the weekend. It’s incredible that Stanford is an underdog in this game. They struggled a bit against UCLA, but there’s no chance Washington bottles up superstar athlete Christian McCaffrey. The electric running back/wide receiver/punt returner/kick returner/potential quarterback combo (you read that description correctly) is statistically the greatest college football ever. There’s nothing this guy can’t do. I wouldn’t be surprised if at one point he just becomes the head coach of the team. This should be a great game between two top-ten teams but expect Stanford to not only cover the spread but also win.

PASADENA, CA - SEPTEMBER 24: Christian McCaffrey 5 of the Stanford Cardinal warms up before the game against the UCLA Bruins at Rose Bowl on September 24, 2016 in Pasadena, California. (Photo by Harry How/Getty Images)

PASADENA, CA – SEPTEMBER 24: Christian McCaffrey 5 of the Stanford Cardinal warms up before the game against the UCLA Bruins at Rose Bowl on September 24, 2016 in Pasadena, California. (Photo by Harry How/Getty Images)

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This Popular Loafer Is Over Half Off


Believe it or not, Crocs are very popular. For that matter, so are loafers in general. It comes as no shock, then, that these Crocs loafers are beloved by all who wear them. More surprisingly, they are currently available for 58 percent off.

That’s right: right now the Crocs Santa Cruz 2 Luxe men’s loafers are on sale for a mere $25.

You can save $35 on these Crocs loafers today (Photo via eBay)

You can save $35 on these Crocs loafers today (Photo via eBay)

Crocs Santa Cruz 2 Luxe Men’s Loafers on sale for $24.99

Mario Batali ordered 200 pairs of his favorite Crocs (By Getty's Nelson Barnard)

Mario Batali ordered 200 pairs of his favorite Crocs (By Getty’s Nelson Barnard)

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Ted Cruz Hits Back At Mark Ruffalo: You’re Helping The GOP. ‘Thx!’


Ted Cruz hit back at Mark Ruffalo after the actor a “prince of chaos” on Twitter.

The Republican senator from Texas tweeted the 48-year-old “Avengers” actor after he slammed him as being a prince of “chaos,” linking an editorial cartoon, from the Washington Post, about how Cruz planned to help Donald Trump prepare for the next presidential debate. In the picture Cruz is depicted as a snake. The words underneath the cartoon read, “The Texas senator who once described Donald Trump as a ‘pathological liar’ now is offering his services to Trump’s campaign.” (RELATED: Joss Whedon Wants To Get You Excited For Hillary, Everybody)

Republican U.S. presidential candidate Senator Ted Cruz drops out of the race for the 2016 Republican presidential nomination as his wife Heidi (R) looks on during his Indiana primary night rally in Indianapolis, Indiana, U.S., May 3, 2016. REUTERS/Chris Bergin

(photo: REUTERS/Chris Bergin)

“The princes of chaos unite,” Ruffalo tweeted. “Ted Cruz offers debate help to Trump – The Washington Post.”

“A good actor (Now You See Me was great) whose arrogant condescending video will add votes to GOP,” Cruz tweeted in response. “Thx!”

The video Cruz referenced was by Hollywood director Joss Whedon titled “Save The Day.” During the three-minute video, more than 25 celebrities take turns pleading with people to go out and vote, many pushing for people to vote for Hillary Clinton. Ruffalo is one of those celebrities featured in the video. (RELATED: Mark Ruffalo: Bernie Sanders Would ‘Mop The Floor’ With Donald Trump)


Ruffalo came out earlier this year and strongly endorsed Bernie Sanders for president. In an interview with MSNBC, the actor suggested Sanders would “mop the floor” with Trump.

“He [Sanders] was charming, he was direct, he felt fresh in his answers,” Ruffalo said. “I just felt a lot of heart from him. He awoke something in me, and it was his ideas, and it’s his decency, and it’s his record, frankly.”

“There’s no doubt in my mind he could beat Donald Trump if he goes up against him.”

Since Sanders has dropped out he has spoken out about supporting Hillary Clinton, though not as fervently.

Howard Dean Gaffes Big Time On MSNBC — Twitter Kicks Him While He’s Down [VIDEO]


In a Friday morning interview on MSNBC, former Vermont Governor Howard Dean apologized for using “innuendo,” when he tweeted that Donald Trump had probably used cocaine prior to Monday’s presidential debate.

“I apologize for using innuendo. I don’t think it’s a good thing to do, I don’t think it’s the right thing to do,” Dean told host Stephanie Ruhle.

Howard Dean speaks onstage during the 'The Contenders: 16 for '16' panel discussion at the PBS portion of the 2016 Television Critics Association Summer Tour (Getty Images)

Howard Dean speaks onstage during the ‘The Contenders: 16 for ’16’ panel discussion at the PBS portion of the 2016 Television Critics Association Summer Tour (Getty Images)

“[Trump’s] entire campaign has been debased by innuendo. Where was the mainstream media calling out innuendo 15 months ago when Donald Trump started running for president of the United States? That’s what I want to know. Do your job.”

Unfortunately for Dean, the media did just that and called out the former DNC chair for not understanding how innuendo actually works.

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China Pitches Fit Over South Korea’s Latest Missile Defense Move


China has ramped up its rhetoric in response to South Korea’s decision on the deployment site for a new missile shield.

The U.S. and South Korea will install a Terminal High Altitude Area Defense (THAAD) missile defense system in Seongju. THAAD will be deployed on a golf course next year, reports Yonhap News Agency.

“We have conducted a simulation-based evaluation of three alternative sites in Seongju. The test results showed the Lotte Skyhill Country Club is the most optimal site for THAAD,” Ministry of National Defense spokesman Moon Sang-gyun told Yonhap reporters.

“The government is determined to finish the THAAD installation within the next year without fail to better protect the security of the country and life of its people from the evolving nuclear and missile threats from North Korea,” explained a Ministry of National Defense statement on the THAAD program.

As the U.S. and South Korea make progress on deploying THAAD, China, which firmly opposes the program, has become even more critical of the project.

“China has made its position on THAAD clear many times,” China’s Ministry of Foreign Affairs spokesman Geng Shaung said Friday during a regular press conference. “It’s placement on the Korean Peninsula will not resolve security issues of relevant countries, nor will it help realize denuclearization and maintain peace and stability on the peninsula.”

“It’s deployment will hurt the strategic and security interests of countries and undermine the strategic balance in the region,” he added. “China firmly opposes THAAD and we will take necessary measures to maintain the strategic balance.”

