China Watchdog Finds $10 Billion in Fake Currency Trade

Posted on September 29, 2014 by RonMamita — 5 Comments

Photographer: Qilai Shen/BloombergContainers sit at the Port of Qingdao, in Qingdao.

China Watchdog Finds $10 Billion in Fake Currency Trade
By Bloomberg News Sep 25, 2014 8:39 AM GMT+0100

Chinauncovered almost $10 billion in fraudulent trade nationwide as part of an investigation begun in April last year, including many irregularities in the port of Qingdao, the country’s currency regulator said today.

Companies “faked, forged and illegally re-used” documents for exports and imports, Wu Ruilin, a deputy head of the State Administration of Foreign Exchange’sinspection department, said at a briefing in Beijing. The trades have “increased pressure from hot money inflows and provided an illegal channel for criminals to move funds,” Wu said, adding that those involved in such fraud would be severely punished.

“Some companies used the trade channel to bring in hot money,” said Zhou Hao, a Shanghai-based economist at Australia & New…

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5 comments on “China Watchdog Finds $10 Billion in Fake Currency Trade”

n3angus says:

September 30, 2014 at 11:43 am

This might be why PIMCO is Shaking it might not have a clear valuation of their assets with these fake trades going on …..
This Fake Currency trade will bring on the SDR fast !!!!!!
http://peoplestrusttoronto.wordpress.com/2014/09/29/china-watchdog-finds-10-billion-in-fake-currency-trade
Say Good Bye to the dollar trade currency benefit and hello to hyper inflation in the USA .

They have the SDR Ready to go , see here ;

Sovereign Wealth Funds,
Special Drawing Rights and the
New Global Financial Architecture
by George Hoguet , Page 37 , https://philosophyofmetrics.files.wordpress.com/2014/09/finalvision_sovereign_wealth_funds.pdf

IMF Determines New Currency Weights for SDR Valuation Basket
http://www.chathamhouse.org/sites/files/chathamhouse/field/field_document/0212gt_schenk1.pdf

Reply
- RonMamita says:
  
  September 30, 2014 at 1:24 pm
  
  Apparently the Money Masters are preparing to push the button for the RMB to join the IMF’s SDR and roll out the new monetary policy with a new world’s reserve currency replacing the USD role.
  
  My senses aligns with the probability that the Money Masters are almost ready, and that their BIG event will be rolled out.
  Have you heard any revealing hints from the delegates preparing the G20 Summit?
  
  Keep keen interest on following the Money.
  As always, many thanks for sharing, and thank you for being here!
  
  Reply
  - n3angus says:
    
    September 30, 2014 at 1:59 pm
    
    Hey this might be why AG Holder is exiting …..
    https://s3.amazonaws.com/khudes/twitter9.18.13.pdf
    https://s3.amazonaws.com/khudes/Twitter9.30.14.1.pdf
    https://s3.amazonaws.com/khudes/Twitter9.27.14.1.pdf
    
    Reply
    - RonMamita says:
      
      September 30, 2014 at 2:59 pm
      
      Those 3 PDFs raises more questions rather than answering any…
      Karen Hudes is suspect, though I will look at her documents as they possibly may identify and verify the criminals.
      HSBC Hong Kong’s broker certificate of 25,500 Metric Tonner Gold deposit is also interesting.
      I also looked at the linked documents to Japan Monetary Agreement Code name TVM-LSM-666
      
      What this has to do with Holder’s resignation?
      What ever legal jeopardy Holder is facing he will continue to face out of office; more importantly is what difficulties will officials in DC and Wall Street face after Holder exits?
      Apparently the Banksters never run out of personnel to fill important offices, but getting quick and timely approvals in time to handle or push through important papers authorizing more criminal activities are questions ever present in a system of institutional crime.
      
      Reply
RonMamita says:

