Business

By Sabrina Valle

HOUSTON (Reuters) – Occidental Petroleum Corp is keeping its total 2022 production guidance at around 1.55 million barrels of oil equivalent per day (boed) despite target reductions in the U.S. Permian basin, Chief Executive Vicki Hollub said on Wednesday.

Occidental reduced its 2022 production outlook in the Permian basin to between 516,000 and 526,000 boed, from 527,000 to 537,000 boed projected in May.

(Reporting by Sabrina Valle; editing by Jonathan Oatis)

source

A look at the day ahead in markets from Anshuman Daga

Markets are dealing with dual flashpoints today on inflation and cross-straits tensions.

Fed speakers have put paid to market thinking they will lighten their inflation war while, across in East Asia, China has its warheads trained on Taiwan as Nancy Pelosi hails Taiwan’s free society.

China furiously condemned the trip by the speaker of the U.S. House of Representatives, which marked the highest-level U.S. visit to Taiwan in 25 years.

Geopolitical tensions are simmering as China embarks on an unprecedented six days of military drills surrounding Taiwan. Risks of escalation are mounting, warn security analysts.

For Fed watchers, concerns of faster U.S. rate rises are back on the radar after St. Louis Federal Reserve President James Bullard said rates will need to be ‘higher for longer’ if inflation does not recede.

That came after a trio of Fed officials from across the policy spectrum signalled that they remain resolute on the need to make policy more restrictive.

Traders now see a chance of about 44% that the Fed will hike by another 75 basis points at its next meeting in September. Heightened rate expectations punctured a two-week rally in U.S. equity markets.

On the data front, a slew of services and composite PMIs of developed economies such as Germany, Eurozone, U.K. and the U.S. for July will be released across today.

In the U.S., durable goods orders are expected to grow 1.9% m/m in Jun from 0.8% in the prior month while factory orders likely slowed to 1.2% m/m in Jun from 1.6%.

Asian stocks are stuck in a narrow range on Wednesday, with Japan recovering from two-week lows while Korean and Hong Kong shares edged up.

Key developments that should provide more direction to markets on Wednesday:

Major earnings: Societe Generale, Infineon Technologies, Commerzbank, Yum! Brands and eBay

Key Asian data: July releases of the S&P Global PMIs for Hong Kong, Singapore and India and thee Caixin China Services PMI

(Reporting by Anshuman Daga; Editing by Vidya Ranganathan)

source

BERLIN (Reuters) – BMW saw a drop in its automotive margin on earnings before interest and taxes to 8.2% from 15.8% last year as the consolidation of its Chinese joint venture BMW Brilliance dampened earnings, it said on Wednesday.

The carmaker reported a group net profit of 3.05 billion euros ($3.10 billion) from 4.8 billion euros last year.

It confirmed its outlook of 7-9% for the automotive segment but said it expects full-year deliveries to be slightly below last year.

($1 = 0.9823 euros)

(Reporting by Victoria Waldersee)

source

By Tom Sims and Marta Orosz

FRANKFURT (Reuters) -Germany’s Commerzbank swung on Wednesday to a bigger-than-expected second-quarter net profit, helped by higher interest rates and increased commission income, and confirmed it was on track to meet its profit target this year.

The return to profit at Germany’s No. 2 bank is a victory for CEO Manfred Knof, who joined the company at the start of 2021 to carry out a 2 billion euro restructuring programme involving hundreds of branch closures and 10,000 job cuts to get back on a sustainable path.

Net profit of 470 million euros ($478.60 million) for the three months through end-June compares with a loss of 527 million euros a year earlier. Analysts had on average expected a profit of 370 million euros, according to a consensus forecast published by Commerzbank.

Investors have been watching earnings reports of major lenders in Europe for signs that a weaker economy, higher interest rates and the war in Ukraine are weighing on their operations and outlooks.

Some of them, including rival Deutsche Bank, have reported surprisingly strong quarterly reports but voiced concerns about the economic outlook.

Germany’s banks are at the centre of a geopolitical storm because the country is particularly dependent on Russian energy and its economy will be hit hard by any supply shortages.

“We are well equipped for upcoming challenges,” said Bettina Orlopp, chief financial officer of Commerzbank.

