While it wasn’t exactly breaking news, with consensus having long ago decided that Halliburton and Baker Hughes would ultimately call off their ill-timed $28 billion merger announced in late 2014 following recurring media leaks, overnight the two companies officially ended speculation when they announced that the contested merger would be called off, resulting in a $3.5 billion termination fee payable to Baker Hughes. And with its immediate future somewhat in limbo, moments ago Baker Hughes outlined its “path for the future.”

It included the following key steps:

• “To reduce costs by simplifying its organization and rationalizing its operational footprint”: i.e., more layoffs
• “Commercial strategy focused on its core strengths in product innovation, while building broader channels for its technology and products” – i.e., returning to its core business model
• “Announces plans to buy back $1.5 billion of shares and $1 billion of debt with $3.5 billion merger breakup fee” – i.e., preventing any further selloff by promising to step in and buy its own securities.

Full release from Baker Hughes below:

Following the termination of its merger agreement, Baker Hughes Incorporated (NYSE: BHI) today outlined a series of actions to reduce costs and simplify its business, enhance its commercial strategy, and optimize its capital structure.

The steps are intended to strengthen the company’s competitive position, financial performance and shareholder returns during the ongoing industry challenges of today and for the additional opportunities that will be available when the market recovers.

Baker Hughes Chairman and CEO Martin Craighead said that the company is well positioned to build on its heritage as a product innovator, focusing on the development of products that lower costs and maximize production for operators in the oil and gas industry.

“Innovation is what we do best and what our customers need the most. It is an enviable capability that is part of our culture and continues to differentiate us in the market. Baker Hughes also has an experienced and exceptionally talented team of people, a global footprint, and industry-leading products, services and technology expertise,” Craighead said. “More than ever, our customers need to lower their costs and maximize production. These objectives align with our strengths in Well Construction, where we have leading capabilities in drilling services, drill bits and completions, and Well Production, where we have a unique portfolio with artificial lift systems, wireline services and production chemicals. We intend to build on our strong foundation and market position by simplifying the structure of our business and evolving our commercial strategy to deliver significant value to shareholders.”

Actions outlined by the company include:

Improving operational efficiency and effectiveness

Baker Hughes is taking immediate steps to remove significant costs that were retained in compliance with the former merger agreement. In addition to removing those previously disclosed costs, the company is evaluating broader structural changes to further significantly reduce costs and improve efficiency, which will allow it to better serve the rapidly shifting global market.

The initial phase of the cost reduction efforts is expected to result in $500 million of annualized savings by the end of 2016. 

Evolving the company’s go-to-market strategy

As it seeks to further capitalize on its leadership position as a product innovator, the company is evolving its go-to-market strategy to align with a changing marketplace and maximize its return on invested capital. The company will be rationalizing where it provides its current full-service model and will build a broader range of global sales channels for select countries, including tailored operating models. These new channels will allow Baker Hughes to take its products to market more efficiently and participate differently in existing markets with lower investment and fewer risks.

In an effort to improve its return on invested capital the company has decided to retain a selective footprint in its U.S. onshore pressure pumping business, while preserving the flexibility to expand for the right opportunities. This approach will allow the company to achieve cash-positive operations in a capital-intensive segment that is expected to remain challenging due to overcapacity, commoditized pricing and low barriers to entry.

Optimizing the company’s capital structure

The company also is taking actions to optimize its capital structure to achieve the right balance between returning capital to shareholders, maintaining strong investment grade ratings and having the necessary cash to fund cost efficiency initiatives, while preserving its financial flexibility.

As part of these plans, the company intends to buy back shares totaling $1.5 billion and debt totaling $1 billion, from proceeds of the $3.5 billion breakup fee. In addition, the company intends to refinance its $2.5 billion credit facility, which expires in September 2016.

“The company will approach these actions thoughtfully, decisively and swiftly to position the company for success and to maximize shareholder value,” Craighead said. “As we implement these changes, we remain focused on running the business efficiently while capitalizing on our strengths as a product innovator to create new growth opportunities. We are extremely appreciative of our customers and their loyalty to Baker Hughes, and our employees are energized to turn our technology expertise into the latest game-changing product innovations that create even more value for them.”

Baker Hughes will provide more details on its plans when Craighead and Senior Vice President and Chief Financial Officer Kimberly Ross host a webcast on Tuesday, May 3 at 7:00 a.m. Central Time (8:00 a.m. Eastern Time). To access the webcast, go to our Events and Presentations page on the Company’s website at: http://ift.tt/1u82mvr.

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In what may be the biggest “self-outing” in years, overnight Australian entrepreneur Craig Wright has publicly identified himself as Bitcoin creator Satoshi Nakamoto, revealing his identity to three media organizations – the BBC, the Economist and GQ. His admission ends years of speculation about who came up with the original ideas underlying the digital cash system.

As the BBC reports, Wright has provided technical proof to back up his claim using coins known to be owned by Bitcoin’s creator. Prominent members of the Bitcoin community and its core development team have also confirmed Mr Wright’s claim although speculation remains that this may be merely a publicity stunt.

At the meeting with the BBC, Wright digitally signed messages using cryptographic keys created during the early days of Bitcoin’s development. The keys are inextricably linked to blocks of bitcoins known to have been created or “mined” by Satoshi Nakamoto. “These are the blocks used to send 10 bitcoins to Hal Finney in January [2009] as the first bitcoin transaction,” Wright said during his demonstration.

Renowned cryptographer Hal Finney was one of the engineers who helped turn Mr Wright’s ideas into the Bitcoin protocol, he said. “I was the main part of it, but other people helped me,” he said. Wright said he planned to release information that would allow others to cryptographically verify that he is Satoshi Nakamoto.

Prominent members of the bitcoin community promptly validated his claim. Soon after Mr Wright went public, Gavin Andresen, chief scientist at the Bitcoin Foundation, published a blog backing his claim. “I believe Craig Steven Wright is the person who invented Bitcoin,” he wrote.

Jon Matonis, an economist and one of the founding directors of the Bitcoin Foundation, said he was convinced that Wright was who he claimed to be. “During the London proof sessions, I had the opportunity to review the relevant data along three distinct lines: cryptographic, social, and technical,” he said. “It is my firm belief that Craig Wright satisfies all three categories.”

However, not everyone has been convinced by Mr Wright’s claims and technical proofs. In its article about Mr Wright, The Economist said “important questions remain” about whether he was Satoshi Nakamoto. In addition, many people involved in bitcoin have taken to social media to express their doubts and have called for further proof.