September 30, 2014 at 9:39 pm
SNBDL Daily Briefing Report prepared using big data solution Quid Sept 26, 2014 Daily Briefing: Our take away from the last 24 hours news US Federal Reserves: While James Bullard sees the FOMC to drop “Considerable Time” in the October meeting and Loretta Mester that the forward guidance should channel the reaction function to data, many other FOMC members have been downplaying inflationary risk or the urgency to act on rates. The main issue, which drives current Fed watchers debate, reflects a political debates around the Transparency Bill (which corresponds to the introduction of “golden rule” or an “auto-pilot” when markets have proven to be under estimating numerous factors when assessing interest rates path -e.g. consequence of the mid-term elections, geopolitical headwinds, effect of commodity prices decrease-). We consider that Bullard proposed timing (drop “Considerable Time” as early as October) is too early because: 1) the FOMC have not a clear view of what could replace the “Considerable Time” language, 2) the US economy narrative might start to suffer from the effect of what could be the uncertainties should the Senate majority goes to GOP at that period, 3) Chair Yellen will not have the opportunity to explain the changes (no press conference in October). We consider that markets over reaction to the September meeting dots, excessive short fixed income positioning, and inability to challenge an excessively optimistic escape velocity scenario increase the change that the Fed will make no change to its forward guidance by October. We have been arguing for a couple of months now that markets are extremely mis reading the Fed reaction function relative to the reaction function explained by the Fed leadership. In this week interview, Dudley (NY – Sole regional Fed permanent voter – close to leadership thinking) indicated that the economy should run “a little hot for some time before normalising rates.” Recent G-20, IMF and OECD downward revision to the US economy growth forecast all indicate that the market is set to be surprise by the timing of a rate hike. We have been stressing since december 2013, that 1) the market consensus is excessively short fixed income (i.e. expecting a quick rate normalisation relative to the scenario supported by economic fundamentals), and 2) this is likely to translate into a short squeeze which might take place as soon as October or November (as we get closer to the mid-term elections and markets realised the impact of a “lam duck administration” should the Senate majority goes to GOP). We consider that the USD strength is likely to reverse as soon as mid-October, when France will validate the change in EZ narrative, while the USD weakness will accelerate the closer we get to the mid-term elections, because operators will realise that a split US government would make it even harder to struck bi-partisans compromises on fiscal budget, debt ceiling increase, immigration etc. These reforms are instrumental to create the conditions for escape velocity – without which the Fed has no justification to embark into a tightening mode -. BoE: Carney is reverse the narrative which pushed GBP lower in order to avoid: first, a currency crisis – which has started to be discussed when Scotland independence was considered -. second, fuelling inflation – currency strength played an important role in the subdued inflationary scenario-. We continue to see BoE talking hawk, in order to avoid hiking rates. We consider that the UK yield curve flattening and long GBP (specifically relative to USD) are the best way to play BoE strategy. ECB: Greece announcement to change fiscal treatment to Differed Tax Assets is very positive heading to AQR (asset quality review) results. The two countries which has been (and continue to be) seen as under pressure from the AQR are Greece and Ireland. The former’s tax change enables to provide EUR 2.5 bn additional capital. Is EUR recent weakening due to an existential threat (too much complacency) or is it the reflect of monetary policy divergence as Draghi argued? We believe that it’s the combined result of the double issues. We have been quite vocal that markets are excessively pricing a monetary divergence, while Fed is likely to continue tightening macro prudential while being late in normalising. Furthermore, the EUR narrative amongst investors seems resuming the existential threats (Eurozone will not be able to undertake the reforms, Germany will not pay for the “lazy” other countries, AfD and Front National will succeed in destroying the EZ and EU for the benefit of Eurasia, Scotland independence and Br-exit risk etc.). We have been indicating in our Europe Update that EUR is heading toward becoming a reserve currency should France and Italy continue to undertake the reforms. For France, we should know as soon as mid-October whether the government will succeed getting the parliament backing to support the reforms. We consider that the likelihood is very high (though the narrative – rhetoric is captured by the anti – reforms). The introduction of structural reforms in France would help calm Germany – Northern European countries – nervousness vis-a-vis the prospect that Sovereign QE would be used to finance deficits and fiscal transfers (and refrain government from doing reforms). We consider that by mid October market sentiment is likely to shift more positively toward EZ, when France reforms votes (budget and responsibility pact) will clear the way for Germany to support EU Commission President Juncker EUR300bn investment plan. Furthermore, we consider that as soon as the banking sector on-going AQR [Asset Quality Review] review will be finalised, the EU banks will use the T-LTRO much more widely than the 1st experience to respond to the growing demand out of the SME sector. We disagree with consensus view that low T-LTRO demand is indicative of a low demand because this is much more likely to be attributable to the banking sector focus on reinforcing their solvency before AQR and undertaking additional credit risks (ECB loans demand survey continue to indicate an increasing demand coming from SMEs in the periphery). Bank of Canada: alike ECB or BoE, BoC wants to benefit from a weak currency without using any tool (through the monetary policy divergence story – a very widely accepted view). As we were expressing many times we do not see this divergence as important as other market participants because it assumes that the Fed has reached the escape velocity and all the indications are supporting the opposite view. Reserve Bank of Australia: In a context where Australia housing market has been pointed out to be in a bubble (after the BIS meeting), the RBA offered a detailed report in which its highlight its view that Macro Prudential should be used as first line of defence against market frothiness. This report echoes the RBA and Australian government views earlier this month (please see our earlier daily briefings), that the housing market constitute a risk of frothiness but it NOT in a bubble right now. In a context, where inflation hawks want to see higher rates we forecast that RBA action will be dismissed and market will continue to focus on any reason which could justify positioning which plays doom and gloom Australia. A scenario which could not only help fixed income investors (should Central Banks undertake new QE programs), Gold – commodity standard bugs – should the crisis spread to a full fledge monetary armageddon -, Russia – which could reduce the pressure of the sanctions – and obviously the Terrorists alike ISIL which could claim a win over a “corrupted West” (in their parlance). Markets analysts are not able to link these interest groups yet but a complete information permitted by big data enables to connect these dots. Russia Central Bank: Nabiullina new 2014 inflation forecast and oil price decreasing stress scenario indicates that the Russian economy is heading toward stagflation. This stagflation may also increase should Iran nuclear talks yield in short term results (as we are expecting and evidences are supporting). RBI: Suffers from monetary divergence pricing, INR depreciation pass through is likely to continue to overshadow the benefit of commodity prices plummeting until markets start pricing the US mid-term elections risk. PBoC: China government is understood to be considering replacing Governor Zhou in the forthcoming IV-Plenum. Chatters see Guo Shuqing, Fmr. Chair of China Securities Regulatory Commission (CSRC, China’s SEC) and current governor of Shandong province to be the likely replacent. Mr. Guo Shuqing is well respected by the markets. His nomination would indicate that the PBoC has taken an accelerated path away from stimuli (a regime PBoC was into since 2008) toward accelerating RMB internalisation – through interest rates liberalisation and financial sector reforms. Ebola: As a response to WHO and CDC worst case scenario upgrade (number of cases could reach as high as 1.4millions by beginning 2015) has motivated more global coordination.. During the recent weeks, we have highlighted