Fiat Chrysler review shows U.S. sales figures were inflated: Automotive News

<p dir="ltr">An internal review that Fiat Chrysler Automobiles (FCHA.MI) (FCAU.N) conducted from mid-2015 found that U.S. sales figures were inflated by 5,000 to 6,000 vehicles, partly amid pressure to keep the company's year-over-year monthly sales streak alive, the Automotive News reported Monday, citing two sources at FCA.</p><p dir="ltr">An FCA spokeswoman declined to comment on Monday.</p><p dir="ltr">A week ago, FCA confirmed that U.S. regulators were investigating claims of inflated sales.</p><div class="separator" style="clear: both; text-align: center;"> <a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhDBesbUNlB_HQs1z9SSHVqCIVNWOSNVCbpPjkzA2qjDpEs4SjNkD333HzJs5ZpsNnyL6cb4eObuj9DW37846NwO0xvB-64-84zBxR7fmh3ZKLxFCDVuAP-x4RfjfI69gQUKnFbkfWI4G4/s1600/dload.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"> <img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhDBesbUNlB_HQs1z9SSHVqCIVNWOSNVCbpPjkzA2qjDpEs4SjNkD333HzJs5ZpsNnyL6cb4eObuj9DW37846NwO0xvB-64-84zBxR7fmh3ZKLxFCDVuAP-x4RfjfI69gQUKnFbkfWI4G4/s640/dload.jpg"> </a> </div>

Fiat Chrysler review shows U.S. sales figures were inflated: Automotive News

An internal review that Fiat Chrysler Automobiles (FCHA.MI) (FCAU.N) conducted from mid-2015 found that U.S. sales figures were inflated by ...

Caesars could face $5 billion hit from unit's bankruptcy:examiner

<p dir="ltr">CHICAGO (Reuters) - Caesars Entertainment Corp (CZR.O) and its private equity backers could be on the hook for up to $5.1 billion in potential damages over a series of corporate deals that a court-ordered examiner said Tuesday led to a $18 billion bankruptcy protection filing by the casino company's operating unit.</p><p dir="ltr">Richard Davis and a team of lawyers have spent a year probing whether Caesars, under the control of Apollo Global Management (APO.N) and TPG Capital [TPG.UL], stripped away prime properties such as the LINQ Hotel & Casino in Las Vegas and left the company unable to pay a mountain of debt.</p><p dir="ltr">"The simple answer to this question is 'yes'," wrote Davis at the start of an 80-page summary of his non-binding investigation, published Tuesday.</p><p dir="ltr">The bankruptcy of Caesars Entertainment Operating Co Inc (CEOC) has pitted some of the biggest names in U.S. finance against each other in a year-long court battle.</p><p dir="ltr">Junior creditors, led by the powerful Appaloosa Management hedge fund, have alleged CEOC was picked clean of its best hotels and casinos for the benefit of the Caesars Entertainment (CEC), as well as Apollo and TPG.</p><p dir="ltr">Davis, a former Watergate investigator, estimated potential damages for claims that he said would have a better than 50 percent chance of success in court ranged from $3.6 billion to $5.1 billion.</p><p dir="ltr">Those claims included fraudulent transfers of assets and breaches of fiduciary duties against the directors and officers of the operating unit and against the parent, Caesars Entertainment, he said.</p><p dir="ltr">In addition, he said claims for aiding fiduciary breaches existed against Apollo and TPG. None of the claims involve criminal or common law fraud, Davis said.</p><p dir="ltr">CEOC said in a statement it planned to resume talks with creditors and file an updated plan of reorganization soon.</p><p dir="ltr">"In assessing the actions of CEC and the sponsors (TPG and Apollo), it is important to remember that the sponsors are among the most financially savvy investors in the country," Davis wrote.</p><p dir="ltr">Sometime in late 2012, Davis said TPG and Apollo began to implement a strategy designed to strengthen their own position in the event of a CEC or CEOC bankruptcy.</p><p dir="ltr">Davis said he found evidence that the operating unit was insolvent as early as 2008, which would have imposed on the business's directors a duty to act on behalf of creditors as well as shareholders.</p><p dir="ltr">Angry creditors have been holding out for the release of the investigation before deciding whether to back a proposal by Caesars to inject $1.5 billion into CEOC and settle the allegations of asset-stripping.</p><p dir="ltr">There have been myriad legal disputes stemming from the bankruptcy. Davis' investigation of Caesars comprised over 8.8 million pages of documents and interviews with 92 witnesses.</p><p dir="ltr">Shares in Caesars Entertainment Corp, which is not part of the bankruptcy, closed up 1.7 percent at $7.20 on Nasdaq on Tuesday.</p><div class="separator" style="clear: both; text-align: center;"> <a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgFALXxR2mEcRVzqSDMce92TryQHy8euy3FmPFkN5dnw6lkXtV2HFer3OXJyPASfC_eUuNv3d_CxHJrejJuLySF0aJB1jCR2B8fnOrShxsO5LrleQ63N7aDgX8_oR7EnWmxmUgaA7y9dHY/s1600/IMG_20160315_232605.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"> <img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgFALXxR2mEcRVzqSDMce92TryQHy8euy3FmPFkN5dnw6lkXtV2HFer3OXJyPASfC_eUuNv3d_CxHJrejJuLySF0aJB1jCR2B8fnOrShxsO5LrleQ63N7aDgX8_oR7EnWmxmUgaA7y9dHY/s640/IMG_20160315_232605.jpg"> </a> </div>

Caesars could face $5 billion hit from unit's bankruptcy:examiner

CHICAGO (Reuters) - Caesars Entertainment Corp (CZR.O) and its private equity backers could be on the hook for up to $5.1 billion in potenti...

Western Union beats as more people use Web, mobile money transfer

<b>Western Union Co (WU.N), the world's largest money-transfer company, reported a better-than-expected quarterly profit as lower prices drew more customers, particularly to its digital money transfer business.</b><br /><br /><blockquote class="tr_bq">Revenue at the company's digital business, which includes westernunion.com and mobile money transfer, jumped 21 percent in the third quarter, accounting for nearly 6 percent of total revenue.</blockquote><br /><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEifaYu0OF7jDgw69nwa8gjJBL_lXSzplkOexBqOhQDZ_qiWtD-9q4-RSfv8fLy2_sX0WXO3MG3msCMJFPvlKag9dqGS6smylsOaW0MCFjcrqKGFAesWYmaIycpswiioFSwRlVFSwvsxARM/s1600/westernunion.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="180" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEifaYu0OF7jDgw69nwa8gjJBL_lXSzplkOexBqOhQDZ_qiWtD-9q4-RSfv8fLy2_sX0WXO3MG3msCMJFPvlKag9dqGS6smylsOaW0MCFjcrqKGFAesWYmaIycpswiioFSwRlVFSwvsxARM/s1600/westernunion.jpg" width="320" /></a>Western Union has cut prices and invested heavily in its online and mobile businesses to better compete with fast-growing rivals such as MoneyGram International Inc (MGI.O), Xoom Corp (XOOM.O) and privately owned Boom Financial Inc.<br /><br />The move is starting to pay off as the company has been eating into the market share of online rivals such as Xoom, by offering highly competitive foreign exchange rates and lower transaction fees.<br /><br />The company said on Thursday it plans to increase its spending on digital and mobile business, compliance and cyber security in the fourth quarter.<br /><br />"Our previous pricing and other strategic actions in Europe and in Russia have helped drive good results," Chief Executive Hikmet Ersek said on a post-earnings conference call.<br /><br />Growth in transactions in Europe and Russia, which account for more than a fifth of Western Union's total revenue, rose 10 percent during the quarter.<br /><br />"We believe market has shown fairly stable pricing recently," Chief Financial Officer Raj Agrawal said, adding that the company expects pricing actions to be modest for the remainder of the year.<br /><br />Western union's third-quarter transaction volumes rose 5 percent. Remittances increased about 5 percent to $22.1 billion.<br /><br />Revenue from the company's consumer-to-consumer business rose 2 percent to $1.15 billion.<br /><br />Western Union forecast full-year earnings of $1.50 per share, the top end of its previous projection of $1.45-$1.50 per share.<br /><br />Net income for the quarter ended Sept. 30 rose 9 percent to $234.1 million, or 44 cents per share.<br /><br />Analysts on average had expected earnings of 38 cents per share on revenue of $1.43 billion, according to Thomson Reuters I/B/E/S.<br /><br /><b>COMPLIANCE COSTS</b><br /><br />Money transfer companies such as Western Union and MoneyGram International Inc (MGI.O) have been forced to spend more to meet stricter compliance requirements to prevent money laundering through their payment systems.<br /><br />Western Union said it expects compliance costs to be about 3.5 percent of full-year revenue.<br /><br />Ersek said compliance, retail agent commissions and certain other costs had risen but the company was managing "discretionary expenses very tightly."<br /><br />Western Union was probed by the Federal Trade Commission and a U.S. district court over fraud-induced money transfers in February.<br /><br />Englewood, Colorado-based Western Union's shares were up about 3 percent at $17.15 after the bell on Thursday.

Western Union beats as more people use Web, mobile money transfer

Western Union Co (WU.N), the world's largest money-transfer company, reported a better-than-expected quarterly profit as lower prices dr...