Why Now?

By going public, Wright hopes to put an end to press speculation about the identity of Satoshi Nakamoto. The New Yorker, Fast Company, Newsweek and many other media organisations have all conducted long investigations seeking Bitcoin’s creator and named many different people as candidates.

In December 2015, two magazines, Wired and Gizmodo, named Mr Wright as a candidate after receiving documents believed to be stolen from him that revealed his involvement with the project. Soon after these stories were published, authorities in Australia raided the home of Mr Wright. The Australian Taxation Office said the raid was linked to a long-running investigation into tax payments rather than Bitcoin. Questioned about this raid, Mr Wright said he was cooperating fully with the ATO.

“We have lawyers negotiating with them over how much I have to pay,” he said.

The stories in December have led to many more journalists and others pursuing him and people he knows, he said. “There are lots of stories out there that have been made up and I don’t like it hurting those people I care about,” he said. “I don’t want any of them to be impacted by this.”

“I have not done this because it is what I wanted. It’s not because of my choice,” he said, adding that he had no plans to become the figurehead for bitcoins.  

“I really do not want to be the public face of anything,” he said, expressing regret that he had been forced to reveal his identity.

“I would rather not do it,” he said. “I want to work, I want to keep doing what I want to do. I don’t want money. I don’t want fame. I don’t want adoration. I just want to be left alone.”

Bitcoins are now accepted as payment for a vast variety of goods and services – everything from international money transfers to ransoms for data encrypted by computer viruses. There are currently about 15.5 million bitcoins in circulation. Each one is worth about $444. Satoshi Nakamoto is believed to have amassed about one million Bitcoins which would give him a net worth, if all were converted to cash, of about $450 million.

Following the news, the price of bitcoin has seen some initial weakness although it appears to have made up some of the losses after falling as low as $439 in overnight trading.

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It has been a busy weekend for mostly negative newsflow.

It all started with China which on Saturday reported yet another disappointing PMI print of 50.1, which both missed expectations and declined from the previous month; then we got the latest Iraq oil output and exports number which rose yet again, pushing it further into near record territory despite a weekend of political chaos in Baghdad which saw protesters loyal to al Sadr penetrate the fortified Green Zone; at the same time Russian total output dipped just 0.5% from its post-USSR record, suggesting the global oil glut is only set to deteriorate.

In M&A news the long awaited termination of the Halliburton-Baker Hughes merger finally took place when the companies announced last night they would not extend the termination deadline; more important was Puerto Rico’s announcement that it would default on a $422 million bond payment for its Government Development Bank while Atlantic City is also expected to announce a default later today; the US shale sector just had its two latest casualties after Ultra Petroleum filed for bankruptcy citing $3.9 Billion Debt; at the same time Midstates Petroleum also filed Chapter 11.

In sum, a bevy of negative news in the past 48 hours which perhaps explains why futures are fractionally in the green as of this moment.

Central planning humor aside, US – and certainly Japanese – equities continue to be driven mostly by the Yen, which has failed to decline substantially after last week’s surge, and as a result the USDJPY remains within several dozen pips of its post October 2014 lows of 106.2.

 

The yen soared almost 5 percent on the final two trading days of last week as the Bank of Japan unexpectedly refrained from boosting stimulus amid fading prospects for a U.S. interest-rate increase this summer.  As a result, Japan led a selloff in Asian equities, with the Topix index sliding for a fifth day as trading resumed after a break on Friday. The yen held its steepest back-to-back gains since the global financial crisis and the Stoxx Europe 600 Index reached a two-week low.

“To sum it up in a single phrase, there was a gap in the communication between the BOJ and the market,” Yoshinori Ogawa, a market strategist at Okasan Securities in Tokyo told Bloomberg. “There are concerns the yen may strengthen beyond 105 per dollar. As we are in the middle of long holidays, liquidity is thin, which makes it easier for speculators to whip markets around with their selling.”

This ongoing pressure on the dollar explains why gold has finally breached the $1,300 resistance level.

What is perhaps strange is that despite a weaker dollar, oil continues to fall for a second day due to the noted previously Iraqi exports which approached record high in April, adding barrels to worldwide supply glut.  Operations weren’t affected Sunday after protesters stormed parliament in Baghdad, threatening to paralyze govt of OPEC’s 2nd-largest producer; disruption broke up Sunday as protesters agreed to leave govt area. “The rally is running out of steam,” says Eugen Weinberg, head of commodities research at Commerzbank in Frankfurt. “Negative sentiment and negative fundamentals are becoming more obvious. Most of the problem surrounds oversupply in the market, and that’s not going away.”

A notable move in Italy has seen local banks all slammed lower following the previously reported news that Italy’s bank bailout fund would use up a third of its firepower already just to buy most of the shares in Banca Popolare di Vicenza’s EU1.5b capital increase through an initial public offering after institutional investors showed little interest, in effect bailing out the first bank under its remit just weeks after being activated.

S&P 500 futures rose 0.1 percent after U.S. equities ended last week with their worst two-day drop since February, amid lackluster earnings and few signs of a pickup in economic growth.

Liquidity in the market will be particularly low today as markets are shut for holidays in China, Hong Kong and the U.K.

Latest Market Snapshot

• S&P 500 futures up 0.1% to 2061
• Stoxx 600 up less than 0.1% to 342
• DAX up 0.9% to 10131
• German 10Yr yield down 2bps to 0.25%
• Italian 10Yr yield down 2bps to 1.47%
• Spanish 10Yr yield down 2bps to 1.58%
• S&P GSCI Index down 0.5% to 358.4
• MSCI Asia Pacific down 1.2% to 130
• Nikkei 225 down 3.1% to 16147
• S&P/ASX 200 down 0.2% to 5243
• US 10-yr yield down 2bps to 1.82%
• Dollar Index down 0.23% to 92.87
• WTI Crude futures down 0.9% to $45.49
• Brent Futures down 1.3% to $46.77
• Gold spot up 0.5% to $1,299
• Silver spot down 0.2% to $17.81