that the global coordination has intensifying to: 1) fight disinformation (we were talking about it in our recent daily briefings), 2) provide short term medical assistance (France, US, Israel, etc.) with the help of military expertise – when numerous Western African countries are indicating the lack of medical personnel – , 3) provide financial support (wealthy donors, government funding, NGO help etc.), and 4) fast track the Ebola drug trial (the drug has had a very good result in the experimental tests). Notwithstanding the on-going difficulties, and the short term negative economic effect, we continue to believe that the fight against Ebola will succeed and will clear the way to the increase in Africa investment and economic support (cf. our note “This time for Africa” which stressed that Africa is heading to experience the same development China had experienced when it joined the WTO in 2001 with positive consequences for both Africa and the world economy). The global coordination triggered by the response to the terrorist risk might help responding to the Ebola risk as well (due to the threat a dirty weapon using Ebola virus constitute). Gaza: As we were expecting since the beginning of Gaza conflict: 1) Fatah and Hamas decided to undertake a national-unity government – a process which will clear the way for normalisation in Turkey – Israel relations in the coming weeks -, 2) Hamas split between moderate, which has joined Fatah, and radicals which are joining the numerous small groups, 3) moderate Hamas has accepted 1967 territories (a first step to recognise Israel, as we were expecting), 4) Iran has shifted toward more collaboration with Sunnis (“President Rouhani called for a united world against Terror”). Next step is likely to be Iran dropping its support to Assad, a view which has already been expressed (though not widely reported) by Ayathollah Ali Khamanei on Aug. 13th (source: http://www.theguardian.com/commentisfree/2011/aug/13/khamenei-support-assad) Please see below our yesterday note: “We are very optimistic (as we have been since the beginning of the Gaza crisis) that : 1) Hamas leadership will break from extremists and will recognise Israel – as Fatah did years ago – (though some radical fractions are already burgeoning with much less financial and arm support), 2) Iran will be instrumental in settling a long-term peace process (as the nuclear negotiation heads toward a civil nuclear Iran), 3) a LT peace process will help the development of Mediterranean sea gas exploitation (as it enables to return to the Israeli – Turkish normalisation, a process which was very close in April but has been postponed by the Gaza crisis).” Fight against ISIL success likelihood increases: In addition to the current Arab countries coalition, Iran and Turkey president expressed strong commitment to help during their UN General Assembly address (though details lack). President Rouhani said “”The extremists of the world have found each other and have put out the call, ‘extremists of the world unite’. But are we united against the extremists?”. Furthermore, the report that a Woman [Mariam Mansouri] joined UAE strike against ISIL is very positive. This is because ISIL ideologues consider that Jihadists fighters killed by women cannot be considered martyrs and go to heaven (this belief has obviously no support in Islam theological books but is a widely spread belief amongst ISIL Jihadists). We have been reporting since Tuesday, that the Social media is also joining the fight against the terrorist organisation, Muslims are making #NotInMyName viral to push the view that ISIL is NOT a State NOR represent Islam. The terrorists organisations are currently in an escalation of violence due to the leadership fight for Abou Moussab Al Zarkawi legacy. Fortunately for the global coalition fight, the “Murders in Iraq and Syria” known as ISIL, have no ideological leadership and will struggle to hire new fighters should the global community take genuine actions to : 1) fight bad governance, to justify 2) reducing mistrust. Unfortunately, mistrust and the “institutions are rotten to their core” mantra is helped by groups as wide as: Extreme right, gold bugs, 2nd amendment supporters and Bitcoin marketers… We are surprised how some “mainstream media” have joined spreading the same “mistrust” message for a clear agenda to avoid improving governance. This pressure is accelerating G-20 actions to push for tax evasion fight (OECD initiative) and improve governance. Oil prices continue to come under pressure (in line with our recent energy update note). However, the situation on the ground continue to be fragile, with a new threats to the security of many countries from Egypt to US. Iraq PM Al-Abadi reporting of threats to US and Paris subways have not been confirmed by US and French intelligence. ISIL threat to westerns facilities is part of the terrorist organisation communication strategy in its competition vis-a-vis AlQaeda. Western Intelligence indicates that although dormant terrorists cells exist in the Western countries, these “still” lack operational support to perpetrate substantial acts. The quickest the West recognises that the fight against ISIL and terrorists necessitate a fight against mistrust which spread not only in the jihadist internet web but also in the extreme right and gold bugs forums, the more the risk of isolated radicalised youth actions will decrease. The fight against mistrust is likely to accelerate with the global governance improvement. Furthermore, any advance in Iran nuclear talks will help Iran joining the fight against ISIL. The recent news flow out of ISIL indicates that the terrorist organisation is getting isolated and its power is weakening. Furthermore, the recent strikes have reduced Al-Qaeda operatives which were preparing attacks against the West (according to informations out of the intelligence community). Russia: Ukrainian situation continues to calm down (BUT NOT deescalate). The Eastern Ukraine region self proclaimed republics autonomy perimeter continue to be the name of the game. As we were expecting, Ukraine (see below from our recent daily briefing) is considering rewriting the IMF program, which half acknowledge that it will be very hard to get back influence on auto-proclaimed republics (in the Donbass region). The Russian business community starts to shift away from the “official communication” that isolated Russia will end up in doom and gloom for other countries and focuses on its own negative impacts. The business community start to see the forthcoming cold war era. To calm down any push back to the current strategy from the oligarchs, Kremlin is 1) pressing those who want to challenge Putin (e.g. Evtushenkov), 2) using budget and SWF to finance investment needs. 3) use communication war to push grass root corporations, individual and close parties (EU skeptics and extreme right and left) to press lawmakers to reverse sanctions. Please find details from old daily briefings: “Too much autonomy (the current self proclaimed government are calling for a full fledge independence – which could give legitimacy to Crimea annexation-) would make Ukraine IMF program dead born (as Kiev government would be in the incapacity to deliver on governance improvement and structural reforms). At the other end, an autonomous regions which would bind by the IMF program reform will increase the ability of Kiev government to strengthen the Ukrainian economy along with the governance improvement. Thus, it would increase the likelihood of joining NATO. Russia is unlikely to let this scenario take place without a fight. Therefore, the Kremlin is putting a lot of emphasis on how badly an isolated Russia would impact the global economy, while the Russian economy is preparing for this outcome (e.g. Russian corporations are considering spinning of their US subsidiaries, Wealth Fund is considered to be used to self-finance needed infrastructure investment, while international experts are rushing to find financial solutions for the New Russia political strategy). From the political spectrum, the opposition is organising itself should oil prices drop sustainably below $75bbl – this scenario is possible should the geopolitical blue sky scenario take place -. But the Kremlin is “threatening” oligarchs to keep them away from joining the opposition. For more analysis on this matter, please see our recent “Russia update note”. US Attorney General Eric Holder resigned. President Obama administration did not provide any hint on who will replace him. GOP has called President Obama to refrain from using the lame duck Congress session to press confirmation for the new Attorney General. This bring another problem should Senate majority goes to GOP because in that case the Attorney General confirmation process could become even more problematic and increase the weaknesses we foresee should GOP get the majority in both the House (a certainty) and the Senate (50/50 chance so far). US Tax inversion: As we were expecting since the announcement of Burger King deal (which has been widely reported as being solely pursuing tax