World Bank to cut 500 jobs in some units as part of revamp

The World Bank said it plans to cut 500 jobs over the next three years as part of a broad restructuring meant to make it more efficient but that has rattled employees.<br /><b><br /></b><b>The long-expected layoffs, along with budget cuts and internal reorganization, have sparked regular staff protests and fears of a broader revolt at a time when the bank is trying to ramp up its work in fighting the Ebola outbreak and other global challenges, and maintain its relevance.</b><br /><br /><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjBbvXT7_x3YcyAc4tp1GXxcKpPmkLvt_fe4mCSAXF7Y_786887M914Jubmi2LMU3ImJLY8jrZPSHTnH0zhG5K9Spgsyu3vfs0IIOjZBAu2tYrRa_NMTET6XO0gZYQrHDz_SFot4SBE2jM/s1600/World_bank.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="237" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjBbvXT7_x3YcyAc4tp1GXxcKpPmkLvt_fe4mCSAXF7Y_786887M914Jubmi2LMU3ImJLY8jrZPSHTnH0zhG5K9Spgsyu3vfs0IIOjZBAu2tYrRa_NMTET6XO0gZYQrHDz_SFot4SBE2jM/s1600/World_bank.jpg" width="320" /></a>The cuts, announced on Thursday, represent about an 11 percent reduction in the 4,500-employee workforce of the bank's internal-facing divisions, including finance, human resources, research and security. These divisions employ about a quarter of the bank's total staff.<br /><br />The bank also plans to cancel 70 vacant job openings, though it wants to hire 250 to 300 new people, largely in its Chennai, India office, which runs some of its administrative and other operations.<br /><br />Some of the 500 employees whose jobs will be cut will also be able to apply for jobs in other World Bank divisions, said the bank, which provides financial and technical assistance to developing countries.<br /><br />The net result will be a loss of about 250 positions, World Bank President Jim Yong Kim said in a note to staff on Thursday.<br /><br />"Staffing decisions are always challenging," Kim said in the note, which was obtained by Reuters. "But we feel confident that the changes we are making will help us better align our staffing to our strategy, which is what our clients want and what we must deliver."<br /><br />Kim launched the first major reorganization for the lender since 1996, to make it more selective and better attuned to the needs of the governments it serves.<br /><br />The reorganization has entailed $400 million in budget cuts to make the institution more competitive with development rivals and allow it to boost lending to middle-income countries.<br /><br />Employees complain the bank is overly focused on minor cuts to areas such as breakfast allowances and parking instead of dealing with meaningful changes to the quality and efficiency of the bank's lending.<br /><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh-uyXVWO9mLLIG4iSmGfd21ILepZTyPOyEwx4o27l6Rqnk85wpAwOjvAuqoaXCGHkw6hzQPW_35ZhxqI1R_pA84qBnKBI2iTcLPVhowr1gg1Ze8q8j5RXDrYEK6qTGqDhrivpdwE19HvA/s1600/world-bank.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh-uyXVWO9mLLIG4iSmGfd21ILepZTyPOyEwx4o27l6Rqnk85wpAwOjvAuqoaXCGHkw6hzQPW_35ZhxqI1R_pA84qBnKBI2iTcLPVhowr1gg1Ze8q8j5RXDrYEK6qTGqDhrivpdwE19HvA/s1600/world-bank.jpg" /></a></div><br />Staff were also incensed after discovering the bank's chief financial officer, who has pushed much of the cost-cutting, received a $94,000 bonus this year. To quell staff discontent, Bertrand Badre earlier this month said he would forego the $24,000 or so of the bonus that he had not yet received.<br /><br />But that has not stopped employees from organizing regular work "stoppages" on Thursdays, advertised via yellow flyers of unknown provenance.<br /><br />About 300 staff showed up at the latest meeting earlier this Thursday, according to one attendee, to discuss the declining quality of World Bank projects and the so-called "expenditure review," among other issues.<br /><br />The bank plans to announce further details about the budget cuts and layoffs next week, Kim said in the note to staff.

World Bank to cut 500 jobs in some units as part of revamp

The World Bank said it plans to cut 500 jobs over the next three years as part of a broad restructuring meant to make it more efficient but ...

Citigroup sets aside $600 million more to cover legal costs

Citigroup Inc (C.N) said it was setting aside an extra $600 million to cover legal expenses in the third quarter due to "rapidly evolving regulatory inquiries," while also disclosing that it was subject to foreign exchange market probes.<br /><br /><blockquote class="tr_bq">Citigroup is one of six major banks that are expected to settle with Britain's Financial Conduct Authority by mid-November over allegations that the banks manipulated foreign exchange markets.</blockquote><br /><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjWWf10NHGnsN9DCPc2ZvFahURwKJONaqCPHRuHCnh-8NryPK0eXuxY_OkHtan-yoYxtpx3JSEr1ToXLM17cEXtEgNY8tpq2xJaq_5AMaDsukxJe-iHwjtmRWDaiOzPlgNn8Fuo_FvMkKA/s1600/citi-banamex.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="190" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjWWf10NHGnsN9DCPc2ZvFahURwKJONaqCPHRuHCnh-8NryPK0eXuxY_OkHtan-yoYxtpx3JSEr1ToXLM17cEXtEgNY8tpq2xJaq_5AMaDsukxJe-iHwjtmRWDaiOzPlgNn8Fuo_FvMkKA/s1600/citi-banamex.jpg" width="320" /></a>The banks are aiming to settle for a total of around 1.5 billion pounds sterling, or $2.42 billion, sources have told Reuters. Barclays Plc, another of the six banks, said on Thursday it had set aside 500 million pounds for the third quarter to cover potential fines.<br /><br />Big banks have paid billions of dollars in recent years to settle investigations into their mortgage lending, commodities and interest-rate trading, and a wide range of other activities. Authorities have broadly been trying to hold banks accountable for the excesses that led to the financial crisis.<br /><br />While the legal costs have hit profits, weighed on share prices, and consumed management time, they have not forced banks to raise money by issuing shares, and are not expected to.<br /><br />Citigroup, for example, is likely to make nearly $28 billion in pre-tax profits over the next five quarters, way more than enough to cover heightened legal expenses, according to analysts at Bernstein Research.<br /><br />The bank's shares fell 2 percent to $52.05 in extended trading after it revised down its third-quarter net income to $2.84 billion from the $3.44 billion it had posted on Oct. 14.<br /><br />On a per-share basis, Citigroup adjusted its profit to 88 cents for the quarter. It had earlier reported a profit of $1.07 per share.<br /><br />Like most banks, Citigroup does not disclose how much money it has set aside to cover legal costs that it can dip into in the future, known as its "reserves." Bernstein Research analysts estimated before Thursday's announcement that Citigroup's remaining reserves were about $2.5 billion at the end of September.<br /><br />Citigroup did not say specifically that the additional legal expenses were recognized in anticipation of a settlement of the foreign exchange probes.<br /><br /><b>MORE POSSIBLE SETTLEMENTS</b><br /><br />After announcing the additional legal expense on Thursday, Citigroup said in a quarterly filing with the Securities and Exchange Commission that its estimate of possible legal costs in excess of its litigation reserves was about $5 billion, the same as it estimated for the end of the previous quarter and for year-end.<br /><br />Citigroup faces additional possible settlements. Federal authorities are investigating possible money laundering through Citigroup's Banamex USA unit, for example. The Mexican part of the Banamex business has been beset by multiple problems in the last few years, including fraudulent loans and rogue trading.<br /><br />Citigroup said in the filing that it was cooperating fully with investigations into its foreign exchange business in Britain, the United States, and elsewhere.

Citigroup sets aside $600 million more to cover legal costs

Citigroup Inc (C.N) said it was setting aside an extra $600 million to cover legal expenses in the third quarter due to "rapidly evolvi...

U.S. regulator to Takata: Give us faulty air-bag documents

U.S. auto safety regulators on Thursday ordered Japanese supplier Takata Corp (7312.T) to provide documents and answer questions under oath related to the government's ongoing probe of potentially defective Takata air bags in millions of U.S. vehicles.<br /><br /><blockquote class="tr_bq">The National Highway Traffic Safety Administration sent a special order to the supplier's American unit, TK Holdings Inc, ordering delivery of the documents by Dec. 1.</blockquote><br /><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjkVnpQWMpJTteWOCP5qnbRyII50bN9tDVfTTSUw1c_MPvlVIROr4BmTL-ZkgX5TDfb7bSzk1EzlqQ7FEW9I2wva99a91oS0DxKXHPetUDvBB4o29PRZDpg59EqxkrwxcIHaG-JLvpBfgU/s1600/sreut.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="194" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjkVnpQWMpJTteWOCP5qnbRyII50bN9tDVfTTSUw1c_MPvlVIROr4BmTL-ZkgX5TDfb7bSzk1EzlqQ7FEW9I2wva99a91oS0DxKXHPetUDvBB4o29PRZDpg59EqxkrwxcIHaG-JLvpBfgU/s1600/sreut.jpg" width="320" /></a>Takata spokesman Alby Berman said on Thursday the company "is cooperating fully with NHTSA and is working to meet their requests."<br /><br />For the past 18 months, Takata has been besieged by chronic, widespread problems with defective inflators in its air bags, which can explode with excessive force and spray metal shards into vehicle occupants.<br /><br />Since 2008, 10 global vehicle manufacturers that use Takata air bags have recalled more than 10 million cars in the United States and more than 17 million worldwide to replace inflators that have been linked to at least four deaths and numerous serious injuries.<br /><br />In June, NHTSA launched its probe of whether Takata air bag inflators made from 2000 to 2007 were properly sealed or subject to other defects. It also asked the automakers to recall air bags in certain regions, such as Florida and Puerto Rico, where the parts were exposed to higher moisture and humidity that could cause deterioration of the explosive material inside.<br /><br />Critics have said Takata and NHTSA have not moved fast enough on the issue.<br /><br />On Thursday, lawyers for U.S. consumers asked a federal judge in Miami to speed up a class action against Takata and four automakers, saying public safety was at stake.<br /><br />U.S. District Judge James Lawrence King scheduled a Dec. 8 hearing on whether Takata and the automakers should turn over internal company documents to the consumers’ lawyers.<br /><br />One safety advocate criticized NHTSA for moving so slowly on issuing the special order, saying such moves typically occur within 30 days of the launch of an investigation.<br /><br />“The big question is why didn’t they send it sooner?” said Clarence Ditlow, executive director of the Center for Auto Safety, which has been pushing for NHTSA to broaden the regional recalls to a national campaign.<br /><br />“You cannot get to the bottom of this defect unless you have the facts, and to delay five months in sending out that letter is inexcusable,” he added.<br /><br />CHEWING GUM<br /><br />NHTSA Deputy Director David Friedman said the safety agency was forcing Takata to supply the documents and answer questions under oath as part the agency's probe. "We expect Takata's full cooperation as we work to keep the American public safe," he said in a statement.<br /><br />NHTSA officials, including Friedman, were due to meet with Takata executives later on Thursday.<br /><br />In the special order signed by Chief Counsel Kevin Vincent, NHTSA ordered Takata to produce documents relating to communication between the Japanese company and its rivals, as well as its customers, related to ruptured air bags.<br /><br />NHTSA also asked the supplier for any documents related to manufacturing issues connected with problems in production of air-bag inflators, including documents cited in an Oct. 17 Reuters article about manufacturing problems at the Japanese company's Mexico inflator plant.<br /><br />The safety agency specifically asked for any documents cited by Reuters, including a March 2011 email from then-supervisor Guillermo Apud titled "Defectos y defectos y defectos!!!!"<br /><br />In the email, Apud, who has since been promoted to engineering manager at Takata's Monclova, Mexico, plant and previously declined to comment to Reuters, said, "A part that is not welded = one life less, which shows we are not fulfilling the mission." He also described in one instance finding chewing gum in an inflator.<br /><br />NHTSA also asked Takata for a list of every death or injury, lawsuit or claim relating to ruptured air bags.<br /><br />Takata also was ordered to provide details on its inflator production capacity to replace millions of potentially defective parts already recalled, as well as its ability to expand manufacturing capacity to meet the recall needs.<br /><br />NHTSA asked Takata whether other inflator makers can build replacement parts to speed the recall process.<br /><br />TRW Automotive (TRW.N) Chief Executive John Plant said Tuesday his company had been contacted by Takata about helping with the recalls, but had not seen any extra business as a result.<br /><br />Autoliv (ALV.N) CEO Jan Carlson said last week his company had picked up business due to Takata's struggles.