THAAD’s X-band radar has a range greater than 1,200 miles, and China argues that the new missile shield will allow the U.S. to peer into Chinese and Russian territories, collect radar data on Chinese and Russian warheads and strategic missiles, and effectively cripple each country’s nuclear deterrent.

“This is a defensive measure aimed not at China, but at North Korea. It is a defense based decision, not a political decision. And it is part of a layered system of defense that will augment many military installations and systems currently in place,” Assistant Secretary of State for East Asian and Pacific Affairs Daniel Russel said Tuesday during a House Foreign Affairs Subcommittee on Asia and the Pacific hearing.

North Korea has not yet commented on the latest news on the THAAD program; its response is likely to be consistent with previous statements.

“If THAAD is deployed in South Korea, it will be exposed to nuclear strikes here and there as the primary target,” a Korean Central News Agency (KCNA) report from Sept. 21 said.

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Chicago Man With Concealed-Carry Permit Shoots, Kills Armed Robber


A licensed concealed-carrier killed an armed robber Wednesday night in Chicago.

The individual in question was sitting in a car with another person when two armed men approached the car. The legal carrier inside of the car fired his gun, striking one of the robbers, Officer Ana Pacheco, a Chicago Police spokeswoman, told

The injured robber was later pronounced dead by authorities.  The other thief fled the scene.

Pacheco confirmed that the man who used his firearm had a legitimate concealed-carry license.

The incident occurred on the 4300 block of South State Street. This incident was one of many shootings across the Chicago area Wednesday.

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Stocks Soar After French Press “Confirm” Deutsche Bank Near Settlement With DOJ

Seemingly confirming the rumor, Agence France Press reports that Deutsche Bank is nearing a $5.4 billion settlement with the US Justice Department. This has catalyzed another leg higher in Deutsche Bank stock and lifted the whole market as it would appear that unconfirmed sources have ‘fixed’ the world’s most systemically dangerous bank (despite the fact that short-dated counterparty risk is soaring).

Here is the tweet…

And the response in the stock…


Which is lifting all stocks…


And now AFP is walking back their comment…


We look forward to the 1605ET denial from The DOJ. Once again we remind readers that Monday is a bank holiday in Germany.

For now, the professionals know exactly what is afoot – anything to slow the outflows of cash… and counterparty risk hedges are soaring…

* * *

Naturally, Deutsche Bank has refused to comment on speculation around the level of the DoJ fine.


Which means that should the DOJ make no announcement on Sunday, any buying spree today in DB may promptly turn into another selloff. Making matters worse, with German trading closed for holiday on Monday, only the far more illiquid US tracking stock will be open, which may accentuate any potential selling.

*  *  *

As a reminder, there were "fixes" galore in 2008 and rumors sent Lehman stock soaring over 10% in at least 6 weeks during the last few months…

Weekend weather: Mostly dry and bright conditions forecast for Saturday and Sunday

Weekend weather: Mostly dry and bright conditions forecast for Saturday and Sunday


Today, Friday, is a rather wet and miserable day by all accounts, with heavy rain coming in from the west, spreading further inland as the afternoon goes on.

The outlook for the next couple of days is somewhat more positive, however, with ‘mostly dry and bright’ conditions forecast for Saturday and Sunday.

Temperatures too will reach a moderately pleasant 14C, with a little light rain falling on Sunday.

Monday is forecast to be rather wet again, with strong winds and heavy rain further blighting the return to work for many.

September 30, 2016 at 09:52AM

Heavyweight champ ‘tests positive for cocaine’ and could be stripped of titles…


Tyson Fury ‘tested positive for cocaine’ and could be stripped of heavyweight title belts

Champion pulled out of his proposed rematch with Wladimir Klitschko after being deemed ‘medically unfit’

TYSON FURY could be stripped of his world title belts after ‘testing positive for cocaine’.

The reigning heavyweight world champion pulled out of his rematch with Wladimir Klitschko after being deemed ‘medically unfit’ and has reportedly been suffering from depression.

Fury appeared at the Manchester Arena this weekend

PA:Press Association

Fury appeared at the Manchester Arena this weekend

Tyson Fury fails to attend press conference ahead of Wladimir Klitschko rematch

It was the second time Fury had cancelled the rematch but was defended by his uncle who claimed that the fighter was suffering from a severe bout of depression.

Peter Fury tweeted last week: “With Tysons condition’ he can not be held culpable’ detailed statement coming soon on health. He will not & should not be stripped of belts.”

Tyson Fury has withdrawn for the second time from a world heravyweight rematch with Wladimir Klitschko

PA:Press Association

Fury failed to turn up to his own press conference

According to ESPN, Fury tested positive for cocaine on September 22 – a day before he pulled out of the proposed bout.

He was forced to scrap the original July 9 date due to an ankle injury, but was scheduled to put the WBA super and WBO titles on the line at the Manchester Arena on October 29.

Fury joined England fans in France after the fight was postponed for the first time

News Group Newspapers Ltd

Fury joined England fans in France after the fight was postponed for the first time

Tyson Fury steps away after his shock win against Klitschko last November but has not fought since

Getty Images

Tyson Fury steps away after his shock win against Klitschko last November but has not fought since

Fury has reportedly failed a Voluntary Anti-Doping Association (VADA) conducted test, with cocaine found in a urine sample.

The world champ’s lawyers lodged High Court papers in July to refute charges that he used a performance-enhancing substance eighteen months ago.

UKAD’S rap dates back to urine samples taken in 2015 when traces of banned substance nandrolone were detected.

But the ban was lifted and the October fight was scheduled to ahead – before Fury pulled out again with his camp declaring him ‘medically unfit’.

Tyson Fury gets the shots in and sings England songs after pulling out of Klitschko fight


Cheniere Works to Streamline With $5.1 Billion Deal for Unit

Cheniere Energy Inc. offered to buy the 20 percent of Cheniere Energy Partners LP Holdings LLC it doesn’t already own in a stock-for-stock exchange valued at $21.90 a share in a deal that simplifies its corporate structure.

Cheniere, the first company to export U.S. shale gas, is offering 0.5049 Cheniere shares for each outstanding share of Cheniere Energy Partners LP Holdings LLC, according to a statement Friday. That’s a premium of about 3 percent, based on Thursday’s closing prices, according to the statement. It values the target at about $5.1 billion.