inversion objective) we’ve indicated that this would sign the end of the system. US Treasury took actions to make it harder to execute such deals, while the tax reform seems in limbo due to DC gridlock. Administrative actions taken by Treasury Secretary Lew makes it harder to execute tax inversion but does not derail it entirely. We consider that G-20 initiative to undertake OECD proposal to reform the rule of “double non-taxation” (see our previous daily briefing) will help improve the tax governance (and incidentally the rise in the mistrust in the public institutions – which are seen to be colluding with businesses -). Markets have reacted negatively to the actions taken against tax loopholes, because these are seen to be the only remaining way for Corporations to improve their EPS (while demand continue to be subdued). We disagree with this view because G-20 initiatives to tackle “tax optimisation” will come along with more investments and fiscal stimuli which would help spur more economic demand. US Economy: high frequency economic data continue to show a mixed message. The widely common economic forecast models have been weak understanding the current economic evolution. We have indicated in our article “Perceptions & realities : closing the gap between the two” that while the growth and inflation continue to be subdued to justify any urgent action from the Fed, there are genuine signs which indicates that growth potential will improve. In a nutshell, big data, technology, energy transition, lower commodity prices and better governance are the driver we see for the creation of goldilock conditions – not too hot, not too cold – which would enable spur sustainable growth and create the conditions for central banks to normalise (in a couple of years) the monetary policy without triggering a new financial crisis or excessive financial bubbles. France – Fmr. Pres. Nicolas Sarkozy come back: Paris appeals court suspends corruption prove into Sarkozy. This is clearing the way for the case to be dropped (please contact us, should you require more details on the juridical reasons of our forecast). This trend will help Sarkozy to increase his chances (already high) to secure the Presidency of the center right party (UMP). We’ve been indicating that Fmr. Pres. Sarkozy strategy evolves around championing good governance while moving away from the Radical right. We see these development as very positive for both France and EZ because Mr. Sarkozy come back will take the french opposition away from the EU-Skeptics and extreme right Front National. This has been confirmed in Mr. Sarkozy’s center right party presidential campaign first speech yesterday. Eurozone economic weaknesses : As we were expecting in our Feb 27th note, and our recent Russia update, the Eurozone economies are suffering from the Russia – Ukraine crisis. We have been saying that the tension with Russia will have short term negative effets as the manufacturers (specifically in Germany) has to mitigate the effect of the sanctions. BUT we continue to express confidence in our views that the Eurozone PMI are likely to rebound in October or November, thanks to the combined effect of: 1) Banks resuming lending as they will have dealt with the Asset Quality Review and will start to benefit from the combination of T-LTRO conditions and SMEs demand, 2) the new EU Commission undertakes genuine actions to speed up European integration (e.g. designated President Tusk Energy Union project), and infrastructure investment (designated President Juncker EUR300bn investment project), 3) a reduction in the excessive risk premium built due to the negative effects of the tension with Russia, and 4) the global collaboration which will bring more support to the energy transition, governance improvement and fight against terror (positive for jobs and growth and negative for energy prices – because it reduces the geopolitical risk premium -). China climate change: As we were indicating in our previous daily briefings, not only China has taken genuine actions to move toward more reforms but also the leadership has taken steps to help climate change. This has started when the social media has put mounting pressure after the episode of excessive pollution in Shanghai (beginning 2013, ahead of the Communist Party Congress). China: ADB chief economist Shang Jin Wei said “At this critical juncture in China’s transition, carrying out the government’s announced structural reforms is more important than meeting the growth target,”. This is in line with our views and the evidences are indicating that China is doing executing the reforms. The IV-plenum is likely to bring more focus from the Western media to the governance improvement and the move toward a rebalanced economy. But even if the reforms are more important we do not see the government changing its GDP target in the near term. The government is fearing that the economic rebalancing has not taken momentum yet although 1) labor intensive manufacturers are relocating in cheaper labor countries, 2) businesses are upgrading their business models, 3) President Xi has conducted many trade – investment agreement with Neighbours (after Premier Li did the same in Africa) to secure investment projects which use Chinese manpower – engineers know-how in this domaine, 4) China is gaining more military presence and has fluxed it mussels – e.g. China “Top Gun” intercept by a US fighter jet -, 5) China has signed many RMB agreement which reinforce the currency usage and prepare its full liberalisation – after Free Trade Zones (FTZ) have proven to be a success -, 6) China has undertaken a genuine fight against bad governance and better regulation – many examples in our recent daily briefings of fight against corruption and bad governance-. We see in FinMin Lou Jiwei comment an indication that not only China wants to create a reserve currency it does want it to be strong when Chinese leaders perceive the heavy pressure place on USD by a category of investors to avoid debasing the currency through deficit financing – although we consider that this worry is misplaced -. Australia: Australia continues to be seen, by markets, as a derivative to the old Chinese model (i.e. commodity provider). This view explains the high beta between Australian assets and commodity prices (or China demand for commodities). This assumes that neither China nor Australia are conducting their rebalancing agenda. We do believe that the curent weaknesses offers genuine opportunity to benefit from the other drivers to the Australian economy which are not related to commodities. We see the current Australian Dollar weakness to continue at least until the USD start to weaken again when markets will realise that it has beaten too much on a quick rate normalisation. Meanwhile, from our previous daily briefing, we have gathered sufficient support to the view that the drivers of the Australian GDP are moving toward: 1) education, health and finance services provider to Asian neighbours, 2) innovation and digital sector, 3) energy resources export to Japan (the later contributes to our constructive view that the current negative Japan Energy Trade deficit will rebalance in the medium term – reducing Japanese Government bonds solvency risk – ). New Zealand: Fontera payout cuts fuel concerns over NZ economic prospects. This increases the pressure on new PM Key Cabinet to accelerate the green shots of rebalancing and reforms. We have been indicating that NZ has already started a genuine shift toward new Tech agriculture, health and education services directed to Asian neighbours.The fact that PM Key secured another term supports our constructive scenario on NZ.. Japan: economic softening raises question about whether Japan will pursue a 2nd VAT hike later this year. PM Abe indicated that he was waiting for more economic data, but we believe that Japan will move ahead although it may be in steps (split the 2nd hike in different sub-steps). We see BoJ keeping the bazooka of QQE-2 un-tested until the JPY excessive depreciation and JGB solvency risk came down * investors are still short JGB expecting a Japan crisis *. The 2nd VAT hike will require some stabilisation at the current levels, though we expect that PM Abe will undertake the 2nd hike in steps, because BoJ is unlikely to be sufficiently confident to move ahead with more QQE while JPY is accelerating its depreciation. PM Abe voiced concerned over the JPY rapid depreciation, as he pointed (rightly in our opinion) to the increase in energy cost, which deteriorate further the energy trade deficit – and increase the risk of JGB solvency -. But, BoJ might do some adjustment to its monetary program but nothing excessive. The news flow out of this weekend G20 meeting shows that the global community is gently pressing the government and the BoJ to pursue structural reforms, economic rebalancing, solvency improvement (through VAT 2nd hike commitment) and adequate monetary policy (not too hot – to avoid a crisis – not too cool – to avoid derailing the on-going portfolio rebalancing approach -). Japan continues to face heavy public