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Archive for Juni 2019

Why Britain’s Elites Can’t Stand Boris Johnson

Posted by hkarner - 30. Juni 2019

Date: 29-06-2019
Source: The Wall Street Journal By Gerard Baker

The U.K.’s likely next prime minister irks the establishment by being both popular and pro-Brexit

A British statesman once opined that politicians need to have a hinterland, a cultural or artistic pursuit or interest that adds inner depth and range to their lives. Never trust people who lead a one-dimensional political life, he said; they’re dull and dangerous.

We learned quite a lot this week about Boris Johnson’s hinterland. The inner life of the prohibitive favorite to be the next leader of the British Conservative Party and prime minister of the U.K. was all over the media. He may be dangerous, but he certainly isn’t dull.

We discovered first that his thoroughly modern ménage—estranged from his wife, he lives in a south London flat with a woman not much more than half his age—is, as the popular novelists might say, stormy. On the day he won the ballot of Conservative members of Parliament, securing his place in the runoff election among regular party members in the country next month, he got into something of a spat with Carrie Symonds, his girlfriend.

Thanks to the creepy prurience—sorry, public-spirited vigilance—of his left-wing, Tory- and Brexit-hating neighbors, we know that the two of them had a screaming match about some red wine spilled on a sofa. The nice folk next door recorded the fight through the adjoining wall, called the police—who discovered nothing more than a bit of domestic strife—and then did what any vigilant citizen would do: turned the tape over to the left-wing, Tory- and Brexit-hating Guardian newspaper. This, by the way, is the same Guardian that has exposed and solemnly denounced intrusions into privacy by rival newspapers over the years. Den Rest des Beitrags lesen »

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Bastards attract each other

Posted by hkarner - 30. Juni 2019

Date: 29-06-2019
Source: The Wall Street Journal
Subject: Trump Praises Saudi Crown Prince for Doing ‘a Spectacular Job’

Most other leaders at the Group of 20 summit shunned the crown prince, after the murder of a prominent Saudi journalist

President Trump meets Saudi Arabia Crown Prince Mohammed bin Salman during a working breakfast on the sidelines of the G-20 summit in Osaka, Japan, June 29.

OSAKA, Japan—President Trump gave a rare endorsement to Saudi Crown Prince Mohammed bin Salman, who was shunned by most leaders at the Group of 20 summit after the murder of a prominent Saudi journalist.

Over breakfast, Mr. Trump called the crown prince “a friend of mine” and said he’s done “a spectacular job” in opening up Saudi Arabia and empowering women, a reference to his move allowing women to drive. Mr. Trump also praised Saudi Arabia’s purchases of U.S. weapons and cutoff of funding to terrorist groups. Den Rest des Beitrags lesen »

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The Digital Revolution Comes for Banking

Posted by hkarner - 29. Juni 2019

Date: 29-06-2019
Source: The Wall Street Journal By Irving Wladawsky-Berger

The growth of digital payments in Asian countries and the rise of mobile banking in the West is shaking up the banking industry

Digital transformations generally follow three distinct stages. First comes the use of information technology to improve the productivity and quality of back- and front-end processes. Distribution is next, leveraging the internet’s reach for online transactions and access to information. Finally, the transformation reaches a tipping point when technologies radically change the business model and user experience, leading to a fundamental disruption of the industry.

We’ve seen such digital journeys and disruptions play out across a number of industries, from retail and media to telecommunications and even IT, in a kind of sorcerer’s apprentice scenario. Yet until recently one industry has managed to mostly withstand the turbulence: banking. Den Rest des Beitrags lesen »

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The new left economics: how a network of thinkers is transforming capitalism

Posted by hkarner - 28. Juni 2019

Date: 29-06-2019
Source: The Guardian By Andy Beckett

After decades of rightwing dominance, a transatlantic movement of leftwing economists is building a practical alternative to neoliberalism.

For almost half a century, something vital has been missing from leftwing politics in western countries. Since the 70s, the left has changed how many people think about prejudice, personal identity and freedom. It has exposed capitalism’s cruelties. It has sometimes won elections, and sometimes governed effectively afterwards. But it has not been able to change fundamentally how wealth and work function in society – or even provide a compelling vision of how that might be done. The left, in short, has not had an economic policy.

