Thursday, September 11, 2008

GAS RUN

http://www.citizen-times.com/apps/pbcs.dll/article?AID=200880911105 Emergency chiefs urge halt to local gas run

COLUMBIA, SC (WIS) - The impending landfall of Hurricane Ike has caused issues with the price of gas and limits on the amount you can buy, according to officials.    http://www.wistv.com/Global/story.asp?S=8993849

Ike shuts down oil and gas production in the gulf

Energy production in the Gulf of Mexico remained largely shuttered Thursday as energy companies scrambled to complete evacuations and shut down refineries in advance of Hurricane Ike.

Roughly 97 percent of all oil production in the Gulf and 93 percent of all gas production is shut down, according to the Minerals Management Service, the federal agency that oversees drilling. Gulf energy production has not fully resumed since Hurricane Gustav struck Louisiana over a week ago.    http://www.nola.com/hurricane-ike/index.ssf/2008/09/energy_industry_scrambles_to_s.html

Wednesday, September 10, 2008

Massive Dollar Short Opportunity

One way or another, the dollar is going down. Hold on to your shorts because this will be the short of the decade.

Recent interventions in commodity markets, which has been a combination of short selling in the Gold market, and large institutions taking profit in a multi-year bull market in hard commodities such as Oil, has caused a short uptick in the dollar. The fed didn't raise interest rates, and US economic data did not get any better. Nor was there any watershed event or even a clear indication that the US economy is improving. There is no other reason the dollar is up, other than the previously mentioned factors. 34% of the world's wealth (calculated in dollars) is still USD based, so any sell off in stocks, commodities, and bonds (meaning a return to cash) means a boon for the USD.

This trade will be a long term play and should not be taken with large leverage unless you are a day-trader who will be in and out of the markets. There is an overwhelming amount of negative data supporting the argument for USD down, so let's examine what could potentially cause the USD to rise, which we shall consider as USD down trade exit strategies.

What can change this trade (stop loss / exit points) can be the following unlikely scenarios:

  • Fed raises interest rates
  • ECB cuts rates (unlikely because unlike the Fed, the ECB only mandate is to contain inflation)
  • US Economy not only bottoms but shows signs of rapid growth (a bottom would not cause the dollar to rise without an increase in rates)


 

Anyone who previously thought it somehow negative to promote the shorting of the dollar should be silenced with Treasury's recent move, a message to the world saying that the US Government will backup free market capitalism with state sponsored socialism for the rich. None of these actions can possibly be good for the dollar in the long term. In the short term, as we see the Euro-bubble collapse, it is possible for the USD to rise slightly, but this should not be a prolonged trend. Euro weakness does not necessarily make a strong dollar, world markets are desynchronized and interest rate parity theory has stopped working years ago.

How to short the dollar?


 

  • Long term close your eyes trade; sell now with no stop loss and take profit at USD Index 65.
  • Short term automated trading systems with Sell USD bias. Tweak your systems to find USD short trends and take profits (systematic day trading)
  • Non-USD portfolio (European/Asian bonds / equities)
  • Long Swiss Francs or CHF based bonds


 

There may be a time when investment in the USD will be the trade, when once again foreign investors will flock to USA as a beacon of capitalism (meaning the ability to make money, which is restricted in many countries by strict government controls and the threat of potential nationalizations). Now is not that time.

http://eliteeservices.net/ Elite E Services FX Systems See more articles at www.eliteforexblog.com

Tuesday, September 9, 2008

Hedge funds - the daredevils of Wall Street - are backing away from risk

September 9, 2008 --

Hedge funds - the daredevils of Wall Street - are backing away from risk, fearful of getting beaten up by the market's persistent turbulence.

JPMorgan Chase's Highbridge Capital and Phil Falcone's Harbinger Capital are among a growing number of big-name hedge funds that are hunkering down, moving into cash and reducing the use of borrowed money, or "leverage," to inflate returns, sources said. http://www.nypost.com/php/pfriendly/print.php?url=http://www.nypost.com/seven/09092008/business/hedge_hogs_hunker_128180.htm

Sunday, September 7, 2008

Paulson Engineers U.S. Takeover of Fannie, Freddie

http://www.bloomberg.com/apps/news?pid=20601087&sid=aY5djDWqugYk&refer=home

Paulson Engineers U.S. Takeover of Fannie, Freddie (Update4)

By Rebecca Christie and Dawn Kopecki

Sept. 7 (Bloomberg) -- The U.S. government seized control of Fannie Mae and Freddie Mac after the biggest surge in mortgage defaults in at least three decades threatened to topple the companies making up almost half the U.S. home-loan market.