pressure to rebalance its energy reliance to nuclear. While we believe that Japan will continue to press for reopening nuclear plants (when Nuclear Watchdog gives his green light), the medium to long term trend is that Japan will use Trade negotiation with neighbours to secure new energy sources while using this pressure to deregulate and move forward with Abenomics 3rd arrow (please see our Japan update for more on our views). The postponing of US-Japan trade partnership may become an issue should Japan postpone the current trend of market deregulation. We have been indicating earlier this year that the The time frame for TPP was very ambitious due to the US gridlock. Central banks news Fed’s Lockhart says inflation risk still low JACKSON, Miss. (AP) — Atlanta Federal Reserve President Dennis Lockhart said Thursday he has more confidence in the economy than he did a year ago, suggesting he’s not seeking an increase in interest rates until mid-2015 or later. Speaking to the Mississippi Council on Economic Education, Lockhart said he sees little danger of inflation and says the current unemployment rate is “still some distance” from full employment.” http://www.businessweek.com/ap/2014-09-25/feds-lockhart-says-inflation-risk-still-low Fed Trio Urges Patience on Rates Amid Cooling Inflation Three Federal Reserve presidents are calling for patience as the central bank weighs when to raise interest rates above zero, arguing moving prematurely poses a greater risk to the economy than waiting too long. “We should be exceptionally patient in adjusting the stance of U.S. monetary policy —- even to the point of allowing a modest overshooting of our inflation target to appropriately balance the risks to our policy objectives,” Charles Evans, president of the Chicago Fed, said yesterday in Washington. Evans joined the New York Fed’s William C. Dudley and Narayana Kocherlakota of Minneapolis in warning the Fed shouldn’t make a change before being sure the economy can withstand higher borrowing costs. Both Dudley and Evans raised concerns about too-low inflation and made references to 1937, the year a tightening of monetary policy helped puncture a weak recovery from the Great Depression. http://www.businessweek.com/news/2014-09-24/fed-trio-calls-for-patience-on-interest-rates-as-inflation-cools US Federal Reserves: While James Bullard sees the FOMC to drop “Considerable Time” in the October meeting and Loretta Mester that the forward guidance should channel the reaction function to data, many other FOMC members have been downplaying inflationary risk or the urgency to act on rates. The main issue, which drives current Fed watchers debate, reflects a political debates around the Transparency Bill (which corresponds to the introduction of “golden rule” or an “auto-pilot” when markets have proven to be under estimating numerous factors when assessing interest rates path -e.g. consequence of the mid-term elections, geopolitical headwinds, effect of commodity prices decrease-). We consider that Bullard proposed timing (drop “Considerable Time” as early as October) is too early because: 1) the FOMC have not a clear view of what could replace the “Considerable Time” language, 2) the US economy narrative might start to suffer from the effect of what could be the uncertainties should the Senate majority goes to GOP at that period, 3) Chair Yellen will not have the opportunity to explain the changes (no press conference in October). We consider that markets over reaction to the September meeting dots, excessive short fixed income positioning, and inability to challenge an excessively optimistic escape velocity scenario increase the change that the Fed will make no change to its forward guidance by October. We have been arguing for a couple of months now that markets are extremely mis reading the Fed reaction function relative to the reaction function explained by the Fed leadership. In this week interview, Dudley (NY – Sole regional Fed permanent voter – close to leadership thinking) indicated that the economy should run “a little hot for some time before normalising rates.” Recent G-20, IMF and OECD downward revision to the US economy growth forecast all indicate that the market is set to be surprise by the timing of a rate hike. We have been stressing since december 2013, that 1) the market consensus is excessively short fixed income (i.e. expecting a quick rate normalisation relative to the scenario supported by economic fundamentals), and 2) this is likely to translate into a short squeeze which might take place as soon as October or November (as we get closer to the mid-term elections and markets realised the impact of a “lam duck administration” should the Senate majority goes to GOP). We consider that the USD strength is likely to reverse as soon as mid-October, when France will validate the change in EZ narrative, while the USD weakness will accelerate the closer we get to the mid-term elections, because operators will realise that a split US government would make it even harder to struck bi-partisans compromises on fiscal budget, debt ceiling increase, immigration etc. These reforms are instrumental to create the conditions for escape velocity – without which the Fed has no justification to embark into a tightening mode -. Bank of England’s Carney says rate rise “getting closer” Carney stuck close to previous remarks on monetary policy in his address to actuaries, much of which focused on the BoE’s plans for further regulating insurers. Britain’s economic outlook was much improved, and a rate rise was only a matter of time, Carney said. “The point at which interest rates … begin to normalise is getting closer,” he said. “In recent months the judgement about precisely when to raise Bank Rate has become more balanced. While there is always uncertainty about the future, you can expect interest rates to begin to increase.” http://www.reuters.com/article/2014/09/25/idUSL9N0P503N20140925?feedType=RSS&feedName=rbssFinancialServicesAndRealEstateNews BOE’s Shafik Says Productivity to Guide Rate Path, Post Reports Bank of England Deputy Governor Nemat Shafik said officials may have to “move more quickly” on rate increases if salary gains aren’t matched by growth in productivity, according to a newspaper interview. The puzzle of weak wages amid strong growth in payrolls is at the center of policy makers’ debate on when to lift borrowing costs from a record low. In an interview with the Yorkshire Post published today, Shafik said that while the recovery is “encouraging,” the rate of pay growth is a key factor because officials don’t want to take any risks. http://www.businessweek.com/news/2014-09-25/boe-s-shafik-says-productivity-to-guide-rate-path-post-reports BoE: Carney is reverse the narrative which pushed GBP lower in order to avoid: first, a currency crisis – which has started to be discussed when Scotland independence was considered -. second, fuelling inflation – currency strength played an important role in the subdued inflationary scenario-. We continue to see BoE talking hawk, in order to avoid hiking rates. We consider that the UK yield curve flattening and long GBP (specifically relative to USD) are the best way to play BoE strategy. ECB’s Draghi expects euro zone to grow modestly in second half – paper (Reuters) – European Central Bank President Mario Draghi expects the euro zone to grow modestly in the second half of the year, helped by the ECB’s recent stimulus steps, and has pledged to do more should it become necessary. In an interview published on Thursday by the Lithuanian business daily Verslo Zinios, Draghi warned that heightened geopolitical tensions could dampen business and consumer confidence. But he said sanctions imposed on and by Russia as a result of the Ukraine conflict had so far been limited in their impact on the euro zone economy. Draghi also said there was a risk that insufficient structural reforms could weigh on the euro zone’s business environment. “According to the preliminary information received over the summer, economic conditions have been somewhat weaker than expected,” Draghi was quoted as saying. “Overall, however, we expect modest growth in the second half of the year.” “It is now in the hands of governments to act decisively on further structural reforms,” Draghi said. “Governments should not unravel the progress made in fiscal consolidation, but use any leeway to make fiscal policies more growth-friendly.” http://uk.reuters.com/article/2014/09/25/uk-ecb-draghi-idUKKCN0HK08120140925 Greece moves to help banks’ capital position ahead of ECB tests (Reuters) – Greece has tabled an amendment to a bill allowing its banks to convert so-called deferred tax assets into tax credits and so strengthen their capital base ahead of European Central Bank stress tests in October. The bill, expected to be voted on by Sep. 30, could save lenders around 2.5 billion euros ($3.2 billion) in core capital over 2015-16 and brings Greece into line with European peers Portugal, Italy and Spain, which have already adopted the measure. http://uk.reuters.com/article/2014/09/25/greece-banks-idUKL6N0RQ2AM20140925?feedType=RSS&feedName=rbssFinancialServicesAndRealEstateNews