Instead, the right has had one. Privatisation, deregulation, lower taxes for business and the rich, more power for employers and shareholders, less power for workers – these interlocking policies have intensified capitalism, and made it ever more ubiquitous. There have been immense efforts to make capitalism appear inevitable; to depict any alternative as impossible. Den Rest des Beitrags lesen »

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The Global Economy’s Next Winners

Posted by hkarner - 28. Juni 2019

Date: 27-06-2019
Source: Foreign Affairs

What It Takes to Thrive in the Automation Age

By Susan Lund, James Manyika, and Michael Spence

Back in business: at an Amazon warehouse in Florence, New Jersey, August 2017

The countries that once led the world toward economic openness are retreating into protectionism. Over the past two and a half years, the United States has abandoned the Trans-Pacific Partnership and imposed tariffs on steel, aluminum, and a wide range of Chinese goods. The United Kingdom is in the process of leaving the world’s largest free-trade area. And rising nationalist sentiment is threatening to repeat these self-destructive acts elsewhere. The rich world is turning inward.

Its timing couldn’t be worse. Even as critics of free trade gain the upper hand, globalization, wholly of its own accord, is transforming in rich countries’ favor. Economic growth in the developing world is boosting demand for products made in the developed world. Trade in services is up. Companies are moving production closer to their customers so they can respond faster to changes in demand. Automation has slowed the relentless search for people willing to work for ever-lower wages. And the greater complexity of modern goods means that research, design, and maintenance are coming to matter more than production. Den Rest des Beitrags lesen »

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Five Facts on Fintech

Posted by hkarner - 28. Juni 2019

By Tobias Adrian and Ceyla Pazarbasioglu

From artificial intelligence to mobile applications, technology helps to increase your access to secure and efficient financial products and services.

Since fintech offers the chance to boost economic growth and expand financial inclusion in all countries, the IMF and World Bank surveyed central banks, finance ministries, and other relevant agencies in 189 countries on a range of topics and received 96 responses.

A new paper details the results of the survey alongside findings from other regional studies, and also identifies areas for international cooperation—including roles for the IMF and World Bank—and in which further work is needed by governments, international organizations, and standard-setting bodies.

Foremost in all countries’ minds is cybersecurity.

Den Rest des Beitrags lesen »

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In A Newly Bipolar World, Europe is Caught in the Middle

Posted by hkarner - 27. Juni 2019

Date: 26-06-2019

The U.S. vs. China

The trade war between the United States and China is increasingly creating a bipolar world. As U.S. President Donald Trump and Chinese President Xi Jinping prepare to meet at the upcoming G-20 summit, Europe is facing an increasingly tense dilemma: Which side should it choose?

United States President Donald Trump began the week before last on a golf course in Virginia. He was unhappy. On Twitter, he complained about London Mayor Sadiq Khan. The two men have a deep, mutual dislike for one another. „Khan is a disaster,“ Trump wrote, „will only get worse.“ In an interview, he complained about Congress, arguing that its members are, „more difficult than frankly many of the foreign leaders. Because they have their own views, you never know exactly, but they have their own views.“

Last Tuesday, he launched his 2020 re-election campaign and peppered his speech with attacks on the media („fake news“), his opponents generally („angry left-wing mob“) and the Democrats overall: „They want to destroy our country as we know it.“ Den Rest des Beitrags lesen »

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Will China Save Transatlantic Relations?

Posted by hkarner - 27. Juni 2019

Date: 26-06-2019
Source: YaleGlobal by Michal Romanowski

With democracies abruptly reversing positions on trade or climate change, once trusted alliances seem temporary in nature. “The multilateral world order is slowly fading into the past with new alliances forming and established ones questioned by their founders,” observes Michal Romanowski. “The United States seems to pursue an isolationist policy, Europe is internally undecided, and China and Russia have cemented their marriage of convenience.” Romanowski, a fellow with the German Marshall Fund of the United States in Warsaw, argues that the transatlantic relationship has never been weaker. The United States is convinced that China is an adversary while Europe’s leaders are divided about whether China represents opportunity or threat. Europe could benefit from conflict between China and the United States, or pick sides. A strong mutual alliance that develops comprehensive policy beyond trade without arrogance or naiveté offers the best path for an effective China agenda, smooth transatlantic relations and cooperation on leading global challenges. –

Europe’s leaders, divided over China as opportunity or threat, must decide on benefiting from a US-China conflict or choosing sides Den Rest des Beitrags lesen »

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A Leader of America’s Fracking Boom Has Second Thoughts

Posted by hkarner - 26. Juni 2019

Date: 25-06-2019
Source: The Wall Street Journal

Pioneer Natural Resources once promised production to rival Libya. Now it’s pulling back.
Pioneer CEO Scott Sheffield has embarked on an extreme belt-tightening regimen.