The bank said that it took charges of 228 million euros in the quarter related to the war in Ukraine, and that it had on hand 564 million euros for any further war-related effects or impact from energy supply disruptions.

Commerzbank reiterated that it would maintain its profit target of more than 1 billion euros for the full year, though it slightly raised its cost target to 6.4 billion euros from 6.3 billion euros.

During the same period last year, the German lender generated a loss due to its restructuring and after a write-off to end an outsourcing project.

Niklas Kammer, an analyst with Morningstar, said ahead of the earnings that profitability “remains challenging” for Commerzbank.

“The competitive German banking market leaves little opportunity for Commerzbank to significantly outearn its cost of equity,” he said.

($1 = 0.9820 euros)

(Reporting by Tom Sims and Marta Orosz; Editing by Rachel More and Muralikumar Anantharaman)

source

WASHINGTON (AP) — A House oversight panel on Tuesday subpoenaed gunmaker Smith & Wesson for documents on the manufacture and sale of AR-15-style semi-automatic rifles after its CEO refused to appear for a hearing on the firearms frequently used in mass shootings.

The House probe found that five major gunmakers took in a combined total of $1 billion in revenue from the weapons over the last decade, and they were at times marketed as a way for young men to prove their masculinity even as they became a “weapon of choice” for mass shooters.

A mass shooting that killed seven people and injured three dozen others at a July 4 parade in the Chicago suburb of Highland Park was carried out with Smith & Wesson’s M&P 15 semi-automatic rifle.

CEO Mark P. Smith originally agreed to testify last week before the Committee on Oversight and Reform along with the heads of two other companies, but pulled out five days before, Democratic Chair Carolyn Maloney of New York said in a statement. The company also hasn’t provided all the information and documents, including data about the sales of its AR-15-style firearms, asked for in its investigation into gun manufacturers, she said. The subpoena also seeks the Massachusetts company’s internal communications around mass shootings.

The company didn’t immediately respond to an email seeking comment.

The hearing with gun executives came shortly before the House passed legislation to revive a ban on certain semi-automatic weapons, including the AR-15, the first vote of its kind in years. But the measure is expected to stall in the Senate, with Republicans solidly opposed.

Gunmakers say the weapons themselves aren’t to blame for mass shootings, which are on the increase but rare overall. Gun-rights supporters argue the firearms are also popular with many people who buy them for self-defense and have a right to own them under the Second Amendment.

source

NEW YORK (AP) — The crypto division of the online brokerage Robinhood will pay a $30 million penalty to New York state for failing to comply with regulations governing money laundering and cybersecurity, the state’s Department of Financial Services announced Tuesday.

The department said an examination of Robinhood Crypto’s operations from Jan. 24, 2019, through Sept. 30, 2019, found that the company’s compliance with banking regulations had not kept up with its growth.

“As its business grew, Robinhood Crypto failed to invest the proper resources and attention to develop and maintain a culture of compliance—a failure that resulted in significant violations of the Department’s anti-money laundering and cybersecurity regulations,” Adrienne A. Harris, superintendent of the state’s Department of Financial Services, said in a news release.

Department of Financial Services officials said Robinhood Crypto improperly certified to the state that it was in compliance with transaction-monitoring and cybersecurity regulations despite its deficiencies in those areas. Additionally, the officials said, the company failed to provide a dedicated phone number for consumer complaints on its website, as is required.

In addition to paying the $30 million penalty, Robinhood Crypto will be required to retain an independent consultant who will evaluate the company’s regulatory compliance, the officials said.

Cheryl Crumpton, associate general counsel for Robinhood Markets Inc., said in a statement, “We are pleased the settlement in principle reached last year and previously disclosed in our public filings is now final. We have made significant progress building industry-leading legal, compliance, and cybersecurity programs, and will continue to prioritize this work to best serve our customers.”

source

First Report: Israel’s Ramon Airport Set To Open To Palestinian Passengers

A pilot program will see the first charter plane fly to Turkey with only Palestinian passengers mainly from the southern West Bank.

An Israeli plan permitting Palestinian travelers to fly out of one of its airports has received official approval. A first charter flight of passengers from the West Bank is set to leave from Ramon International Airport near Eilat in southern Israel later this month.

