DPC Majestic Building from Detroit Opera House 1909
Oil prices are dropping as Exxon announces a -5.7% plunge in output. And as Shell, as I said yesterday, can think of nothing better to do with its remaining funds than to spend it on share buybacks and dividends. Perhaps shareholders should take the money and run. Because what sort of future can they expect for a company that acts like that?
Western oil companies have tens of billions invested in Russian projects they may or may not have access to anymore now the sanctions are coming into effect. The scourge of insecurity. Never good for industry, never good for markets. Prices will rise again, and a lot, just ask Putin, but that doesn’t take away the insecurity over Big Oil’s chances of – even medium term – survival.
The BLS jobless report came in quite a bit less sunny than hoped and expected (unemployment rose to 6.2%, only 209K jobs created), but it would be good to realize that the importance of the report has fallen substantially lately. There will be many, many people in the finance world who are going to get burned because they don’t acknowledge that, or at least not rapidly enough.
While Janet Yellen can perhaps change course by a few degrees in the face of less than sparkly numbers, it’ll still be steady as she blows. Wages didn’t move one bit, nor did part-time jobs, and Yellen did hint at making those numbers more important, but then again the participation rate squeezed up by 0.1%, so those who want to see silver linings don’t have to look that far. It’s all in the eye of the beholder.
The failure – whether intentional or not – of the Fed’s multi-trillion stimulus is now plain for everyone to see. Yellen is not going to fool anyone with another trillion. The next FMOC meeting may announce a temporary taper hiccup, but what use would it be in the face of the past 5-6 years of not achieving much of anything for Main Street with the printer working both day and night shifts?
It’s of course nice, or funny, or hilarious, to see that while GDP rises 4.0% (well, in the first estimate only), the unemployment rate goes up. Upside down Bizarro.
Still, as I’ve noted repeatedly over the course of the last two weeks, what will drive US financial policy as we move forward has much less to do than before with domestic issues, and much more with global ones. That this will throw Americans in front of the steamroller (even more than before) is being taken for granted, and has been ‘absorbed’ into policy making.
The lure, and the advantages, of forcing the entire planet to fight over, and give up much more than before for, US dollars, have won the day. Undoubtedly not a rash decision, but something that’s been decided behind the curtains way back when everyone was still focused on other things. Like the recovery that never came.
This perhaps becomes easier to understand when you take a good look at that -5.7% fall in Exxon output. And the $110 billion that the shale industry comes up short every single year. What numbers like these spell out is the end of an era, the end of our way of life, perhaps the end of our societies as they exist today.
That end won’t come tomorrow morning, but the combination of rising demand and shrinking supply of fossil fuels points to one single and inescapable conclusion: we will need to divide what’s left, and being the humans that we are, that means we’re going to do the dividing by fighting over it. No prisoners.
And while there will be many physical proxy battles over oil and gas, just watch Ukraine, the first major battles will take place in the financial world. Having everyone and their pet poodle scramble to get hold of your particular currency is a mighty mighty weapon in those financial battles.
There are a numbers of goals in this for the people who’ve taken over, and factually run, America: make sure you get as much of what’s left of the fossil fuels as possible, and make sure others get as little as possible. But also: make sure less of it is used going forward, and store the difference under your own control. That goes both internationally, where you make nations and their citizens poorer so they can afford to buy less fuel, and domestically, where you make Americans themselves poorer so they will drive and heat and cool less.
Making Americans poorer may seem a bit counterintuitive in what is still in name a democracy – how to still get their votes? -, but when you start from the realization that shrinking energy supplies automatically mean a shrinking economy, and an end to the growth model the country is based on, in which at present everything needs to be borrowed because far too little is being produced, it all makes a lot more sense.
There is a major shift afoot, or actually already behind us, and unemployment numbers are now but an immaterial little sideshow the media put on. And no matter how many of those 4.0% GDP growth numbers you see, make no mistake: from now on, the -5.7% Exxon output number is much more important. That’s what will drive US policy going forward.
