Can Iran survive sanctions?

New tough sanctions targeting Iran’s oil sector, imposed by the United States, come into force on Monday.

The Iranian president, Hassan Rouhani, has responded robustly.

“There is no doubt that the United States will not achieve success with this new plot against Iran as they are retreating step by step.”

Iran is heavily dependent on its exports of oil, and renewed sanctions, if effective, would hit the economy hard.

The EU has proposed supporting companies trading with Iran despite these new sanctions.

But will these companies risk being hit by secondary sanctions which would limit their own ability to trade with the US?

Why is America imposing sanctions?

Angered at what he describes as a terrible deal, President Donald Trump earlier this year pulled the US out of a multilateral agreement reached with Iran in 2015, under which strict controls were placed on Iran’s nuclear programme in return for the lifting of a wide range of sanctions.

As a result, sanctions lifted by the US and others in 2016 are now being unilaterally re-imposed by the United States.

But other countries, including those of the European Union, believe Iran is holding to its part of the bargain on the nuclear deal and have made clear their intention not to follow America’s lead.

Such is the dominance of the US in global trade, that even the announcement of the renewed sanctions has been enough to trigger a wave of international companies pulling their investments out of Iran, and its crude oil exports have been falling.

How will US sanctions work?

The latest US measures exclude any company that trades with Iran from doing business in the United States.

In addition, under far-reaching secondary sanctions, any US company faces punishment if it does business with a company that does business with Iran.

Sanctions on the banking sector will also be introduced on Monday. In August measures were imposed on a number of industries including trade in gold, precious metals and the automotive sector.

The US has made it clear it wants eventually to cut off Iran’s oil trade entirely, but has allowed eight countries to maintain imports as a temporary concession to give them time to reduce imports. US allies such as Italy, India, Japan and South Korea are among the eight, the Associated Press reports.

Getting around sanctions

In order to allow companies to trade with Iran and not face stiff US penalties, the EU plans to implement a payment mechanism – a Special Purpose Vehicle (SPV) – that will enable these companies to avoid the US financial system.

Like a bank, the SPV, would handle transactions between Iran and companies trading with it, avoiding direct payments into and out of Iran.

So when Iran exports oil to a country in the EU, the company from the receiving country would pay into the SPV.

Iran can then use the payment as credit to buy goods from other countries in the EU through the SPV.

The EU has also updated a statute – called a blocking statue – that allows EU firms to recover damages from US sanctions.

So will they hold?

Even with the EU plan in place, the costs of doing any Iran-related business could still be too high for many companies.

For example, even if the shipping operator were to purchase oil through the SPV mechanism, the company insuring the cargo may still face the threat of secondary sanctions and the potential loss of all its business in the United States.

Iran’s economy isn’t directly reliant on the US financial system, says Richard Nephew, a sanctions expert and senior researcher at Columbia University.

“But the issue is that most of Iran’s biggest trading partners do and that affects their readiness to put at risk their access to the United States to do business with Iran.”

He says small or medium-sized companies are more likely than large companies to use the SPV.

Another problem is that the product used in the SPV to trade with Iran may also violate secondary sanctions, says Leigh Hansson, head of international trade and national security at Reed Smith. “The transaction itself will be problematic.”

Temporary compromise?

The US had insisted on cutting exports to zero but that seems unlikely as it would increase the price of oil, says Scott Lucas, a professor of international politics at Birmingham University.

In addition to the countries allowed to continue buying Iranian oil, the backing of China, Iran’s largest trading partner, may also prove critical.

The last time international sanctions were imposed on its oil industry between 2010 and 2016, Iran’s exports fell by almost a half.

There’s no doubt exports will be affected this time around too, but it’s also clear that Iran and its remaining business partners will be working hard to maintain trading links.

“Don’t be disillusioned about how painful this will be,” says Ellie Geranmayeh, senior policy fellow at the European Council on Foreign Relations. But “Iran has weathered multiple rounds of sanctions before.”

Iranians will be forced into finding creative ways to sell oil, relying on their years of experience of life under previous sanctions.

And to fill the gap left by lost European investment, Iran will be looking east to forge new links with Russia and China.

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Oil up more than 4 percent on U.S.-China trade talk hopes, OPEC cuts

NEW YORK (Reuters) – Oil prices jumped more than 4 percent on Wednesday as the extension of U.S.-China talks raised hopes of easing trade tensions between the two superpowers, while OPEC-led crude output cuts also provided support.

U.S. West Texas Intermediate (WTI) crude CLc1 futures rose $2.38 to $52.16 a barrel, a 4.8 percent gain, by 1:15 p.m. EST (1815 GMT), the first time this year that WTI has topped $50.