Amir Assi, of Al-Amir Group, told The Media Line that after meeting with Israeli civil administration officials on Monday he was given the nod to advertise for a pilot program to fly the first charter plane to Antalya, Turkey for only Palestinian passengers mainly from the southern West Bank.

“For the plan to succeed and (to ensure) the security concerns are addressed, we chose to allow travelers to carry with them the minimum,” Assi said.

The first charter flight will take place on Sunday, August 21.

Assi explains that the focus to find travelers at first will be on Bethlehem and Hebron in the southern West Bank, because the distance is relatively shorter to the remote airport.

It’s unclear yet if Palestinians from the Gaza Strip will be included in the pilot program.

“Travelers will experience the same steps that passengers go through when they leave through Allenby Bridge,” according to Assi, whose company makes connections between tourists from the Palestinian Authority and the rest of the Arab world.

Palestinians crossing the Allenby Bridge checkpoint connecting Jordan and the West Bank first must go through several Israeli security checkpoints.

The only outlet for the Palestinians is Queen Alia Airport in Jordan, but first they have to travel through Israeli-run border crossings to Jordan, which operate under limited hours, and are usually packed with travelers.

“To speed up the process, travelers are asked to take with them small pieces of luggage, but they can come back with large suitcases,” he said.

Assi, who also serves as a consultant for several airlines, says he has been working on the initiative for more than a year, insisting that it will benefit Palestinians by saving them money.

“When a Palestinian leaves through Jordan, sometimes they have to spend a night before catching a flight, now they can flight directly to their destination,” Assi said.

Sources tell The Media Line that the Palestinian Authority has been informed of the Israeli plan, but it has not responded officially to the news, and has yet to say if the PA will participate.

Palestinian Authority Prime Minister Mohammad Shtayyeh has demanded the opening of al-Quds Airport in Qalandia in the West Bank and the removal of all obstacles in order to allow people and goods to move freely to and from the Palestinian territories.

He called on Israel to open al-Quds Airport to the Palestinians in what appears to be a direct rejection of the proposal to allow Palestinians to fly out of Ramon Airport.

Initially, news of the Israeli proposal received mixed reviews. While those in favor of the plan say it will benefit Palestinians, those who oppose the plan are demanding their own airport.

Talaat Alawi, head of With Dignity – the National Campaign for Palestinian Freedom of Movement, told The Media Line that “Palestinian citizens have the right to decide for themselves. No one decides for him.”

Booking will be done through Palestinian tour operators in the West Bank. Passengers will meet in one centralized location before boarding charter buses, and then will have to go through an Israeli checkpoint for a security check before the long ride to the airport, along with a security escort.

Ramon International Airport, which opened in January 2019, has struggled to attract airlines and passengers, and Israeli officials are hoping this plan will inject new life into the airport.

source

By Kevin Buckland

TOKYO (Reuters) – Asia stocks continued a decline from Wall Street on Tuesday, and U.S. long-term Treasury yields sank to a four-month low, pulling the U.S. dollar down against the yen and other currencies as investors worried about the risk of global recession.

There were also jitters about an escalation in Sino-U.S. tension with U.S. House of Representatives Speaker Nancy Pelosi set to begin a visit to Taiwan against the objections of China, which regards the self-governed island as a breakaway province.

Australian equities declined amid an uncertain outlook for commodity demand – which also weighed on crude oil prices – while the local dollar hovered near its highest versus its U.S. counterpart since mid-June with the central bank widely expected to deliver a third consecutive half-point interest rate hike later in the day.

The Australian and South Korean equity benchmarks suffered losses of about 0.3% each, while Japan’s Nikkei tumbled 1.17%.

Chinese blue chips dropped 1.06% and Hong Kong’s Hang Seng lost 1.1%.

Taiwan’s stock index slid 1.68%.

MSCI’s broadest index of Asia-Pacific shares retreated 0.8%.

U.S. e-mini stock futures pointed to a 0.31% lower restart for the S&P 500, which stumbled 0.28% overnight.

The week began with China, Europe and the United States reporting weakening factory activity, with that in the U.S. decelerating to its lowest level since August 2020.

