NEWS,07.10.2012

Chavez's socialist rule at risk as Venezuelans vote

Venezuelans have voted with President Hugo Chavez's 14-year socialist revolution on the line as the leftist leader faced youthful rival Henrique Capriles in his toughest electoral challenge yet. Henrique Capriles, a centrist state governor, edged toward the still popular Chavez in final polls thanks to a vigorous campaign that united the opposition and made him its best chance of ending Chavez's 14-year rule.Chavez has used record oil revenue to support ideological allies around the world, while preaching a fiercely anti-US line, so the election will be watched eagerly from the United States to Belarus and Iran.Across the poor neighbourhoods where the flamboyant former soldier draws his most fervent following, loyalists prepared to blow bugles and trumpets in a predawn wake-up call for voters.Opposition sympathizers banged pots and pans in a protest against Chavez on Saturday night, creating a racket in the upscale neighbourhoods of eastern Caracas. In the city centre, which is more pro-government, the noise was drowned out by supporters playing his campaign music and shouting his name."I ask political actors from the left, right and centre to prepare emotionally to accept tomorrow's results. It's not going to be the end of the world for anyone," Chavez said at a last- minute news conference at the presidential palace.The 58-year-old president staged a remarkable comeback from cancer this year. But he could not match the energy of past campaigns - or the pace set by his 40-year-old basketball-loving opponent.Most well-known pollsters put Chavez in front. But two have Capriles just ahead, and his numbers have crept up in others.There is a risk of violence if the result is contested.There will be no formal international observers, although Venezuela invited a delegation of the UNASUR group of South American nations to "accompany" the vote.Local groups will be monitoring and both sides say they trust the electronic, fingerprint vote system. The opposition says it will have witnesses at all of the 13,810 polling centres from tiny Amazon villages to tough Caracas slums.Capriles geared up on Saturday for the vote by hiking a mountain trail at the edge of Caracas that is popular with athletic Venezuelans. He donned running clothes and mirrored sunglasses, and posed for pictures with supporters.Chavez spent about half an hour in the evening speaking to reporters alongside members of the UNASUR delegation, headed by an Argentine politician. Asked by one reporter if he wanted to stay in office beyond 2018, he glibly replied, "Twenty years is nothing," in reference to a popular Argentine tango song.Capriles shot back via Twitter. "Right now some people continue with the same nonsense and the same stories as always, the difference is this time they're on their way out!"In a politically polarised country where firearms are common and the murder rate is one of the highest in the world, tensions have risen alongside weeks of tough campaign rhetoric, and both camps are vowing to "defend" their votes.Capriles would face big challenges Chavez accuses the opposition of plotting violence and planning to "reject the people's triumph" when he wins, but says that effort will be defeated. Some opposition activists fear he could refuse to step down if the result goes against him.Victory for Capriles would remove the most vocal critic of the United States in Latin America, and could lead to new deals for oil companies in an OPEC nation that pumps about 3 million barrels a day and boasts the world's biggest crude reserves.Capriles wants to copy Brazil's model of respect for private enterprise with strong social welfare programs if he is elected - but he would face enormous challenges from day one.For a start, he would not take office until January 2013, meaning Chavez loyalists might throw obstacles in the way of the transition.He also would have to develop a plan to tackle entrenched high inflation, price distortions and an over-valued currency, while surely butting heads with the National Assembly, judiciary and state oil company PDVSA - all dominated by Chavez loyalists.Another big task would be to figure out the real level of state finances. Last month, a Reuters investigation found that half of public investment went into a secretive off-budget fund controlled by Chavez and had no oversight by Congress.The president has denounced his foes as traitors and told voters they plan to cancel his signature social "missions," which range from subsidized food stores to programs that build houses and pay cash stipends to poor women with children.Tens of thousands of new homes have been handed over this year, often to tearful Chavez supporters at televised events.If Chavez wins, he can consolidate his control over Venezuela's economy and continue his support for leftist governments across Latin America, as well as allies farther afield such as Iranian President Mahmoud Ahmadinejad, Syria's Bashar al-Assad, and Alexander Lukashenko of Belarus.