``Our economy and our markets will not recover until the bulk of this housing correction is behind us,'' Treasury Secretary Henry Paulson, who engineered the takeover along with Federal Housing Finance Agency Director James Lockhart, said in Washington today. ``Fannie Mae and Freddie Mac are critical to turning the corner.''

The FHFA will take over Fannie and Freddie under a so- called conservatorship, replacing their chief executives and eliminating their dividends. The Treasury can purchase up to $100 billion of a special class of stock in each company as needed to maintain a positive net worth. It will also provide secured short-term funding to Fannie, Freddie and 12 federal home-loan banks, and purchase mortgage-backed debt in the open market.

The takeovers bring Fannie, formed after the Great Depression and spun off in 1968, and Freddie, created in 1970, back under the government's fold. It's the biggest step yet in officials' efforts to grapple with a yearlong credit crisis that has caused more than $500 billion of losses and writedowns.

Treasury Gets Stock

Under the plan, the Treasury will receive $1 billion of senior preferred stock in coming days, with warrants representing ownership stakes of 79.9 percent of Fannie and Freddie. The government will receive annual interest of 10 percent on its stake.

As a condition for the assistance, Fannie and Freddie eventually will have to reduce their holdings of mortgages and securities backed by home loans.

The portfolios ``shall not exceed $850 billion as of Dec. 31, 2009, and shall decline by 10 percent per year until it reaches $250 billion,'' the Treasury said. Fannie's portfolio was $758 billion at the end of July, and Freddie's was $798 billion.

Officials are aiming ``to prevent the mortgage market from falling apart,'' said former Federal Reserve Bank of St. Louis President William Poole. The Treasury's funds ``will be flowing in for quite a long time,'' Poole, a Bloomberg contributor, said on Bloomberg Radio.

Herbert Allison, 65, former chief executive officer of TIAA-Cref, will take over as Fannie's new CEO. David Moffett, 56, who was vice chairman of US Bancorp, will head Freddie, Lockhart said. They will work with existing management, he added.

Mudd, Syron Exit

Fannie CEO Daniel Mudd, 50, and Freddie CEO Richard Syron, 64, will serve in a transition period as consultants.

``Americans should be confident that the actions taken today will strengthen our ability to weather the housing correction and are critical to returning the economy to stronger sustained growth,'' President George W. Bush said today in a statement released by the White House.

``The actions taken today are temporary,'' Bush said. As the administration considers the companies' future role, ``it is critical that they not pose similar risks to our economy and to our financial system again.''

While common stockholders of Fannie and Freddie won't be eliminated under the conservatorships, they will be last in line for any claims, Paulson said. Preferred shareholders will be second in absorbing losses, he said.

`Restoration Plans'

Banks and insurance companies have typically purchased the two companies' preferred shares. The Federal Reserve and three other bank regulators said that they will work to ``develop capital restoration plans'' with the ``limited number'' of smaller institutions that hold Fannie and Freddie stock as a significant portion of their capital.

By ensuring that Fannie and Freddie maintain positive net worth, the Treasury will provide ``additional security'' to the owners of Fannie and Freddie bonds and ``additional confidence'' for the holders of their mortgage-backed securities, it said. The Treasury noted that Fannie and Freddie securities are held by central banks and ``investors around the world.''

Lockhart added that interest and principal payments will continue to be made on the companies' subordinated debt.

The government is taking an increasing role in financial markets, after the Fed six months ago provided $29 billion of financing to prevent Bear Stearns & Cos.'s collapse. Chairman Ben S. Bernanke praised today's action in a statement.

`Inherent Conflict'

The plan doesn't answer all of investors' questions about the companies' long-term prospects. It also doesn't address the question of whether the companies will be nationalized, privatized, or kept as government-sponsored enterprises that are shareholder owned. Paulson said that ``only Congress'' can tackle the ``inherent conflict'' of serving shareholders and a public mission.

