Untitled

News Summary
online pillar rising 5-fold, Baidu shares are worth a look (page
15).
G20 Summit kicks off in Antalya, Turkey but attention is on

Paris. Just 10 months and 6 days after Charlie Hebdo
shooting, France was struck by coordinated attacks on Friday
night, killing more than 129 people. Prosecutor Francois
Molins confirmed that three teams of extremists carried out
the coordinated gun-and-suicide bombing attacks across
Paris. According to reports, Syrian passport found near the
body of another attacker was linked to a man who entered the
European Union through a Greek island last month. But here
is the interesting part. US intelligence official told CBS News
that a name and picture were recovered from the Syrian
passport and the individual was not known to intelligence
officials. The official said the Syrian passport might be fake.
The official said the passport did not contain the correct
numbers for a legitimate Syrian passport and the picture did
not match the name (pages 7-10).
Interesting point from Sunday Times David Smith that UK

unemployment is now nearly two percentage points lower
than the 7% rate Governor Mark Carney said would be a
threshold for the Bank of Englands monetary policy
committee to consider raising interest rates. However, also
some intriguing detail in the labour market numbers. Recently
employment growth has been dominated by full-time jobs.
That is still true when we compare the latest numbers, JulySeptember, with a year ago, with full-time jobs up 273,000
and part-timers 146,000. But on a quarterly basis the number
of full-time workers was up by only 31,000, part-timers by
145,000. That could reflect some weakening of labour
demand, though it is an ill wind that blows nobody some good
(page 3-4).
In The Sunday Times, Kathryn Cooper wrote investors are

bracing for further turmoil in financial markets in the wake of
the terrorist attacks in Paris. Dow Jones Index closed down
1.16%; S&P down 1.12%; NASDAQ closed down 1.54%. The
fallout from Fridays atrocities is expected to add to jitters
over the global economy, caused by the Chinese slowdown,
slump in the oil price and the prospect of a rise in interest
rates in America. Analysts warned that global stock markets
could open more than 2% lower tomorrow, with the Euro
expected to lose ground against the dollar and Pound (page 4).
With France on high alert, large department stores closed and
government has advised all citizens to remain indoors. Sunday
Times said a slump in the French economy could force ECB
into even more drastic action to revive the Eurozone economy.
President Mario Draghi may have no choice but to pump
billions more freshly created euros into the blocs financial
system as soon as next month. The ECB is expected to
announce a further 900bn of monetary stimulus at its
December meeting on top of the 1.1 trillion announced in
March (page 5).
However the FT said investors are increasingly confident that
the Eurozone economy will continue its slow, steady recovery.
But it also indicates that the ECBs quantitative easing or QE,
is losing its power to pack a punch in the markets (page 2).
On Friday, IMF staff recommended that Chinese Yuan should
join the elite basket of currencies used to value its own de
facto currency. If approved, as expected, at a November 30
board meeting, it would mark the first significant change to
the IMFs Special Drawing Rights (SDR) basket since the
inclusion of the euro at its creation in 1999 (page 14).
Japan Today reported that Japanese government is likely to

compile an extra budget worth around Jpy3.5trln at the end of
this year to help farmers boost their global competitiveness
and finance social security measures. PM Abe will decide on
the size to fund stimulus measures and instruct ministries to
compile the supplementary budget after reviewing the
preliminary results Monday of Japans Q3 GDP growth at
08:50 JST (page 17).
Reuters News said GDP data on Monday will probably show
Japan fell into a technical recession in the third quarter,
maintaining pressure on the BOJ and Prime Minister Shinzo
Abe to support the world's third largest economy (page 11).
GDP growth expected to be -0.1% from -0.3% over the
quarter. This is followed by Thailand at 09:30 Bangkok;
annually up 2.5% from 2.8% but quarterly up 0.7% from 0.4%.
RBA will publish the Nov Meeting Minutes on Tuesday at
11:30 Sydney. At the same time, Singapore will also release its
Oct NODE, where experts looking for contraction in all the 3
data.
Here are the FX closing rates from Friday Nov 13
Euro
1.0775
Jpy
122.62
Gbp
1.5247
Chf
1.0057
Aud
0.7120
Nzd
0.6538
Cad
1.3322
Responding to last Tuesdays WSJ, where Donald Trump

asserted that the worst of Beijings sins is the wanton
manipulation of Chinas currency, robbing Americans of
billions of dollars of capital and millions of jobs, Barrons
Online said Beijings
currency isnt undervalued,
protectionism would backfire, and raising tensions with
Beijing could lead to disaster. By threatening to impose tariffs
on China in retaliation for its alleged currency manipulation, a
President Trump would risk starting a protectionist war
similar to the one that helped precipitate the Great
Depression. More worrisome, this would come while tensions
between China and the U.S. over disputed islands in the South
China Sea are escalating (page 12).
Also in Barrons Online, keep a watch on Chinas Baidu share
price. It is down 13% this year but with growth in Chinas
These information have been obtained or derived from sources believed to be reliable, but I make no representation or warranty as to their accuracy or completeness.
Copyright 2013 The Poon Report by Vincent Poon. All rights reserved.
Euro News
ECB Quantitative Easing Losing Its Power
to Pack a Punch in Markets
Taken from the WSJ Saturday, 14 November 2015
Long-term yields well above record lows despite signs of more

stimulus to come
As investors gear up for more stimulus from the European
Central Bank, short-term bonds in the eurozone are on a tear,
while investors are much more cautious about longer-dated
debt.
That reflects two things. Investors are increasingly confident
that the regions economy will continue its slow, steady
recovery. But it also indicates that the ECBs bond-buying
program, known as quantitative easing or QE, is losing its
power to pack a punch in the markets.
Earlier this year, when the ECB made clear it would launch a
quantitative-easing program, eurozone bonds of all stripes
went on a strong rally. Now, even though ECB President
Mario Draghi has indicated that more stimulus is coming, the
reaction has been less sweeping.
The belief that QE will lift bonds across the board has run its
course, said Chris Wightman, a senior portfolio manager at
Wells Fargo Asset Management, which manages $496 billion
of assets.
The yield on German two-year debtthe eurozones
benchmark for heavily traded short-term bondssank to an
all-time low of negative-0.37% Friday, after Mr. Draghi a day
earlier reiterated that the central bank may ease policy at its
next meeting in December. Yields fall as prices rise. Two-year
yields are deep in negative territory in a range of countries
inside the currency bloc, meaning investors are paying more
than ever to park their cash for two years.
Longer-term yields, by contrast, are well above the record
lows they touched in April shortly after the ECB launched
quantitative easing. Germanys 10-year note ended Friday at a
yield of 0.56%, having fallen as far as 0.07% earlier in the
year. A selloff later in the second quarter stung many of the
investors who had piled into aggressive bets on government
bonds.
Mr. Draghi said earlier in November that the ECB would
consider expanding or lengthening its bond-buying program
in December. He also said the central bank will consider a
further reduction in rates, some of which are already negative.
The rally in short-term debtwhere yields tend to closely
mirror expectations for short-term interest ratessuggests the
second of these measures is having a more powerful impact,
according to Mr. Wightman.
Many banks, already under pressure from regulators to buy
piles of high-rated government debt, are likely to put money
into the bond market rather than pay to store it at the ECB.
But the prospect of an interest-rate increase from the Federal
Reservewhich is now widely expected in December and has
lifted bond yields in the U.S.is deterring some would-be
buyers of long-term eurozone bonds.
Mr. Wightman said he prefers to buy 10-year U.S. Treasurys,
which yielded 2.280% late Friday, rather than their German
counterparts.
Investors also point to a sluggish but persistent economic
recovery in the eurozone, which should eventually drive up
inflation from ultralow levels. Any prospect of rising prices,
which erode the value of long-term debt, would make lowyielding German debt an even less appealing proposition.
Indeed, a durable rise in long-term yields could actually signal
the success of quantitative easing, given that the program is
designed to boost inflation back to the central banks mediumterm target of just below 2%.
For fund managers, owning 10-year bonds now yielding only a
little more than 0.5% means you are scarcely covering your
management fee, according to Russel Matthews, a portfolio

manager at BlueBay Asset Management, which manages
around $60 billion in assets.
Mr. Matthews favors riskier and higher-yielding eurodenominated bonds issued by countries including Mexico,
Croatia and Bulgaria over German debt. Those bonds should
benefit from an easing of fears over global growth, he said.
Investors are also chastened by their experience earlier in the
year, when the strong eurozone bond rally snapped back
violently in April and May, wiping out many funds gains for
the year.
Investors got burned quite badly in the volatility earlier this
year. As a result, theyre less inclined to chase yields lower,
Mr. Matthews said.
(Full article click - WSJ)
---
Angela Merkel's future under scrutiny for

the first time as German asylum process
criticised
Taken from the Telegraph Saturday, 14 November 2015
A popular talk show the possibility of a coup against the

German chancellor after her own party made implicit
criticisms of her policy
Angela Merkels political future is being questioned for the
first time in Germany as divisions continue to grow in her
government over her open-door refugee policy.
Guests on a popular television political talk show debated the
possibility of a coup against the German chancellor from
within her own party.
The discussion came as civil servants at the government
refugee agency warned identity checks for Syrian asylumseekers were ineffective and open to abuse by economic
migrants and terrorists. But other guests on the television
show were dismissive of the possibility of an internal party
coup against the chancellor.
Anyone who tries to overthrow some one like her will destroy
himself, Karl-Rudolf Korte, a political scientist at the
University of Duisberg-Essen, said, adding that she was
protected by an armour of popularity.
But he added: The situation is not flattering for the
chancellor, a loss of power is quite evident.
Peter Altmaier, Mrs Merkels national refugee coordinator and
the head of her chancellery office, tried to downplay the
disputes with Mr de Maiziere as a communication
misunderstanding.
It is clear there are a lot of discussions over this issue, he
told the talk show. I hope that we can discuss this internally
and behind closed doors. However it is vital that we act as one
as we do.
Mr Schuble has come under fire for his intervention from
coalition partners, and from Joachim Gauck, the countrys
usually non-political president.
Mr Gauck broke with protocol to warn against those who
voice assumptions and perpetuate stereotypes, in remarks
widely seen as directed at the finance minister.
Mrs Merkel came under intense questioning in a special halfhour interview on ZDF television entitiled What Now, Mrs
Merkel? on Friday evening.
In the interview, she vowed to continue her open-door
refugee policy: It is our principle to help people in need, the
German chancellor said. We need to show the freedoms we
enjoy in practice and help those in need.
Mrs Merkel dismissed claims that her government was in
crisis at the end of a week that has seen two of her most senior
ministers openly challenge her refugee policy.
The chancellor has the situation under the control, the
federal government has the situation under control, she said.
I am sure that we will continue to show a friendly face. That
is my sort of welcoming culture.
But she refused to give way on her insistence that Germany

can handle a record influx of some 800,000 asylum-seekers
this year.
Asked about her earlier slogan of We can do it, she replied:
I think we have to work to make sure we can do it, and I
believe we can do it.
She refused to set a limit for the number of refugees Germany
could take in.
I cannot unilaterally define a limits, she said. We in
Germany cannot simply determine unilaterally who can come
and who cannot.
Mrs Merkel refused the discuss the alleged rebellion.
Wolfgang Schuble is in a class of his own, she said
enigmatically.
The chancellor admitted she had made mistakes in the past
and said it was up to her to reduce the numbers of asylumseekers and to crack down on illegal immigration.
But she vowed Germany would continue to open its doors to
genuine refugees.
Im not the first chancellor to fight for something, she said,
comparing her situation to that of Helmut Kohl, the
chancellor who oversaw the reunification of Germany.
She was critical of Germanys European partners, saying she
regretted the EU had not been able to come up with a
common solution.
She compared the numbers arriving in Europe to the more
than two million Syrian refugees Turkey has taken in,
including some 900,000 children.
We are a much richer continent than Turkey, I think its
obvious, she said. We talk about human dignity, then we say
we have be careful about refugees.
While ministers argue, civil servants at the federal office for
migration and refugees have published an open letter warning
of serious flaws in procedures.
Asylum-seekers are being accepted as Syrians without being
asked for any proof of their nationality, they warned.
Those claiming to be Syrian do not need to show passports,
according to the letter. The only checking of their identity is
carried out by freelance translators who often have little or no
experience of Syrian dialects or accents, and are not
accountable for any mistakes.
A large proportion of asylum-seekers were giving false
identities in order to stay in Germany, the letter warned.
The discontinuation of identity checks has also facilitated
infiltration by Islamic State of Iraq and the Levant terrorists
into Europe, it claimed.
Austria on Friday announced plans to build a 2.5-mile stretch
of fence on either side of its busiest border crossing with
Slovenia.
Hungary and Slovenia have already built fences along sections
of their borders.
Austrian officials said the new fence was not intended to
prevent asylum-seekers from entering the country, but to
control the flow.
Its about an orderly entry, not a barrier, Josef Ostermayer,
a minister at the Austrian chancellery said.
Meanwhile in eastern Germany, an eight-month pregnant
asylum-seeker from Somalia was attacked and badly beaten.
The 21-year-old woman was taken to hospital. She has not
been named and details of her injuries have not been released.
Police said they suspect two boys aged 14 and 15 and a 14year-old girl of carrying out the attack.
(Full article click - Telegraph)
---
Greek Obstacles remain in lender talks