Spain faces fresh street protests

Thousands of Spaniards have marched in cities across the country to decry tough austerity measures, part of a growing protest movement that shows no signs of abating and could culminate in a general strike in November.Hundreds of thousands of Spaniards took to the streets yesterday, creating a headache for the centre-right government as it faces regional elections and tries to assure investors the country is stable.Spanish labour unions said they would call a general strike if the government did not hold a referendum on unpopular spending cuts. Prime Minister Mariano Rajoy unveiled 13 billion euros in additional savings in a tough budget last month."It's up to the government whether there's a general strike or not. If they were going to hold a referendum things would be completely different," said Ignacio Fernandez Toxo, leader of Spain's biggest union, Comisiones Obreras. Spain is now at the eye of the euro zone storm, with expectations mounting that the government will soon seek European aid to keep its borrowing costs under control."It's shameful - we're losing everything," said Carmen Lopez, a department store worker at Sunday's protest in the capital. "Pensions, salaries, public healthcare and education. They're taking everything."Some 60,000 people attended the union-organised march in the centre of Madrid. "How can there be peace without bread?" and "Their plunder, my crisis", placards read."I'm a teacher and they've really cut back in education - there are fewer resources, fewer teachers and more students," said Agustin Moreno, who teaches in the Madrid neighbourhood of Vallecas."We will do everything we can. We will keep protesting," he added.Protesters were decked out in the colours of various unions, and many wore T-shirts saying "I used to have social and labour rights"."They're taking away help for people who are unemployed, just at the time when people most need the help," said primary school teacher Francisca Valverde.Protests were taking place in dozens of cities on Sunday, but there were no reports of any violence.Under pressure Rajoy's People's Party (PP) faces regional elections in Galicia, the Basque Country and Catalonia - increasingly vocal about its desire to break away from Spain - in the coming weeks.In the wake of violence during a protest in Madrid on September 25, Rajoy urged a business audience in New York last week to focus on the "silent majority" of Spaniards who do not protest.But a survey in El Pais newspaper on Sunday showed 77% of Spaniards support the protesters, while more than 90% think protests will become more frequent.The government is increasingly unpopular at home and must convince uneasy investors that it can keep a lid on social unrest and carry out its austerity policies.The right to protest has become a topic of fierce debate in Spain since the September 25 demonstration ended in 35 arrests and left 64 people injured.Last week politicians from the ruling People's Party (PP) said laws surrounding protests should be tightened up, with Madrid's local government chief Ignacio Gonzalez saying the capital was in "a constant state of collapse" because of demonstrations.But a Spanish court on Thursday threw out a police case against the organisers of the protest, saying people had a right to express their opinion. The court will also investigate police brutality at Madrid's Atocha station during the demonstration.

Wall Street: US companies 'blaming' weakness in Europe

Wall Street may be bracing for a pullback as US season begins next week - if the clouds of profit warnings from bellwethers ranging from FedEx to Hewlett-Packard lead to a downpour of lower profits - or even losses.Thanks to aggressive stimulus plans from central banks around the world, the Standard & Poor's 500 index. SPX gained 5.8% over the third quarter.That sharp rally occurred even as companies were struggling. Earnings for that period are forecast to fall 2.4 percent from the year-ago quarter. If that happens, this would be the first earnings decline in three years..Market strategists and investors say US stock valuations are broadly out of sync with earnings estimates.They forecast a pullback in stocks in the coming weeks as more companies report results and reduce expectations for the fourth quarter and beyond.Fourth-quarter estimates for S&P 500 companies show a 9.5% gain in profit from a year ago, according to Reuters data. Analysts say that outlook is too high, given what investors are already hearing from the corporate world."It's a divergence right now where the valuations as far as equity prices (are concerned) have soared, and are really putting in place a stronger economy and stronger fundamentals," said Alan Lancz, president of Alan B. Lancz & Associates, an investment advisory firm in Toledo, Ohio."But earnings will be the telltale sign," Lancz added. "And if the guidance isn't particularly strong, the market might be setting itself up for a little disappointment. I don't see a major correction, but I do see a pullback."The earnings season will kick off on Tuesday with results from after the bell.Analysts expect Alcoa's third-quarter results to show it broke even, down from a profit of 15 cents per share a year earlier.JPMorgan Chase & Co and Wells Fargo, the first big financial names to report, are also on tap next week.Blame Europe Nearly half of S&P 500 companies guiding lower for third- quarter earnings blamed weakness in Europe, according to a Thomson Reuters survey.Another 11% blamed the weak global economy, 8% cited strength in the US dollar, and 6% cited the slowdown in China, the survey showed.Weakness in the US economy has not helped. The final read on US second-quarter gross domestic product last month showed growth of just 1.3%, weaker than an expected 1.7%.On Thursday, software maker Informatica issued a profit warning and said business conditions were worsening in Europe. The software company is considered a bellwether because its products are used alongside those made by larger software companies."Parts of Europe aren't just in recession, they're in depression," said Jeff Kleintop, chief market strategist at LPL Financial in Boston. "I think (analysts) underestimated the extent of the global slowdown, and maybe are still underestimating it."Tech feels chill from China While estimates have come down sharply in all 10 S&P 500 sectors since the start of the year, technology is one area where the lower expectations are most notable. Slower growth in China is a big factor in that trend.Earnings growth in the tech sector is expected to be just 2.3% for the quarter, compared with a July 1 forecast of 13.1%.Apple is a big driver of those gains.Technology's profit growth has been crucial for the S&P 500. Minus technology, S&P 500 earnings are expected to be down 3.4%.The tech sector is where the slowdown in China's economy is having the biggest impact, Kleintop said."They consume a lot of US technology products," he said.Recent data shows that the pace of growth in China, the world's second-largest economy, may slow for a seventh quarter, straining earnings in the tech and materials sectorsApplied Materials lowered its third-quarter estimates in August, citing China and Europe. On Wednesday, the chip gear maker said it planned to cut its global work force by 6% to 9%.FedEx, the world's second-largest package delivery company, cut its fiscal 2013 forecast on September 18, saying a weakening global economy gives its customers a reason to switch to less expensive and slower shipping options. FedEx said its earnings could drop as much as 6% for its fiscal 2013 year, which will end in May.On Wednesday, shares of Hewlett-Packard fell a whopping 13% to a nine-year low after it forecast a far steeper-than-expected drop in 2013 profit.The slide in HP's stock price sharply cut the Dow industrials' gains for the day.The S&P 500 sectors showing the biggest projected earnings decline are materials, forecast down 24%, and energy, expected down 18.8%, data show, with those declines tied largely to the global slowdown.In contrast, consumer discretionary stocks are expected to have the strongest profit growth for the quarter data showing a gain of 7.7%.