``Keeping them alive is the wrong approach,'' said Peter Wallison, a fellow at the American Enterprise Institute in Washington and a former Treasury general counsel. ``They need to be sustained, they're essential to financing housing right now. But it doesn't mean that they have to be maintained as GSEs.''

Wallison added that if Fannie and Freddie return to profitability, ``then what the shareholders have is worth something.''

Lobbying Ban

Congress has long avoided making major changes to the two companies, which have had extensive lobbying operations. Lockhart said today that those operations will cease.

``All political activities -- including all lobbying -- will be halted immediately,'' Lockhart said. ``We will review the charitable activity.''

Democratic presidential nominee Barack Obama said today that ``some'' intervention was necessary to prevent a ``larger and deeper crisis,'' while adding that the ultimate resolution of the firms' status will need to be addressed.

Free-marked advocates such as former Fed Chairman Alan Greenspan and Richmond Fed President Jeffrey Lacker have called for the two companies to be split up and sold off.

``Debt holders still face uncertainty, especially regarding what happens in 2010 and what is the business plan going forward,'' said Eric Johnson, president of Carmel, Indiana-based 40/86 Advisors Inc., which manages $25 billion in fixed-income assets.

$5 Billion Purchase

Starting with a $5 billion purchase this month, the Treasury will buy new mortgage-backed securities from the two companies, in an effort ``to broaden access to mortgage funding for current and prospective homeowners,'' according to the Treasury.

The Treasury will hire independent asset managers to purchase and run the portfolio of mortgage-backed securities it will buy. ``There is no reason to expect taxpayer losses from this program, and it could produce gains,'' the department said.

For Bill Gross, manager of the world's biggest bond fund at Newport Beach, California-based Pacific Investment Management Co., today's announcement was good news.

``We own lots of mortgage-backed bonds, and I would expect on Monday and in the ensuing weeks for them to do very well,'' Gross said in a Bloomberg Radio interview. ``So yes, I'm smiling at the moment.''

Inflated Capital

Paulson's decision, taken after consulting with Bernanke, followed a review that found Washington-based Fannie and McLean, Virginia-based Freddie used accounting methods that inflated their capital, according to people with knowledge of the decision.

Paulson, 62, hired Morgan Stanley a month ago to probe the companies' finances. The investment bank concluded that the accounting, while legal, enabled Freddie, and to a lesser extent Fannie, to overstate the value of their reserves, according to the people who declined to be identified because the findings were confidential.

Robert Scully, an adviser to Morgan Stanley CEO and Chairman John Mack, and Ruth Porat, head of global financial institutions, led a 39-person team at the investment bank that explored a range of alternatives for Fannie and Freddie.

Morgan Stanley, officials and regulators determined it was too risky for the companies to try to raise money themselves, because of the losses on many private capital injections in the past year, two people involved in the discussions said. They also deemed a Treasury capital infusion without a government takeover as too risky for taxpayers, the people said.

No End Date

The FHFA will aim to ``preserve and conserve'' the companies' assets and property and put them ``in a sound and solvent condition,'' according to a fact sheet distributed by the Treasury. There is ``no exact time frame'' for when the conservatorship will end, the statement said.

Fannie and Freddie own or guarantee almost half of the $12 trillion in U.S. home loans and the government had been leaning on the companies to help pull the economy out of the housing crisis.

Concern over the companies' capital pushed their borrowing costs to record levels over U.S. Treasuries, sent their common and preferred stocks tumbling and boosted mortgage rates. Fannie is down about 66 percent in New York Stock Exchange trading since the end of June. Freddie has fallen about 69 percent.

Paulson briefed Republican presidential candidate John McCain, Obama, and the Democratic and Republican leaders of the House and Senate. Senate Banking Committee Chairman Christopher Dodd and House Financial Services Committee Chairman Barney Frank and their Republican minority counterparts were also informed.

Congressional Reaction

``Paulson has threaded the needle just right by taking necessary action to stabilize U.S. financial markets while minimizing the liability for taxpayers,'' Democratic Senator Charles Schumer of New York, who heads the congressional Joint Economic Committee, said in a statement. ``This plan will be met with broad acceptance in Congress because it doesn't prejudge the ultimate fate of Fannie Mae and Freddie Mac.''