Early this year, Scott Sheffield realized he had a problem. Investors were cooling on Pioneer Natural Resources Co., the company he built into one of the leaders of the American fracking boom.

Like many shale companies, Pioneer was pumping a lot but making little. It was spending hundreds of millions more than budgeted as it strained to meet a goal Mr. Sheffield set years back—producing a million barrels of oil and gas a day within a decade, enough to rival OPEC nations such as Libya.

So in February, the company’s board replaced Chief Executive Timothy Dove, who had presided over the cost overruns, with Mr. Sheffield, who had retired as CEO in 2016, and asked him to engineer a turnaround.

Mr. Sheffield has since embarked on an extreme belt-tightening regimen at the Irving, Texas-based producer. Pioneer is cutting more than one-quarter of its workforce, including a cadre of senior executives, in part through layoffs and buyouts. Among those who are leaving is Mr. Sheffield’s own brother, Thomas Sheffield, the company’s vice president of health, safety and environment.

The million-barrel-a-day goal? It’s on ice as Mr. Sheffield tries to convince skeptics that Pioneer is a shale company that can live within its means.

“We lost the growth investors,” he said in a recent interview. “Now we’ve got to attract a whole other set of investors.”

Shale drillers transformed the U.S. into the world’s largest oil producer, churning out roughly 12 million barrels a day, according to the Energy Information Administration. But after years of losing money, they are coming under intense pressure from investors and Wall Street financiers to boost returns. How they respond will shape America’s heady pursuit of “energy independence” and its burgeoning status as a geopolitical oil player.

Companies long valued on growth prospects are seeing new capital dry up as many find it more expensive than anticipated to meet lofty production goals. Under pressure to generate positive cash flows, executives are slashing overhead and dialing back drilling plans.

As the frenzy slows, the pace of U.S. production growth is set to moderate this year. Many older wells are falling short of expectations, and some operators acknowledge that they have fewer future drilling locations than they once predicted.

Over the past 10 years, 40 of the largest independent oil and gas producers collectively spent roughly $200 billion more than they took in from operations, according to a Wall Street Journal analysis of data from financial-information firm FactSet. During that time, a broad index of U.S. oil-and-gas companies fell roughly 10%, while the S&P 500 index nearly tripled.

“It’s time to be smarter about being responsible stewards of capital,” said John Groton, director of equity research for Thrivent Asset Management, a Pioneer investor with about $19 billion under management.

At Pioneer, some employees were concerned about the feasibility of meeting the million-barrel-a-day target set by senior executives, former employees said in interviews with the Journal. Some also raised questions about whether Pioneer’s production forecasts were too optimistic and would lead investors to overvalue the company, former employees said.

Pioneer said in a written statement the target was achievable and designed to challenge employees, noting that Exxon Mobil Corp. and Chevron Corp. recently announced similar goals. Pioneer added that it encourages employees to debate the assumptions used to make decisions.

“To date, our well results have, on average, been consistent with our expectations,” Pioneer said.

Mr. Sheffield said the company had become overly focused on growth. “I just don’t think the discipline was there on the capital side,” he said. Mr. Dove, the former CEO, didn’t respond to requests for comment.

Shale wells produce a lot of oil and gas early on, but taper off quickly, meaning drillers must continuously plow money back into the ground to maintain output. The Journal previously reported that thousands of wells drilled in the last five years are producing less oil and gas than companies forecast to investors. Pioneer is among the companies whose wells in some areas are on track to fall short of expectations, according to the Journal’s analysis. The company disputes the findings, saying its methodology for estimating well productivity differs from the Journal’s.

Pioneer was formed in 1997 after Mr. Sheffield merged his family’s company, Parker & Parsley Petroleum Co., with wildcatter T. Boone Pickens’s Mesa Inc. At the time, the Permian Basin of Texas and New Mexico, once a powerhouse oil field that helped the Allied campaign in World War II, had turned into a sleepy province of smaller, low-margin companies.