Taken from the Kathimerini Saturday, 14 November 2015
The prospects of Greece and its lenders settling a set of

outstanding issues ahead of a planned Euro Working Group
(EWG) on Monday remained in the balance after another
round of talks Friday.
Kathimerini understands that the two sides have yet to resolve
their differences on key issues such as the settlement of
nonperforming loans (NPLs) and foreclosures of primary
residences.
The Greek side remains hopeful that an agreement can be
reached over the weekend so that the EWG can pave the way
for Athens to receive the next 2-billion-euro installment of its
third bailout and the 10 billion euros set aside for the
recapitalization of local banks.
During a press briefing in Brussels Friday, European
Commission spokeswoman Mina Andreeva said there had
been progress during the talks in Athens.
Athens appears to have softened its position on the sale of
NPLs to investment funds but only if they are affiliated to
banks or international organizations. Also, the Greek
government wants the Bank of Greece to issue licenses to any
bodies that purchase loan portfolios and to be responsible for
monitoring the process.
The coalition, however, wants mortgages and loans to small
and medium-sized businesses to be excluded from the
transactions.
On home repossessions, Athens still wants primary residences
with a taxable value under 180,000 euros to be protected if
the homeowner is single. The value would rise if the home is
owned by a couple or if they have children, reaching a high as
305,000 euros for a five-member family.
These criteria would prevent 56 percent of homes from being
repossessed, Greek officials estimate. However, the
institutions believe that this is too high. As a result, the
government may lower its starting value from 180,000 to
150,000.
Meanwhile, the government appears intent on increasing
social security contributions so it can minimize the cuts it has
to make to pensions. The draft plan the Labor Ministry is
working on is to increase employers contributions by 1.5
percentage points and by up to 1 percent for employees. This
will help raise around 600 million euros per year.
(Full article click - Kathimerini)
---
David Smith
Economic Outlook: Leave the EU and we
will lose the single market
Taken from the Sunday Times 15 November 2015
THE battle over Britains membership of the EU is now

officially joined. It could be all over by next summer, though it
could drag on for the next two years. I presume that if, as is
likely, David Cameron decides that the EU has not turned a
deaf ear to his fairly modest renegotiation demands, Downing
Street will choose a referendum timing that offers the best
prospect of a yes vote. That probably means waiting until
the refugee crisis has subsided.
Anyway, there is a long way to go, and a lot of subjects to
cover, between now and even an early referendum. But let me
focus on just one today: the issue of trade and access to the
single market.
Last week I quoted projections from PwC which demonstrated
that, though the share of goods and services exports going to
the rest of the EU is in decline from 55% in 1999 to 45% last
year and a projected 37% in 2030 the single market will
remain Britains key trading partner, assuming our
membership continues.
The EU is important even if you adjust for the so-called
Rotterdam effect; exports destined for the rest of the world
that are shipped via the Dutch port, and imports from the rest
of the world that come in the same way. Exclude all exports to
the Netherlands from the numbers and it would still be the
case that more than 40% of Britains overseas sales are to
other states in the bloc.
The EU is even more important when it comes to imports: it
accounted for 53% of the total last year, up from a recent low
of 50% in 2011. Britain had an overall trade deficit with the
rest of the EU of 62bn last year, compared with a non-EU
trade surplus of 28bn.
It is this that has led some in the leave camp to conclude
that we would be better off without EU trade because we
have been in long-term deficit with the rest of Europe or
that if there is a vote to leave, Brussels will be desperate to
quickly put in place a deal to allow EU exporters to continue
to access the British market.
The first conclusion can be easily dismissed. Though the far
left and extreme right have periodically argued for blanket
controls on imports, basic economics tells us that countries
gain from trade even when running a deficit.
The serious issue is whether Britain and the EU would rush to
negotiate a market-access deal after an exit vote. The answer,
provided last week by Lord Mandelson in a speech to the EEF,
the engineering and manufacturing employers federation, was
a firm no.
The Mandelson speech was interesting. Though the EEF is as
broadly pro-EU as the CBI, its event did not attract the same
type of silly Vote Leave stunt as the larger organisation for
business did at its annual conference last Monday. There were
no students dressed as business people holding up placards.
And, while there is inevitably a strong he would say that
wouldnt he element to Mandelsons remarks, they struck a
chord. Whatever else he learnt in Brussels while EU trade
commissioner, he quickly discovered that negotiating new
trade and market access deals is a thankless task. Such
negotiations typically drag on for years, if not decades.
Mandelsons verdict was that, even in the event of a deal, it
would not give Britains exporters anything like the access to
the single market that they enjoy now.
These days, any such deals would not be mainly about tariffs;
industrial tariffs between advanced economies are very low.
They would be about common product, regulatory and safety
standards. For Britain, they are also about completing the
single market in services, where we are strong. This is proving
challenging to negotiate while we remain in the EU, and
would be impossible if we were no longer a member.
In a recent paper, Global Counsel, the strategy advisory firm
chaired by Mandelson, looked at the options for Britain
outside the EU. The paper, written by Gregor Irwin, former
chief economist at the Foreign and Commonwealth Office, was
titled Brexit: The impact on the UK and the EU. It examined a
Norwegian-style European Economic Area (EEA) agreement;
a Turkish-style customs union; a free trade area; Swiss-style
bilateral trade accords for different sectors; and a most
favoured nation approach giving Britain preferential access
to the EU but on less advantageous terms than now.
Of these, only the Norwegian option would give Britain full
access to the single market, but at the cost of continuing to
pay into the EU budget and losing any influence over the
regulations and directives British business would be required
to adopt to gain admission to that market. A free trade
agreement would mean that British exports would escape the
EUs common external tariff but not much else. Full access to
the bloc would be lost.
As for it being in the EUs interest to quickly negotiate a
comprehensive deal to preserve its trade surplus with Britain,
that is not how it works, as became clear at the EEF event. For
some countries and some industries, such as the German car
manufacturers, it would clearly be of benefit to do so. Getting
approval from the remaining 27 member states of the EU, and

from the European parliament itself, would be tough in an
environment in which there would be little goodwill towards
Britain.
Some voters will say that some loss of access to the single
market is a price worth paying to, say, regain control of our
borders (though non-EU net migration is larger than
migration from the rest of the EU). Some businesses,
particularly those that do not trade elsewhere within the
single market, will agree with them. After all, we sell to plenty
of countries with which we do not share a single market,
though largely under trade deals negotiated by the EU.
The single market issue is not, on its own, decisive, but it is
important. And it is just one of many areas in which, as things
stand, a vote to leave the EU would be a step into the
unknown.
PS: There is always something interesting in the labour
market data. For this month, the headlines were all about the
employment rate the proportion of people aged 16-64 in
work reaching a record 73.7%, and the unemployment rate
dropping to 5.3%. Both were interesting.
The 73.7% employment rate, the highest since records began
in 1971, is remarkable considering the big increase since then
in the number of young people staying on longer at school and
going on to further and higher education. Unemployment is
now nearly two percentage points lower than the 7% rate
Mark Carney told us, two years ago, would be a threshold for
the Bank of Englands monetary policy committee to consider
raising interest rates.
There was, however, also some intriguing detail in the labour
market numbers. Recently employment growth has been
dominated by full-time jobs. That is still true when we
compare the latest numbers, July-September, with a year ago,
with full-time jobs up 273,000 and part-timers 146,000. But
on a quarterly basis the number of full-time workers was up
by only 31,000, part-timers by 145,000.
That could reflect some weakening of labour demand, though
it is an ill wind that blows nobody some good. Partly because
of the part-time shift, there was a 0.1% drop in total hours
worked in July-September. Combine that with a 0.5% rise in
gross domestic product and you get a reasonably healthy 0.6%
quarterly rise in productivity output per hour. Just what we
need.
(Full article click - Times)
---
Kathryn Cooper
Paris attack rattles markets as ECB readies
cash injection
INVESTORS were last night braced for further turmoil in

financial markets in the wake of the terrorist attacks in Paris.
The fallout from Fridays atrocities is expected to add to jitters
over the global economy, caused by the Chinese slowdown,
slump in the oil price and the prospect of a rise in interest
rates in America.
Analysts warned that global stock markets could open more
than 2% lower tomorrow, with the euro expected to lose
ground against the dollar and pound.
The longer-term ramifications of the terrorist attacks will not
become clear for several weeks. However, economists said
consumer confidence in the eurozones second-largest
economy would inevitably be hit, potentially pushing France
back into recession.
Large department stores in Paris kept their doors shut
yesterday after the government advised citizens to remain
indoors.
The murder of more than 120 people could rattle the residents
of other European capitals, including London. One senior
British retail source said trading was already soft on the high
street, and could get worse if shoppers feared they could

become a target.
A slump in the French economy could force the European
Central Bank (ECB) into even more drastic action to revive the
eurozone economy, analysts said. Mario Draghi, president of
the ECB, may have no choice but to pump billions more
freshly created euros into the blocs financial system as soon
as next month.
It is highly possible that France will get drawn into recession
again because of what has happened, said David Buik, a
veteran market commentator who worked for the US bank
Cantor Fitzgerald at the time of the attacks on America on
September 11, 2001.
Draghi is left with no option he has to throw the
quantitative easing (QE) book at the problem, he added.
The ECB is expected to announce a further 900bn (636bn)
of monetary stimulus at its December meeting on top of the
1.1 trillion announced in March to boost the eurozone
economy and stave off the threat of deflation. It is likely to
extend its bond-buying programme as well as cutting deposit
rates further into negative territory.
Buik expects stock markets to open about 2.5% lower
tomorrow, compared with the 7% decline seen after the
September 11 attacks.
Last week, global stock markets suffered their worst week
since August as the oil price sank to its lowest level for eight
months. Figures on Friday showed the world oil glut at a
record 3bn barrels.
One analyst said the American stock market would remain
skittish for the next six weeks, in the run-up to the Feds rate
decision.
Nervous investors have poured $105bn (689m) into safe
haven money market funds over the past six weeks the
largest six-week inflow since the collapse of Lehman Brothers
in 2008, according to Michael Hartnett of Bank of America
Merrill Lynch.
Investors are liquidating their bond market investments and
seeking the shelter of cash ahead of the Feds first interest-rate
rise for nearly a decade, expected next month. It would be the
first time since May 1994 that the Fed raises interest rates
while the ECB cuts them.
Hartnett pointed out that previous periods of policy
divergence between Europe and America, such as in 1994,
1987 and 1937, were all crash years. Investors are
anticipating the Federal Reserve through higher-than-normal
cash levels, he said.
Poor GDP data from the eurozone has added to the
uneasiness. The blocs economy expanded by only 0.3% in the
third quarter, below expectations of 0.4% growth. The French
economy grew by just 0.3%.
Tomorrow, official figures are expected to show that price
growth stagnated at 0% last month. That will put even further
downward pressure on borrowing costs in the euro area.
Germany currently pays 0.56% on 10-year bonds. The
equivalent Italian debt has a yield of 1.56%.
---
1.5bn battle for Travelodge
TWO of Americas biggest investment funds are locked in a