Brent crude LCOc1 futures gained $2.48, or 4.2 percent, to $61.20 a barrel.

West Texas Intermediate (WTI) crude CLc1 futures for February delivery rose $2.38 to $52.16 a barrel, a 4.8 percent gain.

The day’s sharp gains extended a rally that has pushed prices up more than 13 percent in 2019.

“After a dreadful December for risk markets, crude oil continues to catch a positive vibe,” said Stephen Innes at futures brokerage Oanda in Singapore, noting that investors were growing less fearful that U.S.-China trade tensions would slow global economic growth and dampen demand for crude.

The trade talks in Beijing were carried over into an unscheduled third day, amid signs of progress on issues including Chinese purchases of U.S. farm and energy commodities.

State newspaper China Daily said Beijing was keen to end the trade dispute, but that any agreement must involve compromise.

Oil prices also have received support from supply cuts by the Organization of the Petroleum Exporting Countries and allies including Russia.

The OPEC-led cuts, which officially began in January, are aimed at reining in an emerging glut as U.S. crude output C-OUT-T-EIA has surged to a record 11.7 million bpd.

Saudi Arabia’s energy minister said he was confident that action to rein in output would bring the oil market into balance. Khalid al-Falih also said he would not rule out calling for further action.

Data from the U.S. Energy Information Administration (EIA) showed domestic crude stockpiles fell less than expected last week. Gasoline and distillate inventories rose more than anticipated.

Crude inventories USOILC=ECI fell by 1.7 million barrels, smaller than the 2.8 million-barrel draw analysts had expected.

Gasoline inventories USOILG=ECI rose by 8.1 million barrels, far exceeding analysts’ expectations in a Reuters poll for a 3.4 million-barrel gain. Distillate stockpiles USOILD=ECI rose by 10.6 million barrels, more than five times the expected 1.9 million-barrel increase, the EIA data showed.

“The report is bearish given the smaller-than-expected decline in crude oil inventories and the very large increase in refined product inventories,” John Kilduff, a partner at Again Capital Management in New York.

Morgan Stanley cut its 2019 oil price forecasts by more than 10 percent. The bank said in a note it now expected Brent to average $61 a barrel this year, and WTI to average around $54 per barrel.

(GRAPHIC: World GDP growth – tmsnrt.rs/2SJo7TX)

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Exclusive: Sears Chairman Lampert submits new roughly $5 billion bid for retailer – sources

NEW YORK (Reuters) – Sears Holding Corp Chairman Eddie Lampert submitted a revised roughly $5 billion takeover bid for the company on Wednesday, people familiar with the matter said, boosting the chances that the U.S. department store operator will escape liquidation.

In a concession, Lampert agreed to assume tax and vendor bills Sears has incurred since filing for bankruptcy protection in October, the sources said. His revised bid was submitted through an affiliate of his hedge fund, ESL Investments Inc, on Wednesday afternoon along with a $120 million deposit, the sources added.

Lampert’s previous bid, which Sears had rejected, was valued at $4.4 billion.

The new bid, which Sears will consider during a Jan. 14 bankruptcy auction, proposes assuming roughly $300 million of tax and merchandise expenses the company has racked up since its Oct. 15 bankruptcy filing, the sources said. It would also preserve up to 50,000 jobs, the sources added. Sears employed about 68,000 people when it filed for bankruptcy.

Ensuring Sears can pay its expenses, which include bills for legal and financial advisors and are known as administrative claims, was a main point of contention as the company negotiated the deal with Lampert.

Lampert’s previous bid had proposed acquiring 425 Sears stores.

The sources asked not to be identified because the details of Lampert’s new bid are not yet public.

Sears and ESL declined to comment.

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Cops say machetes becoming weapon of choice on Winnipeg streets

Winnipeg police say they’re seeing a troubling trend of machetes increasingly being used as a weapon of choice by local criminals.

At a press briefing Tuesday – in which details of two machete-related crimes were released – police Cst. Rob Carver said he’s seen the number of machetes on the streets increase significantly over the last two years.

“Prior to a couple of years ago, it was fairly rare,” Carver said.

Cst. Rob Carver.

“It seems to be a weapon of choice currently by many criminals.

“It’s a very intimidating weapon. You pull out a machete, which is effectively a giant knife. It’s more intimidating than a small knife, and it can certainly do more damage.

“We’ve had some incidences where we have had victims of attacks with a machete and it’s a dangerous, serious weapon.”