U.S. regulator to Takata: Give us faulty air-bag documents

U.S. auto safety regulators on Thursday ordered Japanese supplier Takata Corp (7312.T) to provide documents and answer questions under oath ...

Fiat Chrysler recalling 381,876 Ram trucks for fire hazard

Fiat Chrysler Automobiles NV's Chrysler Group said on Wednesday it is recalling 381,876 Ram trucks mostly in the United States to correct a potential fire hazard.<br /><br /><div class="separator" style="clear: both; text-align: center;"><a href="http://blog.ramtrucks.com/wp-content/uploads/2013/03/RamTrucksEMS.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="480" src="http://blog.ramtrucks.com/wp-content/uploads/2013/03/RamTrucksEMS.jpg" width="640" /></a></div><br />Chrysler said in a statement that problems with 2010-2014 Ram 2500 and 3500 pickups and 4500 and 5500 chassis cabs equipped with Cummins diesel engines could cause fuel-heater housings to overheat and fuel to leak.<br /><br />It said 314,704 of the trucks are in the United States, 59,432 in Canada and the rest outside North America.<br /><br />Chrysler said it was not aware of any accidents or injuries related to the condition.<br /><br />Separately, the automaker is recalling 184,186 Jeep Grand Cherokee and Dodge Durango SUVs from model year 2014 to upgrade software that manages the vehicles' electronic stability control system.<br /><br />Chrysler said the system could be accidentally disabled. No accidents or injuries have been reported.<br /><br /><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjEnB92ggnl9RLzC2uyMp1OyDOjNWqk1xKN4tC1-yC6WaZCNHP1fDPI9pAddrO3AsVQjn_Qlht73XoHI_xR6n8nWaPw4XZ4DfbM8nhc3XXb4YRh7Iu_LfupIM8Qf5i32rPWCSE0_3Kc6Ls/s1600/ram-trucks.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="394" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjEnB92ggnl9RLzC2uyMp1OyDOjNWqk1xKN4tC1-yC6WaZCNHP1fDPI9pAddrO3AsVQjn_Qlht73XoHI_xR6n8nWaPw4XZ4DfbM8nhc3XXb4YRh7Iu_LfupIM8Qf5i32rPWCSE0_3Kc6Ls/s1600/ram-trucks.jpg" width="640" /></a></div><br />

Fiat Chrysler recalling 381,876 Ram trucks for fire hazard

Fiat Chrysler Automobiles NV's Chrysler Group said on Wednesday it is recalling 381,876 Ram trucks mostly in the United States to correc...

Federal Reserve ends bond buying, exhibits confidence in U.S. recovery

<blockquote class="tr_bq"><b>The Federal Reserve on Wednesday ended its monthly bond purchase program and signaled confidence the U.S. economic recovery would remain on track despite signs of a slowdown in many parts of the global economy.</b></blockquote><br /><b>"The Committee continues to see sufficient underlying strength in the broader economy to support ongoing progress toward maximum employment in a context of price stability," the central bank's policy committee said in a statement following a two-day meeting.</b><br /><br /><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiLoxievbvUviKKXLZ7_NkfItgHDV_FEHxNay2TpJkkkfWY_ZIa7LxOdze_qrEeOJY5x5gP5C7oRsd6JjeDT32OWYRX7adqObOjLKzwwtRQEiex36kaPSlgE4pU3vf6Kngcbr0mIKCnsbU/s1600/TreasuryBond.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="278" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiLoxievbvUviKKXLZ7_NkfItgHDV_FEHxNay2TpJkkkfWY_ZIa7LxOdze_qrEeOJY5x5gP5C7oRsd6JjeDT32OWYRX7adqObOjLKzwwtRQEiex36kaPSlgE4pU3vf6Kngcbr0mIKCnsbU/s1600/TreasuryBond.jpg" width="320" /></a>The statement largely dismissed recent financial market volatility, dimming growth in Europe and a weak inflation outlook as headwinds that would do little to undercut progress toward the Fed's unemployment and inflation goals.<br /><br />The Fed pointed to strengthening labor markets, saying that slack in labor markets was "gradually diminishing."<br /><br />It retained its basic language regarding interest rates from recent statements, saying that rates would remain low for a "considerable time" following the end of the bond purchases this month.<br /><br />The timing and pace of rate hikes would depend on incoming economic data, the Fed said, new language that apparently earned the support of Philadelphia Fed President Charles Plosser and Dallas Fed President Richard Fisher, who dissented at the previous meeting.<br /><br />On inflation, the Fed acknowledged that lower energy prices and other forces were holding inflation down, but that overall the economy should progress toward the central bank's 2 percent target.<br /><br /><blockquote class="tr_bq">"The Committee judges that the likelihood of inflation running persistently below 2 percent has diminished somewhat since early this year," the statement said.</blockquote><br /><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjeCwvKUMf6l9ffmYr2bL7oippyRJBnDa8qUYHz5KbiYBXMMwQGXRrQVx13GBtEK1kVyuDPg_92KLnWMnlR9hbMwV5osG9DP-04wtXRKGJrE7aqQvs9fnNd9oRMUXtG_ue9r42eADsnkn4/s1600/USA-FED.JPG" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" height="217" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjeCwvKUMf6l9ffmYr2bL7oippyRJBnDa8qUYHz5KbiYBXMMwQGXRrQVx13GBtEK1kVyuDPg_92KLnWMnlR9hbMwV5osG9DP-04wtXRKGJrE7aqQvs9fnNd9oRMUXtG_ue9r42eADsnkn4/s1600/USA-FED.JPG" width="320" /></a>Minneapolis Fed President Narayana Kocherlakota was the only dissent on the grounds that a downturn in inflation expectations meant the Fed should commit to keeping interest rates lower for longer.<br /><br />The decision to shutter the bond-buying program was almost foregone. The monthly purchases had been steadily cut from $85 billion to $15 billion as part of the Fed's gradual turn away from policies launched to fight the 2007-2009 recession and breathe more life into a tepid recovery.<br /><br />The Fed will continue reinvesting the proceeds of securities that mature each month, meaning its more than $4 trillion balance sheet will remain intact for the time being.

Federal Reserve ends bond buying, exhibits confidence in U.S. recovery

The Federal Reserve on Wednesday ended its monthly bond purchase program and signaled confidence the U.S. economic recovery would remain on ...

Twitter will work with IBM's data analytics offerings to trace customer and then re-sell that data to corporate clients.

<h4>IBM, Twitter to partner on business data analytics.</h4><br /><blockquote class="tr_bq"><b>International Business Machines Corp (IBM.N) on Wednesday announced a partnership with Twitter (TWTR.N) to help shape business decisions using data collected from tweets worldwide.</b></blockquote><br /><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg29yOJ9HONl44ojORLRVCbG4Jj48lc2PDWRQGQyLyaeU_zkJaCtCxC1kU-9H_FgOR7HvLfwgeml9C2VOgn4oLpPsmMLyMCqmOCGKfzBjRcyjxhLBxZNyeKx2cNbhzU99i7accjXrULzNQ/s1600/ibm-and-twitter.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg29yOJ9HONl44ojORLRVCbG4Jj48lc2PDWRQGQyLyaeU_zkJaCtCxC1kU-9H_FgOR7HvLfwgeml9C2VOgn4oLpPsmMLyMCqmOCGKfzBjRcyjxhLBxZNyeKx2cNbhzU99i7accjXrULzNQ/s1600/ibm-and-twitter.jpg" /></a>IBM will help businesses predict trends in the marketplace and consumer sentiment about products and brands and will train 10,000 employees to consult businesses on the best use of Twitter data.<br /><br />IBM chief executive Ginni Rometty has been trying to shift the 100-year-old company's focus away from commoditized hardware to higher-value cloud and data analytics products.<br /><br />In April, Twitter acquired social data provider Gnip to burrow into the 500 million tweets sent daily on its network. [ID:nL3N0N743S]<br /><br />Enterprise clients will now be able to filter the data based on geography, public biographical information and the emotion expressed in the tweet.<br /><br />"We are taking this huge fire-hose of data (and) letting clients decide how to dose that down," Seth McGuire, senior business development manager at Twitter, told Reuters in an interview.<br /><br /><h4>The company previously allowed third-party firms such as Gnip, Datasift and Dataminr to buy access to the tweets and then re-sell that data to corporate clients.</h4><br />While other data analysis software for businesses exists, Twitter hopes the partnership with IBM's established businesses will draw in customers.<br /><br />IBM plans to offer Twitter data as part of its analytics services delivered through cloud computing, including cognitive computing.<br /><br />Software developers will also be able to use Twitter data in applications they are building using IBM's Bluemix and Watson Developer Cloud offering.<br /><br />"Data is the phenomenon of our time," said IBM's Rometty.<br /><br />"Twitter has created something extraordinary. When you bring this together with other kinds of information and leverage IBM's innovations in analytics, Watson and cloud, business decision making will never be the same," she told an event announcing the launch.<br /><br />"This is a huge milestone for Twitter," said Twitter CEO Dick Costolo, adding:<br /><br />"IBM brings a unique ability to integrate complex systems and data to help clients make better business decisions."<br /><br />IBM shares were off 0.12 percent at $163.40 while Twitter shares dipped 3.2 percent to $42.38.

Twitter will work with IBM's data analytics offerings to trace customer and then re-sell that data to corporate clients.

IBM, Twitter to partner on business data analytics. International Business Machines Corp (IBM.N) on Wednesday announced a partnership with T...

Wall Street Disappointed in Twitter’s Slow User Growth; Opportunities Loom amid Low Shares.