1.5bn battle for control of budget hotel chain Travelodge.
Starwood Capital, the hotel and property giant, is fighting it
out with New York private equity firm Apollo Global
Management.
The pair are seen as frontrunners in an auction to buy
Travelodge, which has more than 500 sites and employs
nearly 10,000 people in Britain and Ireland. Suitors are
scrambling towards a final bid deadline at the end of the
month. The increasingly competitive process is likely to value
Travelodge at 1.5bn or more, insiders said.
The company was rescued from collapse three years ago by
two American hedge funds Avenue Capital and GoldenTree
Asset Management and Goldman Sachs.
The trio swooped after Travelodge struggled under a debt
mountain it took on as part of its purchase by Dubai
International Capital in 2006. Travelodges owners are now in
line for a bumper profit. The deal is expected to value its
operating company at 1bn. A portfolio of 144 properties is set
to change hands for 500m as part of the buyout.
Starwood and Apollos willingness to buy both the operating
and property companies is said to have put them at the front
of the queue, according to insiders.
Advent International, which had made an early-stage
approach to Travelodge, backed away from the process after
baulking at the 1.5bn valuation, sources said.
Deutsche Bank is handling the sale process, while CBRE is
advising Deutsche on the property disposals.
Rivals Apollo and Starwood have fought it out for a number of
hotel assets in recent years. Last month Apollo won an auction
for a 1bn portfolio that includes the 906-room Holiday Inn
Kensington Forum in west London, beating Starwood.
Apollo already owns a string of well-known brands in Britain,
including Bella Italia and Caf Rouge, after taking over ailing
restaurant business Tragus last year.
Starwood is best known for creating the Starwood Hotels and
Resorts Worldwide empire, now listed in New York. It has
made huge investments in Europe, including a 809m
(572m) chunk of loans from Irelands bad bank, the
National Asset Management Agency, in 2013.
Earlier this year, Travelodge was touted as a likely stock
market candidate. However, its owners are said to be keen to
cash out of their investment in one transaction and avoid a
lengthy listing process.
A 1.5bn sale would cap a remarkable turnaround for
Travelodge. Since its debt restructuring in 2012, the chain has
undergone a 115m expansion, while its earnings rose to
66.2m last year.
---
BT investors warn on break up
Taken from the Sunday Telegraph 15 November 2015
BTs biggest shareholders have broken their silence to warn

that a break-up of the telecoms giant would be hugely
destructive
BTs biggest shareholders have broken their silence to warn
that a break-up of the telecoms giant would be hugely
destructive and would cost them billions of pounds.
Top City fund managers with large stakes in the company have
spoken out as the debate over the future of Openreach, its
network arm, reaches a crescendo, with Ofcom considering
calls to refer BT to competition regulators.
A representative of one of the biggest investment houses, a top
10 shareholder in BT, told The Sunday Telegraph: My view is
that separation is unlikely and as far as were concerned that is
a good thing. It would be an overhang on the shares for years
as the thing was disentangled.
Another house, also among the largest investors, said: We are

opposed to a spin-off on the basis that it would be disruptive
and would not add value.
BTs future is under scrutiny as Ofcom conducts a once-adecade review of the communications market. Full separation
of Openreach as an entirely independent company is the most
radical of four options on the table, but has gained ground as
Sky, TalkTalk and Vodafone have campaigned fiercely over the
past six months.
They claim an independent Openreach would be more likely
to invest in broadband upgrades and provide faster
installations and repairs.
BTs rivals received a boost last week from John Fingleton, the
former head of the Office of Fair Trading (OFT). He now acts
as a consultant to companies including TalkTalk and said the
test for referring BT to the Competition and Markets
Authority, the successor to the OFT, had been met in spades.
Mr Fingleton said BT should follow the lead of New Zealands
national telecoms operator and voluntarily spin off its
network.
That countrys broadband infrastructure is now owned by a
company called Chorus, which is independent of the retailers
who use it to provide internet access to customers. With
government financial support it is building a fibre-optic
network.
One of BTs biggest shareholders said he would not necessarily
oppose a voluntary split as Openreach has a value that could
and should be better reflected in the share price.
But the fund manager added: You have got to get through the
review though. If you were forced to sell you wouldnt get the
best price.
Openreach last year reported revenues of 5bn and earnings
before interest, taxes, depreciation, and amortisation of
2.6bn, more than 40pc of BTs total. As a stand-alone
company, analysts have estimated it could be worth more than
20bn.
Gavin Patterson, BTs chief executive, has admitted that some
shareholders would probably like Openreach to be sold. It is
understood that the management has repeatedly sought the
support of its biggest shareholders as it battles potential
intervention.
The company has also attracted an ally in Virgin Media, the
owner of Britains cable network, a rival to the Openreach
infrastructure. Virgin is attempting to stand out in the market
by using the technological advantage of cable over BTs copper
lines to offer faster internet access.
Ofcom is due to publish initial findings early next year and has
given no clue on the direction of its thinking.
The Government has also sought to walk the line. Ed Vaizey,
the communications minister, said in September that he was a
sceptic over splitting BT, which would be incredibly time
consuming with enormous potential to backfire.
But Whitehall sources said the comments were followed by
panicked calls from officials to BTs rivals to reassure them
that the Government was not seeking to influence Ofcom.
Sky, TalkTalk and Vodafone received more reassurance last
week when the Prime Minister announced a commitment to
universal broadband at 10 megabits per second by 2020, a
higher bar than was suggested by Mr Patterson last month.
BTs rivals were also quietly contacted by officials who
highlighted the fact that BT was not mentioned as part of the
commitment.
---
Fresh doubts over Shell and BG merger as

Qatar sells 1bn stake
The Qatar Investment Authority has sold 43m shares in BG

Group and a further 24m shares in Shell
The Qatar Investment Authority has offloaded shares in Shell
and BG worth nearly 1bn in recent weeks, raising fresh
questions over whether the oilgiants proposed mega-merger
has the support of major shareholders.
The sovereign wealth fund, led by Sheikh Abdullah bin
Mohammed AlThani, a member of the Qatari royal family, has
sold around 43m shares in BG Group, worth roughly 550m,
and a further 24m shares in Shell, with a value of
approximately 421m.
The sell-off, over a period of less than three weeks between the
end of October and the first week of November, will be a blow
to Shells chief executive, Ben van Beurden.
The Dutchman has had to fend off persistent questions about
the logic of pressing ahead with Shells mammoth 43bn
takeover of BG Group despite the dramatic slump in the price
of oil.
The QIA is one of Shells biggest investors, with a 4.88pc
stake, and also holds a 1.76pc stake in BG. Qatar is also one of
the worlds biggest producers of liquid natural gas, meaning
its support for the bumper tie-up will be of huge importance
to both sides.
Analysts at Olivetree Financial said: The market is concerned
that these sales have been discriminatory towards BG, and
therefore suggesting some underlying reason which might be
worrying for the fate of the transaction.
Sources close to the deal sought to play down the significance
of Qatars share sell-off, arguing that it has been driven by the
Gulf states attempts to free up cash in the face of big losses on
positions in other large European companies.
The QIA has taken big hits on its stakes in the troubled
German carmaker Volkswagen, where it is one of the largest
shareholders, and in Glencore, the mining giant.
The value of those two holdings has plummeted by billions of
dollars in recent months as Qatars infrastructure bill for
hosting the football World Cup in 2022 piles up.
However, while sources close to the QIA declined to comment
on the Shell and BG share sales, they played down suggestions
that one of the world's largest sovereign wealth funds needed
to raise cash. Although it's recent paper losses have been
large, they are relatively minor when compared to the size of
the QIA's fund, estimated to be around $250bn.
Royal Dutch Shell has seen its share price slump by 25pc since
April, when the oil major unveiled its bid for BG. Shares in BG
Group have fallen 17pc over the same period.
Mr Van Beurden originally said for the deal to work, the oil
price needed to be $67 a barrel in 2016, $75 in 2017 and $90
by 2018. Brent crude is currently hovering around $43 a
barrel.
---
AB InBev could be forced into $7bn sale of

beer brands
AB InBev may have to sell a swathe of disposals following its

71bn takeover of SABMiller
Anheuser-Busch InBev could be forced to sell almost $7bn of
beer brands to assuage the concerns of regulators around the
world in the wake of its blockbuster takeover of rival brewer
SABMiller.
The Belgian-Brazilian owner of Budweiser and Stella Artois
has already started to sell assets. Alongside its recommended
offer for SAB, AB InBev unveiled a $12bn deal to offload the
FTSE 100 brewers 58pc stake in its MillerCoors US venture to
partner Molson Coors.
If regulators are strict the Budweiser giant might also be

forced to sell SABs Peroni and Grolsch brands in Britain and
its stake in the Turkish brewer Efes, on top of its prized China
interests, analysts at Berenberg believe.
A sale of SABs stake in its Chinese business might fetch
$3.1bn, while Peroni and Grolsch could be worth $1bn in the
UK, and the 24pc stake in Efes may be valued at $1.25bn, they
said. A sale of AB InBevs Interbrew Italia division and the
brewers Dutch brands would likely raise $400m.
In addition, AB InBev could seek to offload SABs
shareholding in wine company Distell, which could be
considered non-core and is presently worth about $750m,
according to Berenberg. Other smaller disposals or third-party
licencing deals around the world are likely.
AB InBev, the worlds biggest brewer, is offloading the
MillerCoors stake to pre-empt competition concerns that
American regulators were expected to have about its
acquisition of SAB. The Budweiser owner and its advisers are
now starting to reach out to competition authorities around
the world to gauge their attitude towards its mooted 71bn
takeover of SAB, which is the number 2 brewer behind AB
InBev.
Megabrew: The fraught final negotiations that sealed the
takeover of SABMiller
SAB holds a 49pc stake in Chinese business CR Snow - the
producer of the worlds best-selling lager by volume - a
shareholding that industry insiders believe AB InBev will be
forced to offload. The Budweiser brewer is already a major
player in the countrys beer market and its takeover of SAB is
likely to raise concerns with Chinas Ministry of Commerce
(MOFCOM).
China Resources Enterprise (CRE), the state-owned
conglomerate that is SABs partner in the Snow business, is
the most likely buyer of the FTSE 100 brewers stake should
MOFCOM demand a sale. It is thought that AB InBev has
already made preliminary contact with CRE to measure its
reaction to the takeover.
Disposals would generate even more fees for bankers, who
have already earned a significant amount from the SAB deal.
AB InBev last week unveiled a record $75bn in loans to fund
the acquisition, and Freeman & Co, a New-York-based
consultancy, estimates the financing would have netted
$190m in fees. Advisers to SAB and AB InBev are likely to
have generated a further $235m in fees from working on the
takeover itself.
Meanwhile, Trevor Stirling, analyst at Bernstein, estimates
that SAB boss will Alan Clark will enjoy a $65m windfall from
shares and options if the takeover completes. In total, some
$2.1bn will be shared among senior SAB managers and
executives.
Jan Du Plessis, the man who was at the centre of deal
negotiations for SAB, is sitting on shares worth 1.3m. Mr Du
Plessis, who joined SABs board last year but only became
chairman in July, bought the stake for 993,750. He will
receive 650,000 for the role.
France Assaults
Paris attacks: Scores dead in co-ordinated
assaults
Taken from the FT Saturday, 14 November 2015
Paris was struck by coordinated attacks on Friday night,