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9 government officials harassed amid Bighorn Country park plans: Alberta environment minister

Alberta Environment Minister Shannon Phillips said Wednesday there have been nine separate incidents of “verbal and other forms of harassment” of government employees surrounding consultation around the proposed Bighorn Country park plan.

Phillips said two of the cases are quite serious, but did not elaborate.

“These are human resources matters,” she said. “It was enough that I was worried about the safety of the people who work for the government of Alberta in a couple of isolated cases.”

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Phillips has faced criticism after cancelling four upcoming public information sessions on the Bighorn plan. She said the sessions were cancelled due to public safety concerns.

Phillips said the in-person sessions will be replaced with telephone town halls. If and when they are convinced public safety is restored, the government will move forward with in-person information sessions, Phillips said.

“If I am being advised that we cannot guarantee public safety, then I must act. I cannot sit on my hands. That would be irresponsible,” she said in Lethbridge Wednesday. “This is not ideal, that a tiny minority of people is essentially setting the agenda for what ought to be an open and democratic process.

“So that’s why this is a very fluid situation. We will continue to monitor it.

“If we can reinstate those information sessions, we will.”

In a statement Wednesday, the Alberta RCMP said it has not provided any official advice to Alberta Environment and Parks regarding the Bighorn public consultations.

“It is not the role of the RCMP to give specific advice or recommendations to government agencies,” the statement read.

“We can confirm we have been contacted by some members of the public who wanted the police to be aware of some concerning social media interactions around the Bighorn public consultation.

“Alberta RCMP can confirm that we do not have any ongoing investigations relating to the consultations.”

Watch below: Ongoing Global News coverage of the plans in Bighorn Country

Alberta UCP MLA Mike Ellis is calling for another minister to be put in charge of the Bighorn file, citing concerns with the way it’s been handled thus far.

“We do not say this lightly: Given the lack of trust in the region, another minister should take over responsibility for the Bighorn plan,” Ellis said. “The government also needs to make clear that they are withdrawing their arbitrary consultation deadline for the Bighorn.

“The rushed timeline prior to an election is not helpful to anyone.”

In November, Phillips announced eight new parks covering 4,000 square kilometres in the Bighorn area, along the eastern edges of Banff and Jasper national parks.

Residents and area officials have raised concerns about how the project might affect oil and gas exploration, the forestry industry, and off-road vehicle use.

The Bighorn plan is supported by 37 former top provincial biologists in a letter sent to the premier last week.

The telephone town halls are being held as follows:

Tuesday, Jan. 15
Drayton Valley, Sundre and surrounding area
6:30 p.m. – 7:30 p.m.

Wednesday, Jan. 16
Red Deer and surrounding area
6:30 p.m. – 7:30 p.m.

Thursday, Jan. 24
Edmonton
6:30 p.m. – 7:30 p.m.

In a media release issued Wednesday afternoon, the government said dial-in information will “be made available shortly.”

People can also weigh in on the project through an online survey.

With files from The Canadian Press.

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U.S. money fund assets rise above $3 trillion for the first time since 2010

NEW YORK (Reuters) – U.S. money market fund assets increased for a fifth straight week to their highest level since early 2010, as investors further raised their cash pile due to recent market volatility, a private report released on Wednesday showed.

Assets of money market funds, which are seen as nearly as safe as bank accounts, jumped $35.62 billion to $3.029 trillion in the week ended Jan. 8. This marked the first time that money fund assets surpassed $3 trillion since the week ended March 9, 2010, according to the Money Fund Report published by iMoneyNet.

During this five-week stretch, money fund assets have risen by $159.53 billion.

Yields on taxable money funds are approaching levels seen on yields on short-dated Treasuries in the aftermath of the Federal Reserve’s rate increase in December.

“Cash is attractive at today’s levels. Yields have come up a lot without taking on too much risks,” said Collin Martin, director of fixed income with the Schwab Center for Financial Research in New York.

The seven-day simple yield on taxable money-market funds averaged 2.07 percent, up from 2.04 percent the previous week, but the average seven-day simple yield for tax-free and municipal money-market funds fell to 1.19 percent from 1.28 percent last week, iMoneyNet said.

The yield on two-year Treasuries US2YT=RR was 2.56 percent, down 2 basis points from late on Tuesday.

Meanwhile, taxable money market fund assets increased by $34.03 billion to $2.883 trillion, while tax-free assets rose by $1.59 billion to $146.53 billion in the latest week, Money Fund Report said.

(GRAPHIC: U.S. money fund assets – tmsnrt.rs/2N3eZa0)

While investors built up their money fund holdings, they withdrew from stock and bond funds at the start of 2019, according to the Investment Company Institute.