That sank crude, with Brent futures edging down to $99.74 on Tuesday after losing almost $4 overnight. U.S. West Texas Intermediate futures also eased to $93.67, extending Monday’s almost $5 slide.

“Data releases over the past 24 hours have provided further evidence the global economy is slowing,” National Australia Bank strategist Rodrigo Catril wrote in a note to clients.

“Signs of a slowdown are building” in the United States, while “China’s reopening activity burst is over,” he said.

The benchmark 10-year U.S. Treasury yield fell as low as 2.53% in Tokyo trade, the lowest since April 5, amid wagers the slowdown could spur the U.S. Federal Reserve to ease its foot off the policy-tightening pedal. The bonds also benefited from safety-seeking demand before Pelosi’s Taiwan visit, analysts said.

That helped the U.S. dollar slide as low as 130.595 yen for the first time since June 6. The euro jumped as high as $1.0294, a level not seen since July 5.

The Taiwan dollar slipped to its lowest level in more than two years on the weaker side of 30 per U.S. dollar.

Meanwhile, the Aussie was more subdued, retreating 0.26% to $0.7009, but after hitting the highest since June 17 at $0.7048 in the previous session.

Analysts polled by Reuters expect the Reserve Bank of Australia to hike by 50 basis points both on Tuesday and again at its next meeting in September as it races to rein in inflation.

Market participants also see a half-point bump later as a certainty, and have priced an additional 37 basis points of tightening for the September decision.

(Reporting by Kevin Buckland)

source

RENO, Nev.— (AP) — The developer of a geothermal power plant facing legal challenges in Nevada agreed Monday to suspend construction just hours after a U.S. appeals court had refused to halt the project that opponents say would harm an endangered toad and destroy sacred hot springs.

In a ruling Monday morning, a three-judge panel of the 9th U.S. Circuit Court of Appeals rejected a bid by environmentalists and a Nevada tribe to reinstate an injunction that temporarily blocked work earlier this year on Ormat Nevada’s plant 100 miles (161 kilometers) east of Reno.

But hours later, lawyers for Ormat, the government, environmentalists and the tribe filed a joint stipulation in federal court in Reno detailing a voluntary agreement to suspend construction for at least 30 days — and perhaps until the end of the year.

The unusual turn of events comes after the U.S. Fish and Wildlife Service took the rare step of declaring the Dixie Valley toad endangered on a temporary emergency basis in April — something the agency has done only one other time in 20 years.

The project is one of several underway in the West that the Biden administration backs as a way to combat climate change by expediting the transition from fossil fuels to renewable energy.

It would generate carbon-free power by tapping hot water from beneath the earth. But the Fish and Wildlife Service concluded in April it could lead to the extinction of the toad by adversely affecting groundwater that feeds wetlands in the only place the speckled toad, about the size of a quarter, is known to exist.

Monday’s panel ruling from the San Francisco-based 9th Circuit, which heard oral arguments on the appeal in June, said it couldn’t consider the emergency listing because it happened after the appeal was filed in January.

The Center for Biological Diversity and the Fallon Paiute-Shoshone Tribe subsequently amended their suit to include the listing. They allege Ormat and the bureau are violating the Endangered Species Act’s requirement that they consult with the wildlife service before proceeding with any activity that could harm protected species.

The conflict has put a spotlight on some of the challenges the Biden administration faces as it tries to meet its goal of having the U.S. power grid run on clean energy by 2035.

The new agreement filed Monday acknowledges the formal consultation must be completed so any risks to the toad can be fully evaluated before it’s harmed.

“It’s not every day that you can lose at the 9th Circuit but still come out ahead, but today is a win for the Dixie Valley toad,” said Patrick Donnelly, Great Basin director for the Center for Biological Diversity.

“This agreement comes just in the nick of time to save this little toad from extinction,” he said.

Ormat agreed to suspend construction until the service issues a formal biological opinion following the consultation, or until Dec. 31, whichever comes first.

It also agreed to provide 30 days’ notice before resuming any construction. In turn, the opponents agreed they won’t seek any new court orders before receiving such notice.

Ormat Vice President Paul Thomsen said the Reno-based company already was working with the two agencies to facilitate the consultation process “and as part of those collaborative efforts has temporarily paused construction to focus on these efforts.”