Cheniere Chief Executive Officer Jack Fusco promised to streamline the company as it moves beyond developing export terminals into operating one that regularly sends out tankers full of shale gas. Fusco joined the Houston-based company in May, replacing co-founder Charif Souki, who was ousted in December after a dispute over strategy with billionaire investor Carl Icahn.

“There’s no need to have Cheniere Energy Partners LP Holdings LLC out there,” Andy DeVries, a New York-based analyst for CreditSights Inc., said by phone Friday.

The transaction is subject to the execution of a definitive agreement and approval by the boards of Cheniere, Cheniere Energy Partners LP Holdings LLC and a conflicts committee established by the board of Cheniere Energy Partners LP Holdings LLC. It’s expected to close by the 2017 first quarter, according to a presentation on the company’s website.

“The proposed transaction is attractive to investors in Cheniere Partners Holdings who, as new LNG shareholders, would have the opportunity to participate in the future success of the entire Cheniere complex,” Fusco said in the statement.

Cheniere Energy Partners LP Holdings LLC rose 3.5 percent to $22 at 10:24 a.m. in New York. Cheniere fell 1.9 percent to $42.53. Cheniere Energy Partners LP, also controlled by Cheniere, rose 2.1 percent to $28.81.

Cheniere Energy Partners LP Holdings LLC owns 56 percent of the unit that operates Sabine Pass, according to the company website.

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Government Watchdog Says Obamacare Made Illegal Payments to Insurers

Government Watchdog Says Obamacare Made Illegal Payments to Insurers


A government watchdog said Thursday that one of the programs of Obamacare under the Obama administration was making illegal payments to its insurers instead of the U.S. Treasury.

The Government Accountability Office took issue with Obamacare’s reinsurance program, which is designed to stabilize the healthcare marketplace and protect against premium increases in the early years of the healthcare law, The Hill reported.


The Hill reports that under the program, the government takes money from insurers and then gives it to plans with high-cost enrollees.

The reinsurance program was supposed to collect $10 billion in 2014 in its first year of existence, and an extra $2 billion was supposed to go to the Treasury.

The program didn’t bring in nearly that amount, so the administration, through regulations in 2014, gave that money to the insurers instead of the Treasury.

The GAO ruled that this violated the law’s text, but the administration argued that they had the authority to make those payments to insurers because not enough money came in to cover all the payments.

The GAO said in response that the law’s text did not give the Health and Human Services Administration license to make those payments regardless of whether or not there was enough money to go around, and said they could have made payments in accordance with the law.

Problems with programs such as the reinsurance program have caused financial losses among insurers and have caused insurers to drop out of the marketplace or raise their premiums.

The HHS argues that it paid insurers in order to protect against premium hikes.

A group of seven Republican congressional chairmen called on the administration to stop paying insurers over the Treasury.

“The Administration needs to put an end to the Great Obamacare Heist immediately,” they wrote in a statement.

Saving The Day

Saving The Day


Ahead of tomorrow’s GAA Football final replay between Dublin and Mayo.

Maria Brosnan-Barrett writes:

A heartwarming story that I really want to share with GAA fans

My son, David Barrett (6) has been to every Mayo game this year, apart from the drawn final. We struggled to get tickets and it was breaking our poor little man’s heart. We had to take down the poster of Aidan O’Shea from his room as he was so upset.

Then an incredible thing happened: my husband was having a pint in our local pub Mulvihill’s, when he started telling the story to our local barman Darragh (a Corkman better known as “Hightower” on account of his small stature!).

A stranger sitting on his own at the bar overheard the whole story, and fell into conversation with my husband about GAA, the price of milk, and all kinds of other things. He left the bar late in the evening and said to my husband “your son’s name is David, right?”

My husband replied yes. He never knew anything about the man, apart from the fact that his name was Conor and he had very pronounced dimples when he smiled.

Two days ago, a letter arrived to Mulvihill’s addressed to “Master David Barrett, Mayo’s biggest fan” and Hightower’s jaw nearly dropped when he saw a ticket to the final in the envelope!

Little Davey wrote him a letter (above) and I just want to let Conor know, if he ever sees this, that his kindness will never be forgotten.


September 30, 2016 at 09:41AM

Atlanta Fed Q3 GDP Estimate Tumbles To 2.4% From A High Of 3.8%

Just over a month ago, The Atlanta Fed surprised economic watchers when in early August it unveiled that its Q3 GDP tracker was predicting that the US economy would grow at a blistering annualized pace of 3.6% (and as high as 3.80%) a rather dramatic rebound from the "deplorable" 0.8% and 1.4% growth rates in Q1 and Q2, respectively.

Many expressed surprise at the underlying assumptions that would send US economic growth soaring in the second half: after all, it was a near record surge in consumer spending that boosted first half GDP –  and kept it positive – as all other components, most notably Capex, tumbled into a non-consumer recession. Alas, the spending surge that boosted first half growth has now fizzled, as today’s disappointing personal spending data confirmed, so it stood to reason that these overoptimistic estimates for GDP growth would ultimately be revised substantially lower.

Sure enough, moments ago in the latest revision to the Atlanta Fed forecast, the model has just slashed its formerly exuberant GDP growth estimate again, down to a paltry by comparison 2.4%,  below last Friday’s 2.9%, and down to the lowest in this particular series’ lifetime.

This is what the Atlanta Fed said:

The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2016 is 2.4 percent on September 30, down from 2.8 percent on September 28. The forecast of third-quarter real consumer spending growth declined from 3.0 percent to 2.7 percent after this morning’s personal income and outlays report from the U.S. Bureau of Economic Analysis (BEA). Following yesterday’s GDP revision from the BEA and the Advance Economic Indicators release from the U.S. Census Bureau, the forecast of the contribution of inventory investment to third-quarter growth decreased from 0.60 percentage points to 0.26 percentage points and the forecast of the contribution from net exports increased from -0.13 percentage points to 0.13 percentage points.


But what was most notable about the Atlanta Fed’s Q3 GDP estimate is how much higher it was compared to Wall Street’s own forecasts. Well, no more.

Finally, one thing to note is that the Atlanta Fed assumes a substantial inventory build in the current quarter, one which would boost GDP by over 0.5%. Since the various ISM, PMI and regional Fed diffusion indices have failed to confirm such an inventory build. Absent this boost, Q3 GDP drops to 1.9%, and is then set to decline even more in Q4 according to the NY Fed.  How that will impact the Fed’s December rate hike "strategy", remains to be seen.