In one deal after another, Mr. Sheffield, a Dallas native and petroleum engineer trained at the University of Texas, steered Pioneer toward international prospects. He always kept his eye on the Permian Basin, associates say, refusing to sell its holdings there because he valued the predictable returns.

About a decade ago, Pioneer and other smaller operators in West Texas came to understand that new hydraulic fracturing and horizontal drilling technologies could be applied to the Permian’s oil-soaked layers of rock. The innovations led to a renaissance for the Permian, which has since become the chief engine of the American shale boom.

As “Permania” took off, Mr. Sheffield emerged as its central pitchman. He made frequent television and conference appearances to talk up the basin’s abundance of oil. He developed a knack for using figures that forecast the scale of the coming boom, frequently comparing the Permian to prolific areas of Saudi Arabia.

Mr. Sheffield began laying out an ambitious vision for Pioneer’s future. In 2014, he said the company had an inventory of wells to last as many as 150 years. That year he told Forbes he believed Pioneer could increase its output to one million barrels a day by 2024, from about 200,000 barrels.

Infusions of money from Wall Street, eager for a piece of the fracking action, fueled growth at Pioneer and other shale companies. Frackers tapped investors for more than $176 billion in financing from 2015 to 2018, using debt and sales of new shares to continue increasing production. Pioneer financed its expansion during that time with $3.57 billion in bond and equity deals, according to Dealogic.

“It wasn’t how much money you were making. It was, ‘How many locations do you have?’ ” said Jon Brumley, a former chairman of Pioneer’s board.

Mr. Sheffield spoke optimistically about returns on the company’s wells, but that didn’t always translate to overall profits.

In August 2015, Mr. Sheffield said Pioneer’s wells were expected to yield 45% to 60% returns on investment at the oil prices at that time, excluding costs such as administrative expenses and taxes. The company lost $218 million in the second quarter of that year.

The company acknowledged that capital spending exceeded operating cash flow in 2015, but said it is focused on changing that in 2019 and beyond.

In late 2016, Mr. Sheffield pushed back the timeline of the million-barrel goal by two years, to 2026. He stepped down as CEO at the end of that year and retired to the Santa Fe, N.M., area, where he had bought a 2,300-acre ranch from actress Jane Fonda.

That left his handpicked successor, Mr. Dove, to complete Pioneer’s transformation. Mr. Dove, a graduate of the Massachusetts Institute of Technology, sought to make the million-barrel goal part of the company’s strategic plan.

In early 2017, he gathered employees at a Dallas opera house to formally unveil the goal, a move that took some employees by surprise. He later told investors that Pioneer would reach that target by increasing output by at least 15% annually. He also said the company would bring spending in line with cash flow by 2018, assuming a $55 oil price.

Some employees were less confident. Several times in recent years, technical staffers raised concerns to management that Pioneer was being too aggressive with how it talked up its prospects to investors and potential business partners, according to people familiar with the matter.

In one of those instances, the company eventually walked back internal production forecasts for some of its wells in the Permian, according to one of the people. In other instances, Pioneer continued to use what some of the people said were overly optimistic estimates.

Pioneer now says its oil output has been consistent with expectations, and that it has produced more natural gas and natural-gas liquids than expected. It says well productivity has become more predictable as it has drilled more wells and gathered additional data.

Pioneer ran into operational difficulties trying to produce as much oil as it had forecast. In a rocky conference call in August 2017, Mr. Dove disclosed it had drilled a series of “train-wreck wells” and said it would be lowering its oil production target for the year. The company’s stock fell 11% on the news.

Under pressure to meet quarterly output targets, Pioneer began what employees called “the production push,” according to one former employee. It drilled two West Texas wells to horizontal distances of 6,200 and 6,400 feet, according to data from energy consulting firm Wood Mackenzie—barely half the 12,100 feet the company had permits to drill.

That allowed the wells to be finished faster and contribute sooner to quarterly results, the person said, but at the cost of reducing their total long-term production. After 16 months, the wells generated about 125,000 and 160,000 barrels of oil, respectively, according to ShaleProfile, an industry analytics platform. Pioneer’s average Permian well from 2017 generated about 212,000 barrels of oil in that time, ShaleProfile data show.

