Off the Wires

Large majority of U.S. Senate pushes Obama to boost Israel aid

April 25th, 2016  |  Source: Reuters

More than four-fifths of the U.S. Senate have signed a letter urging President Barack Obama to quickly reach an agreement on a new defense aid package for Israel worth more than the current $3 billion per year.

Eighty-three of the 100 senators signed the letter, led by Republican Lindsey Graham and Democrat Chris Coons. Senator Ted Cruz, a 2016 presidential candidate, was one of the 51 Republicans on board. The Senate's Democratic White House hopeful, Bernie Sanders, was not among the 32 Democrats.

"In light of Israel's dramatically rising defense challenges, we stand ready to support a substantially enhanced new long-term agreement to help provide Israel the resources it requires to defend itself and preserve its qualitative military edge," said the letter, which was seen by Reuters.

It did not provide a figure for the suggested aid. Israel wants $4 billion to $4.5 billion in aid in a new agreement to replace the current memorandum of understanding, or MOU, which expires in 2018. U.S. officials have given lower target figures of about $3.7 billion. They hope for a new agreement before Obama leaves office in January.

The funding is intended to boost Israel's military and allow it to maintain a technological advantage over its Arab neighbors.

The letter said the Senate also intends to consider increased U.S. funding for cooperative missile defense programs, similar to increases in the past several years.

Obama has asked for $150 million for such programs, but lawmakers are believed to be willing to send Israel hundreds of millions for programs like its Iron Dome air defense system and David's Sling medium- and long-range defense system.


FBI paid more than $1.3 million to break into San Bernardino iPhone

April 22nd, 2016  |  Source: Reuters

Federal Bureau of Investigation Director James Comey said on Thursday the agency paid more to get into the iPhone of one of the San Bernardino shooters than he will make in the remaining seven years and four months he has in his job.

According to figures from the FBI and the U.S. Office of Management and Budget, Comey's annual salary as of January 2015 was $183,300. Without a raise or bonus, Comey will make $1.34 million over the remainder of his job.

That suggests the FBI paid the largest ever publicized fee for a hacking job, easily surpassing the $1 million paid by U.S. information security company Zerodium to break into phones.

Speaking at the Aspen Security Forum in London, Comey was asked by a moderator how much the FBI paid for the software that eventually broke into the iPhone.

"A lot. More than I will make in the remainder of this job, which is seven years and four months for sure," Comey said. "But it was, in my view, worth it."

The Justice Department said in March it had unlocked the San Bernardino shooter's iPhone with the help of an unidentified third party and dropped its case against Apple Inc (AAPL.O), ending a high-stakes legal clash but leaving the broader fight over encryption unresolved.

Comey said the FBI will be able to use software used on the San Bernardino phone on other 5C iPhones running IOS 9 software.

There are about 16 million 5C iPhones in use in the United States, according to estimates from research firm IHS Technology. Eighty-four percent of iOS devices overall are running iOS 9 software, according to Apple.

The FBI gained access to the iPhone used by Rizwan Farook, one of the shooters who killed 14 people in San Bernardino, California on Dec. 2.

The case raised the debate over whether technology companies' encryption technologies protect privacy or endanger the public by blocking law enforcement access to information.


Investors pull $15bn from hedge funds

Hedge funds have suffered their worst quarter in seven years after more than $15bn was pulled out by investors starting to fight back against the high fees being charged across the industry.

The total amount invested in hedge funds fell to $2.86tn in the first three months of the year, marking the first time since 2009 that the sector has faced two consecutive quarters of net outflows, according to data from Hedge Fund Research.

Sharp market moves have wrongfooted many firms, leading to poor performances in the first quarter from funds such as Bill Ackman’s Pershing Square, and rankling investors already disgruntled over fee structures charging 2 per cent for management as well as 20 per cent of profits. A broad index of hedge fund performance fell 0.7 per cent in the first quarter, according to HFR.