Jeb! Gives Kathleen Kennedy Townsend An ‘Inappropriate’ Tongue Lashing [VIDEO]


Jeb Bush lashed out at Kathleen Kennedy Townsend Thursday night for reporting the story that his father, former President George H.W. Bush, will vote for Hillary Clinton in the upcoming election.

Kathleen Kennedy Townsend speaks onstage as Robert F. Kennedy Human Rights hosts The 2015 Ripple Of Hope Awards (Getty Images)

Kathleen Kennedy Townsend speaks onstage as Robert F. Kennedy Human Rights hosts The 2015 Ripple Of Hope Awards (Getty Images)

The former Florida governor told reporters at Harvard’s Kennedy School of Business that it was “inappropriate” for Kennedy Townsend to have leaked the voter information of the elder Bush, a “private citizen,” reports


“I thought it was a little inappropriate for a person to overhear a frail, 92-year-old man, in a private setting, at a reception for the Points of Light Foundation, which focuses on volunteerism, to hear this and then immediately go on Facebook and put it on there and then go on national television and then not even show up at the board meeting,” (RELATED: Bush One Voting For Hillary?)

“I thought that was inappropriate.”

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Oil Trade Gives Clearest Sign Yet Nigerias Forcados to Return

The oil market gave the clearest sign yet that Nigeria’s Forcados crude is about to flow again for the first time in eight months, after Royal Dutch Shell Plc was among companies said to have purchased the grade halted by militant attacks in February.

Axion Energy Argentina SA, Pampa Energia SA, and Shell, operator of the Forcados export terminal, together bought about 1 million barrels of the grade for delivery to refineries they run in Argentina between Nov. 20 and Nov. 25, according to a person familiar with the deal. The seller was Shell Western.

Nigeria’s oil industry has been so devastated by militant attacks this year that the country said it got an exemption when OPEC on Wednesday reached an accord to restrain crude supplies in an effort to curb a global glut. Oil shipments, the nation’s biggest export, fell to 1.38 million barrels a day in August from as high as 2.1 million in January.

While the state oil company said Thursday that Forcados should restart within two weeks, Nigerian officials have made several pledges for supplies to resume that didn’t materialize in practice. The original restart was anticipated in May. That then got pushed back to June, then September.

Shell spokeswoman Sally Donaldson declined to comment on the cargo purchase. Axion and Pampa didn’t immediately return calls or e-mails requesting comment.

No Tankers

No tankers have loaded from the terminal so far, according to Bloomberg ship-tracking data. Eight cargoes are scheduled to load in October with a further six planned for November, according to loading programs obtained by Bloomberg. Force majeure, a measure that gives Shell the right not to meet contractual obligations, remains in effect for Forcados, Donaldson said by phone Friday.

A militant group called the Niger Delta Avengers claimed in February to have attacked the Forcados pipeline, according to the organization’s website. Shell said that an external force caused the halt, stopping short of calling it an attack.

Forcados is one of Nigeria’s largest crude grades with an average output of about 200,000 barrels a day last year. Its return has helped boost the country’s planned exports next month to about 1.98 million barrels a day, the most since January.

While the resumption offers some hope, the revival of Nigerian supplies still depends on a fragile-looking security situation not deteriorating. That remains unlikely, Manji Cheto, senior vice president for West Africa at Teneo Intelligence, said by phone.

“Nigeria’s rebound is unlikely to be sustained until the government sorts out structural issues in the Niger Delta region,” she said. “There is nothing on the horizon to drive down the NDA so there is no reason to believe there won’t be further attacks on pipelines in coming months.”

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BMW Set to Roll Out Electric Mini, X3 to Counter Mercedes Push

BMW AG will roll out the first battery-powered model of its urban Mini brand as part of a broader push to make electric cars more mainstream and counter ambitious plans from rivals.

The new Mini is set to hit the market in 2019 and will be followed in 2020 by a battery-powered version of the BMW X3 sport utility vehicle, Chief Executive Officer Harald Krueger said Friday in an interview. The variant of the popular X3 would push into the heart of BMW’s portfolio, signaling the company sees the technology as ready for the mainstream after bundling previous green-car offerings under the “i” subbrand. Both new electric models would have “competitive” driving ranges and prices, Krueger said.

The new Mini and BMW vehicles broaden the company’s electric-car push after it introduced the $42,400 i3 city car in 2013 and the $140,700 i8 plug-in hybrid sports car in 2014. Rivals are now catching up, with automakers from General Motors Co.’s Opel to Renault SA trumpeting their latest electric-car offerings this week at the Paris Motor Show. Mercedes-Benz created the EQ nameplate for a series of battery-powered vehicles, with the first due by the end of the decade. Volkswagen AG will introduce 30 electric cars, including Audi models, by 2025. 

“Competitors are now in phase one on their electric strategy, while we’re entering phase two,” said Krueger. “We’re already well on our way to electrifying the core portfolio, using powertrain technology from BMW i.”

For more Paris Motor Show news, click here

BMW was early to develop a stand-alone electric car with the i3 and then introducing plug-in hybrid variants across the main product line. Sales of plug-in hybrid and electric BMW cars is on track to reach about 60,000 vehicles this year, Krueger said, nearly double last year’s figure.

7-Series Additions

Still, BMW’s all-electric expansion stalled in recent years amid concerns about driving range and costs. The recent turnabout stems in part from pressure to meet ever-tighter emissions standards. To reach 2021 targets, the European Union is seeking efficiency improvements from automakers that would be roughly double the gains made since 2010. That’s a challenge for BMW, which is also seeking to bolster its lineup of luxury cars to help pay for investment into self-driving technology.

Plans to add more variants of BMW’s flagship 7-Series sedan are in the works and could include one or two more products in the lucrative segment, said Krueger, who stayed in Munich to deliberate strategy rather than attend the Paris exhibition.

Range and other specifications for the electric Mini and X3 haven’t been finalized yet, the CEO said, speaking following a supervisory board meeting on the company’s strategic path. Depending on how demand develops, adding cars in additional segments is also in the cards, he said, adding that flexibility is key to adapting to unprecedented changes in the auto industry.

Tech Transformation

Manufacturers are facing disruption to their traditional business model of building and selling vehicles, as car-sharing becomes a viable alternative for many consumers and self-driving features emerge. The changes have spawned new competitors like ride-hailing company Uber Technologies Inc., and Apple Inc. has been exploring options in the auto industry. BMW has responded with services under the Now brand, such as car-sharing service DriveNow.