killing scores of people in one of the deadliest terrorist
atrocities in a western capital city since September 11, 2001.
About 100 people were killed at the Bataclan concert hall, 40
others dead in other locations in and around Paris, Reuters
reports, citing a Paris City Hall official.
President Franois Hollande appeared on television to declare
a state of emergency, deploying the military around Paris and
closing Frances borders. He did not name the suspects, but
said: We know who they are, we know where they come
from.
At least six attacks began in busy and popular areas of the
capital around 10pm local time. Shootings targeted a concert
hall near Place de la Rpublique and two other nearby
restaurants in the 10th and 11th arrondissement, while two
explosions rocked the Stade de France in northern Paris.
A police officer with knowledge of the situation said one or
several attackers had taken hostages at the 1,500-seat
Bataclan concert hall on Boulevard Voltaire, where the US
band Eagles Of Death Metal was due to be performing.
Shondip Ghosh, a businessman from Mumbai who lives in
California, was having dinner with three colleagues in a
restaurant near the Bataclan concert hall, when he heard
gunshots.
Shortly after, Mr Ghosh saw a man spattered in blood, who
recounted how three gunmen stormed the concert hall and
started shooting everyone. This was meant to be our evening
out, the shocked businessman said.
Adam Thomson, a Financial Times reporter, near Bataclan,
heard automatic gunfire followed by two huge explosions near
the Bataclan, suggesting an assault by security forces. A police
source said at about 1am local time that the assault was over,
as Mr Hollande made his way to the scene.
At about 2am local time at Batalan, groups of police dressed in
black and carrying riot helmets, shields and heavy artillery
were heading back to their vans. They appeared weary and
walked in silence, refusing to answer questions.
Before security forces stormed the concert hall, dozens were
reported dead.
Its horrific, Mr Hollande said on television. Operations are
still unfolding, theres a police assault at the moment in Paris.
We are mobilising all the police force possible to neutralise the
terrorists.
The Paris police advised residents through social media to stay
indoors. Several metro lines closed.
A witness recounted on BFM TV seeing gunmen shooting at
clients in a restaurant near rue de Charonne. Another
restaurant, Le Petit Cambodge, was targeted, as was Le Petit
Carillon, a bar and restaurant by the Canal St Martin.
FT columnist Simon Kuper, who was watching the game in the
Stade de France, reported that about 20 minutes into the
game, the sellout crowd decked in red, white and blue for
the match against the world champions heard a loud
explosion coming from outside the stadium.
There were a few cheers a common response to a firecracker
at a match. But a few minutes later another loud bang was
heard, followed by police sirens, and it became apparent that
these were not firecrackers. Mr Hollande, who was in the
crowd, left the stadium.
The match continued and French fans did the Mexican wave,
and exuberantly cheered the two French goals. At the end of
the match, the stadium announcer informed the crowd that
because of incidents outside, they could only leave the
stadium by certain gates.
Many fans left the Stade de France, but a couple of thousand

walked on to the field, where they waited quietly, uncertain
whether to leave the stadium and go home, especially given
the reports of shootings coming from central Paris. But within
45 minutes of the final whistle, almost all the crowd had
vacated the stadium.
In a brief statement from the White House, US President
Barack Obama said that the violence was terrorism and
promised that the US would provide any help that France
requested.
We will do whatever it takes to work with the French people
and nations around the world to bring these terrorists to
justice, he said. The attacks were an outrageous attempt to
terrorise innocent civilians.
Even as the events in Paris were unfolding, officials and
analysts said they were struck by how tightly co-ordinated the
series of attacks seemed to be - a level of sophistication in
planning and execution that has not been seen since the 2008
attacks in Mumbai. Given the reluctance so far of Western
intelligence officials to say who was behind the attacks, it also
appeared that there was little or no prior warning of the
terrorist assault.
Paris map shooting
He added: This was not just an attack on Paris and the people
of France, but an attack on all of humanity and universal
values we share.
Adam Schiff, the leading Democrat on the US House
intelligence committee, said the attack had all the signs of a
terrorist operation.
Given the disturbing similarities to other attacks, this clearly
co-ordinated series of violent acts bears all the hallmarks of
international terrorism. Many hundreds of French citizens
have travelled to Syria and Iraq, and the risk from those who
return is well known and severe, he said.
The fact that there appear to have been so many separate
attacks on one night will raise uncomfortable questions for the
French intelligence services.
British Prime Minister David Cameron tweeted that he was
shocked by events in Paris tonight, adding: our thoughts
and prayers are with the French people. Germanys Angela
Merkel said she was deeply shaken by the attacks and that
her thoughts were with the victims, their relatives and the
people of Paris.
If the toll is confirmed, the attacks would be much deadlier
than the terrorist assaults that hit the French capital in
January, when three Islamist extremists killed 17 in a series of
attacks at weekly magazine Charlie Hebdo and a Jewish
supermarket.
Since the Charlie Hebdo assaults, France has lived on high
alert. The French government has deployed thousands of
soldiers throughout the country.
Several months after those attacks, a man decapitated his
employer and tried to blow up a gas plant in southern France
in what prosecutors say was an attack inspired by Isis.
In August, a heavily armed Islamic radical was only just
prevented from attacking a high-speed train between
Amsterdam and Paris with a Kalashnikov assault rifle,
apprehended with the help of two US soldiers.
France is bombing Isis targets in Syria and Iraq and also has
troops fighting extremists in Africa.
The events still unfolding in Paris appeared to amount to the
sum of Western intelligence agencies fears. For years, western
spymasters have worried over the possibility of a Mumbaistyle attack, involving multiple terrorists and numerous
targets in a crowded metropolitan area.
While counterterror agencies have worked hard to mitigate
the threat of such an attack, officials have long warned that it
was almost inevitable.
Even at this early stage it looks like a well-co-ordinated,

substantial attack with multiple cells and multiple targets,
said Raffaello Pantucci, director of international studies at the
think-tank RUSI. This kind of thing will have required a lot of
training and a lot of preparation.
Though yet unclear who is behind the atrocities, prominent
Isis
Twitter accounts
began
using
the
hashtag
#ParisIsBurning in what appeared to be a planned and coordinated manner on Friday evening.
France has long been a prime target for the jihadi group. The
French military is among the most active in striking Isis
targets, and France is a far easier target for Isis to strike than
other similarly-regarded foes such as the US and UK. More
than 1,500 French citizens have travelled to Syria and Iraq to
fight as mujahideen there for Isis or other violent terror
groups and many have already returned.
This seems at the least like an engorged version of the Charlie
Hebdo attack, said Mr Pantucci. I dont know how long it is
going to drag on for, but its surely already going to be looked
back on as one of the largest terror attacks in Europe since
9/11 I can only think of the Madrid bombings [which killed
191 people] as a comparison in terms of this kind of
marauding, high-casualty plot.
Jeb Bush, the former Florida governor and candidate for the
Republican presidential nomination, told a radio show: This
is an organised effort to destroy western civilisation. The US
needed to fortify its alliances, reconnect with our counterintelligence and intelligence capabilities with our European
allies and engage in the Middle East to take out Isis which is
more likely to be the well spring of this type of activity, he
said.
(Full article click - FT)
---
Prosecutor: 3 teams of extremists carried

out attacks
Taken from the CBS News Sunday, 15 November 2015
Three teams of extremists carried out the coordinated gunand-suicide bombing attacks across Paris that left 129 people
dead and 352 injured, a French prosecutor said Saturday.
Paris prosecutor Francois Molins said 99 of the injured were
in critical condition after the "act of barbarism." He said the
attackers in the Bataclan concert hall, where 89 people died,
mentioned Syria and Iraq during their deadly rampage.
French President Francois Hollande has vowed that France
will wage "merciless" war on the Islamic State of Iraq and
Syria, or ISIS, after the jihadists claimed responsibility for the
attacks Friday night.
Grief, alarm and resolve spread across Europe on Saturday as
officials raced to piece together information on the seven
attackers. Officials said one was a young Frenchman known to
the authorities. In addition, a Syrian passport found near the
body of another attacker was linked to a man who entered the
European Union through a Greek island last month.
A U.S. intelligence official told CBS News that a name and
picture were recovered from the Syrian passport and the
individual was not known to intelligence officials.
However, a U.S. intelligence official told CBS News the Syrian
passport might be fake. The official said the passport did not
contain the correct numbers for a legitimate Syrian passport
and the picture did not match the name.
A U.S. law enforcement source told CBS News senior
investigative producer Pat Milton French law enforcement
officials were taking DNA and fingerprints from the dead
terrorists. The test results were being run through databases
as part of effort to identify the terrorists and their networks.
A U.S. Intelligence source told Milton investigators have so far
seen no insider knowledge in the chatter or communications
that is being intercepted to verify who was involved. While
there have been people saying glowing things about the Paris
attack, no one has revealed information about the attack that

only the attackers would have knowledge of, the source said.
Friday night, attackers launched a series of coordinated,
nearly simultaneous attacks: opening fire at Paris cafes,
detonated suicide bombs near France's national stadium and
killing hostages inside a concert hall during a rock show - an
attack on the heart of the pulsing City of Light.
"These places are the places we visit every week," said Ahsan
Naeem, a 39-year-old filmmaker who has lived in Paris for
seven years. "Streets we walk every day ... All those places will
have been full of my people. My friends. My acquaintances."
Hollande, who declared three days of national mourning and
raised the nation's security to its highest level, called the
carnage "an act of war that was prepared, organized, planned
from abroad with internal help."
The president said France would increase its military efforts to
crush ISIS. He said France - which is part of a U.S.-led
coalition bombing suspected ISIS targets in Syria and Iraq and
also has troops fighting militants in Africa - "will be merciless
toward the barbarians of Islamic State group."
ISIS claimed responsibility in an online statement in Arabic
and French circulated by supporters.
The statement mocked France's involvement in air attacks on
suspected ISIS bases in Syria and Iraq, noting that France's air
power was "of no use to them in the streets and rotten alleys
of Paris."
Many of Paris' top tourist attractions closed down Saturday,
including the Eiffel Tower, the Louvre Museum and the
Disneyland theme park east of the capital. Some 3,000 troops
were deployed to help restore order and reassure a frightened
populace.
Interior Minister Bernard Cazeneuve announced that all
public demonstrations would be banned until Thursday and
local governments would have the option to impose nightly
curfews.
The attacks, on an unusually balmy November Friday evening,
struck at the heart of Parisian life: diners in cafes,
concertgoers watching a rock band, spectators at a soccer
match.
Paris Mayor Anne Hidalgo said the places attacked are ones
Parisians love - and ones where they celebrate diversity.
"It is this Paris that was hit. Probably because this example of
living together, which is so strong in our city, is unbearable for
fanatical people," she said.
Parisians expressed shock, disgust and defiance in equal
measure. Some areas were quiet, but hundreds queued
outside a hospital near the Bataclan concert hall to donate
blood. As a shrine of flowers expanded along the sidewalk, a
lone guitarist sang John Lennon's peace ballad "Imagine."
Authorities said seven attackers died in suicide bombings, a
new terror tactic in France. Police said they shot and killed the
other assailant.
Molins, the prosecutor, said all the suicide attackers wore
identical explosives vests.
Authorities in Belgium conducted raids in a Brussels
neighborhood Saturday and made three arrests linked to the
Paris attacks. Justice Minister Koen Geens told the VRT
network that the arrests came after a car with Belgian license
plates was seen close to the Bataclan theater.
In addition, the governor of Bavaria said the arrest of a man in
Germany last week may be linked to the Paris attacks. A
spokesman for Bavarian state police spokesman confirmed
that firearms, explosives and hand grenades were found when
undercover police stopped a man near the German-Austrian
border on Nov. 5.
Ludwig Waldinger declined to confirm reports by public
broadcaster Bayrischer Rundfunk that the man appeared to be
en route to Paris when he was arrested. Bavarian governor
Horst Seehofer told reporters Saturday there were "reasonable
grounds" to assume that there may be a link to the Paris

