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from Breakingviews:

Anadarko’s $5.1 bln settlement adds up in market

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By Kevin Allison
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Stock investors seem to have a firm grip on Anadarko Petroleum’s toxic waste settlement. The record $5.15 billion settlement on Thursday, covering years of environmental claims, was at the low end of a court-defined range which had a midpoint of $9.8 billion. The 15 percent jump in the oil company’s market capitalization is mostly explained by those numbers. And it brings Anadarko’s 12-month stock performance nearly back in line with the S&P 500 after a bumpy ride.

The deal ends a messy legal wrangle for Anadarko and its Kerr-McGee subsidiary. The chemicals unit, acquired by Anadarko in 2006, was accused of trying to sidestep its environmental responsibilities by dumping them onto Tronox, a titanium dioxide business that was spun out of the group in 2005 and later went bankrupt. A litigation trust, set up when Tronox emerged from Chapter 11, went after Kerr-McGee for compensation.

The surge in Anadarko’s shares added $6.4 billion of market value. A bankruptcy judge in December said the company should pay something between $5.15 billion and $14.46 billion. Taking the midpoint as a guide to investor expectations, Anadarko was spared about $5 billion of penalties, accounting for much of the rally. The extra could be seen as a mark of investors’ relief the legal overhang is now gone, or maybe a reflection of the fact that some may have been discounting as much as $16 billion for the settlement, as Jefferies reckons.

from MacroScope:

A question of energy

After two days in The Hague, Barack Obama moves on to Brussels for an EU/U.S. summit with Ukraine still casting the longest shadow.

Europe’s energy dependence on Russia is likely to top the agenda with the EU pressing for U.S. help in that regard while the standoff with Russia could give new impetus to talks over the world’s largest free trade deal.

from Global Investing:

Iran: a frontier for the future

Investors trawling for new frontier markets have of late been rolling into Iran. Charles Robertson at Renaissance Capital (which bills itself as a Frontier bank) visited recently and his verdict?

It's like Turkey, but with 9% of the world’s oil reserves.

Most interestingly, Robertson found a bustling stock market with a $170 billion market cap -- on par with Poland - which is the result of a raft of privatisations in recent years.  A $150 million daily trading volume exceeds that of Nigeria, a well established frontier markets. And a free-float of $30 billion means that if Iranian shares are included in MSCI's frontier index, they would have a share of 25 percent, he calculates.

from The Great Debate:

Assad’s terror farce at the Geneva talks

Just days before the most recent Syrian peace talks in Geneva began, a report detailing “industrial-scale” killing in President Bashar al-Assad’s prisons revealed the nature of his government. Despite this setback, the regime continues to claim that it is only fighting terrorists.

While their rhetoric is convenient, the reality is that only one side of the Syrian negotiations is actively fighting al Qaeda – the opposition. Though Assad has the capacity to attack extremists, from the spring of 2011 until today he has chosen to target civilians instead.

from The Great Debate:

Mexico’s reversal of fortune

In Latin America, this looks to be the year of Brazil -- thanks to the impending World Cup and presidential elections. But with another lackluster year looming in emerging markets, fans of transformation, growth and investment potential should instead look to Mexico.

Brazil’s president, Dilma Rousseff, is expected to win a second term this year, and its soccer team stands a good shot at victory. But growth has slowed considerably. In the world’s seventh largest economy, reforms are stagnating and the country faces a possible ratings downgrade.

from MacroScope:

New face at the ECB

The European Central Bank held a steady course at its first policy meeting of the year but flagged up the twin threats of rising short-term money market rates and the possibility of a “worsening” outlook for inflation – i.e. deflation.

The former presumably could warrant a further splurge of cheap liquidity for the bank, the latter a rate cut. But only if deflation really takes hold could QE even be considered.
Sabine Lautenschlaeger, the Bundesbank number two poised to take Joerg Asmussen’s seat on the executive board, breaks cover today, testifying to a European Parliament committee. A regulation specialist, little is known about her monetary policy stance though one presumes she tends to the hawkish.

from Breakingviews:

Hard to find phoenix in ashes of Batista’s empire

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By Christopher Swann
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

 

It’s hard to find a phoenix in the ashes of Eike Batista’s empire. There are real assets buried under the tycoon’s collapsed EBX Group. Even so, the onetime flagship energy explorer will emerge with poor growth prospects. Investors have already priced in big things for the port and electricity arms. And too much depends on a resurgent Brazilian economy.

from Ian Bremmer:

Why Saudi Arabia and the U.S. don’t see eye to eye in the Middle East

Give credit to Vladimir Putin and his New York Times op-ed on Syria for sparking a new tactic for foreign leaders hoping to influence American public opinion. In recent weeks, Saudi Arabian political elites have followed Putin’s lead, using American outlets to express their distaste with the West’s foreign policy, particularly with regard to Syria and Iran. In comments to the Wall Street Journal, prominent Saudi Prince Turki al-Faisal decried the United States for cutting a preliminary deal with Iran on its nuclear program without giving the Saudis a seat at the table, and for Washington’s unwillingness to oppose Assad in the wake of the atrocities he’s committed. Saudi Arabia’s ambassador to Britain followed with an op-ed in the New York Times entitled “Saudi Arabia Will Go It Alone.” The Saudis are clearly upholding the vow made by intelligence chief Bandar bin Sultan back in October to undergo a “major shift” away from the United States.

In light of the recent actions of the Obama administration, many allies are also frustrated and confused, and even hedging their bets in reaction to the United States’ increasingly unpredictable foreign policy. But of all the disappointed countries, none is more so than Saudi Arabia -- and with good reason. That’s because the two countries have shared interests historically -- but not core values -- and those interests have recently diverged.

from Breakingviews:

Oil’s new age of plenty challenges old assumptions

By Kevin Allison

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

The energy business may enter a tumultuous period in 2014, even if sanctions on Iranian oil exports remain in place. The combination of increased shale drilling, cheaper solar power and higher investments in energy efficiency has the potential to create a glut of oil from countries outside the OPEC producers’ cartel at current prices. A sharp drop in the oil price is possible, and more volatility in oil prices, energy investments and geopolitics is almost inevitable.

from Global Investing:

Perfect storm brewing for the rouble

A perfect storm seems to be brewing for the Russian rouble. It has tumbled to four-year lows against a euro-dollar basket. Against the dollar, it has lost around 7 percent so far this year, faring better than many other emerging currencies. But signs are that next year will bring more turmoil.

While oil prices, the mainstay of Russia's economy, are holding up, Russian growth is not. It is running at 1.3 percent so far this year and capital outflows continue unabated -- $48 billion is estimated to have fled the country in the first nine months of 2013 compared with $55 billion in 2012. Russia's mighty current account surplus has shrunk to barely nothing and could fall into deficit by the middle of next year, reckons Alfa Bank economist Natalia Orlova. Finally, the rouble can no longer count on the central bank for wholehearted day-to-day support. FX market interventions cost the bank $3.5 billion last month  but it also shifted the exchange-rate corridor upwards six times, indicating it is keen to move to a fully flexible currency.

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