NEWS,20.06.2012

Greek coalition takes power

A conservative-led government took power in Greece today promising to negotiate softer terms on its harsh international bailout, help the people regain their dignity and steer the country through its biggest crisis for four decades.The swearing-in of Antonis Samaras as prime minister after elections last Sunday ended weeks of uncertainty that rattled financial markets and threatened to push near-bankrupt Greece out of the euro zone.Samaras, a Harvard-educated economist from a prominent Greek family, will head an alliance of his New Democracy party and Socialist PASOK rivals - the same discredited establishment parties which have dominated politics since 1974."I am fully aware how critical this time is for our nation," Samaras said after he was sworn in at a ceremony conducted by robed Orthodox priests at the presidential mansion."I know very well that Greek people are hurt and need to regain their dignity. I know that the economy must quickly recover to re-establish social justice and cohesion."The coalition parties are in a race to overcome public disgust with their records, face down an emboldened leftist opposition that narrowly failed to win the election, and persuade reluctant euro zone partners to ease the terms of a bailout that has caused deep economic suffering.The cabinet has yet to be named, although a technocrat banker is expected to become finance minister.Party leaders said a team would be formed to renegotiate the terms of the hated 130 billion euro rescue plan with the European Union and IMF, setting up a showdown with the lenders led by paymaster Germany who say they will adjust but not re-write the document.New Democracy and PASOK have little history of cooperation, having alternated in office from the fall of military rule in 1974 until last year, when the economic crisis forced them to share power in a short-lived national unity government.Their coalition will be the first in Greece in decades with an unrestricted mandate - last year's unity government and a coalition that took power in 1989 both had limited powers.The alliance will also be backed by the small Democratic Left party, whose leader Fotis Kouvelis called on the government "to gradually disengage from the terms of the bailout that has bled society".An official from one of the three parties in the coalition said that they had agreed to name National Bank Chairman Vassilis Rapanos as finance minister.Rapanos is an economics professor who worked closely on reforming the economy with a previous Socialist government.Other ministers were expected to be named later.Humiliated People Greece's crisis has left its people not only poorer but feeling humiliated.As the political leaders wrapped up talks on a government, hundreds of Greeks - many until recently members of the prosperous middle classes - gathered under the scorching sun in a big park in Athens for free vegetables offered by a farmers' association from the island of Crete."Not even in my worst nightmares could I imagine that I would end up like this - waiting in line for food," said Eleni Moshidou, 56, a mother of three unemployed sons who was fired from a law firm when the crisis broke out in 2010."I feel humiliated. Our politicians brought us here."Just over a month after an inconclusive election raised fears that Greek would have to leave the euro zone, New Democracy narrowly beat the radical leftist Syriza bloc that wants to scrap the bailout deal which most Greeks blame for worsening a recession which is in its fifth year.Syriza promised yesterday to be a "combative" opposition force that fights on behalf of Greeks struggling through wage cuts and spending cuts that have sent unemployment to record highs.But the new government's first battle is likely to be with foreign lenders as it tries to convince them to sign off on the next instalment of aid and allow more leeway on the austerity pledges.PASOK leader Evangelos Venizelos warned of a "big battle" in Brussels to craft a new bailout deal that would promote growth and contain unemployment."The most critical issue is the formation of the national negotiation team and ensuring that it is successful," he told reporters.Both PASOK and Democratic Left have refused to place senior politicians in the cabinet and could nominate technocrats instead, a move which potentially weakens their commitment to the new government."This government will have a very short life-span. It will disappoint expectations and its support will erode quickly," said independent political analyst John Loulis."It will be a government entirely run by New Democracy; its two smaller partners have already weaseled their way out of it".