Fed up with paying “exorbitant fees” for poor returns, the New York City Employees’ Retirement System has cut its $1.5bn programme, pulling money from managers including Perry Capital and Brevan Howard. The shift comes about 18 months after California’s pension scheme also scrapped hedge funds from its portfolio.

At the same time, sovereign wealth funds have been withdrawing billions from asset managers globally as they turn their attention to supporting their own faltering oil-dependent economies.

Letitia James, public advocate for the New York pension scheme, attacked managers who “balk at negotiations for investor-favourable terms” believing they “could do no wrong, even as they are losing money”.

“If they were truly fiduciaries and cared about our members, they would never charge large fees for failing to deliver on their promises,” she said. “Let them sell their summer homes and jets, and return those fees to their investors.”

Read on here: ($) : http://www.ft.com/intl/cms/s/0/72b5a244-06fd-11e6-9b51-0fb5e65703ce.html#axzz46C3LzQix


Google’s Antitrust Woes in Europe Are Likely to Grow

April 20th, 2016  |  Source: NYT.com

Google’s antitrust problems in Europe are about to get a whole lot bigger.

The company is expected to be charged with breaking the European Union’s competition rules by unfairly favoring Google services, like its search engine and Google Maps, on its Android smartphone operating system over those of rivals, according to three people. The three, who work in either government or the private sector, spoke on the condition of anonymity.

The charges, known formally as a statement of objections, may be announced in Brussels as soon as Wednesday, though the announcement could still be postponed until later this month, according to one of the people.

The expected charges against Google are the latest in a raft of regulatory problems that American tech giants have faced as the European Union has cracked down on these companies’ perceived dominance over how people in the 28-member bloc get access to digital services.

That ranges from privacy complaints over how Facebook uses people’s online information to questions about Apple’s tax affairs from its headquarters in low-tax Ireland. These cases come after previous antitrust investigations into how the likes of Microsoft and Intel operated across regions.

Read on here: http://www.nytimes.com/2016/04/20/technology/google-android-eu-antitrust.html?_r=0


Goldman Sachs revenue slumps to lowest in more than four years

April 19th, 2016  |  Source: Reuters

Goldman Sachs Group Inc's (GS.N) quarterly profit fell by more than half and revenue slumped to its lowest in more than four years as market volatility hit the Wall Street bank's bond trading and investment banking businesses.

Goldman, wrapping up a dismal quarter for big U.S. banks, reported a 40 percent drop in net revenue, reflecting declines in all of its main businesses.

As with other banks, Goldman's trading revenue was hit by sliding commodity and oil prices, worries about the Chinese economy and uncertainty about U.S. interest rates.

Highlighting the challenges facing the bank, Goldman's return on average common equity - a measure of how well the bank uses shareholder money - was 6.4 percent in the quarter, down from 14.7 percent a year earlier. (bit.ly/22KtaAI)

Many investors think ROE should be at least 10 percent to cover the cost of capital.

Goldman, whose shares were down 1 percent in early trading on Tuesday, said its revenue from trading bonds, currencies and commodities (FICC) fell about 47 percent. Equities trading revenue, normally a strength, slid 23 percent.

FICC accounted for 26.2 percent of total revenue in the quarter - a far cry from the 40 percent the business regularly contributed before the financial crisis.

"The market was braced for a weak quarter, but we think the breadth of weakness on the top line will be a disappointment as people try to grapple with the timing of the recovery," Evercore ISI analyst Glenn Schorr wrote in a client note.

Goldman's traditional rival, Morgan Stanley (MS.N), reported a 54 percent drop in adjusted revenue from fixed income and commodities trading and a similar drop in net profit. Its equities trading revenue fell 9.3 percent.

Goldman reported a 56.3 percent fall in net income applicable to common shareholders to $1.2 billion, or $2.68 per share, for the three months ended March 31. That compared with $2.75 billion, or $5.94 per share, a year earlier, when the bank recorded its best quarterly profit in five years.

Analysts on average had expected earnings of $2.45 per share, according to Thomson Reuters I/B/E/S.

Net revenue fell to $6.34 billion from $10.62 billion.