“Ormat is confident that BLM and the Fish and Wildlife Service can find a path forward for the project that will both adequately protect the Dixie Valley toad and allow development of this critical renewable geothermal resource,” he said in an email late Monday.

The 9th Circuit’s panel ruling earlier Monday said further delay of the project would make it “all but certain” Ormat would be unable to meet a contract deadline to complete construction by the end of this year.

Ormat said earlier that failure to meet the deadline would cost the company $30 million over 20 years and could jeopardize the entire project, which was approved by the U.S. Bureau of Land Management in November.

“Beyond the economic losses to Ormat,” the panel said, “the district court properly considered the public interest in a ‘source of carbon-free baseload electricity,’ royalty returns to the federal government, and state and local taxes which would be collected as a result of the project.”

The joint stipulation outlines a schedule with filing deadlines as U.S. District Judge Robert C. Jones in Reno continues to consider the case on its merits.

Critics say the project will violate the Religious Freedom Restoration Act by restricting access to the site where Native Americans have worshipped for thousands of years.

Their lawsuit also accuses the bureau of violating the National Environmental Policy Act by failing to complete an environmental impact statement on the potential impacts — a much more exhaustive review than the environmental assessment it produced.

The 9th Circuit panel ruled that Judge Jones was correct in deferring to the expertise of BLM scientists who concluded that adequate safeguards were in place.

The plans the bureau approved “address unanticipated impacts and impose meaningful mitigation measures as needed,” the ruling said. “BLM was not required to mitigate impacts to zero.”

source

(Clarifies that the FCA oversees banks trading financial products or instruments in the London gold market)

By Peter Hobson

LONDON (Reuters) -Some investors want Russian gold off their books but it’s not that easy to remove.

A de facto ban on Russian bullion minted after Moscow’s invasion of Ukraine — instigated by the London market in early March — does not apply to hundreds of tonnes of gold that has been sitting in commercial vaults since before the conflict started.

Fund managers looking to sell the metal to avoid the deepening reputational risk of holding assets linked to Russia in their portfolios could trigger a costly scramble to replace it with non-Russian gold, according to bankers and investors.

“This would only serve to damage investors. It doesn’t damage the (Russian) regime,” said Christopher Mellor at Invesco, whose fund has around 265 tonnes of gold, 35 tonnes of it produced in Russia with a market value of around $2 billion.

The dilemma facing investors reflects Russia’s heft in the global bullion trade and its hub, the London market, where gold worth around $50 billion changes hands daily in private deals.

A rapid selloff of gold from Russia — a top three supplier — would potentially disrupt that trade by undermining the principle that all bars in the London trading system are interchangeable regardless of their origin, according to three senior bankers at major gold trading banks.

To buttress the market, two of the bankers told Reuters they contacted clients and rival banks to tell them they would not dump Russian bullion minted before the war.

The bankers said they advised their customers and other traders that they should do the same. They declined to be named due to the confidential nature of the conversations.

“I made an effort to call clients. I told them, if you demand that your Russian metal is swapped out, you’ll create a problem for yourself. You don’t want to create a scramble,” one said.

He said his phone lit up with calls after the London Bullion Market Association (LBMA), a trade body that sets market standards, removed all Russian refineries from its accredited list on March 7, meaning their newly minted bars could no longer trade in London or on the COMEX exchange in New York, the biggest gold futures trading venue.

“There was utter confusion. Funds were saying they didn’t want any Russian bars in their holdings,” the banker said.

THE BANK OF ENGLAND

Russia invaded Ukraine on Feb. 24 in what it has called a “special military operation” aimed at demilitarising Ukraine and rooting out dangerous nationalists. Kyiv and the West call this a baseless pretext for an aggressive land grab.

The Bank of England, which operates Britain’s largest gold vault, said it considered Russian gold bars made before the conflict in Ukraine eligible to trade because they are still on the LBMA’s accredited list, known as the Good Delivery List.

“As far as the Bank of England is concerned, any Russian refined gold produced after 8th March is not London Good Delivery. Any bars produced before that remain acceptable, and we told all our customers this was the case. That’s just a point of fact, so we don’t have any comment on this,” the Bank of England said in an emailed statement.