Twitter's publicity campaign, such as the World Cup live update in July and enhanced user-friendly sign ups, the San Francisco-based company suffered another 8 percent decrease in stock price.  As of the third quarter report, Twitter lost US$175 million in sales compared with US$64.6 million last year.<br /><br />On a positive note, revenue growth doubled to US$361 million, exceeding analysts' expectation of US$351.5 million, FactSet said.<br /><br /><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhYJ2mHE_-6gs-qGQY-Mh9hgZDOI6kG1yM0BkfGsvwdZU7SXjmqWcNq8hq19kY1AT9Nz08US-hkUw8K9aadBKTJQDd7puX-ewghoKiXrvf_hMez7NPKv3rlf_rfYxLJaYn4z-abwzwTIJA/s1600/Twitter.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="213" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhYJ2mHE_-6gs-qGQY-Mh9hgZDOI6kG1yM0BkfGsvwdZU7SXjmqWcNq8hq19kY1AT9Nz08US-hkUw8K9aadBKTJQDd7puX-ewghoKiXrvf_hMez7NPKv3rlf_rfYxLJaYn4z-abwzwTIJA/s1600/Twitter.jpg" width="320" /></a>One year after it converted itself as a public entity in November 2013, Twitter still has a hard time convincing Wall Street gurus of its financial success.  A case in point is that the wider the audience reach, the more effective advertisements are, which is identified as Twitter's main source of income.<br /><br />Twitter Inc. Chief Executive Dick Costolo said that while they have performed beyond the financial target, it has become more critical to "increase [their] overall pace of execution."<br /><br />Costolo described Twitter's audiences "as a series of geometrically eccentric circles," specifically the ones with active user accounts (core group), those who do not log in, and those who leverage contents across different platforms (syndicated).<br /><br />Twitter said that they are in the process rolling out programs to improve interaction among Twitter users, including the one implemented on Apple iOS where notification are given even when on logged out users.<br /><br />RAPP senior vice president Craig Elimeliah said Twitter's newest mobile software, which allows marketers to embed their apps on tweets, makes them more attractive to other companies.<br /><br />Twitter's price in stock today might actually be a blessing in disguise, Forbes wrote.<br /><br /><blockquote class="tr_bq"><b>Costolo clarified that although experts tend to compare Facebook's reach against Twitter, one will not be the same as the other.</b></blockquote><br /><b>Twitter's publicity campaign, such as the World Cup live update in July and enhanced user-friendly sign ups, the San Francisco-based company suffered another 8 percent decrease in stock price.  </b><br /><b><br /></b><b>As of the third quarter report, Twitter lost US$175 million in sales compared with US$64.6 million last year.</b><br /><br />On a positive note, revenue growth doubled to US$361 million, exceeding analysts' expectation of US$351.5 million, FactSet said.<br /><br />One year after it converted itself as a public entity in November 2013, Twitter still has a hard time convincing Wall Street gurus of its financial success.  A case in point is that the wider the audience reach, the more effective advertisements are, which is identified as Twitter's main source of income.<br /><br />Twitter Inc. Chief Executive Dick Costolo said that while they have performed beyond the financial target, it has become more critical to "increase [their] overall pace of execution."<br /><br /><b>Costolo described Twitter's audiences "as a series of geometrically eccentric circles," specifically the ones with active user accounts (core group), those who do not log in, and those who leverage contents across different platforms (syndicated).</b><br /><br />Twitter said that they are in the process rolling out programs to improve interaction among Twitter users, including the one implemented on Apple iOS where notification are given even when on logged out users.<br /><br /><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiZ_kg36Z2a9xkqQzITHqOhKzZEXxjO77wRsaimL9zEzx8uPFCuB4AopCgSWYeLYo7pr9cAsHd2ZynErzSPE5sgAehYUfTo0e4NsX_QnonRkpUIZLzth7rMjs0PYhLcU-9u0SvN70hC2ac/s1600/twitter-shares1.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="326" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiZ_kg36Z2a9xkqQzITHqOhKzZEXxjO77wRsaimL9zEzx8uPFCuB4AopCgSWYeLYo7pr9cAsHd2ZynErzSPE5sgAehYUfTo0e4NsX_QnonRkpUIZLzth7rMjs0PYhLcU-9u0SvN70hC2ac/s1600/twitter-shares1.jpg" width="640" /></a></div><br />RAPP senior vice president Craig Elimeliah said Twitter's newest mobile software, which allows marketers to embed their apps on tweets, makes them more attractive to other companies.<br /><br />Twitter's price in stock today might actually be a blessing in disguise, Forbes wrote.  Costolo clarified that although experts tend to compare Facebook's reach against Twitter, one will not be the same as the other.

Wall Street Disappointed in Twitter’s Slow User Growth; Opportunities Loom amid Low Shares.

Twitter's publicity campaign, such as the World Cup live update in July and enhanced user-friendly sign ups, the San Francisco-based com...

Brazil’s Rousseff re-elected by grateful working-class, country divided

<b>Despite opposition from nearly half of Brazil’s voters, leftist President Dilma Rousseff won re-election on Sunday and will have another four years to try to revive growth in a once-booming economy gone stagnant.</b><br /><br /><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjZGapTnTzYrJplLFWOpcc1yl7pGxt_iII-IDHJUD-2yMcUxaEsIP9g0E_Xw4GqhLgLXkzDPKqP3cGdUUfDHz3hZeEnKSz5vcEyXuGD7og-e7WDfzy7byHV03nsFpPTmmQz6D_PGcwsf5Y/s1600/1roussef1.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="370" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjZGapTnTzYrJplLFWOpcc1yl7pGxt_iII-IDHJUD-2yMcUxaEsIP9g0E_Xw4GqhLgLXkzDPKqP3cGdUUfDHz3hZeEnKSz5vcEyXuGD7og-e7WDfzy7byHV03nsFpPTmmQz6D_PGcwsf5Y/s1600/1roussef1.jpg" width="640" /></a></div><br /><b>The 66-year-old Rousseff, who was a Marxist guerrilla in her youth, overcame growing dissatisfaction with the economy, poor public services and corruption to narrowly clinch a second term for herself and the fourth in a row for her Workers’ Party.</b><br /><br />After a bitter, unpredictable campaign that pitted poorer Brazilians grateful for government anti-poverty programs against those exasperated with a stalled economy, Rousseff must now seek to continue flagship social services even as she tweaks economic policies to restore growth.<br /><br />Most investors are skeptical that Rousseff can turn around the slumping economy after four years of ineffective industrial policies. A Brazilian equity exchange traded fund listed in London fell around 10 percent on Monday before markets opened in São Paulo.<br /><br />Still, Rousseff and aides consistently shrug off market pessimism as little more than tantrums by speculators. As her camp celebrated victory late on Sunday, longtime foreign policy adviser Marco Aurélio Garcia told reporters that investors should relax and “take tranquilizers.”<br /><br />Speaking to a relieved crowd of supporters in Brasília, the capital, Rousseff acknowledged the close race and the call for change expressed by many voters.<br /><br />“I know that I am being sent back to the presidency to make the big changes that Brazilian society demands,” she said after winning the runoff election with 51.6 percent support.<br /><br />Her slim, three-point margin over centrist candidate Aécio Neves came largely thanks to gains against inequality and poverty since the Workers’ Party first came to power in 2003.<br /><br />Using the fruits of a commodity-fueled economic boom in the last decade, Brazil’s government expanded welfare programs that helped lift more than 40 million people from poverty despite the current economic woes.<br /><br />The “Brazilian model” has been adopted by center-left parties across Latin America and Rousseff’s victory, however narrow, is a blow for conservatives in the region.<br /><br />It also means there will be no dramatic improvement in ties with the United States, hit in recent years by trade disputes and US government spying programs that infuriated Rousseff.<br /><br />About 40 percent of Brazil’s 200 million people live in households earning less than 700 US dollars a month, and it was their overwhelming support that gave Rousseff victory on Sunday.<br /><br />Now, she pledges to deepen social benefits while working to revive an economy that fell into recession in the first half of this year.<br /><br />She has already promised to replace her finance minister, part of a pledge to rethink economic policies that she has so far been known to all but manage herself.<br /><br />“Such a tight result reduces her capacity to radicalize policies,” said Alberto Bernal, a Miami-based economist with Bulltick Capital Markets. “Pretty much half of the country is against what she has been doing.”<br /><br />Rousseff’s victory came just a year after massive street protests swept Brazil because many advances of the past decade had stalled.<br /><br />The slowing economy, rising prices, and anger over a lack of investment in public services prompted many to ask whether the Workers’ Party had exhausted its ability to improve the lives of people in a country still plagued by vast gaps between rich and poor.<br /><br />But Neves, a senator and former state governor who enjoys support among the upper-middle and wealthy classes, failed to convince a majority of Brazilians that he had enough new ideas to pull Rousseff from power.<br /><br />It didn’t help that many poor Brazilians associate his centrist Brazilian Social Democracy Party with a less inclusive past, a perception that the Rousseff camp deftly exploited.<br /><br />“Even if things are getting worse, many voters prefer to stick with what they know than take a risk on the unknown,” said Fernando Abrucio, a political science professor at the Getúlio Vargas Foundation, a business school in São Paulo.<br /><br />A second Rousseff term will not be easy, especially as a slowing economy strains a government model accustomed to high tax revenues to finance social programs and subsidized credit for companies and consumers.<br /><br />Brazil’s economy, after growing by as much as 7.5 percent the year before she took office, is on track to grow less than 1 percent this year. Prior efforts to gun growth, largely through tax breaks and other subsidies for select industries, have largely fallen flat.<br /><br />Meanwhile, inflation, long a problem in a country with a history of runaway price increases, is now hovering above the government’s tolerance ceiling of 6.5 percent.<br /><br />And while unemployment is near record lows, economists don’t expect it to remain so for long as plunging investment, slower growth and further uncertainty prompt employers to cut back.<br /><br />To correct the course, economists say Rousseff must pursue long-pending tax and labor reforms in order to increase productivity and engage further with the global marketplace.<br /><br />“Without improving efficiency and making Brazil a more productive part of the global economy, the country will just keep muddling along,” said Marcio Garcia, an economist at the Pontifical Catholic University in Rio de Janeiro.<br /><br />Rousseff will also face gridlock in a Congress increasingly weary of the ruling party, which lost seats in this election along with its most important ally. Leading lawmakers promise to make hay over a snowballing corruption scandal at the state-run oil company, Petrobras.<br /><br />Brazilian media in recent weeks have been abuzz with leaked testimony by a former company executive relating alleged kickbacks by contractors to Workers’ Party coffers.<br /><br />One news magazine reported that another key suspect told prosecutors Rousseff was aware of the scheme, an accusation that she has vehemently denied.<br /><br />“She will face resistance on a number of fronts,” said Carlos Melo, a political scientist at Insper, a São Paulo business school. “This is a victory in spite of all the problems—not an affirmation of a job well done.”

Brazil’s Rousseff re-elected by grateful working-class, country divided

Despite opposition from nearly half of Brazil’s voters, leftist President Dilma Rousseff won re-election on Sunday and will have another fou...

