- A host of European banks face potential losses on an estimated $40 billion in exposure to Dubai after the city state's largest corporate entity, Dubai World, asked creditors for a six month standstill on debt repayments, raising fears that recent signs of improvements in banks' bad debt levels could stall. Most banks on Thursday said their exposure to Dubai and Dubai World is small or wouldn't comment.Switzerland's Credit Suisse Group (CS) said its exposure to Dubai World is "not material." According to analysis of Dealogic data, other banks who have worked on bond and loan financings for Dubai entities include Barclays PLC (BCS), Citigroup Inc. (C) and Deutsche Bank AG (DB). Barclays didn't immediately return calls. Citigroup declined to comment, while a person familiar with the matter said Deutsche Bank's exposure to Dubai World isn't noteworthy. Bank analysts at NCB Stockbrokers said Standard Chartered PLC (STAN.LN) is the U.K. bank proportionately most exposed to the United Arab Emirates, with 7% of its loan book in the region. HSBC has about 2% of its loan book in the region, while Barclays, RBS and Lloyds have less than 1% of their loans in the UAE. Dubai World accounts for about $60 billion of the city state's $80 billion in liabilities, of which half is estimated by analysts to be held by European banks. Banks that acted as arrangers or bookrunners on Dubai World's most recent $5.5 billion loan facility in June 2008 include HSBC, RBS, Lloyds Banking Group PLC (LYG), ING Groep N.V. (ING) and Credit Agricole SA's (ACA.FR) Calyon, as well as Bank of Tokyo-Mitsubishi UFJ (MTU), Sumitomo Mitsui Banking Corporation (JD-SMU), Emirates Bank and Mashreq Bank (MASQ.DFM). Calyon in an email said it has a "small exposure" to Dubai World's debt, and that it doesn't think it has any cause to worry about the announced restructuring. ING said its exposure is negligible.
Business Week: - Tesco Lands Deal to Sell Apple(AAPL) iPhones.In a blow to rivals Orange and Vodafone, British supermarket giant Tesco has snagged a deal to sell the iPhone before Christmas in partnership with carrier O2.
- Fannie Mae, the giant mortgage finance company that helps shape lending guidelines, plans next month to raise minimum credit score requirements and limit the amount of overall debt that borrowers can carry relative to their incomes. The changes are the latest in a series of crackdowns by the mortgage industry and could surprise some prospective home buyers. The industry is rolling back loose lending standards that led to the mortgage meltdown and the subsequent economic crisis. But the fear is that if the industry becomes too restrictive, it will freeze out too many borrowers and impede an economic recovery.
The Detroit News:
- ‘Climategate’ puts warming in question. President Barack Obama is about to stride off to Copenhagen, where he'll sign away any hope that America can return to sustained prosperity. The president promises next month's international palaver on climate change will be marked by aggressive action to combat global warming and a firm commitment by the United States to shoulder its share of the responsibility. Translation: Obama will pledge the United States to curbing its appetite for energy, and thus its economic growth, will make reducing emissions a higher priority than creating new jobs and will agree to transfer $1.6 trillion of our wealth to China, India and the other booming developing economies. And it may be based on doctored numbers. The so-called Climategate scandal hasn't hit the front pages of American newspapers yet and may never. But it ought to at least raise the skepticism level of a public that has been panicked into believing the sky is falling, or the polar caps are melting, because of manmade global warming. Purloined e-mails between some of the leading producers of climate change science reveal what seems to be a deliberate attempt to manipulate and distort data to deliver the desired outcome.The e-mails were hacked from the United Kingdom's University of East Anglia Climate Research Unit, an institution that has led in documenting global warming and whose findings have driven United Nations' environmental policy. The research unit has been notoriously protective of its data, fighting off those who want a closer look at its methodology. Messages between the unit's scientists and officials suggest a deliberate campaign to answer calls for public disclosure with a smear job against those who question the validity of climate change science. The scandal provides an opening for the United States, which will pay the highest price if a climate change treaty is signed, to say, "Let's call a time-out and look at the tape." Research skeptical of climate change is denounced as quackery. But science should never be "settled," as the global warming industry has declared this matter to be. Nor should it be cause driven, massaged to align with popular movements. It should be cold, impassive and willing to prove itself against dissenting theories. It should welcome new evidence, even if it alters its assumptions. This isn't how climate change scientists work, according to the stolen e-mails. The British center seems motivated entirely by defending its findings to perpetuate the public policies it worked so hard to influence. It also seems willing to destroy findings that dispute their established position. This is why we can't get a credible answer to why global temperatures have been flat for a decade. The warming warriors who cited every abnormality in weather patterns -- falling lake levels, droughts, hurricanes, milder winters -- as proof of climate change's impact, now tell us that the reversal or disappearance of those abnormalities are a cyclical blip within the longer trend. Maybe, maybe not. We can't be sure because the science is settled, and those who would tackle contrary research do so at their own peril. This matters because world leaders are about to embark on an environmental crusade that will dramatically alter the international economy and the quality of our lives. We are obliged to make sure the research can be trusted.
- Iraq aims to install four new floating oil terminals and three new undersea oil pipelines that will boost export capacity to 8 million barrels per day from a current 1.9 million bpd, a top oil official said. Dhiya Jaafar, current chief of Iraq's South Oil Co. (SOC), which oversees the bulk of exports from the country's vast oil reserves, on Wednesday told Reuters work should be completed on the new terminals and pipelines in the second half of 2011. Iraq has a clutch of deals with global oil majors that it hopes will push it to third from eleventh place among the world's oil producers. A contract with Britain's BP and China's CNPC to develop the country's super-giant Rumaila field has already been finalized. BP, CNPC and the SOC have agreed that current production from Rumaila is 1.05 million bpd, Jaafar said. The baseline output figure will be used to determine the foreign firms' future performance in boosting output, to which their level of remuneration is pegged. Iraqi oil exports reached 1.868 million bpd in October, including exports from the country's northern fields.
Earnings of Note Company/EPS Estimate - None of note
Economic Releases
- None of note
Upcoming Splits - None of note
Other Potential Market Movers -None of note
BOTTOM LINE: Asian indices are sharply lower, weighed down by commodity and automaker shares in the region. I expect US equities to open sharply lower and to rally into the afternoon, finishing modestly lower. The Portfolio is 100% net long heading into the day.
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