Global Top News

• Halliburton, Baker Hughes Abandon $28 Billion Merger Agreement: Halliburton to pay Baker Hughes $3.5b termination fee
• Buffett Hits Hedge Funds While They’re Down, Faulting High Fees: At the annual meeting of his Berkshire Hathaway, he warned about the enduring risk of derivatives, defended stocks in his portfolio and signaled that some of the co.’s biggest subsidiaries are hitting speed bumps; Buffett Says Valeant Business Model Was ‘Enormously Flawed’
• Apollo-Led Consortium Increases Offer for Apollo Education: Consortium led by Apollo Global Management has increased its offer to buy Apollo Education to $10/share, or $1.14b
• Puerto Rico Will Default on Government Development Bank Debt: Will default on a $422m bond payment for its Government Development Bank; GDB and creditors reach tentative framework on 53% haircut
• Ultra Petroleum Files for Bankruptcy, Citing $3.9 Billion Debt: Principal assets are gas-producing properties in Wyoming
• Midstates Petroleum Co. files for bankruptcy protection
• Euro-Area Manufacturing Growing at ‘Anemic’ Pace, Markit Says: Growth was little changed last month as stronger readings in Germany, Italy and Spain were offset by contraction in France
• Energy Future Offers New Reorganization Plan Amid Deal Dispute: Proposal to sell Oncor unit to Hunt Consolidated in jeopardy
• JPMorgan Says Justice Department, SEC Probing Hires in Asia
• ‘Jungle Book’ Holds Off ‘Keanu’ to Stay No. 1 at Box Office: Collected $42.4m in its 3rd weekend in North American theaters
• Oil Bulls Bet the Waning U.S. Shale Boom Will Curb Global Glut: Hedge funds boost bullish wagers to highest in 11 months: CFTC
• AIG Raises $1.25 Billion Selling PICC Stock Near Bottom of Range: Sold 740 million PICC shares at HK$13.08 apiece
• Short Sellers Target Perrigo After CEO Exit as Goldman Says Sell: Short interest at highest since 2013 after forecast cut

Looking at regional markets, Asia stocks opened the week in negative territory with Nikkei 225 resuming its BoJ-triggered declines as JPY strength slams exporters. Nikkei 225 (-3.1%) was dragged lower by a firmer JPY as well as poor earnings & forecasts from several Japanese firms. In addition, auto names were also pressured with Takata shares plunging 10% following reports that US authorities are to call for an expansion of car recalls affected by faulty airbags. Elsewhere, ASX 200 (-0.2%) conformed to the downbeat tone after discouraging Chinese PMI data whilst uncertainty over the upcoming RBA policy meeting adds to the caution. Finally, 10yr JGBs saw a mild uptick in trade amid a risk-averse sentiment in the region, while the 20yr yields declined to a fresh record low of 0.24%.

Top Asian News

• China Factory Stabilization Shows Little Need for Added Stimulus: Official factory gauge, the manufacturing purchasing managers index, stood at 50.1 in April
• Macau Gaming Revenue Stabilizes, Falls Less Than Estimated: April gaming rev. decreased 9.5% versus 13.5% estimated decline
• JPMorgan Hires Ex-BOJ Officials for Research Business in Tokyo: Former BOJ deputy director Hiroshi Ugai recruited as senior economist, Rie Nishihara as senior analyst for banking
• Election Jitters Send Philippine Stock Investors to Sidelines: Rodrigo Duterte, who maintains lead a week before presidential vote, has given few details on economic policies
• Mitsubishi Motors’ Fraud Hits Nissan as Minicar Sales Plunge 51%: Nissan Japan sales of mini, standard vehicle fall 22% in April, Mitsubishi minicar deliveries drop 45%
• Beaches of Dead Fish Test New Vietnam Government’s Response: Thousands rally on Sunday calling for closing of Formosa plant in a nation where public protests, criticism are unusual
• Westpac Warns of Rise in Consumer Defaults on Mining Slowdown: Defaults inching up in mining states of Queensland, WA
• Ricoh Drops Most on Record After Forecasting Decline in Profits: Closes down 16%, most since Nov. 2008, after a record 17% drop during the day
• Takata Falls on Report Recalls May Rise to 100 Million Autos: Co. says no decision on additional recall in U.S. in response to Nikkei newspaper report

The European morning has seen equities kick-off the week in a tight range amid the holiday thinned trade, with UK markets closed and many across Asia also away. European equities trade marginally higher, led higher by exporters amid the EUR strength and with gains capped by the losses in financials, stemming from Italian banks as the NPL saga continues. Additionally, the tone has been somewhat dampened following soft Chinese Official PMI figures over the weekend, subsequently hinting at modest weakening in regards to the momentum of China’s economy.

From a fixed income perspective, Bunds are trading higher with the yield curve seeing some bull flattening, while notable outperformance has been observed in the long end with 30yr yields lower by 4.4bps. As such, some have noted that the price of German paper has been underpinned by residual month-end demand.

Top European News

• Air France-KLM Board Picks Janaillac as New CEO, Chairman: Selected veteran transportation manager Jean-Marc Janaillac as CEO and chairman, to start July 31
• Italian Bank Shares Tumble After Investors Snub Pop. Vicenza IPO: Bank stocks dropped after private investors snubbed an IPO by Banca Popolare di Vicenza and Atlante, Italy’s bank- rescue fund, had to buy almost all the shares; Italy Exchange to Rule on Pop. Vicenza Listing After Stock Sale
• Philips Said Disappointed With Lighting Bids, Leaning To IPO: Could seek valuation of about EU5.5b in potential listing
• Ferrari CEO Switch Said Imminent With Board Choosing Marchionne: Ferrari set to appoint Chairman Sergio Marchionne to replace Amedeo Felisa as CEO as early as Monday, according to people familiar with the matter
• Italy’s Intesa Sanpaolo Sells Payment Units in $1.2b Deal: To sell Setefi and Intesa Sanpaolo Card payment units to a group that includes Bain, Advent in deal valued at EU1.04b
• Deutsche Bank Said to Be Faulted by FCA Over Lax Client Vetting: Firm says it’s fixing lapses regulator cited in March letter
• Merkel’s $1.4b German E-Car Push Boosts Infineon, STMicro: Value of chips in e-cars, hybdrids double that in regular cars
• Spanish Politics Enters Uncharted Waters as Fresh Election Looms: Deadline for patching together a majority from the most fragmented parliament in Spanish history falls at midnight on May 2, triggering a repeat election for late June

In FX, there is not too much to report from early Europe, with the overnight session seeing a USD/JPY test lower but holding off 106.00 for now. A bid tone seen in the EUR with the lead spot rate taking out 1.1470-75 resistance — 1.1500 now targeted but digital out-strikes here said to be providing some supply ahead of the figure. EU manufacturing PMI’s saw the final read up slightly to 51.7, but notable weakness seen in the French component. Nevertheless, last week’s healthy EU wide GDP number adds to encouragement to a move beyond 1.1500. Elsewhere, Cable is shaking off some favour to the Brexit camp, but the EUR/GBP is pushing to new recent highs on the above EUR sentiment. An offered USD tone clearly continues, pushing AUD higher despite RBA risk ahead — outside calls for a rate cut. USD/CAD still eyeing 1.2500 lower down, but trade tight ahead of the North American open.