“The BMW Group needs to continue the move in the direction of tech companies,” he said. “The times when a strategy gets devised, agreed on and then takes 10 years to be executed are over. We have to continually adjust what we do and develop further all the time.”

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Euro Pares Loss on Speculation Deutsche Bank Fine May Be Reduced

The euro pared losses on speculation that Deutsche Bank AG may reach a lower settlement with the U.S. Department of Justice in connection with an investigation into residential mortgage-backed securities.

“Euro-dollar is moving in line with the rally in Deutsche Bank shares,” said Brad Bechtel, a currency strategist at Jefferies Group LLC in New York. “The EUR/USD is currently tied to the outlook for Deutsche Bank shares. If rumors of a much-lower-than-expected fine are substantiated, this will be positive for European banks of course, but also the EUR/USD as well.”

Deutsche Bank’s stock and debt have been under pressure after the U.S. this month requested $14 billion to settle an investigation. The bank has said it expects to negotiate that lower, as other Wall Street banks have.

The euro was little changed at $1.1215 as of 9:57 a.m. in New York, after falling as much as 0.6 percent. Deutsche Bank shares were little changed after declining as much as 9 percent.

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Callidus to Explore Going Private; Says Shares Still Undervalued

Callidus Capital Corp., the lending subsidiary of Canada’s Catalyst Capital Group Inc., said Friday it plans to hire a financial adviser to explore going private, arguing the company’s shares are undervalued in the public market.

“Callidus shares continue to trade at a significant discount,” said Newton Glassman, Toronto-based Callidus’s chief executive officer, in a statement. “Accordingly, our board has determined to explore the possibility of a privatization of the company with a view to maximizing value for all shareholders.”

Glassman has been battling short-sellers at Callidus for much of 2016 after reports were published questioning the quality of its loan book. The company, which denied the claims, launched a legal battled against the authors of the reports, raised its dividend and implemented a share-buyback program at C$16.50 a share, which was extended Friday to Oct. 31. Callidus also released a fair-value estimate from National Bank Financial that pegs the value of its shares at C$18 to $22 a share.

The short positions in the company have fallen to 4.6 percent from a peak in January of nearly 19 percent, according to Markit data.

Callidus shares rose 1.5 percent to C$16.61 at 9:33 a.m. in Toronto and are up 89 percent this year.

Catalyst Capital said in the statement it holds about 65 percent of the issued and outstanding shares in Callidus and doesn’t plan to sell any it holds itself or in its funds, nor does it plan to bid on any shares it doesn’t own.  

Catalyst, Canada’s second-biggest private equity firm, is also run by Glassman.

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Vanguard, Wells Capital Call for a Corporate Bond Reality Check

Some of the world’s biggest investors, including Vanguard Group Inc. and Wells Fargo & Co.’s asset management arm, are dialing down the risk they take in U.S. corporate bonds, even as central banks globally keep the money spigots on. 

With just three months left in 2016, they want to lock in profits for the year and fear the relatively high valuations for investment-grade and junk debt from companies. The securities are trading close to their lowest yields relative to government debt in a year, Bloomberg Barclays index data show. Meanwhile S&P 500 companies’ earnings are falling and companies’ debt levels are high, which also make the bonds look less attractive. Money managers worry the current credit rally, buoyed by cheap money, won’t last long term without higher economic growth.

“We like credit less than we did in the beginning of the year when corporate bonds were a lot cheaper,” said Greg Nassour, co-head of investment-grade portfolio management at Vanguard Group, which manages $3.8 trillion. The firm has been selling some bonds issued by industrial companies and buying safer debt from banks as well as asset-backed securities in recent months.

Other investors may be coming around to that way of thinking. Since the Federal Reserve last week scaled back its expectations for hiking rates next year and thereafter and the Bank of Japan said it was keeping 10-year rates near zero, investment-grade bonds have performed better than high-yield. Safer sectors like utilities have performed better than cyclical sectors like industrials, according to Bank of America Merrill Lynch index data. 

Over most of this year, riskier company bonds have still performed better than safer debt. The shift in recent days may be a sign of how even as central banks are keeping financial markets awash in money, some investors wonder if risks are rising in markets. U.S. stocks fell on Thursday after a Bloomberg report said a number of funds that clear derivatives trades with Deutsche Bank have withdrawn some excess cash and positions and the financial sector fell.

U.S. investment-grade corporate bonds have risen 9.6 percent this year, including price gains and interest payments, according to Bloomberg Barclays index data. Junk debt is up around 15 percent over that same period. Both are performing better than the S&P 500 index, which is about 7 percent higher including dividends.

Valuations for company bonds look relatively high by at least one measure. An investor buying corporate bonds got around 1.38 percentage points more yield than from Treasuries on Thursday, close to one-year lows.

Some investors are still keen on the bonds. There are few better places to put money, with U.S. Treasury yields so low and U.S. equity valuations looking high, said Sean Taylor, the chief investment officer for Deutsche Asset Management in the Asia-Pacific region in an interview in Tokyo.

‘Cooling Off’

But a lot of the forces that lifted corporate bond valuations this year “are cooling off,” said Ashok Bhatia, a senior portfolio manager at Wells Capital Management, which has around $340 billion of assets under management. Wells Capital has trimmed its holdings in investment-grade and high-yield corporate bonds that are sold by relatively risky companies like miners and oil drillers, Bhatia said.

“Owning a little bit less in corporate bonds makes sense, and having your holdings be a little bit more conservative in nature makes sense,” Bhatia said.

Correction Inevitable

In July, S&P Global Ratings said that a correction in credit markets was “inevitable” and “unavoidable,” citing companies’ high level of debt and the fact that borrowings keep rising more. Earnings for the S&P 500 have fallen for five quarters.

Global economic growth is expected to slow to 2.9 percent in 2016 from 3.1 percent in 2015, Bloomberg data show. With weakening global growth and growing debt levels, the corporate bond rally lacks long-term support, said Randy Brown, who oversees $109 billion at Sun Life Financial Inc. in Toronto. He has been buying safer corporate bonds in less cyclical sectors.

It doesn’t make sense to abandon credit altogether, Bhatia said, because as long as the 10-year yield is low in Japan and central bankers in Europe keep buying corporate bonds, overseas investors will look for higher yields in the U.S. Many of those money managers, such as Japanese insurers, are likely to be risk averse and to favor safer securities, said Tom Murphy, a portfolio manager at Columbia Threadneedle Investments in Minneapolis, which has about $26 billion in investment-grade credit under management.

