Ray S. Eñano, Editor business@manilastandardtoday.com extrastory2000@gmail.com
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MONDAY, JANUARY 9, 2017
American oil drillers in cautious comeback NEW YORK―The US oil industry is feeling guarded optimism going into 2017 as it pivots from a brutal two-year slump prompted by crashing crude prices. As the new year kicks off, industry insiders describe a tentative recovery, with some low-cost drilling basins starting to pick up even while others remain depressed. The downturn, among the worst since the 1973 Arab oil embargo, led to bankruptcies, layoffs of hundreds of thousands of workers and a significant pause on the American shale boom. Energy producers have been cheered by the election of Republican Donald Trump, whose cabinet picks include oil industry allies like climate-change skeptic Scott Pruitt to head the Environmental Protection Agency and ExxonMobil chief executive Rex Tillerson as secretary of state. “Operators are still being guarded with their money,” said Jason McFarland, president of the International Association of Drilling Contractors in Houston. “But certainly we’re seeing a loosening of the grip on investments as the price of oil rises.” Even more important, sentiment got a boost from the November 30 agreement by the Organization of the Petroleum Exporting Countries to cut production to address a supply glut that had threatened to push oil prices back to multi-year lows. After the Opec deal, “it is meaningfully different in sentiment,” said David Pursell, a managing director at the Houston energy investment bank Tudor, Pickering, Holt & Co. “Before November 30, this was like the Bataan Death March,” he said, referring to the grim outlook in the industry. Now, “People are cautiously optimistic, which is light years from where we were eight weeks ago.” US oil prices, which tumbled to close to $25 a barrel a year ago, closed at $53.99 a barrel on Friday. Part of the industry’s hesitancy is due to skepticism about whether Opec members and countries outside the cartel, such as Russia, will actually comply with the agreed production cuts. AFP
Business
China’s forex reserves drop by $41b to $3.01t C HINA’S foreign currency holdings remained above $3 trillion in December even as the yuan capped its steepest annual decline in more than two decades.
Reserves fell $41.08 billion to $3.01 trillion, the People’s Bank of China said in a statement Saturday. That matched a $3.01 trillion estimate in a Bloomberg survey of economists. China may take measures to keep its foreign-currency stockpile from slipping too far below the key $3 trillion mark to avoid hurting investor confidence and spurring further declines in the yuan, according to economists at major banks. Policy makers have recently rolled out extra requirements for citizens converting yuan into other currencies after the annual $50,000 quota for individuals reset Jan. 1. “China’s government is well positioned to control outflows more effectively if it wants to,
though it may not want to be seen as reversing China’s ‘opening’ strategy,” Wang Tao, head of China economic research at UBS Group AG in Hong Kong, wrote in a recent note. “In the long run, it may not have much choice if FX reserves fall more sharply on the back of intensifying capital outflow pressures.” Central Bank The decline of foreign exchange reserves in December was mainly because the central bank supplied funds to maintain balance in the foreign exchange market and the depreciation of non-US dollar currencies, the State Administration of Foreign Exchange said in a separate statement on Saturday. For the full year of 2016, the SAFE said
the central bank’s effort to stabilize the yuan was the key reason for the drop in reserves. “The combination of policyinduced yuan stabilization and higher reporting requirements for households buying FX will buy the PBOC a little breathing room, preventing escalating outflows in the first month of the year,” Tom Orlik, chief Asia economist at Bloomberg Intelligence in Beijing, wrote in a note. Policy makers intensified new measures at the beginning of the new year to choke capital outflow including extra requirements for citizens converting yuan into foreign currencies. Last week, the currency posted greater volatility, with the offshore rate notching up its biggest two-day gain on record just days after completing its worst yearly performance against the dollar. The yuan fell 0.9 percent last month, capping a 6.5 percent drop over the year.