Brazil Stock ETFs Tumble on Rousseff as Petrobras Sinks

Ibovespa Tumbles Toward Bear Market as Rousseff’s Win Sinks Real.<br /><br />Brazil’s benchmark equity index led global declines as President Dilma Rousseff’s re-election damped speculation for a change in policies that wiped out $553 billion of stock market value and left the economy in recession.<br /><br /><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh7Klz98QpqO2KPngrFQLpNqI596IvphcN2wLKa5cD-tIHySz5tJzp0us1aoHolTXtRNkhjUlrA7xIYBolFaMm9IQBQRlrHN_V3ttWSnr1qGfKyFM9ZEy8VIBP3WCdHLLxVeexxigEvCEk/s1600/1iY.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="482" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh7Klz98QpqO2KPngrFQLpNqI596IvphcN2wLKa5cD-tIHySz5tJzp0us1aoHolTXtRNkhjUlrA7xIYBolFaMm9IQBQRlrHN_V3ttWSnr1qGfKyFM9ZEy8VIBP3WCdHLLxVeexxigEvCEk/s1600/1iY.jpg" width="640" /></a></div><br />The Ibovespa (IBOV) dropped 2.8 percent to 50,503.66 at the close of trading, the most among the 20 biggest indexes globally. After tumbling as much as 6.2 percent earlier, approaching the threshold for a bear market, the gauge pared losses as education companies and pulp exporters rallied. The real posted the world’s biggest loss as it sank 1.9 percent to a nine-year low.<br /><br />“Investors are concerned that the future will bring more of the same: weak growth, high inflation and intervention,” said Michelle Gibley, the director of international research at San Francisco-based Charles Schwab Corp., which oversees $2.4 trillion in assets. “Cheap isn’t necessarily enough to attract investment - you need some kind of catalyst for change. We still have a down view on Brazilian equities.”<br /><br /><b>Brazil’s Rousseff Wins, Ibovespa Sinks</b><br /><br />State oil company Petroleo Brasileiro SA (PETR4) tumbled 12 percent. The Ibovespa is now down 18 percent from a bull-market high reached Sept. 2.<br /><br />The equity gauge had rallied as much as 38 percent from this year’s low in March amid bets that Senator Aecio Neves would unseat an incumbent who oversaw the slowest growth of any Brazilian presidency in two decades as inflation accelerated past the top end of policy makers’ target. Rousseff, who has maintained record low unemployment, had 52 percent of the vote with 99.99 percent of ballots counted by the electoral court.<br /><br /><br />The Ibovespa last entered a bear market in March as Rousseff’s attempts to shore up growth through subsidized credit from state-run banks and tax cuts on consumer goods failed to avoid a slowdown, then moved back into a bull market in May after polls showed the incumbent losing voter support. After rising to a 20-month high in September, stocks retreated after new surveys showed Rousseff rebounding.<br /><br /><b>Volumes Surge</b><br /><br />“There’s going to be enormous disappointment in the markets that we have not had an opposition victory,” Geoffrey Dennis, the head of emerging-market strategy at UBS AG, said in a telephone interview.<br /><br />The real’s plunge to 2.5224 per dollar put it at the weakest level on a closing basis since April 2005. One-month implied volatility on options for the real, reflecting projected shifts in the currency, was the world’s highest. The currency sank 12 percent in the past three months.<br /><br /><br /><br />Petrobras and state-controlled utility Centrais Eletricas Brasileiras SA were the two worst performing stocks in the 834-member MSCI Emerging Markets Index today as the utility’s voting shares sank 12 percent.<br /><br />“The natural reaction by investors, at this moment, is to sell, with considerable nervousness prevailing,” Camila Abdelmalack, an economist at CM Capital Markets in Sao Paulo, said in a telephone interview.<br />Estacio, Kroton<br /><br />The Ibovespa pared losses as for-profit college operators Estacio Participacoes SA and Kroton Educacional SA both rallied more than 7 percent on speculation that Rousseff’s student-loan program will continue to boost enrollments.<br /><br /><br />“For-profit college operators have been performing very well under Rousseff’s administration as she cut interest rates on student loan programs and made repayment easier,” Marcel Kussaba, an equity analyst at the asset management firm Quantitas Gestao de Recursos SA, said by phone from Porto Alegre, Brazil. “As long as unemployment rates remain low, enrollments should continue to increase.”<br /><br />Exporters including pulp producer Fibria Celulose SA also jumped as the real weakened, boosting the outlook for sales outside Brazil. Fibria climbed 6 percent to 28.95 reais, the highest since November.<br />ETFs Sink<br /><br />Financial shares also dropped today, with state-run Banco do Brasil SA plunging 5.2 percent to 24.40 reais, the lowest closing level since June. Itau Unibanco Holding SA lost 3.5 percent to 32 reais, while Banco Bradesco SA fell 2.2 percent to 32.92 reais.<br /><br /><br />The iShares MSCI Brazil Capped ETF dropped 5.5 percent to $39.30 at 3:34 p.m. in New York, while the Lyxor ETF Brazil Ibovespa ETF (RIO) declined 7.8 percent in Paris, the biggest slide since 2009, with volume more than five times the three-month daily average. The NEXT Funds Ibovespa Linked ETF (1325) declined 6.8 percent at the close in Tokyo, the biggest loss since September 2011, on volume exceeding 12 times the average.<br /><br />Throughout the campaign, Brazil’s stock market and currency retreated when polls indicated Rousseff might win, including a 6.8 percent drop in the Ibovespa during the final week as polls showed her support rising. Neves, who had pledged to cut public spending and attract more private investment, said in his concession speech that he phoned Rousseff to congratulate her on the victory, calling on the president to unify the country.<br /><br /><b>Inflation Tolerance</b><br /><br />Rousseff defended her economic performance by saying she preserved jobs in the face of the global economic crisis. While the economy entered recession in the first half of this year, September’s 4.9 percent unemployment rate was a record low for the month. Real average income has risen 10 percent during Rousseff’s tenure and 33 percent in the past decade.<br /><br />“The market has been very critical of this government’s policies such as intervention on some sectors, overspending and tolerance of inflation and that’s why shares prices are falling so much today,” Pedro Paulo Silveira, the chief economist at brokerage firm TOV Corretora, said in a phone interview from Sao Paulo. “But the reaction seems to be exaggerated. Many companies are getting cheap considering their individual prospects, so I think that there will be a recovery soon.”<br /><br /><b>Bond Prices</b><br /><br />Credit-default swaps insuring Brazil’s debt against non-payment rose two basis points today to 167 basis points, according to prices in New York compiled by Bloomberg. The contracts have risen from the year’s low of 124 basis points on Sept. 3.<br /><br />Brazil’s benchmark dollar bonds due 2025 fell 0.37 cent to 100.95 cents on the dollar while yields on local fixed-rated notes due 2023 rose 0.33 percentage point to 12.37 percent.<br /><br />Investors will turn their focus to Rousseff’s choice for finance minister, said Frederico Sampaio, the chief investment officer of Franklin Templeton Investments Brazil, which manages about $900 million. Rousseff has said that her new government will have a fresh team, including a replacement for Finance Minister Guido Mantega.<br /><br /><b>50% Chance</b><br /><br />The president’s fiscal policies fueled Brazil’s first sovereign rating cut in more than a decade, while the government’s attempts to control inflation by intervening in state-run companies sapped profits.<br /><br />Quantitas, an investment boutique that manages 15 billion reais, estimated last week there is a 50 percent chance Brazil’s rating could be cut to junk in Rousseff’s second term.<br /><br />Brazil’s dollar bonds returned 8.7 percent this year, trailing the average 10.1 percent advance for investment-grade developing nations, JPMorgan Chase & Co. indexes show. In Rousseff’s first three years in office, the notes posted an annual gain of 5.04 percent, lagging behind the 5.6 percent return for similarly rated sovereign peers.<br /><br /><b>Valuation Outlook</b><br /><br />To support the currency, Brazil’s central bank sold $197.2 million of foreign-exchange swaps today as part of an intervention program and rolled over contracts worth $393.4 million.<br /><br />The Ibovespa ended last week with a valuation near a five-month low of about 10 times estimated earnings. Stocks won’t be attractive until valuations fall to about 8 times, according to UBS and USAA Investment Management Co.<br /><br />“Her victory was not totally priced in yet,” Bianca Taylor, a Boston-based senior sovereign analyst and strategist at Loomis Sayles & Co., which oversees $223.2 billion worldwide, including Brazilian sovereign and corporate bonds, said by phone. “We should see a slump in Brazil assets as a whole in the next few days.”

Brazil Stock ETFs Tumble on Rousseff as Petrobras Sinks

Ibovespa Tumbles Toward Bear Market as Rousseff’s Win Sinks Real. Brazil’s benchmark equity index led global declines as President Dilma Rou...