Read on here: http://www.reuters.com/article/us-goldmansachs-results-idUSKCN0XG1EV


Clooney: Sanders is right about 'obscene' amount of money in politics

April 18th, 2016  |  Source: The Hill.com

Actor George Clooney, a major fundraiser for Democratic presidential front-runner Hillary Clinton, said that it’s “ridiculous” and “obscene” how much money goes into presidential campaigns.

In an excerpt of an interview with NBC’s “Meet the Press” taped for Sunday, Clooney was asked if he thought the price of admission to attend a fundraiser the actor is hosting is an “obscene amount of money.”

“Yes, I think it’s an obscene amount of money,” Clooney responded. “You know, we had some protesters last night when we pulled up in San Francisco — and they’re right to protest, they’re absolutely right, it’s an obscene amount of money. The Sanders campaign, when they talk about it, is absolutely right. It’s ridiculous that we should have this kind of money in politics, I agree.”

The actor and his wife, Amal, hosted a fundraiser on Friday night for the former secretary of State, charging couples $353,400 to sit at a table with Clinton and the Clooneys. They are throwing another high-dollar fundraising event Saturday night.

In March, Clinton’s opponent, Sen. Bernie Sanders (I-Vt.), used the word “obscene” to describe the price of admission for Clooney’s fundraiser.

“It is obscene that Secretary Clinton keeps going to big-money people to fund her campaign,” the Vermont senator said on CNN's "State of the Union."

“I have a lot of respect for George Clooney,” he added. “He’s a great actor. I like him. But this is the point. This is the problem with American politics, is that big money is dominating our political system, and we are trying to move as far away from that as we can.”


Israeli military struggles with rising influence of Religious-Zionists

April 15th, 2016  |  Source: Reuters

Nowhere is the growing clout and reach of religious nationalists in Israel more apparent than in its military. Some have begun to push back.

On a searing night in July 2014, Israeli troops gathered on the border with Gaza to prepare for war. Hamas militants had been firing rockets into Israel for days, and Israeli warplanes had begun bombing the Palestinian territory.

The orders for the Givati brigade, an elite infantry unit, came in a typed, single-page letter.

“History has chosen us to spearhead the fight against the terrorist Gazan enemy who curses, vilifies and abominates Israel’s God,” Colonel Ofer Winter, the unit’s commanding officer, wrote in the letter to his troops. He ended with a biblical quote promising divine protection for Israel’s warriors on the battlefield.

The letter quickly circulated on social media and from there to the press. Secular Israelis condemned it, saying it broke a decades-old convention that kept religion out of military missions.

Two years on, the letter remains a symbol of a profound shift within Israeli society: the rising power and reach of religious nationalists. The change has set up a battle for the type of country Israel should be, a battle between the country’s liberals and its more religious nationalist camp.

In its early years, Israel’s two main centres of power – the military and the government – were dominated by the secular and mostly left-wing elite who had founded the state in 1948. But over the past decade or so a new generation of leaders that combines religion and nationalism has emerged.

Religious-Zionism differs from secular Zionism in its historical perspective and messianic undertones. For Religious-Zionists, caring for places like Jewish settlements in the West Bank – the biblical bedrock of Judaism, but also claimed by Palestinians as their home – is a way of fulfilling a religious obligation and building the Jewish state.  

The community, sometimes referred to as the ‘national religious’, has increased its presence in both government and the civil service. This year, for the first time ever, the heads of the national police, the Mossad spy agency and the Shin Bet domestic security service are all Religious-Zionists.

Nowhere, though, has the shift been more pronounced than in the military. Most soldiers in the Israeli army are secular or observant Jews, though Druze and Bedouin Arab citizens serve as well. But over the past two decades, academic studies show, the number of Religious-Zionist officers in the Israeli Defense Force (IDF) has seen a huge increase. The military has also felt the growing influence of rabbis who have introduced matters of faith and politics to the battlefield.

Some politicians and military leaders have begun to push back.