attacks.
CBS News' Investigative Unit can confirm that American law
enforcement is looking into the man arrested in Bavaria. They
have been in contact with Bavarian police on this, as well as
Montenegrin police, as he is a citizen of Montenegro. It
appears he would not talk with police and is possibly still in
detention in Germany.
If the attack does involve militants who traveled to Europe
amid millions of refugees from the Middle East, the
implications could be profound.
Poland's prospective minister for European affairs, Konrad
Szymanski, said that in light of the attacks, Poland would not
comply with an EU plan to accept refugees unless it received
"guarantees of security."
The attack brought an immediate tightening of borders as
Hollande declared a state of emergency and announced
renewed border checks. Germany also stepped up border
checks.
The militants launched six gun and bomb attacks in rapid
succession on apparently indiscriminate civilian targets.
Three suicide bombs targeted spots around the national Stade
de France stadium, in the north of the capital, where Hollande
was watching a France-Germany soccer match. Fans inside
the stadium recoiled at the sound of explosions, but the match
continued.
Around the same time, fusillades of bullets shattered the
clinking of wine glasses in a trendy Paris neighborhood as
gunmen targeted a string of crowded cafes.
The attackers next stormed the Bataclan concert hall, which
was hosting the American rock band Eagles of Death Metal.
They opened fire on the panicked audience and took members
hostage. As police closed in, three detonated explosive belts,
killing themselves, according to Paris police chief Michel
Cadot.
Another attacker detonated a suicide bomb on Boulevard
Voltaire, near the music hall, the prosecutor's office said.
US law enforcement official said the attack was well organized
but not sophisticated. Investigators are not seeing ingenious
explosive devices, rather rudimentary ones, reports Pat
Milton. However, the source said this was not a spur of the
moment decision to launch an attack.
Video shot posted by newspaper Le Monde Saturday captured
some of that horror as dozens of people fled from gunfire
outside the Bataclan.
At least one person lies writhing on the ground as scores more
stream past, some bloodied or limping. The camera pans
down the street to reveal more fleeing people dragging two
bodies along the ground. A woman and two others can be seen
clinging to upper-floor balcony railings in a desperate bid to
stay out of the line of fire.
Le Monde said its reporter Daniel Psenney filmed the scene
from his apartment balcony, and was shot in the arm when he
went downstairs to help someone who had collapsed.
A tall, sturdy 38-year-old concert-goer named Sylvain
collapsed in tears as he recounted the attack, the chaos and his
escape during a lull in gunfire.
"First I heard explosions, and I thought it was firecrackers," he
said.
"Very soon I smelled powder, and I understood what was
happening. There were shots everywhere, in waves. I lay down
on the floor. I saw at least two shooters, but I heard others
talk. They cried, 'It's Hollande's fault.' I heard one of the
shooters shout, 'Allahu Akbar,'" Sylvain told The Associated
Press.
He spoke on condition that his full name not be used out of
concern for his safety.
A U.S. source told CBS News two Americans are known to
have been injured in the attacks.
A male American suffered a leg injury that wasn't believed to

be life-threatening, the source said. He was receiving medical
care and has been in touch with his family in the U.S.
An American woman, Helen Jane Wilson, was undergoing
surgery late Saturday after being shot in the leg.
Wilson told The Associated Press she was at the Bataclan
concert hall to hear the Eagles of Death Metal band perform
Friday night when gunmen burst into the venue, killing 89
people. was shot in the leg and was heading into surgery at
L'hopital Saint-Antoine.
Wilson said she lived in New Orleans before moving to Paris,
where she runs Rock en Bol, a catering company. According to
her Facebook page, Wilson is originally from Los Angeles.
The Paris carnage was the worst in a series of attacks claimed
by ISIS in the past three days. On Thursday, twin suicide
bombings in Beirut killed at least 43 people and wounded
more than 200, and 26 people died Friday in Baghdad in a
suicide blast and a roadside bombing that targeted Shiites.
The militant group also said it bombed a Russian plane that
crashed in Egypt's Sinai Peninsula on Oct. 31, killing 224
people.
ISIS also suffered significant reversals this week, with Kurdish
forces launching an offensive to retake the strategic Iraqi city
of Sinjar and the U.S. military saying it had likely killed
Mohammed Emwazi, the masked British-accented militant
known as "Jihadi John" who is seen in grisly ISIS beheading
videos.
France has been on edge since January, when Islamic
extremists attacked the satirical newspaper Charlie Hebdo,
which had run cartoons of the Prophet Muhammad, and a
kosher grocery. Twenty people died in those attacks, including
three shooters.
French authorities are particularly concerned about the threat
from hundreds of French Islamic radicals who have traveled
to Syria and returned home with skills to mount attacks.
"The big question on everyone's mind is: Were these attackers
- if they turn out to be connected to one of the groups in Syria
- were they homegrown terrorists or were they returning
fighters?" said Brian Michael Jenkins, a terrorism expert.
(Full article click - CBS)
News Americas
Canadian Pension Funds to Buy Chicago
Toll Road
Taken from the WSJ Saturday, 14 November 2015
CPPIB, OMERS and Ontario Teachers to buy Chicago Skyway

for $2.8 billion; will hold equal shares
Three Canadian pension giants on Friday said they would buy
a Chicago toll road for $2.8 billion, underscoring pension
funds continued interest in infrastructure projects and the
steady cash flows they provide.
Canada Pension Plan Investment Board, Ontario Municipal
Employees Retirement System and Ontario Teachers Pension
Plan will acquire Skyway Concession Co., operator of a 7.8mile toll road that connects downtown Chicago with the citys
southeastern suburbs, from infrastructure funds managed by
Australias Macquarie Group Ltd. and a unit of Spanish
conglomerate Ferrovial SA
Canadas pension funds have been actively investing in
bridges, toll roads, power utilities and other infrastructure
projects. These assets typically dont generate the same kind of
growth as equity investments, but often provide stable
revenue streams which help offset volatility elsewhere in the
funds portfolios.
The three Canadian pension funds will each hold an equal
share of Skyway, which operates and maintains the toll road
under a concession that runs through 2104. They are paying a
total of $1.54 billion and using debt to finance the rest of the
$2.8 billion cost. Macquarie and Ferrovial acquired the toll
road in January 2005 for $1.83 billion from the city of
Chicago.
A spokesman for CPPIB, Canadas largest pension fund,
wasnt immediately available for comment on the Skyway
deal. On Thursday, the fund, which oversees 272.9 billion
Canadian dollars ($205.5 billion) in assets, announced a 1.6%
return in its fiscal second quarter ended Sept. 30 despite
declines in global equity markets during that period. The fund
attributed the outperformance in part to its stake in the
Highway 407 toll road in Ontario as well as other
infrastructure assets.
When the S&P 500 stock index is down, the 407 is going to
continue plodding along, providing us with those resilient
cash flows, CPPIBs Chief Executive Mark Wiseman said
Thursday.
About 7.1% of CPPIBs assets are infrastructure. Ontario
Teachers has about 23% of its C$152.4 billion in assets in
infrastructure and real estate holdings, while about 18% of
OMERS C$72 billion fund is in infrastructure.
An Ontario Teachers spokeswoman declined to comment and
a spokeswoman for OMERS couldnt be reached for comment.
Toll-road investments arent without risks. Last year, the
operator of a toll road in Indiana filed for bankruptcy after
struggling with excessive debt and lower-than-expected
traffic.
Australias IFM Investors agreed in March to invest $5.725
billion in the Indiana toll road. IFM, which is owned by 30
Australian pension funds, said it planned to invest heavily in
the toll road to improve customer service, betting the highway
would benefit from U.S. economic growth and the critical role
it plays in that countrys transport network.
Chicago Skyways recent traffic volumes and toll revenues
werent available. The latest figures available on Chicago
Skyways website date back to 2003. In that year, the toll road,
which was built in 1958, served 17.4 million motorists and
generated $39.7 million in toll revenue.
---
Any doubts over about December Fed hike

may be swept away
---
Inflation numbers from the United States on Tuesday could be

the provider of the final domino in the Federal Reserve's track
to raise interest rates next month.
Earlier in November a robust report on U.S. employment
hardened expectations for the Fed's first rate increase in
nearly a decade and if prices are shown to be rising steadily
those views will likely solidify.
Reuters polls see inflation a 1.9 percent year-on-year,
unchanged from the previous reading.
Minutes from the Fed's October meeting will also be
published, giving an insight into the Committee's decision to
remove a key sentence on global risks from its policy
statement.
"We have had a strong October jobs report and Fed Chair
Janet Yellen herself referring to a December rate rise as a 'live
possibility' for the first time," said Chris Hare, economist at
Investec.
"The coming week should shed a little more light on the
prospects for tightening this year."
While most U.S. data has been relatively upbeat, retail sales
rose less than expected in October, suggesting a slowdown in
consumer spending that could temper expectations of a strong
pickup in fourth-quarter economic growth.
In the meantime, Britain's Bank of England was once pegged
as likely to be the first major central bank to tighten policy but
prices fell again last month, data will probably show on
Tuesday.
With inflation so far below its 2 percent target the BoE's
Monetary Policy Committee won't be raising its benchmark
rate from a record low 0.5 percent until at least April, a
Reuters poll found, putting it several months behind the Fed.
British retail sales numbers on Thursday will offer clues as to
how consumers are faring.
"While inflation looks odds on to post its lowest rate since
March 1960, we do not think this decline will worry the MPC
too much, with weak price pressures driven largely by lower
energy prices rather than domestic economic weakness,"
wrote Ruth Miller at Capital Economics.
ASIA
No change in policy is expected from the Bank of Japan on
Friday but it could ease monetary policy further early next
year, according to nearly half the analysts surveyed by
Reuters, as consumer prices fall short of central bank
forecasts.
GDP data on Monday will probably show Japan fell into a
technical recession in the third quarter, maintaining pressure
on the BOJ and Prime Minister Shinzo Abe to support the
world's third largest economy.
South Africa's Reserve Bank will hold its repo rate at 6.0
percent on Thursday, waiting until early next year before
tightening. The Hungarian and Indonesian central banks will
also probably leave policy unchanged.
In China, where Beijing has rolled out a flurry of support
measures since last year to avert a sharp slowdown, key data
will show how the country's housing market is performing and
whether it is supporting the struggling economy.
"Recently, we have seen an increasing number of cities
reporting a sequential home price increase, a trend which we
think continued despite a slowdown in home sales growth in
October," said Rob Carnell at ING. "Overall, we believe that
China's growth prospects depend on housing."
The world's second-largest economy grew a reported 6.9
percent in the third quarter from a year earlier, the weakest
pace since the global financial crisis, but a pace many say
likely overestimated the real pace of growth.
(Full article click - Reuters)
Taken from the FT Saturday, 14 November 2015
Taken from the Reuters Saturday, 14 November 2015
US Democratic presidential debate: Who to