In commodities, in thin European trade WTI has managed to hang on to gains seen last week and continues to reside above the USD 45.00/bbl handle while Brent remains in close proximity to USD 47.00/bbl. Elsewhere, gold has continued its rally and has risen above the psychological USD 1300/oz as risk-averse sentiment and USD weakness underpinned the safe-haven, Silver printed just below USD 18/oz at USD 17.93/oz, while copper saw flat trade amid a lack of market participants as various nations including the world’s largest consumer China were away.

On today’s calendar we’ll get the final revision for the US this afternoon while the main focus will be the April data for ISM manufacturing and prices paid prints. March construction spending data will also be released.

Bulletin Headline Summary from Bloomberg and RanSquawk

• European bourses trade modestly higher, led by exporters as EUR/USD approaches 1.1500 to the upside
• Fixed income remains supported amid light volumes this morning, with the UK away for May Day Bank Holiday
• Highlights today include US Manufacturing PMI and scheduled comments from Fed’s Lockhart, ECB’s Draghi and Lautenschlaeger
• Treasuries rally in overnight trading as equity markets mixed in Europe, lower in Asia with many bourses closed due to holiday; economic data this week will be dominated by Friday’s nonfarm payrolls report.
• U.S. Treasury says China, Japan, Germany, S. Korea, Taiwan meet two of three criteria for pursuing FX policies that could provide unfair competitive advantage, under Trade Facilitation and Trade Enforcement Act of 2015
• In a world awash with debt, it’s hard to imagine that there may not be enough to go around. Yet, JPMorgan predicts record-low global yields ahead
• Italian bank stocks dropped in Milan trading after private investors snubbed an initial public offering by Banca Popolare di Vicenza SpA and Atlante, the country’s bank- rescue fund, had to buy almost all the shares
  Markit Economics in London said its monthly Purchasing Managers Index points to “anemic” factory growth in the Euro-area as stronger
• in Germany, Italy and Spain were offset by contraction in France
• Gold advanced above $1,300 an ounce as investors flood back to precious metals as risks to the global economy prompted the Federal Reserve to signal it will take a slower approach to further interest-rate increases
• Puerto Rico will default on a $422 million bond payment for its Government Development Bank, escalating what is turning into the biggest crisis ever in the $3.7 trillion market that U.S. state and local entities use to access financing
• Brazil’s President Rousseff promised increased spending on her party’s most popular social program and took other measures aimed at her electoral base, less than two weeks before the Senate is expected to vote in favor of the impeachment process she calls a coup d’etat
• After ratcheting up lending at the behest of President Dilma Rousseff, Brazil’s state-controlled banks may be in store for more pain as Brazil’s longest recession in a century sparks a surge in delinquencies
• Halliburton Co. and Baker Hughes Inc. called off their $28 billion merger that faced stiff resistance from regulators in the U.S. and Europe over antitrust concerns
• The hundreds of protesters who pulled down blast walls and forced their way into Baghdad’s Green Zone on Saturday laid bare growing political chaos that increasingly poses a threat to the country’s security and the economy
• Sovereign 10Y bond yields mixed; European equity markets mixed, Asian markets lower; U.S. equity-index futures rise. WTI crude oil drops, metals higher

US Event Calendar

• 8:50am: Fed’s Lockhart speaks at Amelia Island, Fla.
• 9:45am: Markit US Manufacturing PMI, April F, est. 50.8 (prior 50.8)
• 10am: ISM Manufacturing, April, est. 51.4 (prior 51.8)
• 10am: Construction Spending, March, est. 0.5% (prior -0.5%)
• 5:30pm: Fed’s Williams speaks in Los Angeles

DB’s Jim Reid concludes the overnight wrap

Earnings will again be a big focus for markets this week with 124 S&P 500 companies set to report, headlined by the likes of Merck, Pfizer and Kraft Heinz. We’ll also get the latest reports from 17% of the Stoxx 600 including some of the big banks. With the market firmly back to scrutinizing the data too, the big focus there this week comes on Friday when we’ll get the April employment report in the US. We’ll have a full preview of that closer to the date but as well as the labour market numbers it’s worth also keeping an eye on today’s ISM manufacturing print which, following on from softer regional readings, is expected to show a modest 0.4pt decline to 51.4. Our US economists are actually forecasting for a drop below 50 (to 49.0) and the data will give an early insight into what extent, if at all, growth is rebounding in Q2. We’ll also get the April PMI’s this week, so there’s plenty to keep us busy.

Over the weekend the main focus has been on the China data released on Sunday. The data showed a slight drop in the official manufacturing PMI for April, declining a modest 0.1pts to 50.1 (vs. 50.3 expected) while the non-manufacturing PMI was also lower, falling 0.3pts to 53.5. New orders subcomponents for both were softer, although especially in the latter where the component dropped back below 50. We’ll have to wait for the reaction from markets in China as bourses are closed for a public holiday (along with Hong Kong) today. The focus is more on Japan however where markets have reopened following a public holiday of their own on Friday. With the Yen unchanged this morning but hovering around 18 month highs, the Nikkei has plunged -3.62%, while the Topix is -3.55%. Elsewhere the ASX (-0.63%) and Kospi (-0.73%) are weaker too while moves for Oil aren’t helping with WTI down close to -1%.

Meanwhile the other headline grabber from the weekend is the news out of Puerto Rico with the confirmation that Governor Padilla has declared a debt moratorium on a $422m repayment due today by the island’s Government Development Bank, and so triggering a default. The bigger news now might mean what this means for the nation’s other general obligation bonds, of which according to Bloomberg $800m are due to be repaid by July. A story worth following.