Still, there are reasons to be concerned about credit, Sun Life’s Brown said.

“The longer that rates are lower, the more risk there is at the other end,” said Brown, Sun Life’s chief investment officer. “Credit is challenged and ultimately has to reprice.”

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Everything You Need To Know About Gold In 50 Stunning Slides

Submitted by Pater Tenebrarum via,

A Companion Update to this Year’s “In Gold We Trust” Report

Our good friends Ronnie Stoeferle and Mark Valek of Incrementum AG have just published a new chart book, which recaps and updates charts originally shown in this year’s 10th anniversary edition of the “In Gold We Trust” report and provides an overview of recent developments relevant to the gold market. The chart book can be downloaded in PDF form via the link at the end of this post.


Queen Elizabeth skeptically eyes what little is left of England's once sizable gold hoard

Queen Elizabeth skeptically eyes what little is left of England’s once sizable gold hoard. Her mien seems to indicate regret. Well-known socialist financial guru Gordon Brown ordered the sale of half of the UK’s gold in 1999, at prices that had just reached 20 year lows. Not surprisingly, these prices have never been seen again. While he created a once-in-a-lifetime buying opportunity for the rest of the world, the Queen possibly suspects that regrets over this ill-conceived disposal could one day easily become a great deal more intense.


We show one of the updated charts below, namely the proprietary Incrementum inflation signal. The calculation of the signal is based exclusively on market-derived inputs. It tends to be far more sensitive to changes in inflation/ deflation pressures than many other gauges, which results in more timely responses to changes in these pressures. At present it clearly indicates that the environment for precious metals remains favorable.



The Incrementum Inflation Signal: current conditions are favorable for precious metals and other inflation-sensitive assets – click to enlarge.


The Big Bad Bear

Many well-known mainstream financial media seemed uncharacteristically silent about the 11 year long (and quite relentless) gold bull market from 1999-2011. Occasionally a disparaging remark was dropped, or a few sentences ascribed to Warren Buffett were quoted (something about Martians scratching their heads in wonderment when looking at gold hoards gathering dust in vaults on Earth). Compared to the rah-rah-rah that usually tends to accompany rising stock prices, gold’s rally almost had the air of a funeral.

If memory serves, most of Wall Street officially discovered the bull market around 2009 – 2010, not exactly an example of the most rapid or timely embrace of a strong uptrend either (there were a few notable exceptions). Quite a few WS houses only became truly enthusiastic about gold a few months before it peaked and remained that way for almost an entire year thereafter, a time period during which gold basically went nowhere – until it broke down, that is.

Over the past few years a lot of ink has been spilled on the bear market that started in late 2011 though. Around mid 2013, numerous authors writing for the above mentioned publications were suddenly kissed by the muse and discovered they had a great deal to say about the bear market in gold. Even endearing new terms for gold entered the lexicon (“pet rock”). Falling gold prices seemed to be a very effective antidote for writer’s bloc.

We have penned several missives on gold’s role as the J.R. Ewing of the investment world – it is essentially the asset they love to hate. There are of course very good reasons for this, many of which we have discussed in depth in “Gold and the Grave Dancers”.

That is not the point of the above though. We mainly want to remind readers of the unusual efforts expended between mid 2013 and late 2015 on producing a veritable flood of screeds proclaiming gold’s imminent demise. This backdrop serves as the mise-en-scène for the following table from the chart book, which shows the annual performance of gold since 2001 in terms of nine major currencies:



Gold’s annual performance since 2001 in terms of nine major currencies. 2013 was indeed quite a bad year for gold; and to be sure, 2015 wasn’t much to write home about either. Other than that, gold’s average annual gain of 10.85% (in terms of all currencies combined) or 11.94% in USD terms, means it has vastly outperformed every other major asset class since 2001 – click to enlarge.


As you can see, there is a time for everything. Even including the massive correction of 2011 – 2015 (in USD; 2011 – 2013 in EUR), gold is beating the annualized returns of other major financial asset classes by a huge margin over the past 16 years.


Points of Departure

Naturally, there is no guarantee whatsoever that gold will resume its outperformance in coming years, but we believe the secular bull market still has some life left. In fact, long term bull markets in gold and commodities traditionally tend to deliver their greatest gains in the final rally phase (this is so because these assets are driven by fear rather than greed – and fear always produces price spikes).

The next chart illustrates the relative price performance of gold, the SPX and the 30 year t-bond since mid 1999. The yields of the latter two are not included in this comparison, i.e., on a total return basis they have done better than is shown here – but a huge performance gap would remain even so:



Price performance of gold, stocks and bonds since mid 1999. We’re not sure what the Martians would say to this, except maybe “we should have bought some” – click to enlarge.


Whether gold, stocks or bonds are the better investment obviously depends on one’s starting point, but it is worth noting that the one we have chosen above – the 19.5 year low in gold in 1999 – is never mentioned as a viable point of departure in the mainstream financial media. And yet, they will glibly parrot truisms like “buy low, sell high”.

A great many authors like to focus on gold’s manic spike high on January 21 1980, which obviously puts the metal’s subsequent performance in the worst possible light. This makes very little sense though, considering that the final 41% gain of that particular rally was produced in the span of just five trading days.

Obviously it was a very unique situation – indeed, it was a speculative blow-off driven by fears over the Soviet Union’s brazen invasion of Afghanistan on December 24 1979. On the eve of the invasion gold traded at $473 – a time at which its advance had already been egged on considerably by the Iranian revolution. It peaked exactly one month later at $850. A mere five trading days before the peak it traded at $603.



The Incrementum chart book attempts to help to answer the question whether gold remains an attractive investment. After all, it is no longer the bargain it was back in 1999-2001 – but that certainly doesn’t mean its secular advance is necessarily done. We think there is every reason to believe its best days are yet to come.

*  *  *

50 Slides for the Gold Bulls Incrementum Chartbook


*  *  *

Download link: Incrementum Chart Book – 50 Slides for Gold Bulls (pdf)

All-Star Grandma Decapitates ISIS Fighters In Revenge-Fueled Bloodlust


An Iraqi grandmother leads a militia of 70 men fighting Islamic State in the Salahuddin province to avenge the killings of her family members.