Other congressional statements indicated hearings are likely as soon as this week.

Fannie was created by the government in 1938 as part of President Franklin D. Roosevelt's New Deal. Freddie was chartered in 1970 to compete with Fannie.

As losses on the mortgages grew late last year, the companies recorded $14.9 billion in combined net losses, eating into their capital. Fannie raised $14.4 billion since November and Freddie sold $6 billion of preferred securities. Plans for a $5.5 billion sale were delayed as the company's fortunes sank.

Required By Regulator

Fannie had $47 billion of capital as of June 30, according to company filings. The company is required by its regulator to hold $37.5 billion. Freddie's capital stood at $37.1 billion, compared with a requirement of $34.5 billion, filings show.

Fannie's market capitalization is now $7.6 billion, down from $38.9 billion at the end of last year. Freddie's has fallen to $3.3 billion, from $22 billion over the same period.

Bernanke participated in the meetings because the central bank was given a consultative role in overseeing Fannie's and Freddie's capital under legislation approved in July.

The FHFA was scheduled to release its assessment of the companies' capital levels as early as last week as part of a quarterly appraisal of their finances.

To contact the reporter on this story: Rebecca Christie in Washington at Rchristie4@bloomberg.net; Dawn Kopecki in Washington at dkopecki@bloomberg.net

Last Updated: September 7, 2008 17:23 EDT

Saturday, September 6, 2008

US Blackmailed By China on Fannie and Freddie Bailout

Bloomberg is reporting Fannie's Mudd Soothed Asian Investors as Bonds Rose .
Fannie Mae Chief Executive Officer Daniel Mudd was sitting down to a glass of wine with his wife at their Washington home around 10 p.m. on Saturday July 12 when Treasury Secretary Henry Paulson called.


 

Concerns about the financial health of the biggest U.S. mortgage finance company had driven Fannie Mae's borrowing costs to the highest since March the previous week and its shares had tumbled 45 percent on the New York Stock Exchange. Investors in Asia, the biggest foreign owners of Fannie Mae's $3 trillion of bonds, were asking the Treasury to bolster the government- sponsored company and its smaller competitor, Freddie Mac, said three people with knowledge of the talks.

Paulson told Mudd he had a plan to restore confidence in Fannie and Freddie, the core of the Bush administration's efforts to revive the U.S. housing market. ``At that point, the proposal began to take form,'' Mudd, 49, said in an interview. ``We're trying to solve a crisis of confidence. Would this do it?''

The next afternoon, before financial markets opened Monday in Asia, Paulson announced the rescue plan, saying he would seek authority to buy unlimited equity stakes in the companies and their bonds if needed, while the Federal Reserve would lend directly to Fannie and Freddie. Congress included the proposals in a broader housing bill that President George W. Bush signed into law last week.

Asian investors were among the most important groups to soothe because central banks, financial institutions and funds in the region own $800 billion of Fannie Mae and Freddie Mac's $5.2 trillion in debt, according to data compiled by the Treasury. U.S. officials were concerned that sales from the region would push lending rates higher, said the people, who declined to be named because the discussions were confidential.

Paulson, the 62-year-old former CEO of Goldman Sachs Group Inc., "knows the markets; he's seen parts of this movie before," Mudd said. The decision to allow Fannie and Freddie to borrow from the Fed's so-called discount window was meant to "send a message to the markets that it wasn't just a someday aspiration, but those confidence building measures are in place right now before Tokyo opens on Sunday night," he said. Karl Denninger wrote a scathing attack of Paulson's maneuver in Now We Know - There WAS A Threat . My thoughts on the so-called "confidence building measures" of this scheme follow.

Confidence Building?

  • How can anyone have confidence in the markets when the Fed, the SEC, or the Treasury Department has to intervene on a weekly basis?
  • How can anyone have any confidence in earnings statements when level 3, market to fantasy assets rise every quarter?
  • How can anyone have confidence in banks when Citigroup Holds $1.1 Trillion in Mysterious Off Balance Sheet Assets ?
  • How can anyone have any confidence when the FASB Postpones Off-Balance-Sheet Rules for a Year, at Citigroup's request, because "It's not practical" to implement the rules now. (Please see Not Practical To Tell The Truth for more on this story).
  • How can anyone gave confidence in financial institutions when Deleveraging Risk Is High And Growing At Lehman and other broker dealers?
  • How can anyone have any confidence in banks when there are 25 Rock Solid Reasons To Believe The Banking System Is Unsound .
  • How can taxpayers have any confidence when Congress acts in the best interest of Fannie Mae executives, investors like Bill Gross who bet on a taxpayer funded bailout, and China, rather than the best interests of taxpayers and innocent citizens that had nothing to do with this housing mess?
  • How can anyone have confidence in the system if there is even the remotest possibility that the US financial system was held hostage by China?