Departing Barroso sees European Union stronger after euro debt crisis

Outside the European Commission's hulking headquarters, a poster on a street lamp proclaims "Titanic: final weeks".<br /><br />It is advertising an exhibition in Brussels on the cruise liner sunk by an iceberg off Newfoundland a century ago.<br /><br /><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjc5OgVRKw6NI5UYnZN95VKXOooutAKm1Hfvf-Vo6hdqyeNeCvqA93xUtlLF0Pv07qA6aLJHU5SwRxdg6V-5c15nWayah_MHXNb7J-10ZooubZJa80_roH3zlf37HfdIBsAMwPJ9DFTZcQ/s1600/eu-red.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="211" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjc5OgVRKw6NI5UYnZN95VKXOooutAKm1Hfvf-Vo6hdqyeNeCvqA93xUtlLF0Pv07qA6aLJHU5SwRxdg6V-5c15nWayah_MHXNb7J-10ZooubZJa80_roH3zlf37HfdIBsAMwPJ9DFTZcQ/s1600/eu-red.jpg" width="320" /></a>But as Jose Manuel Barroso spends his last few days at the helm of the European Union's often maligned executive arm, with his designated successor Jean-Claude Juncker speaking ominously of "Europe's last chance", it's hard not to see the irony.<br /><br />Barroso, a former Portuguese prime minister, is proud of having helped keep an enlarged 28-nation Europe afloat for 10 years through the most severe economic and financial storm in half a century.<br /><br />"I was always confident that we would prevail, but I had to push the ship in the right direction, sometimes against very strong headwinds," Barroso said in an interview after a bruising final EU summit, his 75th as Commission president.<br /><br />His legacy is to have helped the euro currency zone survive a searing 2009-13 debt crisis by establishing a financial rescue fund, enacting stricter budget rules, tightening financial regulation and starting to build a European banking union.<br /><br />But he leaves amid a howling Eurosceptic gale in Britain and chill winds of anti-EU populism in many other member states, whipped up by mass unemployment and economic stagnation.<br /><br />His happiest moments were receiving the Nobel Peace Prize on behalf of the Union in 2012 "at a time when there were lots of doubts about the EU even in European countries", and signing the Lisbon Treaty that revamped the bloc's complex institutions after French and Dutch voters rejected a European constitution.<br /><br />He also helped make Europe a world leader in the fight against climate change and the drive for cleaner energy.<br /><br />But after years of crisis with sleepless nights spent trying hold the euro zone together, other memories are more somber.<br /><br />Barroso recalled hosting a private brainstorming session with the chief economists of the main European and U.S. banks in July 2012 at the peak of the crisis.<br /><br />"I asked them two questions. 'How many of you think Greece will still be in the euro zone at the end of the year?' All except one said 'no'. The central scenario was the Greek exit.<br /><br />"Then I asked: 'How many of you believe we'll be able to sustain the euro in its present form?' It was 50/50."<br /><br />With financial markets in turmoil, he spent most of that month persuading Greek Prime Minister Antonis Samaras to embrace radical reforms and German Chancellor Angela Merkel, the most powerful EU leader, to keep Athens in the currency area.<br /><br />"There were many important personalities even in the German government saying the best thing is to put Greece and some others out so that we can save the rest," he recalled.<br /><br />If Greece had been cut loose, Portugal, Spain and Italy would have come under immediate market pressure. The survival of the euro, launched in 1999 as Europe's central economic project underpinning its single market, would have been in jeopardy.<br /><br />Barroso said he had appealed to Merkel's cautious instincts.<br /><br />"For me the point was not so much to convince her of the interest of having Greece in the euro, but to convince her of the danger of not having Greece.<br /><br />"I said 'do you want to jump in the dark?'. This is a powerful argument with someone like Angela Merkel whose decision-making system is basically conservative in the good sense of the word. She tries to minimise risk, not to maximise benefit."<br /><br />On another occasion, at a fraught Group of 20 economic summit in the French resort of Cannes in November 2011, Barroso enlisted the support of U.S. President Barack Obama to thwart German pressure to force Italy to accept an International Monetary Fund standby loan program.<br /><br />"This was perhaps my most difficult moment," he said.<br /><br />He told doubting world leaders such as Obama and Russian President Vladimir Putin the euro would survive, not with one neat, clean solution, but by "muddling through".<br /><br />Barroso's decade in office began under a cloud. He was not the preferred candidate of the two main EU powers, Germany and France, and was picked only after Britain vetoed then Belgian Prime Minister Guy Verhofstadt, a keen European federalist.<br /><br />Deep inside the centre-right pragmatist, who began political life as a Maoist student radical in Portugal's 1974 revolution, lurks a feeling that the EU establishment looked down on him.<br /><br />He is bitter about criticism from fervent enthusiasts for European integration who maintain he weakened the Commission's leading role and kowtowed to the big member states.<br /><br />"How can all these experts on European politics say and write that EU institutions have been downgraded and what we have now is (the rule of) inter-governmentalism and Germany? They have understood nothing," Barroso said.<br /><br />"The powers I have today are much bigger than the powers of my great predecessor Jacques Delors, someone I greatly admire," he said, citing notably the Commission's enhanced role in surveillance of national budgets.<br /><br />Those new powers are one reason why Barroso's term is ending amid a political furore.<br /><br />Seeking to enforce fiscal rules strengthened during the crisis, the Commission is in a stand-off with France and Italy over their budget deficits. Barroso clashed with Italian Prime Minister Matteo Renzi over Rome's publication of a confidential letter from the Commission that demanded an explanation.<br /><br />There was also an outcry by Britain over a statistical revision of national accounts that means London is required to pay a 2.1 billion euro top-up into the EU budget by Dec. 1.<br /><br />No one in Brussels seems to have realised how explosive the annual accounting exercise could be, Barroso acknowledged.<br /><br />With the anti-EU UK Independence Party snapping at his heels, British Prime Minister David Cameron refused to pay and unleashed verbal fury at Brussels, saying this sort of incident made it harder to persuade Britons to vote to stay in the EU. He was backed by Renzi who denounced "bureaucrats without a heart".<br /><br />Visible shaken by the firestorm, Barroso said the matter had been handled "at a technical level" without his knowledge.<br /><br />As the longest-serving EU leader, Merkel presented Barroso and European Council President Herman Van Rompuy, who chairs EU summits, with a gift of fine porcelain plates at a farewell lunch -- a delicate gift to end a tempestuous assignment.

Departing Barroso sees European Union stronger after euro debt crisis

Outside the European Commission's hulking headquarters, a poster on a street lamp proclaims "Titanic: final weeks". It is adve...

Federal Reserve to take away the punch bowl

Unless it springs a major surprise, the U.S. Federal Reserve will call time this week on its program of government bond purchases, which at one point was pumping $85 billion a month into financial markets and the economy.<br /><br />James Bullard, who heads the St. Louis Fed, has suggested that sticking with bond purchases for a few more months would give policymakers time to assess a deteriorating inflation outlook.<br /><br /><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhQabqXrnF8PYgg6k6NbpI-N_nwuefOUVKo6sygW7Wrw35GCGU2nJdgdrxeXvEFTM64ZF0APSMr-qCIIuZXz1wmpYIvswH9MgPD595h5syaEvwWyieVcgzq81FAXldN0T7cgtK-V_tyJj8/s1600/1unti2.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="160" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhQabqXrnF8PYgg6k6NbpI-N_nwuefOUVKo6sygW7Wrw35GCGU2nJdgdrxeXvEFTM64ZF0APSMr-qCIIuZXz1wmpYIvswH9MgPD595h5syaEvwWyieVcgzq81FAXldN0T7cgtK-V_tyJj8/s1600/1unti2.png" width="320" /></a>That helped markets to calm from a violent sell-off 10 days ago but economists expect the Fed to turn off its money taps on schedule on Wednesday, while giving accompanying assurances that it will respond if a global downturn threatens its economy.<br /><br />"We remain optimistic that the recent upshift from 2 percent to 3 percent growth will be sustained," economists at Bank of America Merrill Lynch said in a note.<br /><br />It may well be that the Fed keeps U.S. interest rates virtually at zero for longer given tumbling energy prices and an absence of wage growth. Investors have already pushed expectations for an initial rate rise back several months to late next year.<br /><br />Global concerns are centered on the extent of China's slowdown and the malaise in the euro zone, over which the specter of deflation still hovers.<br /><br />Results of stress tests on European banks, announced on Sunday, showed 25 banks had failed as of the end of 2013 but most have since repaired their finances.<br /><br />The European Central Bank has staked its reputation on this exercise, hoping it will draw a line under years of financial and economic turmoil. But whether it leads to a resurgence of bank lending is uncertain given the euro zone's economic doldrums.<br /><br />"Thinking that lending somehow can lead GDP is an illusion, and I don’t know how that has somehow crept into the policy debate," said Erik Nielsen, chief global economist at Unicredit.<br /><br />"Businesses need to believe in an increase in the demand for their products before asking for credits, and now that external demand growth is no longer there, this is when the euro zone needs demand stimulus."<br /><br />Euro zone inflation data in the week to come will show whether the threat of deflation has eased at all. The consensus is for the headline rate to have edged up to 0.4 percent in October but that will bring little comfort.<br /><br />Germany’s Ifo sentiment survey will give a glimpse of how things are going for Europe’s largest economy in the last three months of the year. It contracted in second quarter and is unlikely to have done a lot better in the third.<br /><br />ECB'S SHOULDER TO THE WHEEL<br /><br />The ECB’s three-pronged plan to push money into the faltering economy involves offering banks new cheap long-term money on the condition that they lend it on, coupled with purchases of covered bonds and asset-backed securities.<br /><br />Reuters exclusively reported last week that the ECB may also buy corporate bonds but there is no certainty that the combined effort will do enough to lift growth and inflation.<br /><br />Full-on quantitative easing of the sort the Fed is now winding up remains politically difficult to countenance.<br /><br />On Monday the ECB will announce how many covered bonds, which are backed by high-quality assets so holders may be reluctant to give them up, it bought in its first week in the market.<br /><br />The euro malaise has intensified a debate about debt-cutting over growth-boosting spending.<br /><br />The European Commission has until Wednesday to decide whether to throw back France's draft 2015 budget after Paris said it would not meet EU deficit limits until 2017.<br /><br />Paris has said it will not accept demands for deeper cuts than already planned. Italy is making a similar case.<br /><br />The hope is that a renewed French and Italian commitment to economic reforms will persuade Germany to loosen its purse strings and the ECB to act more forcefully.<br /><br />But Germany continues to rebuff suggestions that it should increase public spending and insists it will balance its budget next year for the first time since 1969 despite the fact it is flirting with recession.<br /><br />People familiar with its deliberations said the Bank of Japan, which has tried for two decades to banish deflation, will resist pressure at this week's policy meeting for more stimulus measures or to accept that its inflation target is unrealistically high.<br /><br />It is preparing to roughly halve its 1 percent economic growth forecast for this fiscal year, but will stick to its prediction that inflation will hit its 2 percent target in the year from next April.<br /><br />Having spent $15 billion of its reserves trying, and largely failing, to underpin the rouble, Russia's central bank faces a difficult policy decision on Friday.<br /><br />There is growing speculation it may soon raise rates to support the rouble, which is being hit by plunging oil prices and Western sanctions imposed over the Ukraine crisis.

Federal Reserve to take away the punch bowl

Unless it springs a major surprise, the U.S. Federal Reserve will call time this week on its program of government bond purchases, which at ...