Equity funds saw $11.29 billion in outflows in the week ended Jan. 2, while bond funds recorded $14.16 billion in outflows, ICI said earlier on Wednesday.

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Stocks boosted by U.S.-China trade hope, oil prices soar

NEW YORK (Reuters) – Stocks around the world extended recent gains and oil prices jumped on Wednesday on optimism the United States and China may be inching toward a trade deal, soothing fears of an all-out trade war and its possible impact on global growth.

Heightened risk appetite boosted U.S. Treasury yields to the highest this year, while the U.S. dollar extended losses after minutes from a Dec. 18-19 Federal Reserve policy meeting showed many Fed policymakers said the central bank could be patient on future rate hikes.

Delegations from China and the U.S. ended talks in Beijing on Wednesday amid signs of progress on issues including purchases of U.S. farm and energy commodities and increased access to China’s markets.

China has pledged to purchase “a substantial amount” of agricultural, energy and manufactured goods and services from the United States, the U.S. Trade Representative’s office said on Wednesday.

MSCI’s all-country index .MIWD00000PUS climbed 1.03 percent for a fourth day of gains.

That added to advances since last week in equity markets around the world, following a strong U.S. employment report and comments from the Federal Reserve chief that calmed worries U.S. interest rate hikes would hurt growth.

A range of Fed policymakers said last month they could be patient about future interest rate increases and a few did not support the central bank’s rate increase that month, minutes from their Dec. 18-19 policy meeting showed.

On Wednesday, a clutch of Fed officials said they would be cautious about any further increases in interest rates so the central bank could assess growing risks to an otherwise-solid U.S. economic outlook.

The U.S. stock market was supported by advances by technology and other trade-sensitive sectors. The benchmark S&P 500 .SPX index is up by about 10 percent from 20-month lows hit around Christmas.

“If you want to gauge how investors are viewing the trade talks, just watch tech, and semiconductors in particular,” said Jack Ablin, chief investment officer at Cresset Wealth Advisors in Chicago.

The Dow Jones Industrial Average .DJI rose 91.67 points, or 0.39 percent, to close at 23,879.12, the S&P 500 .SPX gained 10.55 points, or 0.41 percent, to end at 2,584.96 and the Nasdaq Composite .IXIC added 60.08 points, or 0.87 percent, to finish at 6,957.08.

The pan-European STOXX 600 benchmark closed up 0.53 percent, its highest close in nearly four weeks.

Oil prices jumped, helped by the hopes of easing trade tensions between China and the U.S., while OPEC-led crude output cuts also provided support.

Brent crude LCOc1 futures rose $2.72 to settle at $61.44 a barrel, a 4.6 percent gain. U.S. West Texas Intermediate (WTI) crude CLc1 futures rose $2.58 to settle at $52.36 a barrel, a 5.2 percent gain.

The dollar tumbled to its lowest level since October after the Fed expressed caution about future rate hikes, and as investors reduced safe-haven bets due to optimism about U.S.-China trade talks.

“It will probably be mid-year before the Fed excites hike prospects again,” said Joseph Trevisani, senior analyst at FXStreet.com in New York.

U.S. Treasury yields climbed to the highest this year, helped by improved risk appetite, but retreated following dovish commentary from Fed speakers and a strong 10-year note auction.

Benchmark 10-year notes US10YT=RR were last down 2/32 in price to yield 2.7225 percent after earlier rising to 2.747 percent, the highest since Dec. 28.

Gold prices rose on Wednesday, with spot gold XAU= up 0.68 percent to $1,293.65 per ounce.

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Fed policymakers say U.S. rate hikes can wait, for now

RIVERWOODS, Ill./CHATTANOOGA, Tenn. (Reuters) – U.S. Federal Reserve policymakers say they will wait to deliver more interest rate hikes until they have a better handle on whether slowing global growth and financial market volatility will undercut an otherwise solid U.S. economic outlook.

Presidents of four of the 12 Fed regional banks on Wednesday said they wanted greater clarity on the state of the economy before extending the central bank’s rate hike campaign any further.

Minutes of the Fed’s December meeting, released on Wednesday, showed fellow policymakers widely shared that view, seeing risks from markets and abroad as making “the appropriate extent and timing of future policy firming less clear than earlier.”

The message underscores a sense that the Fed is nearing the end of its rate-hike cycle. It also synchs broadly with the view of Fed Chairman Jerome Powell, who last week eased market concerns that the Fed was ignoring signs of an economic slowdown and assured markets he would be patient and flexible in policy decisions this year.