ECB’s test may not be final word on health of Europe’s banks * Banks in better shape after raising billions of capital * ECB health test not likely to put ‘blood on the wall’ * Frankfurt dismayed by bank tricks to polish finances FRANKFURT, Sept 25 (Reuters) – It has been billed as a make or break moment for Europe’s banks: the publication of rigorous industry-wide health checks next month after three previous tests failed to spot problem lenders. http://www.cnbc.com/id/102032851 ECB: Greece announcement to change fiscal treatment to Differed Tax Assets is very positive heading to AQR (asset quality review) results. The two countries which has been (and continue to be) seen as under pressure from the AQR are Greece and Ireland. The former’s tax change enables to provide EUR 2.5 bn additional capital. Is EUR recent weakening due to an existential threat (too much complacency) or is it the reflect of monetary policy divergence as Draghi argued? We believe that it’s the combined result of the double issues. We have been quite vocal that markets are excessively pricing a monetary divergence, while Fed is likely to continue tightening macro prudential while being late in normalising. Furthermore, the EUR narrative amongst investors seems resuming the existential threats (Eurozone will not be able to undertake the reforms, Germany will not pay for the “lazy” other countries, AfD and Front National will succeed in destroying the EZ and EU for the benefit of Eurasia, Scotland independence and Br-exit risk etc.). We have been indicating in our Europe Update that EUR is heading toward becoming a reserve currency should France and Italy continue to undertake the reforms. For France, we should know as soon as mid-October whether the government will succeed getting the parliament backing to support the reforms. We consider that the likelihood is very high (though the narrative – rhetoric is captured by the anti – reforms). The introduction of structural reforms in France would help calm Germany – Northern European countries – nervousness vis-a-vis the prospect that Sovereign QE would be used to finance deficits and fiscal transfers (and refrain government from doing reforms). We consider that by mid October market sentiment is likely to shift more positively toward EZ, when France reforms votes (budget and responsibility pact) will clear the way for Germany to support EU Commission President Juncker EUR300bn investment plan. Furthermore, we consider that as soon as the banking sector on-going AQR [Asset Quality Review] review will be finalised, the EU banks will use the T-LTRO much more widely than the 1st experience to respond to the growing demand out of the SME sector. We disagree with consensus view that low T-LTRO demand is indicative of a low demand because this is much more likely to be attributable to the banking sector focus on reinforcing their solvency before AQR and undertaking additional credit risks (ECB loans demand survey continue to indicate an increasing demand coming from SMEs in the periphery). Bank of Canada says its policy can diverge from Fed’s OTTAWA (Reuters) – Canadian monetary policy can diverge from that of its neighbor to the south, even as the U.S. Federal Reserve’s exit from its extraordinary stimulus measures will likely raise market interest rates in Canada and weigh on the loonie, a Bank of Canada official said on Wednesday. Deputy Governor Timothy Lane also warned that the unwinding of the Fed’s policy could pose risks to the financial system globally as asset prices and volatility now reflect liquidity spawned by the accommodative actions of central banks in the United States and other countries. While Lane said the U.S. Federal Reserve’s exit from extraordinary monetary policies is “good news” for Canada as it is a sign a sustained U.S. economic expansion is underway, he added that the normalization of U.S. policy will act to tighten Canadian monetary and financial conditions. http://ca.reuters.com/article/domesticNews/idCAKCN0HJ23X20140924 Bank of Canada: alike ECB or BoE, BoC wants to benefit from a weak currency without using any tool (through the monetary policy divergence story – a very widely accepted view). As we were expressing many times we do not see this divergence as important as other market participants because it assumes that the Fed has reached the escape velocity and all the indications are supporting the opposite view. RBA’s Glenn Stevens sceptical but open to limits on investor loans Reserve Bank of Australia Governor Glenn Stevens may consider some limits home loans to investors to stop distortions in the housing market. Mr Stevens told told the Melbourne Economic Forum at Melbourne University that he was concerned about double-digit growth in home finance to investors. He acknowledged measures known as “macro-prudential” tools, which do things like limit the proportion of a property’s value that can be borrowed, may help curb lending. “I have certain scepticism about macro-prudential tools as a panacea, but I remain open to using them if it seems sensible to do so and that’s the kind of thing we have in mind right now,” he said. http://www.smh.com.au/business/the-economy/rbas-glenn-stevens-sceptical-but-open-to-limits-on-investor-loans-20140925-10lw84.html#ixzz3ENkUcdez Reserve Bank of Australia: In a context where Australia housing market has been pointed out to be in a bubble (after the BIS meeting), the RBA offered a detailed report in which its highlight its view that Macro Prudential should be used as first line of defence against market frothiness. This report echoes the RBA and Australian government views earlier this month (please see our earlier daily briefings), that the housing market constitute a risk of frothiness but it NOT in a bubble right now. In a context, where inflation hawks want to see higher rates we forecast that RBA action will be dismissed and market will continue to focus on any reason which could justify positioning which plays doom and gloom Australia. A scenario which could not only help fixed income investors (should Central Banks undertake new QE programs), Gold – commodity standard bugs – should the crisis spread to a full fledge monetary armageddon -, Russia – which could reduce the pressure of the sanctions – and obviously the Terrorists alike ISIL which could claim a win over a “corrupted West” (in their parlance). Markets analysts are not able to link these interest groups yet but a complete information permitted by big data enables to connect these dots. UPDATE 1-Russia’s central bank chief says 2014 inflation may exceed 7.5 percent * Nabiullina says 2014 inflation may exceed 7.5 percent * Central bank works on “stress” scenario of sharp crude price drop MOSCOW, Sept 25 (Reuters) – Russian consumer price inflation may exceed 7.5 percent this year, its central bank governor said on Thursday, the latest admission by policymakers that international tensions over Ukraine are damaging the economy. http://www.cnbc.com/id/102031868 Russia Central Bank: Nabiullina new 2014 inflation forecast and oil price decreasing stress scenario indicates that the Russian economy is heading toward stagflation. This stagflation may also increase should Iran nuclear talks yield in short term results (as we are expecting and evidences are supporting). Rupee hits 1-1/2 month low; central bank steps in to support MUMBAI: The rupee hit its lowest level in one-and-a-half months on Thursday, weighed down by a sharp fall in the domestic share market and demand for the greenback from importers, but the central bank stepped in to limit further losses. Traders said the central bank likely sold dollars via state-run banks starting around 61.40 rupee levels to prevent a further fall in the local currency. http://economictimes.indiatimes.com/articleshow/43432194.