The taper will continue, far fewer dollars will be available globally and domestically, interest rates will rise, as will unemployment and foreclosures. Oil prices will suffer at first from falling international demand, but with supply falling just as fast not too long from today, we will be looking at $200. And then some.
The more the US fails internally, the more it will chest thump abroad. And with both the reserve currency and the by far largest weapons arsenals, it has extremely powerful tools to thump its chest with. Both at home and abroad.
Many of the Wall Street money managers who made billions by anticipating the U.S. housing bubble see more trouble on the horizon. Unlike before the crisis, when those traders were mostly united against subprime mortgages, the wagers vary this time. Some are against U.S. junk bonds, while others are targeting European sovereign debt. The warnings come from hedge-fund managers including Joshua Birnbaum and Greg Lippmann, who rose to prominence when trading for Goldman Sachs and Deutsche Bank, respectively. The moves mark the first time since the crisis that most of these investors, who generated big profits after the downturn riding the global economic recovery, have begun to turn bearish again. “There’s one thing for sure: History repeats itself, and this is starting to feel like a bubble,” said Stuart Lippman, manager of a credit-markets-focused hedge fund at TIG Advisors in New York. “We’re building up to something.”
Whitebox Advisors a Minneapolis hedge-fund firm that anticipated the crisis, warning of an imminent credit-market panic as early as 2006, is close to starting a fund to wager against the debt of several European countries and the euro, according to a letter to investors viewed by The Wall Street Journal. The moves don’t quite yet represent another “big short,” the term writer Michael Lewis applied to precrisis bets against soaring housing prices. In most cases, the hedge funds say they are trying to capitalize on prices they think are far out of whack and that may suffer a correction over the coming months, rather than predicting widespread financial calamity. But the shift from some of Wall Street’s most closely followed names shows growing worry about potential pockets of distress. Paul Singer, who oversees one of the world’s biggest hedge-fund firms, $25 billion Elliott Management Corp., this week told investors that many markets could turn south with “head-spinning abruptness and shocking intensity.”
The fears come after years of low interest rates that have encouraged investors of all sizes to pile into junk bonds and other relatively risky areas in search of yield. If prices drop, it could hurt small investors who have bought company debt to make up for paltry returns on U.S. Treasury bonds. Demand for junk bonds has skyrocketed in recent years, driving up prices and pushing yields to the lowest level on record. Yields fall as prices rise. Relative calm across much of Europe has benefited debt issued by countries such as Italy and Spain, with many traders shrugging off prior worries of a euro-zone crisis. But some cracks are starting to show: High-yield bonds in July suffered their biggest price declines in over a year, as lofty valuations and concerns about the potential for interest-rate increases drove a flight from funds that hold riskier debt.
Exxon Mobil fell after reporting oil and natural gas production declined to the lowest level in almost five years, raising the stakes as it seeks to pursue crude deposits in Russia. The world’s largest energy company dropped 4.2% to $98.94 at the close in New York, the biggest slide in almost three years, after reporting second-quarter earnings that beat analysts’ estimates. The company’s oil and gas output decreased 5.7% to the equivalent of 3.84 million barrels a day, the lowest since the third quarter of 2009, according to data compiled by Bloomberg. Exxon had been expected to post quarterly output equivalent to 3.96 million barrels, based on six analysts’ estimates. Crude from Exxon wells in Europe and Asia dropped, while gas production faltered in every region in which the company does business except Africa and the South Pacific.
Exxon is going after crude in Russia’s Arctic regions in an effort to extract some of the largest oil reserves and reverse a trend of declining production for the company. It’s allocating $39.8 billion to capital projects this year, including hundreds of millions for an exploratory well in Russia’s Kara Sea, as part of a 29-year agreement signed with Moscow-based Rosneft in 2011. Sanctions threaten to halt that progress after the U.S. and European Union said July 29 they would restrict the export of technologies for energy production to Russia. The oil-producing nation holds an estimated $8 trillion worth of crude underground. Exxon is awaiting further details on U.S. and EU sanctions to determine any effects, Vice President David Rosenthal said on a conference call today. He declined to comment on how the recently completed Berkut platform, a joint venture with Rosneft of Russia’s Far East coast, was financed.