Policy makers now may prefer using capital controls instead of burning through foreign exchange reserves to defend the yuan, said Gao Yuwei, a researcher at the Bank of China Ltd.’s Institute of International Finance in Beijing. Dollar Rally There are still uncertainties facing the yuan as to whether the resurgent dollar will continue its rally in January and the Federal Reserve’s future US interest-rate hikes, said Wen Bin, a researcher at China Minsheng Banking Corp. in Beijing. China’s gold reserves stood at $67.9 billion by the end of December, compared with $69.8 billion a month earlier. The nation kept gold reserves unchanged at 59.24 million troy ounces for a second month in December, the first time it halted purchases for two consecutive months since disclosing holdings as of June 2015. Bloomberg
LAS VEGAS SHOW. A Candy Bean, one of the interactive Beam robots that are operated by an actual person from a remote location, dispenses candy to a show attendee during the 2017 Consumer Electronic Show in Las Vegas, Nevada on January 7, 2017. AFP
US jobs growth in December slackened WASHINGTON―Job growth in the world’s largest economy slowed in the final month of 2016 and the already-low unemployment rate rose marginally, the Labor Department reported Friday. The US added a solid 156,000 jobs in December but the jobless rate nudged up to 4.7 percent, reversing some of the sudden drop in November, when unemployment fell to 4.6 percent, its lowest level in nearly a decade. The figures provide the final official snapshot of the US labor market during Barack Obama’s presidency and confirm a picture of the relative health of the economy he will hand over to President-elect Donald Trump later this month. In all of 2016, the US added 2.2 million jobs, down from the 2.7 million in 2015, and 10.5 million have been added since December 2008, just before Obama took office amid the financial crisis. The job gains in December were short of the consensus forecast for 175,000 new positions, but while the jobs engine may have cooled in the month the report also pointed to positive trends. The November figure saw a major upward revision of nearly 15 percent to 204,000 net new positions added for the month, bringing the average job gains for the past three months to 165,000. Wages also crept up, with average hourly earnings rising to $26.00, an unusually-large increase of 10 cents from November. Wages gained 2.9 percent compared to 2015, the largest 12-month increase in seven years. The strongest job gains were seen in healthcare, which added 33,000 positions for the month; in bars and restaurants, which added 30,000; and in manufacturing, which added 17,000 new positions. The manufacturing sector has declined by 63,000 positions since January, however, and the sector has been a primary focus of Trump’s. The data showed little change in the share of long-term unemployed, or those without work for 27 weeks or more, which stood at 1.8 million people. The rate of participation in the labor force was also little changed at 62.7 percent. In a separate report, Commerce Department data showed the US trade deficit edged up in November as a strong dollar helped the US import more goods and made exports more expensive. AFP
Burgundy stirred but not shaken by sale to US billionaire By Marjorie Boyet PERNAND-VERGELESSES, France-He may be American and own a major football club, Arsenal, but Stanley Kroenke, the new boss of a prestigious Burgundy vineyard, says he knows his wine and won’t mess with tradition— and locals say they believe him. The Bonneau du Martray vineyard “shares the same philosophy as ours in California, based on the quality of the land and the wines,” said his manager, Armand de Maigret. “We are winemakers, not a marketing machine.” A point well taken by Louis-Fabrice Latour, head of Burgundy’s wine federation BIVB, who says he is “reassured” by Kroenke’s status as a wine professional who makes some of the world’s most expensive wine. “He will respect the Burgundy tradition,” Latour said. The sporting empire of Kroenke, 69, also includes gridiron team the Los Angeles Rams and basketball’s Denver Nuggets and his fortune was estimated at $7.7 billion (7.3 billion euros) by Forbes magazine last year. ‘Californian tricks’ De Maigret said Kroenke’s team would “maintain the domain while adding a few Californian tricks and transferring some Burgundy tricks to California.” Kroenke bought an 80-percent share in the Bonneau du Martray vineyard, which has been run by the same family for nearly 200 years, for an undisclosed sum. De Maigret earlier told the French financial newspaper Les Echos that Kroenke’s first foreign acquisition in
This picture taken on January 6, 2017 shows the vineyard of “Domaine Bonneau du Martray” in the Bourgogne region near Pernand-Vergelesses, eastern France. In the absence of heirs, the owners of a prestigious wine estate in Burgundy contacted ten potential buyers on the planet. And it is an American billionaire, owner of the Arsenal football club, who spent a fortune on 11 hectares of great wines. PHILIPPE DESMAZES/AFP
the wine-making world was “the product of love at first sight.” Located near the picture-postcard town of Pernand-Vergelesses, the vineyard produces two highly regarded grand crus: a white wine, Corton
Charlemagne, and a red, Corton. Both are mostly for export. Its vines are spread over 11 hectares (27 acres) on the prestigious Corton hill near Beaune. Kroenke bought the vineyard from
four brothers, all in their sixties and none of whose offspring were interested in taking on the business. With no heirs to pass the property on to, they contacted 10 potential buyers around the world.
The best offer came from Kroenke, who is married to Wal-Mart heiress Ann Walton Kroenke and also owns vineyards in Napa Valley in California, where he produces the cabernet sauvignon Screaming Eagle. In 1995, wine guru Robert Parker awarded the 1992 vintage of Screaming Eagle a near-perfect 99 points. ‘Event on the hillside’ The size of his new acquisition is rare in Burgundy, where the trend has been for large domains to be divvied up into ever smaller plots. Meanwhile the sum of the transaction is a well-guarded secret. A spokesman for the Le Bault de la Moriniere family would say only that the figure was “very, very high.” Some local winemakers are talking about a price tag of 100 million euros, but when asked about the rumor the spokesman told AFP: “You’re way off”—implying that the sum was even higher. Latour said news of the sale was “an event on the hillside,” noting that only around 1.5 percent of the winegrowing region changes hands—outside of families—each year. A Chinese investor bought the Gevrey-Chambertin chateau and vineyard for eight million euros in 2012, and two other sales stood out in 2014: the LVMH luxury group snapped up the Clos des Lambrays and the 20-hectare Pommard chateau was bought by Silicon Valley boss Michel Baum. Other American neighbors for Kroenke will be the Kopf family, who bought the Maison Louis Jadot in 1985. AFP