watch
The Democratic presidential candidates will take the stage in
Des Moines, Iowa, for their second debate on Saturday night.
They will meet little more than 24 hours after the terrorist
attacks in Paris. CBS News, which is airing the debate, told the
New York Times early on Saturday that it was revising its
plans to focus more on terrorism and national security.
While the Republican side has already hosted four of 12
planned debates and is contending with 14 prospective
candidates, the Democrats have whittled the field down to just
three: former secretary of state Hillary Clinton; Bernie
Sanders, the Vermont senator; and Martin OMalley, the
former Maryland governor. They plan to host six debates: 20
fewer than they hosted during the 2008 primary season.
The low number of events and Saturday night scheduling
seems designed to draw as a little attention to the early
debates as possible which some critics say is exactly what
the Democratic National Committee wants. With Mrs Clinton
looking poised to take the nomination early next year, the
party has been keen to protect her standing.
For Saturday the biggest question is whether she can pull off
another strong performance and reassure donors and
supporters that her early wobbles are over.
According to a New York Times-CBS News poll released on
Thursday, Mrs Clinton now has the support of 52 per cent of
Democrats, a slight dip from mid-October when her support
was at 56 per cent. Trailing behind her is Mr Sanders with 33
per cent and Mr OMalley with 5 per cent.
Expect the candidates to take on recent news stories such as
the terrorist attacks in Paris the student debt protests and
racial unrest at college campuses, as well as evergreen issues
like gun control, immigration, Wall Street regulation and
income inequality.
Heres what to watch for with each of the candidates:
Hillary Clinton
Burdened at the beginning of her campaign by her ongoing
email scandal, a looming Benghazi hearing and questions
about her character, Mrs Clinton appears to have turned a
corner. At the last debate on October 13 in Las Vegas, she
pulled off a gaffe-free performance and received a boost from
her rival Mr Sanders, who declared that America was sick of
hearing about Mrs Clintons damn emails saving her from
explaining why she decided to set up her own private email
server while serving as secretary of state.
Just days after that debate, vice-president Joe Biden
announced that he had decided not to seek the presidency
after months of consideration, effectively clearing the path for
Mrs Clinton to take the Democratic nomination. A few days
after that, Mrs Clinton successfully powered through her 11hour Congressional hearing where she calmly answered
Republicans questions about her response to the 2012 US
consulate attack in Benghazi and private email server.
That hearing appeared to confirm Democrats claims that one
of the Congressional committees chief goals was to damage
Mrs Clintons standing as a presidential candidate, rather than
bring more clarity to the Benghazi incident an assertion
inadvertently confirmed by Kevin McCarthy, the House
majority leader.
But there are signs of more trouble ahead. On Thursday Fox
News reported that the FBI had expanded its probe of Mrs
Clintons emails to explore whether she violated a provision of
the Espionage Act for gross negligence in her handling of
national defence information.
In the meantime, look for Mrs Clinton to extol her new $30bn
plan to aid coal country and to continue emphasising her
human side after early polls showed many voters found her
to be dishonest, a liar and untrustworthy.
Bernie Sanders
During the last debate, the Vermont senator handed Mrs
Clinton one of her biggest wins of the night by shifting the
conversation away from the details and ethics of Mrs Clintons
private email. This time, pundits will watch to see if Mr
Sanders decides to take on Mrs Clinton more aggressively, or
if he will be content to see his candidacy push Mrs Clinton to
the left on issues such as trade, foreign policy and Wall Street.
A self-identified democratic socialist, Mr Sanders has
attracted nationwide attention for his liberal views on
alleviating student debt, expanding social benefits and
cracking down on Wall Street.
Between June and September, Mr Sanders raised $26.2m,
much of it from small donations, while Mrs Clinton during
that same period raised $29.9m.
His candidacy has forced Mrs Clinton to abandon key
positions. Since Mr Sanders began gaining in the polls, she
has come out against both the Keystone XL pipeline and the
Trans-Pacific Partnership deal, the latter of which she
championed while secretary of state.
Since the start of the primary race Mr Sanders has focused
much of his attention on Iowa, whose caucus on February 1
marks the first electoral contest of the presidential campaign.
A Sanders victory in Iowa could slow Mrs Clintons path to the
nomination.
During Saturdays debate, watch for Mr Sanders to be
challenged on the issue of gun control where he has taken a
more centrist view than some of his Democratic colleagues.
Martin OMalley
Trailing in third place, Mr OMalley has struggled to gain
attention while sharing the stage with Mrs Clinton and Mr
Sanders. Polling at about 5 per cent, he raised just $1.2m in
the third quarter a fraction of the donations that his two
competitors collected.
A true liberal, Mr OMalley has advocated for a $15 minimum
wage, the expansion of social security benefits and restoring
the Glass-Steagall act, which separated the businesses of
commercial lenders and investment banks.
On foreign policy, he is less hawkish than Mrs Clinton,
arguing against the creation of a no-fly zone over Syria, for
instance, an idea that Mrs Clinton has publicly supported.
Among the three, Mr OMalley, the former mayor of
Baltimore, is the most adamant on gun control and will
probably use the debate to push Mrs Clinton and Mr Sanders
to ban assault weapons. During the debate, look out for him to
distinguishing himself from his two rivals on the topics of
immigration and race relations.
---
Trump Is Wrong on China

Taken from the Barrons Online Saturday, 14 November 2015
Beijings currency isnt undervalued, protectionism would

backfire, and raising tensions with Beijing could lead to
disaster.
Donald Trump is trying hard to look presidential these days.
Too bad hes using Herbert Hoover as a role model.
Hoover, of course, is best remembered as having been
president during the stock market crash of 1929 that presaged
the Great Depression. What helped turn a normal recession
into a global economic disaster was the spread of
protectionism, starting with the Smoot-Hawley tariff, which
resulted in retaliation even before Hoover signed the bill in
1930.
By threatening to impose tariffs on China in retaliation for its
alleged currency manipulation, a President Trump would risk
starting a protectionist war similar to the one that helped
precipitate the Great Depression. More worrisome, this would
come while tensions between China and the U.S. over

disputed islands in the South China Sea are escalating.
Those concerns, at this point, thankfully are hypothetical. But
Trumps recent bluster about Chinas currency betrays a deep
lack of knowledge of economics, as well as of the actual facts
and data driving the exchange rate.
Most important, the Chinese yuan or renminbi is
fundamentally overvalued, not undervalued, as Trump
asserts. Moreover, if any manipulation has occurred recently,
it has been meant to prop up the currency, not lower it.
Despite barriers erected by the government, capital is fleeing
the yuan because of its negative fundamentals and those of
Chinas economy.
Chinas monetary authorities are spending hundreds of
billions of their foreign-exchange reservesmainly dollarsin
a vainglorious attempt to preserve the illusion of the yuans
strength. The aim is to demonstrate that the currency should
be a component of the Special Drawing Rights, the
International Monetary Funds basket of currencies. Being
added to the SDR is largely symbolic, but of huge importance
to Beijing in terms of international prestige and to make the
yuan a reserve currency alongside the dollar and the euro. But,
in doing this, the monetary authorities are working at crosspurposes to efforts to stimulate Chinas slowing economy,
including six rounds of interest-rate cuts in the past year.
Trump doesnt let any of this get in the way of his story. His
broadsides about stupid U.S. officials being bested by canny
foreign governments drown out discussions of the facts. But as
a light is pointed at his misinformed, reckless charges, how
long can his campaign be carried by his xenophobic message?
For now, Trump and his fellow Washington outsider, Dr. Ben
Carson, stand atop the leader board of Republican
presidential hopefuls. Their lack of governmental experience
is at the core of their appeal, a dramatic demonstration of the
contempt with which the governing class is held, and not
without justification. Similarly, being a first-term senator no
longer is seen as an impediment to the nations highest office,
as the candidacies of Marco Rubio and Ted Cruz demonstrate,
not to mention the history of the White Houses present
occupant. The successful records of Jeb Bush, the former
Florida governor, and John Kasich, the current Ohio
governor, seem to be marks against them.
In the past week, Trump demonstrated in written and oral
statements that he is simply wrong about the facts and actions
regarding Chinas currency.
In an op-ed piece in last Tuesdays Wall Street Journal, Trump
asserted that the worst of Beijings sins is the wanton
manipulation of Chinas currency, robbing Americans of
billions of dollars of capital and millions of jobs.
Economists estimate that the yuan is undervalued anywhere
from 15% to 40%, he continued, without presenting proof or
sources to back it up. As a result, China has imposed a de
facto tariff on all imported goods.
In response, he continued, On day one of a Trump
administration, the U.S. Treasury Department will designate
China a currency manipulator. This designation will trigger a
series of actions that will start the process of imposing
countervailing duties on cheap Chinese imports, defending
American manufacturing and preserving American jobs.
Last Tuesday evening, during the GOP presidential
candidates debate on Fox Business Network, Trump
complained that Chinas currency manipulation isnt
addressed by the Trans-Pacific Partnership trade agreement,
signed by the U.S. and 11 trading partners. That was until Sen.
Rand Paul of Kentucky pointed out that China isnt part of the
TPP. Trump said the deal is designed for China to come in, as
they always do, through the back door and totally take
advantage of everyone.
Regardless of Chinas status vis--vis the TPP, Trumps

diagnosis of its currency maneuvers is demonstrably wrong.
And his prescription is certain to be ineffective and have
horrendous side effects.
As for the supposed manipulation, that story is more than five
years past its expiration date. From around the beginning of
the Beijing Olympics in 2008 through the global financial
crisis, the currency was held ruler-flat at 6.83 yuan to the
dollar. But in the following 2 years, the yuan steadily
increased in value, to just over six to the dollar (so it took
fewer yuan to buy a greenback).
From early 2014 through midsummer of this year, the yuan
declined slightly in value, fluctuating around 6.20 to the
dollar. Then, in August, Beijing shocked the financial world
with a sudden 3% depreciation. Last Friday, the Chinese
currency was near 6.38.
As noted, the yuans recent decline should be viewed in the
context of its 33% appreciation against the buck since mid2005, when it was allowed to float, and its more than 55%
gain against Chinas trading partners in general. With the
yuan tethered to the U.S. currency, it also has seen a
significant upward revaluation internationally, along with the
greenback.
THATS ALSO BECAUSE the Peoples Bank of Chinas
monetary policy had been inappropriately tight, according to
David P. Goldman, head of the Americas division at Reorient
Group in Hong Kong. Despite six interest-rate cuts in the past
year, real rates remain too high amid Chinas deflation, he
argues. Indeed, if Beijing is manipulating its currency, it has
been to keep it from falling further since Augustcontrary to
what Trump asserts.
In fact, Chinese authorities are demonstrating an intractable
will to prop up the yuan in the face of relentless capital
flight, writes Anne Stevenson-Yang of J Capital Research.
The clearest evidence is a sharp decline in Chinas foreignexchange reserves. According to U.S. Treasury data cited by
Bianco Research, Chinese authorities appear to have
liquidated about $60 billion of Treasury securities in August
to provide the dollars to defend its currency. (That should
please Trump, given that he pledged in his WSJ piece to
reduce foreign holdings of U.S. debt, a curious aim, given that
global demand for our securities is a great advantage for
America.)
A further drop in the yuan wont help Chinese exports,
Stevenson-Yang explains. Overproduction of steel, a major
export, and an overpriced currency have resulted in a onethird decline in the metals price. But a cheaper yuan wont
expand glutted foreign markets ability to absorb the surfeit of
steel. At the same time, she estimates, capital flight from
China is running at about $100 billion a month. This is a key
concern to Chinas government, which wants to keep money at
home to deploy on chosen investment targets and to maintain
the optics of a historically unprecedented forex trove, she
writes.
As with OPEC and oil, keeping up prices means restricting
supply. Similarly, the Chinese central bank sops up surplus
yuan with its dollar reserves. Again, this is precisely the
opposite of the currency manipulation that Trump imagines.
Moreover, this works against the PBOCs efforts to ease
monetary conditions through lower interest rates and
reductions in bank reserve requirements. Easing monetary
conditionsfor domestic reasonswould lead to a lower yuan
exchange rate.
All of which sounds rather arcane. But misunderstanding
currency-exchange rates which improbably emerged as a
topic of discussion in a prime-time televised debate carries
geopolitical risks. If a President Trump were to use tariffs to
retaliate against China, countermeasures would surely follow.
In the 1930s, protectionism led to tit-for-tat retaliation that
contracted world trade. Lowering trade barriers since then has

led to increased global growth.
Leaving economics aside, threatening a trade war with China
comes at a time when Sino-American tensions are rising more
than generally realized. Clashes between the U.S. and China
over the South China Sea, along with the latters sovereignty
claims over some artificially enhanced islands poses a tail
risk, according to BCA Research. Thats jargon for a lowprobability event, but one that would have momentous
effects if realized.
The U.S. Navy sent a destroyer into the disputed waters on
Oct. 27, and while BCA conceded that Washington has
international law on its side, the Chinese consider the waters
theirs. By implication, the U.S. is challenging Chinas
extravagant sovereignty claims over a vast stretch of [the
South China] sea, which links Singapore and the Indian Ocean
region to the western Pacific and the massive economies of
East Asia, BCA observes.
Confronting China over a phony currency issue wont help the
U.S. deal with the threat of Chinas expansionism in the South
China Sea. If anything, it could pose the specter of a 1930sstyle trade war. Even worse, it could potentially lead to a
military clash in the Pacific.
Sorry, Donald, picking fights with our biggest global rival
wont make America great again.
(Full article click - Barron's Online)
---
Paris Attacks Make National Security Top