Stocks had suffered their worst December performance since the Great Depression. Other signs of tightening financial conditions had surfaced as well, including a sharp slowdown in issuance of corporate bonds.

“I think they have certainly changed their tune,” said Eric Stein, a portfolio manager for Eaton Vance who attended Rosengren’s talk. “If financial conditions continue to ease from here (as they have to start the year) and growth stays strong, I think they will still look to hike, but for now a wait and see approach is prudent.”

Stocks extended a fourth straight day of gains on Wednesday as policymakers spoke and the minutes were released, partially reversing the precipitous drop in the fourth quarter of 2018.

UNCERTAINTY PROMPTS POLICYMAKER CAUTION

Three of the four policymakers who spoke Wednesday — Charles Evans of Chicago, Eric Rosengren of Boston, and James Bullard of St. Louis — are voting members this year on the Federal Open Market Committee, the bank’s 10-member policy-setting panel.

While Bullard has long opposed the Fed’s rate hikes, the caution from Evans and Rosengren marked a shift in their views.

Evans, who has been among the most vocal backers of gradually tightening U.S. monetary policy, told reporters Wednesday he still believes the Fed will need to deliver three more rate hikes this year.

But, in his first public comments since November, he nodded to an array of “tough-to-read” factors highlighted by the recent market selloff. With inflation showing no signs of breaking above the Fed’s 2-percent target, he said, “we have good capacity to wait and carefully take stock of the incoming data and other developments.”

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Rosengren similarly said he expects solid growth this year and said he suspects financial markets are “unduly pessimistic,” and said in a Bloomberg TV interview he thinks the Fed will need to raise rates twice this year.

But in a break from speeches last year, when he emphasized the risks of allowing unemployment to stay below sustainable levels for too long, Rosengren on Wednesday highlighted potential threats to growth. He said he was taking on board the cautionary signals from markets, including rising bets on rate cuts.

“There should be no particular bias toward raising or lowering rates until the data more clearly indicate the path for domestic and international economic growth,” Rosengren told the Boston Economic Club. “I believe we can wait for greater clarity before adjusting policy.”

CALL FOR PATIENCE

The Fed’s own forecasts, released after the central bank’s fourth 2018 rate hike in December, called for two more rate hikes this year.

Traders disagree. Short-term U.S. interest-rate futures are now pricing in less than a one-in-four chance of a rate hike this year, and about a one-in-four chance of a rate cut by next January.

The minutes of the Fed’s December meeting released Wednesday provided a more nuanced view of the policy outlook.

While the voting members unanimously backed the December rate hike, they judged a “relatively limited amount of additional tightening likely would be appropriate”. A few of the seven non-voting members of the panel opposed the rate increase.

And, in a strong indication the Fed may pause what has been a steady quarterly diet of rate increases, many of the entire group of 17 thought the Fed “could afford to be patient about further policy firming,” the minutes showed.

December’s rate increase marked the ninth increase of a quarter percentage point since December 2015, when the Fed began lifting interest rates from near zero, where they had been since the financial crisis in 2008.

St Louis Fed’s Bullard, who has long been critical of the Fed’s rate increases, told the Wall Street Journal that while the Fed had “a good level of the policy rate today,” there was no rush to push them higher.

The fourth president to speak Wednesday, Raphael Bostic of Atlanta, said earlier this week that the Fed was likely to need at most a single rate increase this year.

On Wednesday he said his view was driven by conversations with business executives, who say they have become more defensive in preparing for slower growth by paying down debt and holding off on new plans.

Those conversations “are not consistent with the business sector ramping up,” Bostic told the Chattanooga Area Chamber of Commerce. Bostic, who backed all four rate hikes in 2018 as an FOMC voter, does not have a policy vote on the panel this year.

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Investigation launched after farmer dies tragically while demolishing shed – FarmIreland.ie

A Co. Mayo farmer died tragically today after part of the roof of a shed which he was demolishing fell on him.

The tragedy occurred in a townland near the village of Ballindine in the afternoon.

The remains of the middle-aged victim, who is married with a family, have been taken to Mayo University Hospital, Castlebar) where a post mortem will take place tomorrow.

Both An Garda Siochana and the Health and Safety Authority (HSA) have launched an investigation into the circumstances of the accident.

Farm accident death figures were down 40pc in 2018, according to figures released from the Health and Safety Authority (HSA).

The farming sector, which has consistently been the most dangerous sector in which to work, featured 15 work-related deaths last year compared to 25 in 2017.

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Cows pulled from slurry tank by specialist crews 

Firefighters were called to a farm in Co Tyrone to rescue three cows from a slurry pit.

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