Nah, it’s just fear.
Ultra-low interest rates globally have spurred investors to chase yield in ever riskier corners of the bond market, but some are starting to pull out of the race into high-yield papers. “We take our exposure in high yield bonds to zero, and keep the proceeds in cash,” Julius Baer, which has around $409 billion in total client assets, said in a note Wednesday. “Speculative-grade bonds have become expensive and are facing serious liquidity challenges.” Julius Baer isn’t alone in heading for the sector’s exits. Around $6.34 billion has flowed out of high-yield bond mutual funds and exchange-traded funds over the past four weeks, although a net $17.15 billion has flowed in so far this year, according to data from Jefferies.
In addition to the outflow, the SPDR High Yield Bond ETF tumbled in pre-market trading Friday, down 33 percent. High-yield bonds, otherwise known as speculative grade or junk debt, are issued by companies with a rating of ‘BB’ or lower from Standard & Poor’s or ‘Ba’ or below from Moody’s. They have a higher risk of default compared with investment-grade debt, but traditionally offered higher yields as compensation. Julius Baer is concerned that as regulators “tighten the screw” on banks, it will limit their ability to provide liquidity in the high-yield bond market. “Liquidity conditions could become as precarious as in late 2008,” it said. “If investor sentiment worsens, their low liquidity means that we would not be able to get out in time.”
If yesterday’s selloff catalysts were largely obvious, if long overdue, in the form of the record collapse of Espirito Santo coupled with the Argentina default, German companies warning vocally about Russian exposure, the ongoing geopolitical escalations, and topped off by a labor costs rising and concerns this can accelerate a hiking cycle, overnight’s latest dump, which started in Europe and has carried over into US futures is less easily explained although yet another weak European PMI print across the board, with UK manufacturing growing at the slowest pace in a year in July as a cooling in new orders and output ended the first half’s “stellar growth spurt”, probably didn’t help. However, one can hardly blame largely unreliable “soft data” for what is rapidly becoming the biggest selloff in months and in reality what the market may be worried about is today’s payroll number, due out in 90 minutes, which could lead to big Treasury jitters if it comes above the 230K expected.
In fact, today is one of those days when horrible news would surely be great news for the momentum algos. More importantly even than the noisy jobs number, the Fed will increasingly be looking at the quality composition of jobs (full time vs part time), and whether wages are growing: watch hourly earnings today as the FOMC have shifted towards wages as one of their main criteria for when to become more hawkish. The market is expecting this to stay at 0.2% M/M but the year-on-year number is tipped to increase to +2.2% Y/Y (vs 2.0% previous). Still, with futures down 0.6% at last check, it is worth noting that Treasurys are barely changed, as the great unrotation from stocks into bonds picks up and hence the great irony of any rate initiated sell off: should rates spike on growth/inflation concern, the concurrent equity selloff will once again push rates lower, and so on ad inf. Ain’t central planning grand?
Who needs the young anyway?
Across much of the euro area, young adults are worst hit by wage deflation or stagnation, which increasingly is seen as a threat to the 18-member bloc’s nascent economic recovery. Economic weakness is a mounting concern for the European Central Bank, which took unprecedented action in June, becoming the first major central bank to take one of its main rates negative. Threats to price stability are real, President Mario Draghi said last month, citing high unemployment, weak demand and low inflation. In Spain, the region’s fourth-largest economy, people under 30 have had the sharpest drop, reflecting their 42% jobless rate compared with 25% unemployment for the total population. The average gross annual salary earned by 20-to-24-year-olds was 15% lower in 2012 than in 2010, while it declined 0.3% across all age groups. It dropped by 8% for people as much as five years older, according to data from Spain’s statistics agency INE.
In Portugal, the average monthly wage for 18-to-24-year-olds fell 25% between 2011 and 2012, whereas it rose 1% for the whole population, the most recent data published by the national statistics agency show. The decline was 17% for people as much as 10 years older. While few European countries offer recent wage statistics by age group, a similar pattern is probable in most of the European Union’s 28 members, said Zsolt Darvas, an economist at the Bruegel research institute in Brussels. “It makes sense for wages to decline to share the few jobs available, but young people are bearing the brunt of the adjustment,” Darvas said. “That’s neither fair nor positive for the economy. Older people earn more and their standards of living wouldn’t be as hurt by a pay cut.”