Climate law could raise gas prices, lobbyists say

California regulations designed to fight global warming could force half of the state's refineries to close, trigger fuel shortages and add $2.70 per gallon to the cost of gasoline, according to a study released Tuesday by an oil industry lobbying group. The study, issued by the Western States Petroleum Association, argues that California's upcoming cap-and-trade system to cut carbon dioxide emissions could wreak havoc with fuel supplies as early as 2015. So could the state's low carbon fuel standard, a policy requiring refiners to lower the carbon intensity of the fuel they sell in California.Oil companies have a history of resisting California's climate change rules. But Catherine Reheis-Boyd, president of the petroleum association, said Tuesday that her group isn't trying to overturn the state's global warming law, known as AB32. Instead, the association wants to change how the state implements the law. If gasoline prices jump due to the fuel standard and cap and trade, she warned, Californians would probably demand that the entire law be scrapped."People could revolt, and if that happens, that's the end of it," Reheis-Boyd said. "If this goes the way we think it will, you won't have a program in 2015."2006 legislationPassed in 2006, AB32 requires California to bring its greenhouse gas emissions back to 1990 levels by 2020. Both the low carbon fuel standard and the cap-and-trade program, which starts this fall, were created to implement that law. Several oil companies that belong to the petroleum association tried to block AB32 in 2010 with a statewide ballot measure, but voters rejected it.Some environmentalists called Tuesday's report a scare tactic aimed at California legislators who are nervous about the state's fragile economy. The state has already endured two gas price spikes this year, with the statewide average for a gallon of regular finally falling below $4 last weekend for the first time since February."One thing I don't understand is, the electric utilities have stepped up, with renewable power and energy efficiency, the car companies have stepped up, with increased fuel efficiency - the oil companies seem to be the only ones who have no way to comply with AB32," said Adrienne Alvord, the California and western states director for the Union of Concerned Scientists. Complex, unpleasantTuesday's report was researched and written by the Boston Consulting Group and focuses on how California's 14 refineries will respond to both the fuel standard and cap and trade. The scenario is both complex and unpleasant.To comply with the low carbon fuel standard, refiners will need to blend more ethanol into their gasoline. But not just any ethanol will do.The process used by most American ethanol producers - distilling fuel from corn - releases too many greenhouse gases, according to California air pollution regulators. So the refiners would need to buy cellulosic ethanol, which is made from woody plants and has a smaller greenhouse gas footprint.Unfortunately, cellulosic ethanol has not yet been mass-produced. So the refineries would most likely buy Brazilian ethanol, made from sugar cane, and ship it here. Even with transportation factored in, Brazilian ethanol has a smaller greenhouse gas footprint than American corn ethanol, according to California's standards.Importing Brazilian ethanol would cost the California refineries money. In order to make a profit, they would most likely start shipping larger amounts of their gasoline to customers in other states or countries, where they wouldn't have to comply with the low carbon fuel standard. That would raise gas prices here.At the same time, the refineries would face an added expense due to the cap-and-trade system. The system will set an overall limit on the carbon dioxide emissions and create a market in which companies buy and sell the right to produce set amounts of greenhouse gases. That could cost refineries dearly, especially if carbon prices in the new market rise much higher than the state expects.Refineries threatenedAs a result, as many as seven California refineries would no longer be profitable, said Brad VanTassel, senior partner of the Boston Consulting Group.Should they close, the state could lose between 28,000 and 51,000 jobs, with the losses occurring not just at the refineries but at businesses frequented by refinery workers. California also could lose $3.1 billion to $3.4 billion in tax revenue. "Even if you lose just 30,000 jobs, that's a big deal to a state that's got 11 percent unemployment," VanTassel said.California has lost oil refineries before. In 1996, the state ordered oil companies to change the formula of fuel sold here in an effort to cut air pollution. It worked, but some refineries closed rather than pay for the necessary upgrades. At the same time, oil companies had been closing smaller California refineries to reduce the state's oversupply of gasoline and boost profits at remaining refineries.