Fannie Mae Chief Executive Officer Daniel Mudd called Paulson's move a "confidence building measure". Mudd cannot possibly be further from the truth.

By Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Click Here To Scroll Thru My Recent Post List

Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management . Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.

Visit Sitka Pacific's Account Management Page to learn more about wealth management and capital preservation strategies of Sitka Pacific.

I do weekly podcasts every Thursday on HoweStreet and a brief 7 minute segment on Saturday on CKNW AM 980 in Vancouver.

When not writing about stocks or the economy I spends a great deal of time on photography and in the garden. I have over 80 magazine and book cover credits. Some of my Wisconsin and gardening images can be seen at MichaelShedlock.com .

© 2008 Mike Shedlock, All Rights Reserved

Freddie and Fannie get nationalized by Feddie?

I've been reading The Black Swan, which talks about the impact of highly improbable events and how often they actually happen. Two years ago, if you had asked Wall Street insiders what the probability was of a bankruptcy of Fannie Mae (FNM) and Freddie Mac (FRE), they'd have most certainly said less than 1%. And yet that is basically what we've just witnessed. It's not technically a bankruptcy, but the equity has been wiped out and the company has been taken over by the only entity that can guaranty the debt - the US govt/taxpayers. http://seekingalpha.com/article/94191-bad-news-friday-nights

http://news.google.com/news/url?sa=t&ct=us/0-3&fp=48c2a097ee0030a3&ei=GdPCSIvpKqT2ygSHurjYAw&url=http%3A//www.digitaljournal.com/article/259495&cid=1241810220&usg=AFQjCNEITbykqvBVNfQMbQWVyyqsLZuXKA

http://www.nolanchart.com/article4736.html     "Will the foreign dollar holders, the ones who hold most of the U.S. debt in the world, also applaud the move?" If they do, the Fed will probably get away with this power grab, at the expense of the taxpayers.

Of course, they won't call it nationalization. They won't even call it a bailout. They'll use high-sounding phrases like the ones that Fox News and the Times are using, because those are the words the banking interests gave to the major news organizations in the first place.

Indeed, the U.S. financial debacle is now so ingrained - and a so-called "Super Crash" so likely - that most Americans alive today won't be around by the time the last of this credit-market mess is finally cleared away - if it ever is, Rogers said.... http://www.moneymorning.com/2008/09/06/jim-rogers-book/

http://money.cnn.com/2008/01/03/news/newsmakers/gross_pimco/?postversion=2008010311Gross avoided exposure to subprime securities and also anticipated the effect that the decline in home prices would have on the broader economy and corporate bonds, Morningstar said.

http://www.howestreet.com/articles/index.php?article_id=7395 The Treasury Department is close to finalizing a plan to help shore up mortgage giants Fannie Mae and Freddie Mac, according to people familiar with the matter. Precise details of Treasury's plan couldn't be learned. The plan is expected to involve a creative use of Treasury's new authority to make a capital injection into the beleaguered giants.

The plan includes changes to senior management at both companies, according to a person familiar with the plans. An announcement could come as early as this weekend.

On Friday, a series of high-level meetings were planned between Federal Reserve Chairman Ben Bernanke, Treasury Secretary Henry Paulson, the chief executives of Fannie Mae and Freddie Mac and the companies' new regulator, the Federal Housing Finance Agency.

Treasury has been working with bankers at Morgan Stanley to use its newfound authority, granted by Congress in July, to devise a way to prop up the mortgage giants, which have been pummeled by investors in recent weeks.


 

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Friday, September 5, 2008

Ruble falls Russian bonds face potential default

http://www.bloomberg.com/apps/news?pid=20601087&sid=a2Vnuf1g659I&refer=home Sept. 5 (Bloomberg) -- Russian stocks plunged and the cost to protect government bonds from default jumped to the highest in almost four years as the central bank shored up its currency pummeled by the conflict in Georgia and tumbling commodity prices.