In January, IDF Chief of Staff Gadi Eisenkot announced he would remove a 15-year-old unit dedicated to “Jewish Awareness” from the military rabbinate – the department in charge of providing religious services within the ranks. The Jewish Awareness Branch has periodically drawn criticism from both inside and outside the military for pushing an ideological, right-wing and religious agenda. Some secular Israelis worry that too much religion in the military may lead to soldiers questioning who they should obey: their officer or God.

Read on here: http://www.reuters.com/investigates/special-report/israel-military-religion/

 


Putin says shares Russians' pain over economic hardship

April 14th, 2016  |  Source: Reuters

President Vladimir Putin assured ordinary Russians on Thursday that he was trying to relieve the hardships inflicted on them by the slowing economy and the financial knock-on effects of Russia's stand-off with the West.

Putin used a televised phone-in, an annual event when he fields questions from ordinary citizens around the country, to strike a conciliatory tone on foreign policy, saying Russia wanted friendly relations with the rest of the world.

Wrapping up the event after three hours and 40 minutes, Putin said he had heard a lot of impassioned questions from worried citizens. Many of the questions were about issues such as high inflation, poor public services and wage arrears.

"I share your concerns in nearly 100 percent of cases," Putin said. "We'll work together so that your problems are relieved."

Addressing public concerns over the economy is crucial for the Kremlin because Russians vote in a parliamentary election in September.

The phone-in did not feature criticism directed personally at Putin. Executives at state television, which is deferential to the Kremlin, controlled who had the chance to pose questions. His critics say the phone-in is a ritual designed to mask the lack of true democracy.

But the event provided an opportunity for Putin to show he has voters' interests at heart, in part by hauling officials over the coals for failing to protect citizens.

Putin took questions via video link from two women, Tatiana and Yelena, who said they had not been paid for months of work at a fish processing plant on a Pacific island, and that officials ignored their complaints.

The issue is a widespread one since Russia's economy slowed, with businesses that are struggling with falling sales often delaying wages.

The Russian president, live on air, instructed his prosecutor-general to think about firing the local prosecutor for failing to act on the women's complaints.

Read on here: http://www.reuters.com/article/us-russia-putin-idUSKCN0XB12R


Peabody, world's top private coal miner, files for bankruptcy

April 13th, 2016  |  Source: Reuters

Peabody Energy Corp (BTU.N) filed for U.S. bankruptcy protection on Wednesday after a sharp drop in coal prices left it unable to service debt of $10.1 billion, much of it incurred for an expansion into Australia.

The Chapter 11 bankruptcy filing from Peabody, the world's biggest private-sector coal producer, ranks among the largest in the commodities sector since energy and metal prices began to fall in mid-2014 as once fast-growing markets such as China and Brazil started to slow.

Unlike most large corporate bankruptcies, Peabody's filing did not sketch out a plan for cutting debt, although it said it expected its mines to continue to operate as usual.

Peabody estimated its assets at $11.0 billion and liabilities at $10.1 billion as of the end of 2015, according to court documents.

The St. Louis-based company said its planned sale of mines in New Mexico and Colorado had fallen through and that its Australian operations were excluded from the bankruptcy filing.

Peabody has secured $800 million in debtor-in-possession financing from both secured and unsecured creditors, including a $500 million term loan, $200 million bonding accommodation facility and a letter of credit worth $100 million, it said.

"This process enables us to strengthen liquidity and reduce debt, build upon the significant operational achievements we've made in recent years and lay the foundation for long-term stability and success in the future," Peabody Chief Executive Officer Glenn Kellow said in a statement.

Shares of Peabody, which closed at $2.07 on Tuesday, were halted on Wednesday.

Debt troubles for Peabody date back to its $5.1 billion leveraged buyout of Macarthur Coal in 2011, just when prices peaked for the metallurgical coal that the Australian company supplies to Asian steel mills.

As demand for metallurgical coal fell, particularly in China, Peabody's financial woes intensified. The company took a $700 million writedown on its Australian metallurgical coal assets last year.

At home, the U.S. shale boom of the past few years made natural gas competitive with thermal coal, and the Obama administration's environmental regulations raised operational costs.