Young people tend to be hired with lower wages, and on work contracts that are easier to end or temporary, compared with more stable positions held by older people, he said. In Spain, 52% of under 30-year-olds had short-term employment in the second quarter versus a general rate of 24% for all employees, INE data showed last month. Those different labor market conditions are widening the income gap between generations, leading 20-to-24-year-olds to earn 50% less than the average wage in 2012, compared with a 33% difference eight years earlier.
The Federal Reserve is trying to change as little as possible as it crafts its strategy to exit from record stimulus. The trouble is financial markets have changed so much that the still-developing plan may prove costly and ultimately unworkable. The approach, sketched out in the minutes of the Fed’s June 17-18 meeting and in officials’ comments since then, retains a focus on the federal funds rate as the central bank’s target. Policy would continue to be conducted mainly through banks rather than via dealings with money-market funds. “They don’t want to make wholesale changes in the way they interact with markets when they are going to have so many other issues in play” as they raise interest rates, said Lou Crandall, chief economist at Wrightson ICAP LLC in Jersey City, New Jersey, who has been watching the Fed for three decades.
The strategy has drawbacks, given the way money markets have evolved since the recession. Banks no longer need to borrow in the once-vibrant fed funds market to meet reserve requirements, as they did before the crisis, because the Fed has pumped so much money into the financial system during the last six years. As a result, trading in that market has dwindled and now mainly comprises U.S. branches of foreign banks acting as arbitragers, according to research by economists at the Federal Reserve Bank of New York. To help keep that market alive, the Fed will have to pay those banks a premium to continue trading in it, which will eat into the profits the central bank remits to the U.S. government each year.
And even then, foreign banks may be unwilling to continue their trades as stricter regulations on leverage take effect. “I don’t like the political or economic implications” of the plan, Joseph Gagnon, a former Fed and U.S. Treasury official who is now at the Peterson Institute of International Economics in Washington, said in an e-mail. “It costs the taxpayers money, and it makes for a less efficient financial system,” he added, a view echoed by former Fed Governor Jeremy Stein in an interview. Dennis Lockhart, president of the Federal Reserve Bank of Atlanta, suggested in a July 11 interview with Bloomberg News that policy makers would reach a final agreement on their exit blueprint at their next meeting in September. Under the developing plan, the Fed would continue to set a target range for its benchmark federal funds rate, which banks charge each other on overnight loans. The interest rate it pays banks on reserves would be the ceiling, and the rate it pays to borrow cash from money funds and others would be the floor.
They kept him on just to get the loans. This smells very bad.
Ukrainian lawmakers backed a tax increase needed to qualify for a $17 billion bailout by the International Monetary Fund and rejected the prime minister’s resignation after warnings that the country risked a default. “The first major economic news today is that Argentina went into default,” Prime Minister Arseniy Yatsenyuk told lawmakers after the vote today. “And the second is that Ukraine didn’t default, and it never will.” Ukraine is relying on the IMF’s funding for its budget needs and for making about $10 billion in foreign debt payments by year-end. The Washington-based lender’s mission urged the government and the legislature to adopt austerity measures before its board decides next month on the second disbursement of a $1.4 billion tranche. Parliament turned down Yatsenyuk’s resignation submitted last week in protest over lawmakers’ failure to approve the bills required by the IMF and needed to finance a military push against pro-Russian separatists in eastern Ukraine.