To hammer home the point that pre-invasion Russian gold was meant to be treated the same as gold from other places, some banks told clients for whom they stored gold that they would have to pay extra to offload Russian bullion because it would breach their existing contracts, the two bankers, a third banker and two gold-owning investment funds said.

The bankers’ conversations with clients and rivals, which have not previously been reported, highlight the role played by a handful of players in the London gold market, where trades happen in bilateral deals.

Twelve banks dominate trading in the London gold market and four of them — JPMorgan, HSBC, ICBC Standard Bank and UBS — operate vaults. Anyone trading bullion relies on their services, directly or indirectly, to settle trades.

JPMorgan, HSBC, ICBC Standard and UBS declined to comment when asked about how they handled investor requests to sell their holdings of Russian gold.

The LBMA, which is made up of gold refiners, traders and banks, is not a regulator, and relies on market participants to uphold its rules.

The large quantity of Russian gold in the London market and Russia’s rapidly emerging pariah status in the wake of the Ukraine invasion, however, put the banks in a difficult spot, according to lawyers and market experts.

“I think you’re seeing the banking community trying to navigate a very complex situation,” said Peter Hahn, emeritus professor at the London Institute of Banking & Finance.

“The Financial Conduct Authority (FCA) should question the practice to understand whether the actions were, generally, for the benefit of market participants … and whether the practice was transparent to market participants.”

The FCA is the British regulator responsible for overseeing banks where they trade financial products or instruments in the London gold market. It declined to comment.

A spokesman for the LBMA said the association was “anecdotally” aware that some owners and traders of Russian gold have wanted to swap it out or not to deal with Russian gold in the future.

Asked what the LBMA thought of this, the spokesman said that it “maintains a neutral stance provided the efficient operation of the market is unaffected.”

The spokesman declined to comment on bankers’ efforts to prevent a sell-off of Russian gold. He said that the LBMA “does not distinguish between different types of good delivery gold”.

POTENTIAL LOSSES

The bankers’ actions appear to have worked.

Good delivery gold bars minted in Russia before the invasion have not traded at a discount to the rest of the market, according to traders. Larger investors — including some exchange traded funds (ETFs) with Russian gold worth more than $1 billion — do not appear to have sold up.

“Our ETFs are not able to get all Russian metals off their books at short notice,” said a spokesperson for Zürcher Kantonalbank.

“The potential losses would not be compatible with our fiduciary duty to our clients and its sale is currently not possible due to the current situation.”

Zürcher Kantonalbank’s current ETF stock of about 160 tonnes of gold comes mainly from Swiss refineries and the share of Russian gold is negligible, according to the spokesperson.

A widespread and rapid clearout of Russian gold from investor portfolios could push its price down by anywhere from $1-$40 an ounce compared to non-Russian gold, people in the industry said.

At least $12 billion worth of Russian gold is stored in vaults in London, New York and Zurich, according to a Reuters analysis of data from 11 large investment funds. The total amount is likely significantly larger but there are no publicly available figures to quantify it.

If Russian gold traded at a discount of $5 an ounce, the cost to funds of replacing $12 billion worth of metal would be around $34 million.

A Reuters analysis of investment data shows that the share of Russian gold in eight large ETFs actually rose to 7% on average in mid-July from 6.5% in mid-March.

Some gold market participants have pushed ahead with selling their Russian holdings but they have tended to have less to offload.

Britain’s Royal Mint, for example, said it had Russian bars worth around $40 million in its ETF and got rid of them by mid-March.

Others are trying to reduce their Russian holdings over time, asking the banks which store their gold to gradually cut their allocation or refusing to accept Russian gold bars in new deliveries.

Asset manager Abrdn said it had asked its bank to reduce its Russian holdings. In mid-March, Russian gold accounted for 10% of the roughly 45 tonnes held in its Aberdeen Standard ETF. By mid-July, that proportion had fallen to 9.8%.

Those seeking a faster exit, meanwhile, have been left in a bind.

“Everyone has the same problem. Everyone wants to solve it, no one knows how,” said a source at a major investment fund.

(Additional reporting by Elisa Martinuzzi;Editing by Veronica Brown and Carmel Crimmins)

source