Issue in U.S. Presidential Race
Taken from the WSJ Sunday, 15 November 2015
Democratic Candidates Set to Debate Saturday Night;

Republicans Call for More Aggressive Approach to ISIS
National security issues moved to center stage in the race for
the White House, as Democratic candidates prepared to weigh
in on the Paris terrorist attacks in a debate Saturday and GOP
contenders called for new strategies in the battle against
Islamic State.
The Paris assaults quickly shifted the 2016 political debate,
opening up new GOP lines of attack on the Obama
administration and highlighting key differences among the
Democratic candidates views on foreign policy.
In Iowa, the attacks scrambled plans for the second
Democratic presidential debate, forcing a new focus on
national security questions when the candidates face off
Saturday night.
After a bloody siege left at least 129 people dead in the French
capital, CBS News quickly altered its game plan for the debate,
with moderators rewriting the script and crafting new queries
focused on terrorism and U.S. leadership on the global stage.
Christopher Isham, CBS News vice president and Washington
bureau chief, said he was in the middle of a debate rehearsal
Friday when reports of the Paris attacks first emerged.
Cancelling or postponing the Democratic showdown was
never seriously considered, Mr. Isham told reporters Saturday
morning during a pre-debate walk-through at Drake
University.
We felt it made the debate even more important, he said. It
gave it some immediacy.
Steve Capus, the executive editor of CBS News, wrote on
Twitter the attacks in Paris require important questions for
the candidates.
Domestic policy still will be part of the discussion Saturday
evening, Mr. Isham said. But candidates now will be asked
specifically about how the U.S. should respond to the Paris
attacks.
Its definitely refocused our questions, he said.
With the spotlight now on national security, the debate likely
will highlight clear contrasts among the leading Democratic
presidential contenders.
Hillary Clinton and Bernie Sanders have outlined starkly

different approaches to foreign policy, with the former
secretary of state staking out more hawkish ground and the
senator from Vermont cautioning against the perils of
international intervention.
Mrs. Clinton has called for a more aggressive response in
Syria, including a no-fly zone there, while Mr. Sanders has
said he wants to avoid a quagmire in the Middle East.
In the wake of the Paris attacks, the Democratic candidates
condemned the assaults and pledged to stand in solidarity
with the French people. Mr. Sanders called France the first
friend of the United States and former Maryland Gov. Martin
OMalley echoed President Obama, saying that this was an
assault on our common humanity.
Mrs. Clinton said, We must stand side-by-side every step of
the way with France and our allies around the world to wage
and win the struggle against terrorism and violent
extremism.
Meanwhile, Republican presidential candidates called for a
swift response from the U.S., urging a more aggressive
approach to battling Islamic State, also known as ISIS or ISIL,
and criticizing the Obama administrations foreign policy.
We must wage this war and we must win...we must deny ISIS
territory, former Hewlett-Packard CEO Carly Fiorina said
Saturday afternoon. She called the attacks in Paris the direct
consequence of this administrations policies.
Real-estate mogul Donald Trump seized on President
Obamas interview Thursday with ABC Newsbefore the
attacksin which he described making sure that ISIL
continues to shrink in its scope of operations until it no longer
poses the threat that it does.
President Obama said ISIL continues to shrink in an
interview just hours before the horrible attack in Paris. He is
just so bad! CHANGE, Mr. Trump posted on Twitter Friday
night. We need much tougher, much smarter leadership
and we need it now.
Former Arkansas Gov. Mike Huckabee also invoked Mr.
Obamas use of the word shrink and said the U.S. should not
admit those claiming to be Syrian refugees. He said in a
written statement Saturday, Its time for a president who will
act to protect Americans, not just talk and protect the image of
Islam.
Retired neurosurgeon Ben Carson, after addressing hundreds
of Republican activists in Orlando, told reporters Friday night
that the U.S. must redouble efforts to defeat not just the
Islamic State terrorist group, but the entire global jihadist
movement.
I think America involvement should be trying to eliminate
them, completely destroy them, he said. Asked if that effort
should include ground troops, he said. Boots on the ground
would probably be important.
Texas Sen. Ted Cruz called for consulting with NATO allies
and abandoning any plans to resettle Middle East refugees
who might have been infiltrated by ISIS in the U.S.
We must make it crystal clear that affiliation with ISIS and
related terrorist groups brings with it the undying enmity of
America that is, in effect, signing your own death warrant,
he said in a written statement.
Former Pennsylvania Sen. Rick Santorum, who served on the
Armed Services Committee, told Republican activists gathered
in Orlando on Saturday that the violence illustrates the
importance of a commander-in-chief with foreign policy
experience.
This is an organized effort to destroy Western civilization and
we need to lead, former Florida Gov. Jeb Bush told radio talk
show host Hugh Hewitt Friday night. This is the war of our
time and we have to be serious and engaging to confront it.
News Asia
IMF says renminbi should join elite SDR
basket of currencies
Taken from the
The International Monetary Funds staff has recommended

that Chinas renminbi should join the elite basket of
currencies used to value its own de facto currency.
The move is a vote of confidence in Chinas economic reforms
and its efforts to establish the nations currency as an
international reserve asset.
If approved, as expected, at a November 30 board meeting, it
would mark the first significant change to the IMFs Special
Drawing Rights (SDR) basket since the inclusion of the euro
at its creation in 1999.
It would also be a victory for China, which has been eager to
see the renminbi join the dollar, euro, yen and pound in the
basket, and gain the stature of a reserve currency that comes
with it.
The inclusion of the renminbi as the fifth currency in that
basket would be a momentous event in the annals of
international finance, said Eswar Prasad, a former IMF
economist and China mission head.
It represents an important step in the renminbis
ascendancies to the status of a global reserve currency, and
will have gradual but significant repercussions in global
currency markets and on international capital flows, he said.
Christine Lagarde, the IMFs managing director, said a
lengthy staff review had determined that the renminbi met the
funds two main criteria for inclusion that it was widely
used and that it was freely usable.
Because of Chinas status as the worlds largest trading nation,
the renminbi met the widely used criteria some time ago,
and the IMFs review has focused on whether it is freely
usable.
That assessment has been focused mostly on whether the
renminbi could be used as needed by the IMFs 188 member
countries if they were given loans denominated in the
currency. For China, satisfying that criteria has meant opening
up its bond market for use by other countries central banks
and other measures.
On Friday, the IMF staff sent a paper detailing its findings to
the IMF board, which is now expected to approve that
recommendation on November 30.
I support the staffs findings, said Ms Lagarde.
In a statement, the Peoples Bank of China thanked the IMF
for the recommendation and said it was an acknowledgment
of the progress in Chinas recent economic development,
reform and opening up.
Going forward, China will continue to deepen economic
reforms and promote financial opening up, the PBOC said.
Including the Chinese currency in the SDR basket would help
improve the current international monetary system, which
would benefit both China and the rest of the world, the PBOC
said. We hope the RMBs inclusion in the SDR basket will be
supported by the international community.
The US and leading European shareholders have said in the
past that they would support the renminbis inclusion in the
SDR basket should the staff determine that it had cleared the
necessary hurdles.
As we have previously stated, we intend to support the
renminbis inclusion in the Special Drawing Rights basket
provided the currency meets the International Monetary
Funds existing criteria, a US Treasury spokesman said after
Fridays announcement. We will review the IMFs paper in
that light.
Douglas Rediker, a former US representative at the IMF, said
the fact that the US was supportive, that major European
shareholders and that Ms Lagarde had come out so strongly
for the recommendation means that the outcome is

effectively pre-ordained.
But it was also overdue, he said.
The staff recommendation was a recognition of the
increasing role that China and its currency plays in the global
financial and trading system, Mr Rediker said. Failure to
include the RMB...would be a failure to move to a global
recognition of reality.
---
Baidus Shares Are a Buy
Taken from the Barrons Online Saturday, 14 November 2015
Baidu shares are down 13% this year, in part because the
online-search giant has pledged to invest more than $3 billion
in online to offline development. But O2O, as Americans
first dubbed it, has recently caught fire in China, promising to
be as disruptive to service providers like travel agencies and
restaurants as e-commerce was to retailers. As a result, Baidu
stock is worth another look.
Such services promise to be Chinas next online growth pillar.
CLSA reckons they could rise fivefold, to nearly $400 billion
(2.5 trillion yuan), within five years, and Baidu (ticker: BIDU)
could generate an added $2.4 billion in revenue in 2019
equivalant to 20% of this years totalif it captures a 20%
share.
What is O2O? Its a business model in which companies try to
persuade online customers to use their offline services. An
example would be an online coupon that offers a discount on
dinner in a restaurant.
Investors reluctance about Baidu shares is mostly attributable
to the fact that O2O hasnt been a huge success in selling
services in the U.S. O2O can require a large sales force to go
out and persuade individual restaurants and shop owners to
create online capacity. Having only 10 cities with over a
million residents, the U.S. doesnt offer the scale to reward
such labor-intensive efforts.
But China does. It has 276 cities with more than a million
residents. Already, China has surpassed the U.S. in some
areas: About 60% of movie tickets in China are sold online,
versus only 20% in the U.S., and 2% of restaurant bookings in
China are made online, double the percentage in the U.S.
Baidu has made progress this year in O2Os two big
categories, restaurants and travel. Its Nuomi unit, which
offers restaurant coupons, saw its market share jump to 20%
in July from 10% in January. Last month, via a share swap,
Baidu traded away its online travel subsidiary Qunar (QUNR)
for a 25% stake in Ctrip.com (CTRP). Collectively, Ctrip and
Qunar own 80% of Chinas online travel market.
To be sure, Baidus O2O investment has hurt margins, which
have fallen to 16% from 2013s 35%. But Baidu is aiming
high, says CLSAs Elinor Leung.
One concern is that Baidu will keep burning cash to acquire
and retain users. For instance, the nascent online fooddelivery services business, in which Baidu competes, gives out
an average subsidy of $1.25 to $1.90 per order, or about a 33%
discount. But eventually the bleeding will stop. In a survey of
573 consumers, CLSA found that half would keep using O2O
services even if subsidies drop.
Another worry is competition. Last month, two rivals,
Meituan and Dianping, backed by Tencent Holdings
(700.Hong Kong) and Alibaba Group (BABA), merged to
create Chinas largest group buy service. Like Nuomi, they
offer discounts once a minimum number of people respond.
But CLSAs Leung is not worried. Successful O2Os require a
large sales forceBaidu has 40,000 staff to draw on. Tencent
and Alibaba also are more interested in making money off
O2O through mobile-payment systems rather than more
labor-intensive operations.
Baidus O2O potential isnt reflected in its share price of $199.