Moving on. Earnings season is ticking along and in the US we’ve now had the latest quarterly earnings from 310 S&P 500 companies. There’s a familiar trend to what we’ve seen in the past with 77% beating at the EPS line and 57% at the revenue line – which largely matches previous quarters although the beat in sales is a bit better than what we’ve seen historically. As we’ve highlighted previously however, this masks what has been a significantly weaker period for earnings relative to last year. Our equity colleagues in the US highlight the important point that analysts have chopped their EPS forecast by over 9% for this quarter since the turn of the year, making it less of a surprise to see so many companies coming ahead of estimates. In fact our colleagues note that Q1 EPS should wrap up at about 5% lower YoY unless we see big beats from the remaining reporters. We’re currently down close to 6% on a YoY basis although ex-energy that’s only -0.5% yoy.

In a quick recap of markets on Friday, it was a pretty soft close to the week for markets on both sides of the pond, with volatility across currencies and some fairly mixed data plaguing sentiment. A late bounce into the close helped limit the loss for the S&P 500 to just -0.51%, however European bourses moved the other way in the late stages of trading there, culminating with the Stoxx 600 closing with a -2.13% decline which was the biggest daily fall since February. There was a similar underperformance in credit markets with the iTraxx Main and Crossover indices ending 2.5bps and 11bps wider respectively, while in the US CDX IG ended the day just 1bp wider. Currency markets were dominated by weakness for the US Dollar. In fact the Dollar index closed the day down -0.72% meaning it weakened over 2% during the week with the index now back to trading at the lowest level this year. It’s the mirror image for the Euro with the single currency up +0.87% on Friday and a shade over 2% on the week.

In terms of the US data, the core PCE was confirmed as rising +0.1% mom in March as expected which has resulted in the YoY rate dipping a tenth to +1.6%. The employment cost index print was reported as increasing +0.6% qoq in Q1. Meanwhile, there was some mixed signals coming from the personal income and spending reports last month. Income rose +0.4% mom and a little more than expected (vs. +0.3% expected), while spending (+0.1% mom vs. +0.2% expected) was below consensus. The Chicago PMI for April declined a steeper than expected 3.2pts to 50.4 (vs. 52.6 expected) while there was similar weakness in the ISM Milwaukee (-6.7pts to 51.1). Finally later in the session we got confirmation of a downward revision to the final April University of Michigan consumer sentiment print, by 0.7pts to 89.0. More concerning perhaps was the 3pt downward revision to the expectations reading to 77.6 which is the lowest since September 2014.

There was plenty of data released in Europe on Friday too. The highlight was a better than expected Q1 GDP print (+0.6% qoq vs. +0.5% expected) for the Euro area. This had the effect of keeping the YoY rate unchanged at +1.6% and while the headline reads positive, our Macro colleagues in Europe noted that some caution is warranted, however. They highlight in particular that there are transitory factors at play and numerous forces – including global uncertainty, rising oil and political risk – to prevent underlying growth from accelerating. Meanwhile, there was some disappointment in the CPI headline estimate for the Euro area after printing at -0.2% yoy (vs. -0.1% expected), a decline of two-tenths. The core print was recorded as declining three-tenths to +0.7% yoy (vs. +0.9% expected). Elsewhere, German retail sales were reported as declining unexpectedly in March (-1.1% mom vs. +0.4% expected) and so shrinking annual growth to +0.7% yoy.

Staying in Europe, there was some focus also on Portugal on Friday after the nation retained its IG credit rating status from DBRS. The news is significant as the agency is the only one to rate Portugal investment grade and so according to the FT, this allows the country to continue to benefit from QE bond buying by the ECB.

We’ll also get the final revision for the US this afternoon while the main focus will be the April data for ISM manufacturing and prices paid prints. March construction spending data will also be released. Away from the data we’ll start to hear from a number of Fedspeakers again. Lockhart (today and Wednesday), Mester (Tuesday), Kashkari (Wednesday) and Bullard (Thurday) are all scheduled while Bullard, Kaplan, Lockhart and Williams are all due to take part in a panel interview on Friday. Meanwhile the ECB’s Draghi is scheduled to speak this afternoon, while Weidmann is also due to speak later in the week.

It’s another big week for earnings with 124 S&P 500 companies set to report, accounting for 16% of the index market cap. The highlights look set to be AIG (today), Pfizer (Tueday), Kraft Heinz (Wednesday) and Merck (Thursday). In Europe we’ll get reports from 17% of the Stoxx 600 including Shell, HSBC, BNP, UBS and BMW.

via http://ift.tt/21pzq1L Tyler Durden

 

 

 

Fear Internationalization? It Could Mean Financial Security

Written by Jeff Thomas (CLICK FOR ORIGINAL)

 

 

In the early sixteenth century, the Hunt-Lenox globe was drawn, showing uncharted (and presumably dangerous) areas, marked with the warning: “HIC SVNT DRACONES” – “Here are Dragons.”

 

Subsequent to that time, mariners sometimes adopted the phrase, “there might be dragons,” if they became concerned for their safety when in unfamiliar waters.

It’s now an archaic saying, yet it’s even more applicable today than in times of yore. There are literally millions of people (particularly in the EU, US and Canada) who are fearful that their country of residence is becoming increasingly less free and less safe for themselves and their wealth. Some are looking into the prospect of internationalizing themselves, but a much smaller percentage actually take the plunge. Why should this be so? Well, as in centuries passed, for many, the reason is that … there might be dragons.

Of course, none of the mariners of old had actually ever seen a dragon, so each one conjured up his own image, and this is just as true today. For those of us who advise on internationalization, here are a few perceived dragons that we hear about repeatedly:

I don’t know anything about internationalization. I wouldn’t know where to begin.

You’ve already begun. Follow the “International Man” website. It has over five years of archived articles that cover virtually every aspect of internationalizing. In addition, obtain a copy of “Going Global.” Go online to research destinations that fit your personal situation. Then, instead of a holiday to Disney World, go to a country that seems to you to be the most likely best choice for either a second home, or even a complete change of national residence. You’ll be amazed at how extensive and varied the opportunities are out there.

Won’t I just end up as a slave to a different country instead of my home country?

Not if you choose your destination well. Many countries are far less invasive to your freedoms and wealth than the three jurisdictions mentioned above. Some, in fact, are just as prosperous and well-developed as your present country, yet have zero direct taxes.

In addition, should you choose to live in multiple destinations, you’d be less “owned” as a visitor or temporary resident than if you were a full-time resident and citizen.

Will I have rights there, since I’ll be a foreigner?

For those countries that fall under English common law, your rights will be almost identical to those of the locals. (This is less true in countries that come under civil law – notably Spanish America and much of Europe.) However, most everywhere, you will be regarded as a guest and, in many ways be treated better than locals. In some countries, you would be treated better by both locals and the government than you were at home.