Wahida Mohamed Al-Jumaily, better known as Um Hanadi, started fighting al-Qaida in 2004 and later made ISIS the target of her war against jihadis. ISIS is responsible for the deaths of Um Hanadi’s first two husbands, father and three brothers, which she says justifies any means to kill them.

“I fought them, I beheaded them, I cooked their heads, I burned their bodies,” she told CNN.

Um Hanadi, 39, now says she’s at the top of ISIS’s most wanted list. Bombs have been detonated outside her house several times and she has received death threats from the group, including personal ones from leader Abu Bakr al-Baghdadi.

“Six times they tried to assassinate me,” she told CNN. “I have shrapnel in my head and legs, and my ribs were broken. But all that didn’t stop me from fighting.”

Um Hanadi and her militia operate in the recently liberated town of Shirqat, located about 50 miles south of ISIS’s Iraq stronghold Mosul.

The force is backed by Iraqi ground forces in the area, which provides the militia with weapons.

“She lost her brothers and husbands as martyrs,” Gen. Jamaa Anad, commander of Iraqi ground forces in the Salahuddin province, told CNN. “So out of revenge she formed her own force.”

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This Is The Rumor Causing The Spike In Deutsche Bank Shares

In the past few hours, DB stock has staged a dramatic rebound, surging from its overnight -9% lows, to green on the day. What is causing it: after all, aside from a trivial "Dick Fuld-esque" letter by John Cryan to his employees blaming speculators for the plunge, there has been no actual news.

The catalyst for the spike is again a rumor.  As Bloomberg writes, "there has been trader unsubstantiated speculation – launched on Twitter – that the bank may reach a lower RMBS settlement with the U.S. DoJ than feared."

"unverified handles on Twitter speculate the DoJ fine may be $5.4b, vs reports earlier this month the DoJ had sought $14b. Unverified handles including @fiatcurrency, @Fxmacro Tweet or retweet the speculation."

The rumor got extra significance after some traders repeated and "justified it" in the process, to wit: "Deutsche Bank stock is being helped by speculation the DoJ settlement could be lower than feared," Sylvain Loganadin, market analyst at FXCM, told Bloomberg by phone. “People don’t want to stay short on Deutsche Bank going into the weekend in case there’s a statement”: Loganadin

Putting the rumored $5.4 billion number in context, earlier today JPM said that there is a possibility that "DB settles US RMBS at an amount inline with our expected level of $3-4bn leading to no capital raise" however it admitted that another alternative is that "the DOJ demands significantly more than c$4bn which DB would be reluctant to accept in ourview as it would otherwise trigger a capital raise."

* * *

The catalyst for the rumor is a phone conversation held earlier today between the US president and German chancellor although as Bloomberg reported just before 6am, President Barack Obama and German Chancellor Angela Merkel didn’t discuss U.S. Justice Department’s case against Deutsche Bank AG during phone call, according to German government spokeswoman Ulrike Demmer.

Adding some color to potential regulatory intervention, Bloomberg also noted that when asked about concerns over Deutsche Bank, chairman of the White House Council of Economic Advisers Jason Furman says Obama administration is monitoring banking system daily. 

Furman, speaking at a Bloomberg breakfast in Washington, says Europe made less progress than U.S. in protecting banks. “They’ve made less progress in terms of increasing capital for their financial institutions, less progress in putting in place some of the mechanisms we have for resolving them,” Furman says about Europe.

However, he adds that “there are a lot of mechanisms both within Europe and within the U.S.” to protect the financial system, Furman says.

It was not clear if that included bailouts.

* * *

Naturally, Deutsche Bank has refused to comment on speculation around the level of the DoJ fine.

Which means that should the DOJ make no announcement on Sunday, any buying spree today in DB may promptly turn into another selloff. Making matters worse, with German trading closed for holiday on Monday, only the far more illiquid US tracking stock will be open, which may accentuate any potential selling.

*  *  *

As a reminder, there were "fixes" galore in 2008
and rumors sent Lehman stock soaring over 10% in at least 6 weeks
during the last few months…

Oil Sands Cost Cutting Close to Bone as Crude Stalls

Canadian oil-sands producers are running out of tricks to buoy their share prices as crude prices keep bumping up against a $50 ceiling.

After two years of slashing costs to cope with plunging oil prices, shares began rebounding as the market appeared to hit a bottom earlier this year. Now, with the commodity recovery taking longer than expected — even with this week’s agreement by OPEC to limit supply — and the pace of reductions slowing, a correction could be in store for oil-sands shares.

“We’re getting close to the bone” with cost cutting, said Martin Pelletier, a fund manager at TriVest Wealth Counsel in Calgary, in an interview. He pointed to a “huge gap” between companies’ valuations and the price of oil. Without a solid recovery kicking in soon, companies are “going to go lower.”

It’s a lot harder for oil-sands producers to cut costs than it is for their shale-rock drilling brethren. Shale producers can just stop drilling wells, idling rigs and dispensing with all the equipment and labor that goes along with them. Canadian oil-sands companies such as Suncor Energy Inc. and Cenovus Energy Inc., with the massive facilities required to mine and process tar-like bitumen, can’t scale down so easily.

Shale drillers also deploy new technology more regularly, boosting efficiency with each new well. Oil-sands developments take years to plan and build and cost billions of dollars. With the low commodity prices, new projects have been canceled or delayed, hampering companies’ ability to introduce the latest, cost-saving equipment.

That’s left oil-sands producers to rely mainly on slashing operating costs such as labor, non-essential maintenance and spending on garbage trucks and road repairs, to cope with low oil prices in the near term, according to consulting firm Wood Mackenzie Ltd. In the future, new projects will take advantage of technology advances to help reduce capital costs, but that’s an unlikely scenario for the next few years, Pelletier said.

In the meantime, share-price gains are expected to outpace crude in the coming quarters, raising pressure on producers to deliver better profits. The West Texas Intermediate U.S. benchmark oil price is forecast to rise 2.6 percent by the second quarter next year, while the average target price for a Canadian S&P sub-index of Canadian energy companies is expected to gain almost 14 percent, according to analyst estimates compiled by Bloomberg. The price-to-earnings ratio for the 50-member S&P/TSX sub-index has risen to 350 from 98 in the first quarter.

WTI was little changed at $47.83 a barrel at 9:56 a.m., gaining about 4.2 percent this week after the Organization of Petroleum Exporting Countries’ agreement to reduce the collective’s production to as low as 32.5 million barrels a day.