Budget and tax code amendments adopted today allow the cabinet to avoid complications with IMF program revisions in the future given lawmakers’ reluctance to back unpopular bills, said Oleksandr Parashchiy, head of analytics at investment bank Concorde Capital in Kiev. [..] The vote “solves most of Ukraine’s problems up to the end of 2014,” Parashchiy said by phone. The government has prepared “a back-up” for the rest of the year to avoid further revisions of budget spending and economic forecasts every time an IMF mission comes to Ukraine.’’ Ukraine’s economy shrank more than analysts predicted in the second quarter, contracting 4.7% from a year earlier, in the wake of months of bloody fighting against insurgents. The conflict is disrupting trade, weighing down an economy that’s contracted in seven of the past eight quarters. While the IMF sees Ukraine’s gross domestic product declining 6.5% this year, the government predicts a 6% slump in the amended budget approved today.
This could break the EU/US axis.
Thanks to the Independent, we may know the answer, and it is a doozy, because according to some it is nothing shy of a sequel to the Molotov-Ribbentrop pact: allegedly Germany and Russia have been working on a secret plan to broker a peaceful solution to end international tensions over the Ukraine, one which would negotiate to trade Crimea’s sovereignty for guarantees on energy security and trade. The Independent reveals that the peace plan, being worked on by both Angela Merkel and Vladimir Putin, “hinges on two main ambitions: stabilising the borders of Ukraine and providing the financially troubled country with a strong economic boost, particularly a new energy agreement ensuring security of gas supplies.”
Amusingly, this comes on the day when the WSJ leads with “On Hold: Merkel Gives Putin a Blunt Message. Germany’s Backing of Russia Sanctions Marks Breach in Pivotal European Relationship” in which we read that ” Angela Merkel spoke to Russian President Vladimir Putin for at least the 30th time since the Ukraine crisis erupted. She had a blunt message, according to people briefed on the phone conversation: Call me if you have progress to report in defusing the conflict. That was July 20. The two leaders haven’t spoken since.” They may or may not have spoken since, but it is not because Putin has “no progress to report” – it’s because the two leaders have come to a secret agreement which will hardly make Ukraine, or most of Europe, not to mention the UN, happy as it requires that Crimea be permanently handed over to Russia in exchange for Russian gas, which has been cut off for a month now due to non-payment by Kiev. Here is how the deal came to happen:
Sources close to the secret negotiations claim that the first part of the stabilisation plan requires Russia to withdraw its financial and military support for the various pro-separatist groups operating in eastern Ukraine. As part of any such agreement, the region would be allowed some devolved powers. At the same time, the Ukrainian President would agree not to apply to join Nato. In return, President Putin would not seek to block or interfere with the Ukraine’s new trade relations with the European Union under a pact signed a few weeks ago.
Second, the Ukraine would be offered a new long-term agreement with Russia’s Gazprom, the giant gas supplier, for future gas supplies and pricing. At present, there is no gas deal in place; Ukraine’s gas supplies are running low and are likely to run out before this winter, which would spell economic and social ruin for the country. As part of the deal, Russia would compensate Ukraine with a billion-dollar financial package for the loss of the rent it used to pay for stationing its fleets in the Crimea and at the port of Sevastopol on the Black Sea until Crimea voted for independence in March.
Go Abe go.
Ask Japanese Internet millionaire Shinichi Nishikubo about Shinzo Abe’s weak yen and you’ll get an earful. Nishikubo is that rarity in Japan: a rebel entrepreneur who bets big and makes deals many contemporaries would never contemplate. Most famously, Nishikubo bought into money-losing budget airline Skymark in 2003 and took on its presidency a year later. Indeed, he got so into learning what airlines do that he took flying lessons. In 2010, he decided to soar higher. Peers shook their heads at news Nishikubo was ordering four Airbus A380s, later coming back for two more. A February 2011 Orient Aviation magazine headline summed it up succinctly: “Crazy or a Genius?” As that deal now implodes, many might answer “crazy.” Still, Abenomics deserves a share of the blame. Were Nishikubo’s ambitions bigger than demand for seats on his airline? Probably. But when he ordered that fleet of A380s, the yen was trading around 80 to the dollar. Its subsequent 20%-plus drop in value really smarts when you’re paying for planes that list at $414 million.