"2016 will probably go down as the worst year in history for U.S. coal," JPMorgan said in an analyst note to clients on Tuesday. U.S. production declined 31 percent in the first quarter from a year earlier, although stockpiles still remain high, the note said.

Producers accounting for about 45 percent of U.S. coal output have filed for bankruptcy in the current industry downturn, based on 2014 government figures.

Peabody reached an agreement with New York Attorney General Eric Schneiderman in November to amend its disclosures to warn investors that concerns about the environmental impact of coal consumption could have a significant impact on demand for its products.

While coal use has stalled globally, largely because of China's economic slowdown and efforts to protect domestic miners and rein in rampant pollution, most analysts expect consumption to remain stable or rise in the future.

Some 500 coal-fired power stations are under construction. Eighty percent of them are in the Asia-Pacific region, where consumption is still growing in emerging markets as well as developed economies such as Japan and South Korea.


`Barclays Premier League' Winds Down Along With Bank's Ambitions

April 12th, 2016  |  Source: Bloomberg

Soccer league will have several top sponsors, not just one. Barclays deal was worth 40 million pounds to Premier League       

For the last 15 years, Barclays Plc has used the global popularity of Premier League soccer to gain footing in new markets. Next month, its reign as title sponsor ends, a reflection of the league’s growing ambitions and the bank’s shrinking ones.

Barclays’ strategy has changed dramatically in the three years since it last renewed the 40 million-pounds-per-year sponsorship ($57 million). About 20 billion pounds of profit has been wiped out by misconduct charges over the last five years, and its plans for global dominance have retrenched.

Since 2014 Barclays has withdrawn from its European retail operations in Spain, Italy and Portugal, and in March announced plans to leave Asia and Africa, regions where the Premier League counts some of its most avid fans. As well as turning away from seven Asian countries, Barclays is looking for a buyer for a 62 percent stake in Barclays Africa. The focus for now is on core business in the U.K. and the U.S.

It has also pulled back from other high-profile sponsorships, including tennis’s World Tour Finals. “The thing you pay the big money for -- which is to put your name on the top -- no longer was relevant for us as a business,” Barclays global head of sponsorships, Nathan Homer, said in an interview.

At the same time, the Premier League has grown unabated. Television revenue will be $2.5 billion a year next season, and the value of the title sponsorship has grown more than tenfold in 23 years.

To capitalize on its own popularity, the league has decided to forgo a title sponsor entirely. Like the National Football League, the FIFA World Cup and the Olympics, the Premier League will instead try to add sponsors in each of seven categories. Nike Inc. has become the official ball sponsor, Electronic Arts Inc. is the sports technology partner, and the league is close to naming an official beer.

Barclays will stay on as the official bank. “It couldn’t have suited us better,” said Homer, who said the role will cost Barclays about one-quarter of what it paid for the title sponsorship.

Looking back on one of soccer’s longest-lasting commercial relationships, Homer said Barclays got more than an advertising boost. The deal required the league to use the bank for all of its financial transactions, which have increased significantly in number and value over the years.

“Overseas rights have gone from just under 50 million pounds in year one to nearly a billion a year now -- all of that had to come through foreign exchange to become pounds in the bank,” he said. “So there’s a very attractive revenue side to becoming a partner with the Premier League before you even think about all the benefits a marketing partner would enjoy.”

Fourteen of the league’s 20 teams also bank with Barclays, giving the lender access to millionaire players, coaches and deep-pocketed owners. Meanwhile, the relationship gave Barclays instant recognition in its new target markets -- the Premier League is watched in 212 territories and its most-famous team, Manchester United, claims to have a global following of 659 million.

“As we expanded, it was a very simple awareness and brand stature that worked very efficiently: ‘If Barclays can afford to sponsor the Premier League they must be a serious player in the business,’” Homer said.

The new agreement gives Barclays the first right to any of the league’s banking needs, though its exclusive access to teams is over. Homer is confident most will stay with his bank. “It’s not as easy as saying I’m going change my beer from one to another and just change the barrel.”




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