Will I have to learn a new language?

Yes, or no, depending on your choice of destination. For anywhere in Central or South America (except Belize, Suriname and Guyana), yes. For the Caribbean, Australia, New Zealand, Canada, Ireland, the UK, and many Pacific islands, English is the primary language. In many other countries – Israel, the Philippines, and most of Europe, English is spoken by a majority of residents. Your choice of destination may, in part, depend on your ability (or willingness) to learn another language.

What if I can’t find any friends?

Most choice destination countries already have entire expat communities. However, many who expatriate themselves find that they prefer the locals and choose either integrated communities, or predominantly local communities.

If I cash out here, my funds to start over elsewhere might be limited. How can I be sure that I’ll be able to afford to live there without giving up my lifestyle?

First, if you wait to cash out until after events such as a real estate crash has occurred at home, or confiscation of your bank deposits has occurred, then yes, you will have less when you leave. Hence, the sooner the better. Second, your lifestyle would be likely to change, as you’d probably make different choices than before, based on new opportunities. Third, you may choose a destination where you’re already far more wealthy than most locals – where the cost of living is far lower than what you now pay. Fourth, even in a high-cost-of-living destination, if you choose to work, you’d probably be making more than at home. Fifth, if you move to a low-tax, or no-tax jurisdiction, you’d retain much more of your gross income. (My own country is such a destination and I’ve met countless people who came without even enough money to buy a used car, but ended up very successful.)

What if I’m unhappy there?

It’s a big world. There are many other choices and your first stop needn’t be your last. However, if you do your homework well, before going, you’re likely to pick more wisely the first time out.

What if I decide I want to go back?

Some people (but not many) do make that choice. But, they then find that any government that wants your money is more than happy to take you back. (Governments have no objection to wealth coming back in, they only try to stop it going out.) Even those who renounce their citizenship often find that they’re welcomed back into their first country, either on a visa or by reinstating their citizenship. However, the great majority, having succeeded at internationalizing, never choose this option.

Many people fear perceived dragons when considering internationalization. When doing so, they often overlook the very real dragon that’s creeping up behind them – the dragon of a declining world power that’s compensating for its decline through overreach – increasing taxation, removal of basic freedoms, an increasing police state, plus ever-expanding capital controls and governmental surveillance. As the situation worsens, the known world may well become more threatening than the new one.

The Middle Ages came to an end, in part, because new lands were discovered to the west by the mariners. Many people opted to stay put, for fear of dragons. Others opted for the slogan found on the reverse of Spanish coinage at that time. The two pillars on the coins represented the Straits of Gibraltar, and the slogan on the pillars – “PLUS ULTRA” (more beyond) signified a whole world apart from the old one, with new opportunities. The choice today is the same. Your future may depend on your outlook – whether you see the greater world from the standpoint of HIC SVNT DRACONES or PLUS ULTRA.

 

 

Please email with any questions about this article or precious metals HERE

 

 

 

 

Fear Internationalization? It Could Mean Financial Security

Written by Jeff Thomas (CLICK FOR ORIGINAL)

via http://ift.tt/1rMHkGH Sprott Money

The price of gold shot up over $60 this week. The price of silver moved up proportionally, gaining over $0.85. The mood is now palpable. The feeling in the air is that of long suffering suddenly turned to optimism. Big gains, if not the collapse of the price-suppression cartel, are now inevitable.

The headlines and articles, screaming for gold to hit $10,000 to $50,000, are pervasive. Today we won’t dwell on our favorite point that if the price of gold hits $50,000 then that means the price of the dollar has collapsed. If you own an ounce of gold, then you may have a lot more dollars. But unfortunately, each of those dollars is worth a lot less.

Today, we want to look at this new alleged precious metals bull market. Does it have legs? Are we likely to see silver hit $20, much less $1,000? We will support our analysis with a new graph to show the big picture.

Let’s look at the only true picture of supply and demand fundamentals. But first, here’s the graph of the metals’ prices.

       The Prices of Gold and Silver

Next, this is a graph of the gold price measured in silver, otherwise known as the gold to silver ratio. The ratio was down slightly this week. 

The Ratio of the Gold Price to the Silver Price

For each metal, we will look at a graph of the basis and cobasis overlaid with the price of the dollar in terms of the respective metal. It will make it easier to provide brief commentary. The dollar will be represented in green, the basis in blue and cobasis in red.

Here is the gold graph.

       The Gold Basis and Cobasis and the Dollar Price

We actually had to expand the range of both axes. The price of the dollar fell off the bottom, currently about 24mg. The cobasis (which is our measure of the scarcity of gold) also fell off the bottom, while the basis (which is our measure of abundance) rose above the top.

As the price of gold continues to rise, it becomes more abundant. Indeed, we can hardly say “scarcity” any more with a cobasis below -1%.

Look, the supply and demand fundamentals could change at any time. However, as of this moment, the picture painted by the basis is not $10,000 or $50,000. It’s more like $1,235. More on this below.

First let’s turn to silver.

The Silver Basis and Cobasis and the Dollar Price

The first thing you’ll notice is that the red cobasis line (i.e. scarcity) has not been falling to match the falling price of the dollar measured in silver (i.e. rising price of silver, measured in dollars) the way it has in the gold chart above. However, two factors mitigate this. One, the silver cobasis is much lower on an absolute basis (no pun intended). In gold, the cobasis is -1.1%, whereas for silver it’s -1.4%.

Two, silver has a much stronger tendency to a falling basis and rising cobasis as each contract nears expiration. In times of greater scarcity, it causes temporary backwardation—each contract tips into backwardation before it goes off the board. This phenomenon begins to distort the silver chart much farther out than in gold, and to a greater (numerical) degree. It has already taken hold in the July silver contract.

This segues into our next chart, a view new to this Report. We show the August and December gold contracts and the September and December silver contracts. Just the basis only, to make the chart easier to read.

The Gold and Silver Basis with LIBOR

You can see another aspect of our previous point. Even this far out, the silver contracts show more volatility than gold. And the two different months deviate from one another more than in gold.

Note the strong rising trend starting around mid-January.

So what is this showing, really? The basis is the real-world profit you would make to carry metal. Suppose you buy a bar of metal and simultaneously sell a futures contract, storing the metal in the meantime. You pocket the carry spread. If we quote it in terms of dollars, it’s about 14 cents for December silver. We quote it as an annualized percentage, so that you can easily compare it to other investments (more on this in a moment).