This is something Japan-watchers consistently seem to ignore. Prime Minister Abe’s devaluation is routinely couched as smart economic policy. But it’s disastrous for companies like airlines that buy fuel and aircraft – both prohibitively expensive in the best of times – priced in U.S. currency. Exchange rates clearly contributed to Nishikubo’s undoing. If Abe were looking through the economic lens of today, not one from 1994, he might engineer a stronger yen. On the one hand, a rising currency is about confidence; Japan’s weak-yen obsession comes more from insecurity. On the other, with nuclear reactors idled amid safety concerns, Japan’s energy needs have the economy importing inflation – the bad kind. Also, a lower yen runs contrary to Abe’s ambitions for Japan Inc. to expand abroad anew.
The central bank wants to halt the bubble, while the government keeps on handing out interest free loans. Yeah, that should work …
More than 4,000 households in England used the government’s Help to Buy loan scheme to buy properties in June, the highest monthly total since the scheme began in 2013. The latest government data indicated more than 4,300 completions during the month, with more than 27,100 homes bought using the scheme. The figures refer to the first phase of Help to Buy, which offers buyers an interest-free loan worth up to 20% of the price of a new-build home. Data from the Department for Communities and Local Government showed that £1.1bn of loans had been offered, supporting purchases worth £5.65bn. More than two-thirds of buyers took the chance to take out a 95% mortgage, with the rest putting down larger deposits.
Nearly a third of sales were in the £150,001 to £200,000 price bracket, while a quarter involved homes costing less. A fifth were in the £200,001 and £250,000 bracket. The median value of properties bought through the scheme was £187,000. Loans are available on properties costing up to £600,000 and there is no upper limit on applicants’ incomes. The figures indicated that Help to Buy is not a major contributor to Britain’s galloping house market. Fewer than 250 households, or 0.9% of the Help to Buy total, had used the scheme to buy properties costing more than £500,000 while 3% of the total had household incomes in excess of £100,000 a year. More than eight out of 10 purchases were made by first-time buyers. The scheme, which went live in April 2013, was designed to kickstart construction by helping buyers with small deposits. The housing minister, Brandon Lewis, said the scheme was doing what it had been designed to achieve.
Argentina’s government was in a defiant mood on Thursday after defaulting on its debt for the second time in 13 years. Economy minister Axel Kicillof, speaking after 11th hour talks with bondholders in New York failed to avert a default, played down the impact it would have on the country’s citizens. “We’re not going to sign an agreement that jeopardises the future of all Argentinians,” he told a press conference in New York. “Argentinians can remain calm because tomorrow will just be another day and the world will keep on spinning.” Markets appeared to disagree, with Argentina’s Merval share index falling almost 7% on Thursday and the peso down more than 4% against the dollar. Analysts said a fall in Argentina’s currency would cause further pain in the country, pushing up the price of imports and driving inflation higher. Steen Jakobsen, chief economist at Saxo Bank, said the fallout would be difficult for a country where inflation is already 12% on official measures and 40% unofficially. “At a minimum we’ll see a loss of GDP of at least 1% if not 2%,” he said.
Argentina was already locked out of international capital markets following its earlier default in late 2001, and Neil Shearing, chief emerging markets economist at Capital Economics, said the latest default would be viewed as a local issue: “Confirmation that Argentina has officially fallen into default is likely to rattle local markets and has the potential to do significant damage to the domestic economy. But we suspect that contagion to other emerging markets is likely to be limited.” Argentina has been locked in a decade-long dispute with hold-out investors that the government has described as “vulture funds” – a group of US hedge funds led by billionaire Paul Singer’s NML Capital, an affiliate of Elliott Management. The vast majority of Argentina’s bondholders agreed to debt restructuring deals in 2005 and 2010 following its 2001 default, wiping off more than 70% of the value of their investment but securing regular interest payments. But the holdout investors refused the restructuring and are demanding repayment in full.
Swaps still rule the world.