FINANCE MINISTRY JOINS CENTRAL BANK IN DEFENDING RUSSIA'S WEAKENING CURRENCY

The ruble sank to another historic low Wednesday, passing the 41 per U.S. dollar mark twice in morning trading as the Finance Ministry announced it was joining the Central Bank in moves to defend Russia's rapidly weakening currency.<br /><br /><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg466E0joOHkerHGuZ5a0Nw7gTI_s2-vLcRbXREFxZB17ZNbl-78yR2sPGbQvjSHTvSwmPPLXeN79egqhyun33Cpsmi13fz6gPApgORppOlly-njKyoQIBtMKNrGqWdXRNFnern_g71t7U/s1600/Ruble-Stulov-Vedomosti.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="426" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg466E0joOHkerHGuZ5a0Nw7gTI_s2-vLcRbXREFxZB17ZNbl-78yR2sPGbQvjSHTvSwmPPLXeN79egqhyun33Cpsmi13fz6gPApgORppOlly-njKyoQIBtMKNrGqWdXRNFnern_g71t7U/s1600/Ruble-Stulov-Vedomosti.jpg" width="640" /></a></div><br />Shortly after midday a dollar was worth 41.04 rubles, the Russian currency's lowest level since being restructured in the 1998 default crisis. It is just a week since the ruble breached the 40 to the dollar mark for the first time.<br /><br />The ruble also set a new low against the euro, its third in three days, ploughing past 52 to the euro shortly after 5 p.m. in Moscow.<br /><br />Pressure on the ruble, already battered by tension over Ukraine and Western sanctions on the Kremlin, has intensified since the beginning of the week as the price of crude oil, Russia's key export and the backbone of its state finances, plunged to four-year lows.<br /><br />"Ruble weakening has become the dominant theme, with the Central Bank the lonely seller," analysts at Sberbank CIB said in a research note Tuesday.<br /><br />The Central Bank said Wednesday that it had spent $2.72 billion of foreign currency between Friday and Monday, as the total amount of reserves spent buoying the ruble already this month edges toward $10 billion.<br /><br />The ruble pared losses later in the day, falling to 40.68 against the dollar in the early evening.<br /><br />One spur for the afternoon correction was a statement by Finance Minister Anton Siluanov, who said Russia would begin foreign exchange deposit auctions within a month.<br /><br />Siluanov said such a move would slightly reduce pressure on the ruble. A representative of the Central Bank told the Prime economic news agency that the auctions would help meet demand for foreign currency.<br /><br />The amount of money available to the Finance Ministry for this type of operation was probably around $5.7 billion, according to Dmitry Polevoy, ING Bank's chief economist in Russia. But he added that while it may slow the ruble's decline, it was unlikely to stop it.<br /><br />"Given the scale of the market stress, the Finance Ministry deposits alone won't be able to cure the foreign exchange market," Polevoy said in a note to investors Wednesday.<br /><br />Brent oil fell to a new four-year low of $83.9 per barrel in London on Wednesday. Crude had recorded its biggest one-day fall in three years a day earlier and has plunged over 20 percent since a mid-June high.<br /><br />"Weak oil is having a direct impact on the national currency, which could lead to fresh historical lows against the dollar," analysts at Promsvyazbank said in a note Tuesday.<br /><br />The Central Bank said Wednesday that it had lifted its proscribed trading corridor for the ruble, which it uses as a guide for market interventions, by 35 kopeks Tuesday. The upward shift was the 11th such move since the beginning of this month.<br /><br />The Central Bank automatically sells its foreign currency reserves on the market once the ruble overshoots the boundary set for it, shifting the trading corridor by 5 kopeks every time it spends $350 million.<br /><br />A shift of 35 kopeks indicates that the Central Bank, which releases foreign currency data with a two day time lag, spent about $2 billion Tuesday in efforts to strengthen the currency.<br /><br />Few experts predict that the ruble will reverse its recent falls in the face of weakening crude prices and the continuing impact of Western sanctions on Russia, which is struggling to avoid a recession after a sharp slowing of growth last year.<br /><br />While causing pain for importers, ruble devaluation generates extra money for Russian commodity exporters and extra money for the government's coffers through increased tax revenues.<br /><br />"It is interesting how the Central Bank is not panicking," Timothy Ash, head of emerging market research at Standard Bank, said in a note to investors Wednesday. "They appear comfortable with ruble weakness — seeing this as an escape valve for market concerns and also a likely kicker for growth."

FINANCE MINISTRY JOINS CENTRAL BANK IN DEFENDING RUSSIA'S WEAKENING CURRENCY

The ruble sank to another historic low Wednesday, passing the 41 per U.S. dollar mark twice in morning trading as the Finance Ministry annou...

FORMER YUKOS INVESTORS EYE RUSSIAN ASSETS IN EUROPE AND U.S.

Former investors in defunct oil firm Yukos will ask U.S. and EU courts to expropriate Russian-owned assets on their territory as part of a $50 billion damages ruling made by the Hague arbitration court in June, German newspaper Der Spiegel reported Monday.<br /><br />Yukos was bankrupted and dismembered in the 2000s as the Russian government seized key oil assets from oligarchs who had snapped them up on the cheap during Russia's chaotic 1990s privatizations. Two of Yukos' owners, Mikhail Khodorkovsky and Platon Lebedev, spent about a decade in prison. Others fled, joining overseas investors fighting for compensation.<br /><br />Tim Osborne, the lawyer representing the interests of exiled Russian billionaires and former Yukos shareholders Leonid Nevzlin and Vladmir Dubov, said the case for expropriating Russian assets would soon be brought before German courts, Russian business daily Vedomosti cited Der Spiegel as saying.<br /><br />Osborne added that the group was also moving to bring similar cases to courts in the U.S., Britain, the Netherlands and France.<br /><br />If German courts decide in the investors' favor, fees paid by German energy firms for Russian gas could be handed over to the plaintiffs, according to Der Spiegel. Russia's state-controlled Gazprom provides 38 percent of Germany's natural gas.<br /><br />In June, the Hague ordered Russia to pay $50 billion to Yukos investors after ruling that Russia had broken the Energy Charter Treaty when it nationalized the company to pay for its alleged tax evasion. The court also demanded that the Russian government pay court fees of $65 million.<br /><br />In its ruling, the court wrote: "The primary objective of the Russian Federation was not to collect taxes but rather to bankrupt Yukos and appropriate its valuable assets."<br /><br />Russia's Finance Ministry said at the time that it planned to appeal against the decision, calling it "politically biased."<br /><br />Before its demise, Yukos was one of Russia's largest oil and gas companies and was the first to embrace transparent management and seek Western finance and participation. After state prosecutors exploded the company with charges of massive tax evasion its key assets were hived off to small state-owned oil firm Rosneft. Then a small time player in the energy market, Rosneft has become one of the world's biggest oil majors.<br /><br />In July the European Court of Human Rights ruled that Russia must pay ex-Yukos shareholders 1.86 billion euros ($2.37 billion) in compensation for the nationalization of Yukos, a decision that the Finance Ministry rejected as unfair.<br /><br /><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh1QOcKXty5xHCGIFutBS_2LVr7v76MwGyEEpQvCZNcAJEds3nQzc9cDoy9puwfRUiPR7SQL_Cu1r26mtl8QB92w8a4vbX0byyl6InislAznChGtj5IjTCDFV_sthjlHavenlg4zzsvQA8/s1600/rYukos.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="426" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh1QOcKXty5xHCGIFutBS_2LVr7v76MwGyEEpQvCZNcAJEds3nQzc9cDoy9puwfRUiPR7SQL_Cu1r26mtl8QB92w8a4vbX0byyl6InislAznChGtj5IjTCDFV_sthjlHavenlg4zzsvQA8/s1600/rYukos.jpg" width="640" /></a></div><br />

FORMER YUKOS INVESTORS EYE RUSSIAN ASSETS IN EUROPE AND U.S.

Former investors in defunct oil firm Yukos will ask U.S. and EU courts to expropriate Russian-owned assets on their territory as part of a $...

PUTIN signs law curbing foreign ownership in "Russlan Media"

President Vladimir Putin has signed into law a widely criticized bill limiting foreign ownership in Russian media assets to 20 percent, according to a document published Wednesday on the government's legal information website.<br /><br /><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgk7qbfy7NDK_lwZWwbYUUhDRYSMIz7L4I8CJGdeLl6KCsRzh5VE6JRuDk-W6yf_TM3-IKAwBLCOJLZHMqTVtHlKi3ZAQGseTEJJOAVADDBAt1WmDyc3lSNPlAVrddSzpFoP6qrZM_Dw54/s1600/rmagazines-newspapers.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="422" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgk7qbfy7NDK_lwZWwbYUUhDRYSMIz7L4I8CJGdeLl6KCsRzh5VE6JRuDk-W6yf_TM3-IKAwBLCOJLZHMqTVtHlKi3ZAQGseTEJJOAVADDBAt1WmDyc3lSNPlAVrddSzpFoP6qrZM_Dw54/s1600/rmagazines-newspapers.jpg" width="640" /></a></div><br />The law will force some of the world's largest media companies — including Conde Nast, Hearst Corporation and Axel Springer — to sell off or shut down their Russian assets by Feb. 1, 2017.<br /><br />It will also directly impact The Moscow Times' owner Sanoma Independent Media, the Russian branch of Finnish media group Sanoma and one of Russia's largest publishing houses.<br /><br />The media bill galloped from proposal to new legal reality in under a month over the objections of industry players and the companies concerned. An earlier law had limited foreign shares in radio and television to 50 percent but bypassed print media.

PUTIN signs law curbing foreign ownership in "Russlan Media"

President Vladimir Putin has signed into law a widely criticized bill limiting foreign ownership in Russian media assets to 20 percent, acco...

BRITAIN may block $6.5 billion russian energy deal

A $6.5 billion attempt by Russian billionaire Mikhail Fridman to buy the oil and gas operations of German utility firm RWE, which has operations in British coastal waters, could be blocked by London, the Financial Times reported Wednesday.<br /><br /><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgO9J9kVJixG_z53AeXSLDgoaS7sCieGox0KhavO8YG7sx9bhGkVSTIzIlhdmNZrRKK9RaWI-yjk0bfJs4y3gss1B9bJlwkdQUEj2dHq2bYUG6zkzSk9S7U7SK9qSpaOCVw8MgMbwmExfo/s1600/rFridman.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="426" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgO9J9kVJixG_z53AeXSLDgoaS7sCieGox0KhavO8YG7sx9bhGkVSTIzIlhdmNZrRKK9RaWI-yjk0bfJs4y3gss1B9bJlwkdQUEj2dHq2bYUG6zkzSk9S7U7SK9qSpaOCVw8MgMbwmExfo/s1600/rFridman.jpg" width="640" /></a></div><br />The purchase, if completed, would be the first major acquisition for Fridman's Luxembourg-based fund LetterOne. The fund was set up last year to invest proceeds from the sale by Russian tycoons of their stake in private Russian oil firm TNK-BP to state owned Rosneft last year.<br /><br />United Kingdom Energy Minister Ed Davey was "not minded" to give official approval to the sale, the Financial Times reported citing unnamed sources.<br /><br />The U.K. government is apparently reluctant to approve the sale due to Western sanctions imposed this year on Moscow for its annexation of the southern Ukrainian region of Crimea and support for separatist rebels in the east of the country.<br /><br />Fridman is not among dozens of Russian businessmen and officials who have been hit with asset freezes and travel bans as a result of sanctions. LetterOne is not a sanctioned company.<br /><br />A consortium of four Russian billionaires, including Fridman and German Khan, his business partner in LetterOne, were handed $28 billion for their stake in TNK-BP in a $55 billion deal last year. The sale turned Russia's state-owned Rosneft, a key target of Western sanctions, into the biggest publicly-listed oil company in the world.