The trend for the past few months is that carrying is more and more profitable. What does that tell us? It means that more and more firms will enter the carry trade. A profit attracts people, for some odd reason or another having to do with wanting to make money or something…

Anyways, we know that more market participants are carrying metal because it’s more profitable than it was. Whatever number of people wanted to do it when the profit was 7 cents, we know that more will do it for 14.

What is this telling us about the state of the market for metal? If more and more metal is going into carry trades, then the marginal buyer of metal is this trader who carries metal—whom we often call the warehouseman. The marginal demand for metal is to be carried. This is a dangerous state, because when it flips around, then this marginal demand disappears and then the marginal supply of metal is coming out of carry trades. This is hardly the picture of a shortage driving a durable bull market.

We included two different LIBOR rates on the chart. It’s interesting to compare the basis to LIBOR. Now, in gold, carrying is about the same as 6-month LIBOR. In silver, the return is above that, and at one point got above 12-month LIBOR.

We have one final point. These traders are carrying metal to earn a small spread, with no price exposure. They are arbitragers. The activity of the arbitrageur always causes compression of the spread from which he is profiting. In this case, the carry trade involves buying metal in the spot market and selling it in the futures market. This tends to push up the price of spot metal and pull down the price of futures contracts.

So we have a growing group that’s pushing to compress the basis spread—basis is futures minus spot. Yet the basis is widening despite that. What could cause something to rise, when there’s a powerful and growing force trying to make it fall? What is the even-bigger force at work here?

It is the fast and furious buying of speculators, who bid up futures contracts on leverage. Paper gold is rising, and it’s pulling up gold metal. Paper silver is rising, and it’s pulling up silver metal.

For now.

 

© 2016 Monetary Metals

via http://ift.tt/1Nh0jlZ Monetary Metals

Authored by Eric Zuesse via Strategic-Culture.org,

The great investigative journalist Seymour Hersh, in two previous articles in the London Review of Books ("Whose Sarin?" and "The Red Line and the Rat Line") has reported that the Obama Administration falsely blamed the government of Syria’s Bashar al-Assad for the sarin gas attack that Obama was trying to use as an excuse to invade Syria; and Hersh pointed to a report from British intelligence saying that the sarin that was used didn’t come from Assad’s stockpiles. Hersh also said that a secret agreement in 2012 was reached between the Obama Administration and the leaders of Turkey, Saudi Arabia, and Qatar, to set up a sarin gas attack and blame it on Assad so that the US could invade and overthrow Assad.

"By the terms of the agreement, funding came from Turkey, as well as Saudi Arabia and Qatar; the CIA, with the support of MI6, was responsible for getting arms from Gaddafi’s arsenals into Syria."

Hersh didn’t say whether these 'arms' included the precursor chemicals for making sarin which were stockpiled in Libya, but there have been multiple independent reports that Libya’s Gaddafi possessed such stockpiles, and also that the US Consulate in Benghazi Libya was operating a "rat line" for Gaddafi’s captured weapons into Syria through Turkey. So, Hersh isn’t the only reporter who has been covering this. Indeed, the investigative journalist Christoph Lehmann headlined on 7 October 2013, "Top US and Saudi Officials responsible for Chemical Weapons in Syria" and reported, on the basis of very different sources than Hersh used, that:

"Evidence leads directly to the White House, the Chairman of the Joint Chiefs of Staff Martin Dempsey, CIA Director John Brennan, Saudi Intelligence Chief Prince Bandar, and Saudi Arabia´s Interior Ministry."

And, as if that weren’t enough, even the definitive analysis of the evidence that was performed by two leading US analysts, the Lloyd-Postal report, concluded that:

"The US Government’s Interpretation of the Technical Intelligence It Gathered Prior to and After the August 21 Attack CANNOT POSSIBLY BE CORRECT."

Obama has clearly been lying.

However, now, for the first time, Hersh has implicated Hillary Clinton directly in this 'rat line'. In an interview with Alternet.org, Hersh was asked about the then-US-Secretary-of-State’s role in the Benghazi Libya US consulate’s operation to collect weapons from Libyan stockpiles and send them through Turkey into Syria for a set-up sarin-gas attack, to be blamed on Assad in order to ‘justify’ the US invading Syria, as the US had invaded Libya to eliminate Gaddafi. Hersh said:

"That ambassador who was killed, he was known as a guy, from what I understand, as somebody, who would not get in the way of the CIA. As I wrote, on the day of the mission he was meeting with the CIA base chief and the shipping company. He was certainly involved, aware and witting of everything that was going on. And there’s no way somebody in that sensitive of a position is not talking to the boss, by some channel".

This was, in fact, the Syrian part of the State Department’s Libyan operation, Obama’s operation to set up an excuse for the US doing in Syria what they had already done in Libya.

The interviewer then asked:

"In the book [Hersh’s The Killing of Osama bin Laden, just out] you quote a former intelligence official as saying that the White House rejected 35 target sets [for the planned US invasion of Syria] provided by the Joint Chiefs as being insufficiently painful to the Assad regime. (You note that the original targets included military sites only – nothing by way of civilian infrastructure.) Later the White House proposed a target list that included civilian infrastructure. What would the toll to civilians have been if the White House’s proposed strike had been carried out?"

Hersh responded by saying that the US tradition in that regard has long been to ignore civilian casualties; i.e., collateral damage of US attacks is okay or even desired (so as to terrorize the population into surrender) – not an ‘issue’, except, perhaps, for the PR people.

The interviewer asked why Obama is so obsessed to replace Assad in Syria, since "The power vacuum that would ensue would open Syria up to all kinds of jihadi groups"; and Hersh replied that not only he, but the Joint Chiefs of Staff, "nobody could figure out why". He said, "Our policy has always been against him [Assad]. Period". This has actually been the case not only since the Party that Assad leads, the Ba’ath Party, was the subject of a shelved CIA coup-plot in 1957 to overthrow and replace it; but, actually, the CIA’s first coup had been not just planned but was carried out in 1949 in Syria, overthrowing there a democratically elected leader, in order to enable a pipeline for the Sauds’ oil to become built through Syria into the largest oil market, Europe; and, construction of the pipeline started the following year. But, there were then a succession of Syrian coups (domestic instead of by foreign powers – 1954, 1963, 1966, and, finally, in 1970), concluding in the accession to power of Hafez al-Assad during the 1970 coup. And, the Sauds' long-planned Trans-Arabia Pipeline has still not been built. The Saudi royal family, who own the world’s largest oil company, Aramco, don’t want to wait any longer. Obama is the first US President to have seriously tried to carry out their long-desired "regime change" in Syria, so as to enable not only the Sauds’ Trans-Arabian Pipeline to be built, but also to build through Syria the Qatar-Turkey Gas Pipeline that the Thani royal family (friends of the Sauds) who own Qatar want also to be built there. The US is allied with the Saud family (and with their friends, the royal families of Qatar, Kuwait, UAE, Bahrain, and Oman). Russia is allied with the leaders of Syria – as Russia had earlier been allied with Mossadegh in Iran, Arbenz in Guatemala, Allende in Chile, Hussein in Iraq, Gaddafi in Libya, and Yanukovych in Ukraine (all of whom except Syria’s Ba’ath Party, the US has successfully overthrown).