Pioneer said it didn’t drill shorter wells to accelerate production. “It is not unusual to drill shorter lateral wells for a variety of reasons, including to reduce the risk of operational challenges associated with longer lateral lengths,” the company said.

Hydraulic fracturing and horizontal drilling technologies led to a renaissance for the Permian Basin, which includes this area on the outskirts of Odessa, Texas.

Last year, Pioneer’s board grew more concerned about exceeding the budget, chairman J. Kenneth Thompson said in an interview. Shareholders were ratcheting up pressure to moderate growth and spending. Pioneer spent $549 million more than it took in from operations in 2018, according to FactSet, even though U.S. benchmark crude prices rose to an average of $65 a barrel. Many competitors also overshot their budgets, few by as much as Pioneer.

Pioneer’s board approved a $500 million increase in the company’s capital budget, to between $3.3 billion and $3.4 billion, in the middle of last year, but was surprised to learn in January about additional overspending of about $350 million, Mr. Sheffield said.

By late February, Pioneer’s shares had declined about 40% from their 2014 peak. The board, with Mr. Sheffield as chairman, reached a “strong consensus” that major cost reductions were necessary, and Mr. Dove elected to retire, the company said.

Mr. Thompson, the current chairman, said the board wanted to cut overhead to $2.25 per barrel of oil and gas produced, from $3.26, and that Mr. Dove had opposed such moves, which would require layoffs.

In his first year back as CEO, Mr. Sheffield wants to generate roughly $800 million in excess cash, which would demonstrate that Pioneer can meet investor demands for profits, cash flow and growth. In addition to the job cuts, it sold acreage in South Texas and is looking to shed assets used to process natural gas.

Pioneer’s shares temporarily surged after Chevron sought to buy Anadarko Petroleum Corp. Mr. Sheffield made clear he isn’t interested in selling Pioneer. He also isn’t quite letting go of his million-barrel goal.

“I can’t guarantee we’re going to grow 15% a year if I don’t know what the oil price is,” he said, explaining it could take as long as 15 years if the industry experiences more downturns. “But my point is the rock will produce over one million barrels a day,” he said.

Based on its existing well production and drilling practices, Pioneer would need as many as 90 rigs—about four times its current total—to reach one million barrels a day by 2026, estimates Tom Loughrey, president of oil-and-gas consulting firm Friezo Loughrey Oil Well Partners LLC. “This is really outside the realm of possibility,” he said.

Pioneer has told investors it would take 60 to 70 rigs to produce one million barrels a day by 2026. It said it hoped drilling advances would allow it to reach the target with fewer rigs.

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Boris to the Rescue, Maybe

Posted by hkarner - 26. Juni 2019

Date: 25-06-2019
Source: The Wall Street Journal By The Editorial Board

Britain’s Tories embrace London’s former mayor. Will anyone else?

Former British Foreign Secretary Boris Johnson

Boris Johnson is on track to lead Britain’s Conservative Party—and be the next Prime Minister—and Britons would feel better about that if anyone knew what it means. Amid a national Brexit meltdown, Mr. Johnson has run a leadership campaign by promising everything to everyone.

Britain is now three years from its referendum to leave the European Union, and two departure deadlines have come and gone with a third looming on Oct. 31. Theresa May, whom Mr. Johnson is vying to replace, failed because she never articulated a compelling vision for Brexit and how Britain might thrive on its own.

Mr. Johnson is pitched as the politician who can ride to the Tory rescue. Brexiteers will trust him more than Mrs. May since he has always been one of them. He also speaks with great fervor about the global trading opportunities for Britain outside the EU.

Yet it’s still impossible to say what form of Brexit he really wants. He has promised Brexiteers he’s determined to leave on Oct. 31 with or without a divorce-and-trade pact with the EU. This may now be the only way to save the Conservative Party from disintegration amid rising support for a Brexit Party that knows for sure what it thinks about the biggest question facing British politics.

The problem is that Mr. Johnson also is winning support from Remain Tories on the strength of his promise to do better than Mrs. May at negotiating a deal, and the premise of that pledge is that there will be a deal. Someone will be disappointed, and those who are will dog Mr. Johnson as they did Mrs. May. Den Rest des Beitrags lesen »

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