Whenever the knotted world of credit-default swaps is pushed to the forefront in a financial crisis, conspiracy theories abound. Argentina is no exception. Argentine Economy Minister Axel Kicillof described a group of so-called holdout creditors this week as “vulture funds” after failing to reach a restructuring agreement with them. Kicillof specifically directed his ire at credit swaps, a market, he said, that clouds the motives of creditors while leading to “the most wretched speculative capitalism that exists.” “When they present a solution you don’t know if it’s something you can believe at the negotiating table or if there’s something else that you’ll never know about happening outside that gives them greater benefits,” Kicillof told reporters at a July 30 news conference. Many bond buyers also own credit swaps as protection against losses or as a way to double down on a company’s creditworthiness. The dual roles can skew incentives because creditors will sometimes stand to profit more from a swaps payout than an issuer actually meeting its debt obligations.
One of Argentina’s holdout creditors is New York-based hedge fund Elliott Management Corp., which also sits on an industry committee that will determine whether investors who bought credit-swaps protection on the nation’s bonds are paid out. The $24.8 billion fund manager, run by billionaire Paul Singer, last year denied in a U.S. court that it owned credit swaps that would allow it to profit if the government halted payments. Citigroup Inc. and JPMorgan are also among the 15 dealers and investors on the swaps committee. Both Wall Street titans are said to be negotiating to buy the defaulted bonds that Elliott and other creditors own. Citigroup is in talks to buy the securities, according to Buenos Aires-based newspaper Ambito, and discussions with JPMorgan are also ongoing, according to a bank official with knowledge of the situation.
Argentine Economy Minister Kicillof says the funds are like vultures since they prey on countries in distress and seek massive profits by squeezing governments through embargo attempts and lengthy litigation. Kicillof says Elliott is seeking a profit of 1,600% on its investment of defaulted bonds and would still make 300% if it accepted the restructuring terms. Argentina claims it can’t offer holdout creditors a better deal without violating a “rights upon future offers” clause in the restructured bonds that may trigger additional claims. The clause requires Argentina to extend to the restructured bondholders any improved terms it “voluntarily” offers holders of the defaulted bonds.
Two American patients stricken with Ebola are being flown from Africa to the U.S., ABC News has learned. The patients, Nancy Writebol and Dr. Kent Brantly, will be transported one by one, sources said. There are plans to transfer one of the patients to Emory University Hospital’s special facility containment unit within the next several days, hospital officials said in a statement. Officials added that it’s unclear when the patient will arrive in Atlanta. “Emory University Hospital has a specially built isolation unit set up in collaboration with the CDC to treat patients who are exposed to certain serious infectious diseases,” hospital officials said.
“It is physically separate from other patient areas and has unique equipment and infrastructure that provide an extraordinarily high level of clinical isolation. It is one of only four such facilities in the country.” “Emory University Hospital physicians, nurses and staff are highly trained in the specific and unique protocols and procedures necessary to treat and care for this type of patient. For this specially trained staff, these procedures are practiced on a regular basis throughout the year so we are fully prepared for this type of situation.”
More than half of California is now under the most severe level of drought for the first time since the federal government began issuing regular drought reports in the late 1990s, according to new data released Thursday. According to the U.S. Drought Monitor report, in July roughly 58% of California was considered to be experiencing an “exceptional” drought — the harshest on a five-level scale. A federal report says more than half of California is now in an exceptional drought and that current drought conditions are the worst in the state’s history. This is the first year that any part of California has seen that level of drought, let alone more than half of it, said Mark Svoboda, a climatologist with the National Drought Mitigation Center, which issued the report. “You keep beating the record, which are still all from this year,” he said.
The entire state has been in severe drought since May, but more of it has since fallen into more severe categories — “extreme” and “exceptional.” Nearly 22% more of California was added into the exceptional drought category in the last week alone. California is also more than a year’s worth of water short in its reservoirs and moisture in the state’s topsoil and subsoil has nearly been depleted, according to the report. “It’s hard because the drought is not over and you’re in the dry season. Our eyes are already on next winter,” Svoboda said. “Outside of some freakish atmospheric conditions, reservoir levels are going to continue to go down. You’re a good one to two years behind the eight ball.” The lowest reservoir levels on record were in 1977, Svoboda pointed out, but he said the vulnerability has increased as the state’s population has grown. “The bottom line is, there’s a lot of ground to make up,” he said. “Mother Nature can’t put it back in that fast.”