NEWS,02.03.2012.

Sufficient oil in world to crimp Iranian supply FOR US

Global oil producers appear to have enough spare capacity to make up for Iranian exports curtailed by tough new sanctions, according to US Energy Secretary Steven Chu.Chu said it was important that sanctions be used to crimp Iranian oil sales to ensure Tehran does not develop nuclear weapons, despite the release of an Energy Information Administration report this week that showed supplies are tight.” There is spare capacity and we believe - we'll see - but I think there is sufficient spare capacity," Chu told reporters on Capitol Hill, noting that the administration will do whatever it can to help stabilise oil prices, including looking at tapping strategic reserves.” It would be very destabilising; I think everybody would agree, if Iran developed nuclear weapons. We're trying to convince Iran in its best interests not to go in that direction," he said.The final determination on whether there is enough spare capacity is up to President Barack Obama, who will announce it to Congress by the end of the month.Chu's confidence in supplies speaks to the "tough balancing act" faced by the Obama administration as it implements the sanctions, said Suzanne Maloney, a former

State Department adviser and now a senior fellow at the Brookings Institution. The administration must show it intends to crack down as a deterrent to countries that buy Iranian oil and "unnerve Tehran's confidence in its ability to ride out these pressures," Maloney said. Iran maintains its nuclear program is for peaceful purposes and denies it is trying to build nuclear weapons.Obama must also fend off any ideas in an election year that he is anything but tough on Iran, said David Pumphrey, an analyst at the Center for Strategic and International Studies.”‘ We think we are capable, in effect, of seeing this through' - that's how I would read the messaging," said Pumphrey, a former Energy Department official. In a report that is part of the new sanctions law, the Energy Information Administration (EIA), an independent arm of the US Energy Department, found that Saudi Arabia has been pumping more oil.Saudi Arabia, which has the world's biggest spare oil capacity, has produced an average of 9.7 million barrels per day over the last two months, up 600,000 bpd from the same period last year, the EIA said. But the EIA also said the cushion provided by that spare capacity was modest by historical standards: 2.5 million barrels per day, compared with an average of 3.7 million bpd a year ago. That cushion is about equal to total shipments from Iran, the world's third-largest oil exporter. Relying on the spare capacity "will require everything to work almost flat out, and hoping that additional capacity can come online smoothly," said Sarah Emerson at Energy Security Analysis Inc in Boston."I think we need to expect some hiccups along the way.” US sanctions on foreign banks that handle Iranian oil payments begin to take effect in June. But Obama, under a law he signed late last year, can offer exemptions to countries that show they have "significantly" cut their purchases from Iran."We still don't have a definition of significant yet. It's a bit of 'the eye of the beholder,'" Pumphrey said.There is strong political pressure from Congress to push ahead. Senator Joe Lieberman, an independent, said the EIA report was a "green light" to implement aggressively the energy sanctions.” With sufficient spare capacity among global oil producers, there is no excuse for countries and companies around the world not to curtail their purchases of Iranian crude, and thus deny the Iranian regime the financial lifeblood it needs for its illicit nuclear activities," Lieberman said in a statement.Obama faces mounting political fire for high gasoline prices, which are due in part to tensions in the Middle East.Chu told lawmakers at a hearing on Thursday that the administration is doing what it can to ease the sting of high prices on consumers and businesses. Some Democrats have urged the administration to release oil from its Strategic Petroleum Reserves, but Chu declined to comment on how or whether the new analysis from the EIA would affect that decision.” The president will use whatever tools he has to do what we have to do. We have the SPR option on the table," Chu told reporters. US House of Representatives Speaker John Boehner said Obama does not seem to support a release as a way to curb rising gasoline prices. Republican Senator Lisa Murkowski said the reserves, stored in huge salt caverns, should be saved for real supply emergencies rather than to try to ease prices.” I understand that tightness in world oil markets and the pressing need for sanctions on Iran leave you in a difficult position," said Murkowski, the top Republican on the Senate Energy Committee.” It is critical that we fully enforce our sanctions regime and preserve our strategic stockpiles until we really need them," she wrote to Obama.