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst RBI: Suffers from monetary divergence pricing, INR depreciation pass through is likely to continue to overshadow the benefit of commodity prices plummeting until markets start pricing the US mid-term elections risk. China Considers Replacing Central Bank Governor Zhou: WSJ China may replace central bank Governor Zhou Xiaochuan as part of wider personnel changes as President Xi Jinping places allies in top government positions, the Wall Street Journal reported today. The government hasn’t yet made a final decision about Zhou, the Journal said, citing the officials. The government’s personnel changes may come at the time of a major party meeting next month, it said. Zhou accompanied Premier Li Keqiang on a tour of Shanghai’s free-trade zone on Sept. 18 before its one-year anniversary. http://www.bloomberg.com/news/2014-09-24/china-considers-replacing-central-bank-governor-zhou-wsj.html PBoC: China government is understood to be considering replacing Governor Zhou in the forthcoming IV-Plenum. Chatters see Guo Shuqing, Fmr. Chair of China Securities Regulatory Commission (CSRC, China’s SEC) and current governor of Shandong province to be the likely replacent. Mr. Guo Shuqing is well respected by the markets. His nomination would indicate that the PBoC has taken an accelerated path away from stimuli (a regime PBoC was into since 2008) toward accelerating RMB internalisation – through interest rates liberalisation and financial sector reforms. Economic news U.S. Mortgage Rates Drop From a Four-Month High Mortgage rates in the U.S. dropped from a four-month high, reducing borrowing costs as demand for housing improves. The average rate for a 30-year fixed mortgage was 4.2 percent this week, Freddie Mac said in a statement today. That’s down from 4.23 percent, the highest since early May. The average 15-year rate slipped to 3.36 percent from 3.37 percent, the McLean, Virginia-based mortgage-finance company said. The housing market is recovering as foreclosures subside and employment growth fuels demand. Sales of new homes in the U.S. surged in August, jumping 18 percent to a 504,000 annualized pace, the highest level since May 2008, Commerce Department figures showed yesterday. http://www.bloomberg.com/news/2014-09-25/u-s-mortgage-rates-drop-from-a-four-month-high.html Capital Goods Orders Point to U.S. Investment Gain: Economy American factories received more orders for machinery, communications gear and electrical equipment in August as an improving economy gave companies the confidence to expand. A 0.6 percent advance in bookings for non-military capital goods excluding aircraft followed a 0.2 percent decrease in July that was smaller than previously estimated, according to data from the Commerce Department issued today in Washington. Another report showed firings remain low. Growing sales paced by demand for automobiles and housing are prompting companies to invest in new equipment and hire more workers, which will give the world’s largest economy a boost in the second half of the year. Other data today showed a softening in consumer sentiment, reflecting a drop among lower-income households that may prevent more broad-based gains in spending. http://www.bloomberg.com/news/2014-09-25/orders-for-u-s-capital-goods-climb-more-than-forecast.html Soybeans Fall to Four-Year Low as Weather Buoys Outlook Soybean futures fell to a four-year low as favorable weather aids farmers in gathering a crop forecast at the largest ever in the U.S., the world’s top grower. Corn and wheat declined. Warm, dry Midwest conditions in the next five days should help maturing crops and harvesting, Bryce Anderson, a meteorologist at DTN, said in a note. The Department of Agriculture estimates soybean output this year will rise 19 percent to 3.913 billion bushels from 2013. Farmers collected 3 percent of the oilseeds as of Sept. 21, down from an average of 8 percent in the prior five years, according to the USDA. “The very favorable weather outlook over the next five to seven days is pushing the idea that we’ll see some meaningful harvest progress between now and next week,” Greg Grow, the director of agribusiness for Archer Financial Services Inc. in Chicago, said in a telephone interview. “The demand is coming at these prices, but the supply is looming extremely large.” http://www.businessweek.com/news/2014-09-24/wheat-extends-advance-as-slump-to-four-year-low-may-spur-demand News Analysis: ADB trims down Philippine GDP growth forecast for 2014, 2015 MANILA, Sept. 25 (Xinhua) — The Manila-based Asian Development Bank (ADB) has trimmed down its 2014 gross domestic product (GDP) growth forecast for the Philippines from its April projection of 6. 4 percent to 6.2 percent. In an update of the Asian Development Outlook 2014, the bank’s flagship publication released Thursday, the ADB also said that the Philippines’ GDP would grow by 6.4 percent in 2015, lower than the 6.7 percent it projected in April. http://news.xinhuanet.com/english/indepth/2014-09/25/c_133672292.htm Coal ruling to hit India’s nascent economic recovery: Report MUMBAI: The Supreme Court verdict cancelling 214 coal blocks may adversely impact India’s economic recovery as it will hit key sectors and its “tremors” will be felt in states as well, a rating agency said today. In a landmark judgement, the apex court yesterday quashed allocation of 214 out of the 218 coal blocks which were alloted to various companies since 1993. The top court, however, allowed these cancelled blocks to continue extracting coal till March 31, 2015. http://economictimes.indiatimes.com/articleshow/43441030.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst Ebola Ebola spread stabilizing in Guinea as toll nears 3,000: WHO (Reuters) – The spread of Ebola seems to have stabilized in Guinea, one of three West African states worst-hit by the disease, but a lack of beds and resistance in affected communities means its advance continues elsewhere, the World Health Organization said. Underscoring drastic measures being taken to halt the worst outbreak on record of the deadly virus, Sierra Leone put three more districts — home to over a million people and major mining operations — under indefinite quarantine. http://uk.reuters.com/article/2014/09/25/us-health-ebola-who-idUKKCN0HK0SV20140925 Canada pledges $27 million to fight Ebola UNITED NATIONS: Canada announced Thursday it will contribute Can$30 million (US$27 million) to the United Nations and non-government agencies fighting the spread of Ebola in West Africa. International Development Minister Minister Christian Paradis made the comments in New York where world leaders attended a meeting on the epidemic convened by UN Secretary-General Ban Ki-moon later Thursday. http://economictimes.indiatimes.com/articleshow/43448849.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst Ambassador Nancy Powell Appointed as Ebola Coordinator for the Department of State Secretary Kerry named Ambassador Nancy Powell to lead the Ebola Coordination Unit at the Department of State. In this role, Ambassador Powell will lead the State Department’s outreach to international partners, including foreign governments, to ensure a speedy and truly global response to this crisis. http://investing.businessweek.com/research/markets/news/article.asp?docKey=600-201409250453M2______EUPR_____3d30000002a4fb80_3600-1 Ebola crisis calls for ‘strong’ action, Obama tells United Nations (CNN) — The West Africa Ebola outbreak is “a growing threat to regional and global security,” U.S. President Barack Obama said Thursday, telling a high-level meeting on the deadly epidemic at the U.N. General Assembly that only an international response can prevent “a humanitarian catastrophe across the region.” “If ever there were a public health emergency deserving of an urgent, strong and coordinated international response, this is it,” the President said. http://edition.cnn.com/2014/09/25/world/africa/ebola-outbreak/index.html Ebola: As a response to WHO and CDC worst case scenario upgrade (number of cases could reach as high as 1.4millions by beginning 2015) has motivated more global coordination.. During the recent weeks, we have highlighted that the global coordination has intensifying to: 1) fight disinformation (we were talking about it in our recent daily briefings), 2) provide short term medical assistance (France, US, Israel, etc.) with the help of military expertise – when numerous Western African countries are indicating the lack of medical personnel – , 3) provide financial support (wealthy donors, government funding, NGO help etc.), and 4) fast track the Ebola drug trial (the drug has had a very good result in the experimental tests). Notwithstanding the on-going difficulties, and the short term negative economic effect, we continue to believe that the fight against Ebola will succeed and will clear the way to the increase in Africa investment and economic support (cf. our note “This time for Africa” which stressed that Africa is heading to experience the same development China had experienced when it joined the WTO in 2001 with positive consequences for both Africa and the world economy). The global coordination triggered by the response to the terrorist risk might help responding to the Ebola risk as well (due to the threat a dirty weapon using Ebola virus constitute). Gaza Hamas, Fatah agree Palestinian Authority to take control of Gaza Hamas has agreed to the establishment of a Palestinian state within the ’67 borders, Fatah negotiator says. Palestinian factions Hamas and Fatah reached an agreement on Thursday by which the Palestinian Authority will take control over the Gaza Strip. The deal also includes Hamas’ consent for a Palestinian state within the 1967 borders, according to a Fatah official. http://www.haaretz.com/news/middle-east/1.617732 Fatah-Hamas agreement gives unity government control over Gaza The Gaza ceasefire struck in August between Israel and the Palestinians called for the Palestinian Authority, led by President Mahmoud Abbas, to take over civil administration in Gaza from the Islamist Hamas. Officials from Hamas and Abbas’ Fatah movement announced the deal on Thursday in Cairo, where they had been meeting under the auspices of Egypt’s intelligence services. http://www.reuters.com/article/2014/09/25/us-mideast-gaza-cairo-talks-idUSKCN0HK1JI20140925 Iran’s president appeals for ‘united’ world against extremism in name of Islam Iran’s president urged Thursday for global action against extremism waged in the name of Islam and hinted that a deal over Tehran’s nuclear program could bring greater Iranian cooperation on fighting terrorism. But Hassan Rouhani also highlighted the deep rifts that stand in the way, blaming U.S. wars and Western-directed policies in the region as creating breeding grounds for militant groups. “Terror has become globalized,’’ Rouhani said in an address to the United Nations General Assembly. “Extremists of the world have found each other and have put out the call: Extremists of the world unite. But are we united against the extremists?’’ http://www.washingtonpost.com/world/irans-president-appeals-for-united-world-against-extremism-in-name-of-islam/2014/09/25/3d58d250-44c2-11e4-b437-1a7368204804_story.html Gaza: As we were expecting since the beginning of Gaza conflict: 1) Fatah and Hamas decided to undertake a national-unity government – a process which will clear the way for normalisation in Turkey – Israel relations in the coming weeks -, 2) Hamas split between moderate, which has joined Fatah, and radicals which are joining the numerous small groups, 3) moderate Hamas has accepted 1967 territories (a first step to recognise Israel, as we were expecting), 4) Iran has shifted toward more collaboration with Sunnis (“President Rouhani called for a united world against Terror”). Next step is likely to be Iran dropping its support to Assad, a view which has already been expressed (though not widely reported) by Ayathollah Ali Khamanei on Aug. 13th (source: http://www.theguardian.com/commentisfree/2011/aug/13/khamenei-support-assad) Please see below our yesterday note: “We are very optimistic (as we have been since the beginning of the Gaza crisis) that : 1) Hamas leadership will break from extremists and will recognise Israel – as Fatah did years ago – (though some radical fractions are already burgeoning with much less financial and arm support), 2) Iran will be instrumental in settling a long-term peace process (as the nuclear negotiation heads toward a civil nuclear Iran), 3) a LT peace process will help the development of Mediterranean sea gas exploitation (as it enables to return to the Israeli – Turkish normalisation, a process which was very close in April but has been postponed by the Gaza crisis).” Iraq & Syria Turkey may do more against Islamic State, but how much uncertain UNITED NATIONS: Turkey appears to be inching toward a greater role in the US-led coalition against the Islamic State after the group freed 46 Turkish hostages, but it remains unclear how far it will go to combat the militants. As the United States builds a military coalition including Gulf Arab states to fight the radical Sunni militant group, Turkey has been conspicuous by its absence, playing no public role in US-led air strikes on Syria this week. “We are seriously considering military cooperation with the United States to combat IS,” a senior Turkish official told Reuters on Wednesday, referring to the group by its acronym. http://economictimes.indiatimes.com/articleshow/43401751.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst Iran blames ‘errors’ of outsiders for rise of Islamic State (Reuters) – Iran President Hassan Rouhani blamed the rise of the Islamic State group and other militants on “certain intelligence agencies”, saying the solution to stopping them must come from the Middle East region itself and not the West. “The extremists of the world have found each other and have put out the call, ‘extremists of the world unite’. But are we united against the extremists?” Rouhani asked in a speech to the 193-member United Nations General Assembly on Thursday. http://uk.reuters.com/article/2014/09/25/uk-un-assembly-rouhani-idUKKCN0HK1O020140925 IRAQI PM: PLOT TO ATTACK US, PARIS SUBWAYS NEW YORK (AP) — Iraq’s prime minister said Thursday that captured Islamic State militants have told Iraqi intelligence agents of an alleged plot to attack subways in the United States and Paris, but French and American officials said they had no such information. A senior Obama administration official said no one in the U.S. government is aware of such a plot, adding that the claim was never brought up in meetings with Iraqi officials this week in New York. President Barack Obama met with Prime Minister Haidar al-Abadi on Wednesday. The administration official was not authorized to discuss the matter publicly by name and spoke on condition of anonymity. There was no immediate comment from France. A half-dozen French officials contacted by The Associated Press said they knew of no plot. http://www.apnewsarchive.com/2014/Iraqi-PM-says-Islamic-State-plot-uncovered-to-bomb-subway-systems-in-US-and-Paris./id-52a42e4fcf454b3dbc1fe5dc48cb4b19 UAE’s First Female Pilot Fighting Isis Militants Wins Fans Online The United Arab Emirate (UAE)’s ambassador to the United States, Yousef Al Otaiba, confirmed the news on Thursday (25 September) saying Mansouri is the country’s first female fighter pilot deployed in the fight against Isis. “I can officially confirm that the UAE strike mission on Monday night was led by female fighter pilot Mariam Al Mansouri. She is a fully qualified, highly trained, combat-ready pilot and she is on a mission. We will bring whatever it takes to defeat ISIS and other forms of extremism,” said Otaiba, reported UAE’s The National newspaper. http://www.ibtimes.co.uk/uaes-first-female-pilot-fighting-isis-militants-wins-fans-online-1467248 French, U.S. planes strike Islamic State, Britain to join coalition NEW YORK/BEIRUT (Reuters) – French fighter jets struck Islamic State targets in Iraq on Thursday, and the United States hit them in Syria, as a U.S.-led coalition to fight the militants gained momentum with an announcement that Britain would join. The French strikes were a prompt answer to the beheading of a French tourist in Algeria by militants, who said the killing was punishment for Paris’ decision last week to become the first European country to join the U.S.-led bombing campaign. http://ca.reuters.com/article/topNews/idCAKCN0HJ1H120140925 France may join Syrian airstrikes – defense minister France’s possible participation in airstrikes on Islamic State targets in Syria is “on the table,” Reuters quoted the defense minister as saying on Thursday. Jean-Yves Le Drian’s statement came hours after President Francois Hollande ruled out such strikes. “The opportunity is not there today. We already have an important task in Iraq and we will see in the coming days how the situation evolves,” Le Drian told RTL Radio, speaking about the possibility France might join raids in Syria. http://rt.com/news/line/2014-09-25/#71428 Islamic State militant who beheaded Americans believed identified: FBI Washington: FBI Director James Comey said the United States has determined the identity of the Islamist militant who beheaded two American journalists in Syria, but declined to provide any additional information on the masked operative who spoke in a British accent. “I believe we have identified him,” Mr Comey said during a briefing with reporters at FBI headquarters in Washington, the first time that a US official has narrowed the investigation of that killer to a specific suspect. http://www.smh.com.au/world/islamic-state-militant-who-beheaded-americans-believed-identified-fbi-20140926-10m9cw.html#ixzz3EO2IlkK7 UK police arrest 9 men suspected of terror offenses in London London (CNN) — Nine men have been arrested in the United Kingdom on suspicion of terror offenses, London’s Metropolitan Police said Thursday. The men, ages 22 to 51, were detained Thursday morning in London on suspicion of being members of a banned organization, supporting a banned organization and encouraging terrorism. They were taken to police stations in central London and remain in custody, a police statement said. Eighteen homes, business premises and community buildings across London are being searched as part of the investigation. Officers are also searching a home in Stoke on Trent in the English Midlands. http://us.cnn.com/2014/09/25/world/europe/uk-terror-arrests/index.html?hpt=hp_t2 Islamic State crisis: U.S. hits IS oil targets in Syria The US-led coalition against Islamic State (IS) has targeted 12 oil refineries in Syria on a third night of air strikes against the militants. Raids carried out by US, Saudi and UAE aircraft killed 14 of the group’s fighters and five civilians in eastern Syria, activists said. According to the Pentagon, the refineries generated up to $2m (£1.2m) per day in revenue for the militants. http://www.bbc.com/news/world-middle-east-29357934 Brent steady near $97 after bounce from lowest in over 2 yrs * Abundant supply pressures Brent prices * Market shrugs off potential supply risks in Syria * Saudi August oil output falls, Libya production rises SINGAPORE, Sept 24 (Reuters) – Brent crude steadied n
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China Watchdog Finds $10 Billion in Fake Currency Trade

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