BRITAIN may block $6.5 billion russian energy deal

A $6.5 billion attempt by Russian billionaire Mikhail Fridman to buy the oil and gas operations of German utility firm RWE, which has operat...

IS RUSSIA HEADING FOR ANOTHER 1998-STYLE CRISIS?

Not since the financial crisis of August 1998 has Russia faced the very real possibility of a currency crisis that could seriously threaten the fundamental stability of the country's economic and political system.<br /><br />Though the ruble's loss of 20 percent of its value this year falls well short of the 70 percent collapse in 1998 and is even lower — in relative terms — than the 30 percent decline experienced in 2008, there are key parallels between the 1998 crisis and the crisis developing in Russia today. Both Russia's leaders and citizens would do well to remember the lessons of August 1998 as they face the coming storm.<br /><br /><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh0IaKVsT_5d-eZrR5KsVunZ2xqz10C6-gm32he07V_xDOfmPgE82lEzmAlNkQUXIJcfJYsOlRfDdC_oM5FV2rSsp3iSpGxeBphwQVa-VG5XYkrP6ylY-Yaf0VWJjxoCxtuJPPQhHt_A2w/s1600/ruble.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="213" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh0IaKVsT_5d-eZrR5KsVunZ2xqz10C6-gm32he07V_xDOfmPgE82lEzmAlNkQUXIJcfJYsOlRfDdC_oM5FV2rSsp3iSpGxeBphwQVa-VG5XYkrP6ylY-Yaf0VWJjxoCxtuJPPQhHt_A2w/s1600/ruble.jpg" width="320" /></a>There is a wide range of macroeconomic forces that can influence the exchange rate through supply and demand for the national currency. Importantly, most of these forces lie outside the control of the government. The Asian financial crisis of 1997 issued a collective wakeup call to international lenders as they realized the mistake of their myopic enthusiasm for investment in developing economies.<br /><br />Having awoken to the fundamental weaknesses in these economies, investors became risk averse toward developing economies — Russia included — almost overnight. Russia's access to foreign borrowing was cut off at the very same time that oil prices — the country's eternal economic crutch — were declining. Falling oil prices meant fewer dollars coming into Russia, thus strengthening the dollar against the ruble, as well as less revenue going into state coffers. The foundations of a debt crisis were set.<br /><br />By 1998, years of post-Soviet economic decline, a costly war in Chechnya and unsustainable social spending had nearly bankrupted the Russian state. The government and many private firms were heavily burdened with foreign loans denominated primarily in dollars with few willing lenders remaining.<br /><br />Regardless of the value of the ruble, these loans had to be repaid in dollars when they came due. Thus, the Russian government had a major interest in propping up the ruble: It would cost far more rubles to pay off these loans at 20 rubles to the dollar than it would at 6 rubles to the dollar. It was able to do so only as long as it had the currency reserves to buy up excess rubles on currency markets with dollars, thereby reducing the ruble's supply and maintaining the currency's value.<br /><br />By August 1998, the country had burned through $27 billion, exhausting its foreign currency reserves until it could no longer defend the currency. This resulted in a de facto "float" that revealed the true market price of the ruble, far below the futile peg that former Russian President Boris Yeltsin's government had tried to defend.<br /><br />Currency crises like the one in August 1998 are often characterized by a vicious downward spiral of self-fulfilling prophecies. As expectations rise that the government will eventually fail in its efforts to defend the currency, more and more ruble holders will convert their rubles into stabler currencies. Demand for rubles falls while demand for dollars rises, putting downward pressure on the Russian currency. Furthermore, these transactions flood the market with even more rubles that the government is forced to buy up if it hopes to maintain the currency's value.<br /><br />Since nobody wants to be the last man holding rubles when the currency collapses, this spiral can exacerbate and accelerate the coming collapse. Speculative attacks only add fuel to this fire.<br /><br />Though Putin's Russia in 2014 is a vastly different country than Yeltsin's Russia in 1998, the parallels between the two eras are strong enough to warrant Russians to take heed. Though the government does not have the same debt burden today, neither does it have infinite reserves.<br /><br />A costly intervention in Ukraine's ongoing conflict, the costs of integrating Crimea into Russia, falling oil prices, unsustainable budget expenditures for the sake of maintaining regime support, and billions wasted defending the ruble could quickly drain the country's estimated $450 billion in reserves. By comparison, the 2008 intervention to defend the ruble cost $200 billion. Though it can hold out for much longer than it did in 1998, Russia cannot withstand falling oil prices and exchange rates forever, especially if sanctions drag on.<br /><br />If Russia reaches the day when it has exhausted its reserves, it will struggle to find willing lenders, just as it struggled in 1998. But this time it won't just be due to risk aversion on the part of international lenders; sanctions on Russia's largest banks have choked off much of the country's access to international borrowing.<br /><br />This reality lays the foundation for a new debt crisis that could rock the public and private sectors as Russian firms struggle to service existing debts without access to additional international borrowing. As was the case in 1998, most of those existing debts are denominated in dollars — and now in 2014 — euros. Businesses are well aware that those debts will become increasingly costly to repay as the ruble spirals downward.<br /><br />And so the vicious cycle takes hold. Indebted businesses snatch up what few dollars and euros they can acquire on already-strained domestic markets, fueling the ruble's fall. Firms with large holdings in rubles exchange them for foreign currencies as a hedge against further devaluation. The ruble falls further.<br /><br />Eventually, the man on the street will realize that his life savings — what little there may be — are evaporating as the ruble slides further. The self-fulfilling prophesy becomes reality as ordinary Russians struggle to meet the basic needs of their families amid rampant inflation.<br /><br />Two key consequences of the August 1998 crisis are worth remembering. First, the country's economic trajectory was put in a tailspin once again, with Russians' real wages falling to their lowest level in the post-Soviet era. Russia's economy would recover only with the rebound in oil prices during the ensuing decade. There is no guarantee that Russia can count on such fortune today, and the full economic costs of Russia's current confrontation with the West remain to be seen. However they tally, they will be steep.<br /><br />Second, the 1998 crisis was a watershed moment in Russia's political development. The people of Russia, beaten down by years of economic trauma and failed reforms, were ready by 1998 for anyone but Yeltsin. Russians demanded anyone who could restore order and stability to Russia's economic and political system; Russians demanded the anti-Yeltsin.<br /><br />August 1998 set the stage for the rise of Vladimir Putin, the anti-Yeltsin. Should the vicious cycle of economic crisis grip Russia once again, we can only imagine what kind of "anti-Putin" could rise from the ruins.-Robert Person

IS RUSSIA HEADING FOR ANOTHER 1998-STYLE CRISIS?

Not since the financial crisis of August 1998 has Russia faced the very real possibility of a currency crisis that could seriously threaten ...

Russian Finance Minister: RUSSIA NEEDS BACKUP BUDGET FOR WORST-CASE SCENARIO

Russia must create a contingency budget to counter the threat that Western sanctions, economic stagnation and low oil prices will dash the country's hopes of restoring growth in the near term, Finance Minister Anton Siluanov said Friday.<br /><br /><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjpkmfa6c_Un-25sBN8lIeA64M-VVOIwEjxbbJs105NgNLrsau0uSryOhT48CQozPuueBf4eHyIvGmzSfkxcEDdhlDn62j3Op2n7X-anKzqRyD6qDJF7G4rXyhOcb2HU2t3SRLOJAUrcPo/s1600/Anton_Siluanov.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="426" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjpkmfa6c_Un-25sBN8lIeA64M-VVOIwEjxbbJs105NgNLrsau0uSryOhT48CQozPuueBf4eHyIvGmzSfkxcEDdhlDn62j3Op2n7X-anKzqRyD6qDJF7G4rXyhOcb2HU2t3SRLOJAUrcPo/s1600/Anton_Siluanov.jpeg" width="640" /></a></div><br />"A budget cannot constantly have expenses that were drafted in a different economic reality. We must always have another version in case times like these continue," Siluanov said in a speech to Russia's parliament, the State Duma, news agency RIA Novosti reported.<br /><br />The latest budget for 2015-17, which faced its first reading in the State Duma on Friday, is based on the optimistic forecast that sanctions will ease and oil prices next year will average $100 per barrel. The budget predicts GDP growth of 1.2 percent next year, 2.3 percent next year and 3 percent in 2016.<br /><br />This scenario looks increasingly far-fetched: Economic growth has crashed in 2014, with a recent World Bank forecast predicting growth of 0.5 for this year, 0.3 percent next year and 0.4 percent in 2016. Western sanctions on Russia over its actions in Ukraine show no sign of letting up and the price of Brent crude oil — the global benchmark — was at $86 per barrel on Friday amid a global supply glut that will likely keep prices depressed in the short term.<br /><br />Siluanov has criticized the budget before. At an investment summit late last month he called the budget's forecast "optimistic" and said Russia "will have to try very hard to ensure the planned growth rates," according to Reuters.<br /><br />Experts polled by The St. Petersburg Times noted previously that the 2015-17 budget is crippled by new expenses and past promises that are now too exorbitant to fulfill, including the cost of supporting Crimea — which Russia annexed from Ukraine in March — and the state's massive $700 billion rearmament program.<br /><br />Lower budget revenues led to a controversial decision earlier this year to use contributions to privately managed pension funds to fill gaps in the state budget for the second year in a row. The move was heavily criticized by economists, who said that it will both increase the state's future spending obligations and deprive nascent markets of strong institutional investors.<br /><br />Siluanov on Friday also asked Russian lawmakers for permission to use, if necessary, up to 500 billion rubles ($12 billion) from the government's Reserve Fund, an oil-revenue-funded piggy bank, to fulfill spending obligations next year.<br /><br />"We created [the fund] for this, and there are now more than 3 trillion rubles ($72 billion) in the Reserve Fund," RIA Novosti quoted Siluanov as saying.<br /><br />At the same time, the minister warned that the fund is "not infinite" and urged lawmakers to optimize government programs and bring state spending in line with the budget's limitations.

Russian Finance Minister: RUSSIA NEEDS BACKUP BUDGET FOR WORST-CASE SCENARIO

Russia must create a contingency budget to counter the threat that Western sanctions, economic stagnation and low oil prices will dash the c...