CLSA estimates the core search business is worth $200 a
share, assuming a conservative 15 times 2016 earnings, even
though its search revenue could grow by an annualized 30% in
the next three years. Baidus Ctrip stake and Nuomi are worth
another $23 to $28, giving the stock an additional 14% upside.
(Full article click - Barron's Online)
---
Shipping industry braced for storm to blow

long and hard
The global maritime industry is enduring hardships likely to

affect it forever
The shipping industry is battening down the hatches for a
global economic storm that could last years.
The slowdown in China, Europes anaemic recovery and the
failure of other emerging markets to live up to growth
expectations is having a devastating effect on the global
maritime industry, which carries 65pc of the worlds trade.
One of the hardest-hit parts of the industry is container
shipping, the movement of the ubiquitous steel boxes
measured in 20ft equivalent units (TEUs) that transformed
the industry in the 1950s by speeding up and simplifying
international trade.
The strength of the headwinds faced was underlined recently
when Maersk, the worlds biggest shipping line, reported a
shocking set of financial results. Profits last quarter crashed
61pc to $264m (174m) and revenue dropped 15pc to $6bn.
As a result of the poor performance, the Danish company
announced plans to axe 4,000 of its 23,000 shore-based staff.
Its as bad as its been since the financial crash, said
Jonathan Roach, container market analyst at shipbroker
Braemar. This week I saw an 8,500-TEU container ship being
chartered at an all-time low and a 4,250-TEU Panamax ship
going for $6,300 a day, the lowest rate since 2009.
Its not just container shipping that has been hit. The Baltic
Dry index, a benchmark that tracks the cost of shipping bulk
raw materials such as coal, steel and iron ore has tumbled to a
near 30-year low.
Prior to the crash, growth in global trade pushed up freight
rates and shipping lines were ordering more vessels to meet
demand. Events triggered by Lehman Brothers collapse
changed that. Trade fell and freight rates collapsed.
However, with ships that had been ordered entering the global
fleet, capacity rose, yet without enough cargo for them to
transport, rates remained suppressed.
Normally, over-capacity works itself out of the market as
older, less efficient ships that consume more fuel are
scrapped, but a perfect storm of factors mean this has not
happened at a sufficient rate to ease the problem.
The slowdown in the Chinese economy has hit the shipping
industry hard because of the impact it has on global trade. The
country has a massive demand for raw materials, both for its
industrialisation and to feed its manufacturers, who then ship
their goods to Western markets.
The problems are exacerbated by the global overcapacity for
steel which is holding down the prices of scrap metal, meaning
shipowners are reluctant to send ships to the breakers yard.
Finally, because the oil price is so low, fuel costs are suddenly
less of an issue for ship owners.
Ship owners are holding on, says Jeremy Penn, chief
executive of the Baltic Exchange, the London-based maritime
information business. The issue of scrappage is not such a big
one when the oil price is lower, as relative economy of modern
ships is less pronounced.
It wasnt supposed to be like this. At the start of the year, there
were high hopes that the fortunes of the shipping industry
would be on the brink of turning around.
However, the recovery failed to take place and Drewry, the

shipping consultancy, has halved its projections for this years
container trade growth to 2.2pc.
Clarkson, another consultancy, has revised its forecast down
to 3.7pc. Compounding the problem is a 7.1pc increase in
container ship capacity Clarkson is expecting this year, taking
it to the fleets capacity of 21.9m TEU.
The opening of the widened Panama Canal next year will only
add to their troubles, as demand for ships previously too large
to fit through the waterway now have new routes open to
them.
Faced with such troubles, shipping lines are changing tack to
deal with the problems, with some attempting to grow their
way out of the troubles.
I expect to see a number of deals, said Soren Skou, chief
executive of Maersk, which he thinks would be good for
container lines and customers.
His company is in talks with Singapore-based Neptune Orient
Lines about a possible $1.9bn takeover, as is Frances CMA
CGM, the worlds third-biggest shipping line.
While China Ocean Shipping Group Company (COSCO) and
China Shipping Group are also expected to merge to create the
worlds fourth-biggest shipping line, after Mediterranean
Shipping Company (MSC).
While formal mergers are in train, shipping companies have
already formed alliances to create efficiencies by sharing
resources.
Maersk and MSC have combined forces to create 2M; Cosco, K
Line, Yang Ming, Hanjin and Evergeen are working together
as CHKYE; and CMA CGM, United Arabia Shipping Alliance
and China Shipping Container Lines have formed another
group.
By working together, they hope ships will sail with more
cargo, reducing waste.
Alliances might be one solution, but scale is the ultimate
answer in shipping, allowing those that are big enough to
invest in truly massive vessels to survive and even thrive.
While smaller operators might find themselves struggling for
financing, the giants are the ones still able to order the more
economical ships carrying close to 20,000 TEU.
Some lines are already working in alliances, but larger
businesses would have the capacity to get rid of older ships,
and pull together the big and efficient vessels, which offers
economies of scale, said Braemars Roach.
Oil might be cheap now, but a ship that can carry 20,000
containers consumes less fuel to transport each TEU than one
carrying 5,000 a fact certain to worry smaller operators
unable to afford such huge vessels.
Back on shore, the impact of the shippings troubles are being
felt. While the UK is no longer a major force in shipbuilding,
the City remains the gobal maritime hub, with the bulk of
contracts and cargoes negotiated in London, which remains a
favoured centre for legal and insurance matters.
About 75,000 UK jobs are supported by the industry, and the
storm at sea is already being felt in London.
Theres been a slow burn of difficulties, bankruptcies and
consolidation, said Penn. For example, if youre a broker
working on commission and rates are far below what they
were, youre still doing the same amount of work for far less
money.
While customers might benefit from cheaper rates, the longterm impact is unclear. It could take decades for excess
capacity to be matched by demand, while the giants of the
industry could squeeze out competitors and begin pushing up
rates.
Either way, the future is unlikely to be smooth sailing.
---
BHP Billiton to Face Questions From

Shareholders
Taken from the WSJ Sunday, 15 November 2015
Thursdays annual meeting is likely to be one of the trickiest in

years for BHPs long-time chairman, Jac Nasser, and its CEO,
Andrew Mackenzie
When shareholders in BHP Billiton Ltd. gather in Perth,
Western Australia, for its annual general meeting this week, a
faraway iron-ore mine in rural Brazil will be on their minds.
The breaches at two tailings dams near BHPs jointly owned
Samarco operation in the Minas Gerais state on Nov. 5
unleashed a flood of mud across the surrounding area, leaving
nine people confirmed dead and 19 missing. The clean-up bill
could reach at least $1 billion, according to Deutsche Bank
estimates.
BHPs Australian-listed shares have fallen to their lowest level
since the financial crisis and close to 10-year lows in the dam
bursts aftermath, as investors fret about the cost to the
businessboth reputational and financialand whether the
worlds largest miner by market value can continue to pay its
current dividend. BHPs London-listed shares have also
suffered.
Against such a backdrop, Thursdays shareholder meeting is
likely to be one of the trickiest in years for BHPs long-time
chairman, Jac Nasser, and its chief executive, Andrew
Mackenzie.
I hope they cut the dividend, said one Australian-based fund
manager, who holds shares in BHP and expects it to be a key
topic at the meeting next week. The [dividend] policy is
creating havoc with the management of the company.
For Mr. Mackenzie, holding to BHPs dividend is a
reputational issue. The companys policy is to maintain or lift
investor payouts every half-year, even in the face of the
downturn in world commodity markets in the last few years.
For cash-hungry investors like big pension funds, that sort of
commitment is one of the key attractions of resources stocks
like BHP.
The miners boss has strengthened his rhetoric to soothe such
investors, even though earnings for its June-ended fiscal year
slumped nearly 90%. Over my dead body sounds a little
strong, but it is almost right, Mr. Mackenzie said in
discussing the annual results in August, referring to the
possibility of a dividend cut.
Analysts are less sure he can hold the line. BHP aims to
generate enough cash flow each year not only to cover its
costs, but also to fund new investment and its shareholder
payout, without going too much further into debt.
Meeting those different objectives is becoming harder. Even
before the Samarco disaster, Standard & Poors Ratings
Services cautioned that the miners payout pledge could
weaken its financial position given a broader downturn in
commodity prices. The price of iron ore, which contributed
80% of BHPs earnings last year, has fallen below $50 a ton
this year, down by a third from a year ago.
In response to a request for comment, BHP pointed to a
recent speech by Mr. Nasser in which he said the companys
balance-sheet strength had provided it with the confidence to
increase its dividend this year.
BHPs dividend already looks out of line with its long-term
performance. The company on average paid out around 20%
of its earnings before interest, tax, depreciation and
amortization in the years from 1970 to 2012, Goldman Sachs
has calculated. BHP would have to halve its current payout to
achieve that sort of sustainable level now, the bank reckons.
It remains unclear how much harder the catastrophic dam
bursts will make Mr. Mackenzies task. While offering some
support on the ground, BHP has been careful to state that
responsibility for the accident lies with Samarco, a limited
liability company it owns in equal parts with Vale SA, the

Brazilian mining giant.
But some local lawyers have suggested the co-owners will be
targeted if their joint venture cant cover the legal and cleanup costs. BHP should make a provision of around $400
million to cover potential charges over the next two years,
Credit Suisse analysts say.
To date, BHP has provided no explanation of what caused the
Samarco disaster, amid growing criticism of the company in
Brazil. The companys investors will be looking for a clearer
accounting come Thursday.
---
Gov't eyes extra budget worth around Y3.5

tril
Taken from the Japan Today Sunday, 15 November 2015
The government is likely to compile an extra budget worth

around 3.5 trillion yen at the end of this year to help farmers
boost their global competitiveness and finance social security
measures, government sources said Saturday.
Prime Minister Shinzo Abe will decide on the size to fund
stimulus measures and instruct ministries to compile the
supplementary budget after reviewing the preliminary results
Monday of Japans gross domestic product data for the JulySeptember period.
The extra budget will be bigger than the previous years 3.12
trillion yen, but the government will use unspent money from
the fiscal 2014 budget and tax revenues for this fiscal year to
avoid issuing new government bonds, the sources said.
Projects to be financed by the extra budget will be formally
decided by mid-December, the sources said.
The government has already started to form measures to
support Japans agricultural sector following a free trade deal
agreed by Japan and 11 other Pacific Rim nations.
The extra budget will likely help finance projects aimed at
enhancing farmers global competitiveness, including
consolidating farmland for lending by young farmers and
companies, the sources said.
The supplementary budget will also be used to build nursing
homes for the elderly and assist nurturing of human resources
in nursing care to reduce the number of people leaving jobs to
care for their family members.
The government will also consider providing benefits to lowincome pensioners, the sources said.
It will also include disaster prevention measures after eastern
and northeastern Japan was devastated by flooding in
September, the sources said.
The extra budget will be formed at a time when the
government is aiming to turn the primary balance deficit into
a surplus by fiscal 2020, as Japans fiscal health is the worst
among industrialized nations with public debt at more than
200% of nominal GDP.
To pursue the fiscal consolidation goal, the government will
finance the extra spending with unspent funds from fiscal
2014 and part of this fiscal years tax revenues which are
exceeding the original estimate, the sources said.
The government is also considering reducing the issuance of
new government bonds in the initial budget for the current
fiscal year, they said.
(Full article click - JT)

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News Summary

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Japan Today reported that Japanese government is likely to

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grounds" to assume that there may be a link to the Paris

A male American suffered a leg injury that wasn't believed to

CPPIB, OMERS and Ontario Teachers to buy Chicago Skyway

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Taken from the FT Saturday, 14 November 2015

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US Democratic presidential debate: Who to

Trump Is Wrong on China

Beijings currency isnt undervalued, protectionism would

come while tensions between China and the U.S. over

Regardless of Chinas status vis--vis the TPP, Trumps

contracted world trade. Lowering trade barriers since then has

Paris Attacks Make National Security Top

Democratic Candidates Set to Debate Saturday Night;

Hillary Clinton and Bernie Sanders have outlined starkly

The International Monetary Funds staff has recommended

for the recommendation means that the outcome is

Baidus Shares Are a Buy

Taken from the Barrons Online Saturday, 14 November 2015

Baidus O2O potential isnt reflected in its share price of $199.

Shipping industry braced for storm to blow

The global maritime industry is enduring hardships likely to

However, the recovery failed to take place and Drewry, the

BHP Billiton to Face Questions From

Thursdays annual meeting is likely to be one of the trickiest in

liability company it owns in equal parts with Vale SA, the

Gov't eyes extra budget worth around Y3.5

The government is likely to compile an extra budget worth