Producer Cuts

Oil-sands producer Cenovus will have cut more than C$1 billion in capital, operating and administrative expenses by the end of the year. Since the end of 2014, operating costs have fallen 31 percent at its oil-sands business, helped by laying off almost a third of the company’s work force — all with the goal of being able to “make money” at $50 a barrel oil, according to Chief Financial Officer Ivor Ruste in a Sept. 7 presentation in New York.

“The question, is are these permanent reductions? Or are they cutting down to the bare bones to just withstand the downturn?” said Stephen Kallir, a research analyst at Wood Mackenzie in Calgary.

Cenovus isn’t finished yet, said spokesman Brett Harris. “We believe we can continue to reduce our overall cost structures,” he said.

Magnifying Glass

By lowering operating expenses, the impact goes “right to the bottom line,” boosting margins for existing operations, said Kevin Birn, director at industry consultants IHS Cera’s energy group in Calgary. “So you’re going through everything and scrutinizing everything you need,” he said. 

Companies are also pushing for higher production in a bid to lower per-barrel costs, he said. “We’ve seen more barrels coming from existing facilities than historically they’ve been able to achieve.”

The average cost to produce a barrel of oil, called the lifting cost, for the five largest oil-sands producers has fallen 35 percent since the beginning of 2015, according to data compiled by Bloomberg. At the same time, net debt to earnings before interest, tax, depreciation and amortization has surged three times as profit fell.

Larger competitors Imperial Oil Ltd., Canadian Natural Resources Ltd. and Suncor, also have taken billions of dollars out of their operations.

Cold Lake

Imperial Oil, Exxon Mobil Corp.’s Canadian affiliate, has reduced unit costs by 35 percent since 2014 at the company’s production operations. At its Cold Lake site, costs have fallen 40 percent, helped by lower prices for natural gas and more use of equipment automation, said Bart Cahir, senior vice president of upstream operations. 

Overall costs to produce a barrel of oil are now below C$20 “but we know we have much more work to do,” Cahir said during a Sept. 21 presentation.

Suncor has managed to lower oil-sands operating costs in the third quarter to “well below” C$24 a barrel, Chief Executive Officer Steve Williams said in a Sept. 7 presentation to analysts in New York. 

“We can run for the next 25 years at less than $40 a barrel WTI, so we’ve got a long future ahead,” he said in an e-mailed response to questions. Suncor is one of the lowest-cost producers and achieved that by “focusing on what we could control” as well as continuing to invest in production “when others did not,” he added.

Canadian Natural is “confident that there are ongoing opportunities for further cost reductions,” the company said in an e-mail response to questions about whether more cost cuts are possible, without quantifying reductions.

Eventually companies will have to invest in new projects and introduce new, more efficient technology to really capture cost savings, said IHS’s Birn. “You can push operating costs down so far, but you will hit a limit.”

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Free Money

Free Money


Right now.

Glued to the pavement outside the Batchelors Inn [Batchelor’s Walk, Dublin 1.]


(Thanks Graeme Kelly)

September 30, 2016 at 09:10AM

Commerzbank Wont Discuss Resuming Dividend Payments Before 2019

Commerzbank AG affirmed plans to shed 9,600 jobs and said the company won’t consider resuming dividend payments until it has carried out most of the job cuts in 2019.

Next year and 2018  “will be the two main restructuring years,” Chief Financial Officer Stephan Engels said in a Bloomberg Television interview in Frankfurt. “When we finish those three years, it is the right moment to discuss” dividends again.

Commerzbank plans to reduce about one in five jobs, suspend dividends and shrink securities trading in the biggest overhaul since its bailout. Impairments of 600 million euros ($671 million) to 700 million euros to goodwill from its acquisition of Dresdner Bank eight years ago will probably result in a third-quarter loss, the lender said on Friday after the supervisory board approved Chief Executive Officer Martin Zielke’s plan.

The company’s shares dropped as much as 8.5 percent in Frankfurt on Friday, bringing the decline this year to 41 percent. Deutsche Bank AG dipped below 10 euros for the first time ever on Friday. The negative market sentiment on banks is “very short term,” Engels said in the interview.

Commerzbank plans to offload the parts of the investment bank that will become too capital heavy in the future. The bank is separating its equity-market business to sell in “whatever form,” the CEO said at a press conference Friday. That entity won’t include the commodity business which offers hedging products.

When the overhaul is complete, Commerzbank will be no bigger than it was before its 2008 acquisition of Dresdner Bank. The company’s struggles, along with those of cross-town competitor Deutsche Bank, reflect an industry still wrestling with the legacy of the financial crisis and riven with structural defects of Germany’s three-pillar banking system. That has only deepened the effect of negative interest rates and stiffer regulation for financial institutions.

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India Misses Monsoon Rainfall Forecast as La Nina Proves Elusive

India, which gets more than 70 percent of its rain during the annual monsoon, missed a forecast for above-normal showers as a La Nina weather pattern failed to set in.

Rainfall totaled 862 millimeters, or 97 percent of the average between 1951 and 2000, data from the India Meteorological Department showed Friday. That’s less than the 106 percent predicted by the state forecaster with a margin of error of 4 percent. The agency defines normal rain as plus or minus 4 percent of the average, making this year the first normal monsoon since 2013.

The U.S. this month dropped its La Nina watch and reduced the odds of the event that can cause wet weather in Indonesia, India and Thailand. The pattern’s absence during the June-to-September monsoon caused weak rainfall in the later part of the season. Still, timely and well-distributed rain is expected to boost food-grain production to a record this year.

Monsoon rainfall was normal to excess over 85 percent of India, while it was deficient in the rest of the regions.

The four-month rainy season affects both summer and winter crop sowing in India and directly waters more than half of all farmland. Rainfall was 14 percent below a 50-year average in 2015, following a 12 percent shortfall in 2014, data from the meteorological department show.

Record Harvest

The government has set a record food-grain harvest target of 270.1 million metric tons for the crop year that began on July 1, compared with 252.2 million tons a year earlier. Production of grains including rice and corn planted during the monsoon will total 135.03 million tons, Agriculture Minister Radha Mohan Singh said on Sept. 22. An increase in water level in reservoirs will boost winter-sown crops such as wheat and mustard, according to S.K. Pattanayak, agriculture secretary.

India’s 91 main reservoirs held 117.2 billion cubic meters of water as of Sept. 29, up 22% from 96.45 billion cubic meters a year earlier, according to the Central Water Commission.

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