The central bank said it intervened after the ruble fell to the lowest level in almost a year against the dollar yesterday. Russia's RTS Index dropped the most among 88 stock indexes tracked by Bloomberg today, capping its worst week since May 2006, and credit-default swaps on the government's debt rose 13 basis points to 165, the highest since November 2004, according to CMA Datavision prices.

Thursday, September 4, 2008

Palin drives down markets

http://www.clusterstock.com/2008/9/sarah-palin-pick-blamed-for-clobbering-stock-market Alongside last Friday's announcement that Alaska Governor Sarah Palin would be John McCain's running mate, the Dow Jones Industrial Average fell 170 points. Stocks have shown weakness ever since.

Elite E Services FX Systems (EESFX) Trading Group Chat in Skype Public Chat

Elite E Services FX Systems (EESFX) Trading Group Chat in Skype Public Chat

Trading is a lonely business. Markets move fast and information is king. EES has a vast network of contacts and resources in the FX community. A healthy FX chat can create a live 'chat log' of information, discussion, links, resources, and FX news that will complement the other means of communication of EES FX.

How the group will communicate:

What will be discussed?

  • Direction of FX markets
  • What trading systems are working / not working
  • Trading training and education
  • Broker issues (execution, margin, etc.)
  • New systems and other providers of systems
  • Potential development of new trading systems
  • Economics
  • FX derivatives

The group itself will be 100% FREE to all members, as we do not want to discourage true traders from joining.

How we will work together:

  • Co-management of trades (if requested)
  • Exchanging of trading strategies / trade ideas
  • Co-development of trading systems.
  • Discussion and use of new FX technologies and 3rd party signal providers

EES has a dedicated client base that will participate and EES will have FX products and systems for lease or purchase. Anyone can get these systems free, along with support and other free trading tools, by opening a live FX account at ANY participating broker with only $250 minimum (FXCM for example).


 


 

World's Largest Gold Refiner Runs Out of Krugerrands

Aug. 28 (Bloomberg) -- Rand Refinery Ltd., the world's largest gold refinery, ran out of South African Krugerrands after an ``unusually large'' order from a buyer in Switzerland.

The order was for 5,000 ounces and it will take until Sept. 3 for inventories to be replenished, said Johan Botha, a spokesman for Rand Refinery in Germiston, east of Johannesburg. He declined to identify the buyer.

Coins and bars of precious metals are attracting investors as a haven against a sliding dollar and conflict between Russia and its neighbor Georgia. The U.S. Mint suspended sales of one- ounce ``American Eagle'' gold coins, Johnson Matthey Plc stopped taking orders for 100-ounce silver bars at its Salt Lake City refinery and Heraeus Holding GmbH has a delivery waiting list of as long as two weeks for orders of gold bars in Europe.

``A lot of people are worried about the dollar, they're worried about inflation and now we have geopolitical risk with what's happening in Russia,'' said Mark O'Byrne, managing director of brokerage Gold and Silver Investments Ltd. in Dublin. O'Byrne said his company's sales are up fourfold this year, heading for a record since its founding in 2003.

Gold rose to a record in March and is 25 percent higher than this time last year, while the dollar dropped 7.4 percent against the euro. Silver is up 15 percent in the period.

http://www.bloomberg.com/apps/news?pid=20601012&sid=acH4WhPh1WJ0&refer=commodities

Wednesday, September 3, 2008

Iran calls for production cuts

http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article4663676.ece
The price of crude oil tumbled yesterday in the futures markets as the destructive force of Hurricane Gustav dwindled.

Traders are focused again on the weakening global economy and panicky behaviour is being detected within Opec, suggesting that some cartel members fear that the oil price could crash. The gloom in the commodities markets pushed the price of US light crude as low as $105.46 per barrel yesterday, a $10 fall. Iran, the most hawkish member of the oil cartel, called for agreement next week on a cut of 1.5 million barrels per day in output.

Oil price of $100 a barrel on horizon...

ABU DHABI GOES TO THE MOVIES; $1B INVESTMENT IN FILM PRODUCTION...