Hersh was wrong to say that "nobody could figure out why" Obama is obsessed with overthrowing Assad and his Ba’ath Party, even if nobody that he spoke with was willing to say why. They have all been hired to do a job, which didn’t change even when the Soviet Union ended and the Warsaw Pact was disbanded; and, anyone who has been at this job for as long as those people have, can pretty well figure out what the job actually is – even if Hersh can’t.

Hersh then said that Obama wanted to fill Syria with foreign jihadists to serve as the necessary ground forces for his planned aerial bombardment there, and, "if you wanted to go there and fight there in 2011-2013, ‘Go, go, go… overthrow Bashar!’ So, they actually pushed a lot of people [jihadists] to go. I don’t think they were paying for them but they certainly gave visas".

However, it’s not actually part of America’s deal with its allies the fundamentalist-Sunni Arabic royal families and the fundamentalist Sunni Erdogan of Turkey, for the US to supply the salaries (to be "paying for them", as Hersh put it there) to those fundamentalist Sunni jihadists – that’s instead the function of the Sauds and of their friends, the other Arab royals, and their friends, to do. (Those are the people who finance the terrorists to perpetrate attacks in the US, Europe, Russia, Afghanistan, Pakistan, India, India, Nigeria, etc. – i.e., anywhere except in their own countries.) And, Erdogan in Turkey mainly gives their jihadists just safe passage into Syria, and he takes part of the proceeds from the jihadists’ sales of stolen Syrian and Iraqi oil. But, they all work together as a team (with the jihadists sometimes killing each other in the process – that’s even part of the plan) – though each national leader has PR problems at home in order to fool his respective public into thinking that they’re against terrorists, and that only the ‘enemy’ is to blame. (Meanwhile, the aristocrats who supply the "salaries" of the jihadists, walk off with all the money.)

This way, US oil and gas companies will refine, and pipeline into Europe, the Sauds’ oil and the Thanis’ gas, and not only will Russia’s major oil-and-gas market become squeezed away by that, but Obama’s economic sanctions against Russia, plus the yet-further isolation of Russia (as well as of China and the rest of the BRICS countries) by excluding them from Obama’s three mega-trade-deals (TTIP, TPP & TISA), will place the US aristocracy firmly in control of the world, to dominate the 21st Century, as it has dominated ever since the end of WW II.

Then, came this question from Hersh:

"Why does America do what it does? Why do we not say to the Russians, Let’s work together?"

His interviewer immediately seconded that by repeating it, "So why don’t we work closer with Russia? It seems so rational". Hersh replied simply: "I don’t know". He didn’t venture so much as a guess – not even an educated one. But, when journalists who are as knowledgeable as he, don’t present some credible explanation, to challenge the obvious lies (which make no sense that accords with the blatantly contrary evidence those journalists know of against those lies) that come from people such as Barack Obama, aren’t they thereby – though passively – participating in the fraud, instead of contradicting and challenging it? Or, is the underlying assumption, there: The general public is going to be as deeply immersed in the background information here as I am, so that they don’t need me to bring it all together for them into a coherent (and fully documented) whole, which does make sense? Is that the underlying assumption? Because: if it is, it’s false.

Hersh’s journalism is among the best (after all: he went so far as to say, of Christopher Stephens, regarding Hillary Clinton, "there’s no way somebody in that sensitive of a position is not talking to the boss, by some channel"), but it’s certainly not good enough. However, it’s too good to be published any longer in places like the New Yorker. And the reporting by Christof Lehmann was better, and it was issued even earlier than Hersh’s; and it is good enough, because it named names, and it explained motivations, in an honest and forthright way, which is why Lehmann’s piece was published only on a Montenegrin site, and only online, not in a Western print medium, such as the New Yorker. The sites that are owned by members of the Western aristocracy don’t issue reports like that – journalism that’s good enough. They won’t inform the public when a US Secretary of State, and her boss the US President, are the persons actually behind a sarin gas attack they’re blaming on a foreign leader the US aristocrats and their allied foreign aristocrats are determined to topple and replace.

Is this really a democracy?

via http://ift.tt/1NNvQfr Tyler Durden

The Panama Papers leak was for appetizers. The real leak, one which took place quietly and under the radar a few days ago, and may have exposed far more wealthy and important individuals, was that of the Qatar National Bank – the Middle East’s largest lender by assets – where a massive 1.5 GB data dump posted online last week exposed the personal data of thousands of clients.

According to IBT, the massive data dump appears to contain hundreds of thousands of records including customer transaction logs, personal identification numbers and credit card data. Additionally, dozens of separate folders consist of information on everything from Al Jazeera journalists to what appears to be the Al-Thani Qatar Royal Family and even contains a slew of records listed as Ministry of Defence, MI6 (the UK foreign intelligence service) and Qatar’s State Security Bureau, also known as “Mukhabarat”.

The bank told Reuters it had taken immediate steps to ensure customers would not suffer any financial loss after the security breach although it was not clear how the bank planned to protect accounts whose details, including customer names and passwords, have already been published.

“We are taking every measure to protect the privacy of our customers and have engaged an external third party expert to review all our systems to ensure no vulnerabilities exist,” the bank said in a statement on Sunday. “All our customers’ accounts are secure.”

Except, of course, all those thousands whose data is already in the public domain.

According to Reuters, the 1.5GB trove of leaked documents posted online included the bank details, telephone numbers and dates of birth of several journalists for satellite broadcaster Al-Jazeera, supposed members of the ruling al-Thani family and government and defense officials.

Some files had pictures of account holders from Facebook and LinkedIn, a potentially sensitive issue in a conservative country where privacy is valued.

The bank said the breach was an attack on its reputation, rather than specifically targeted at the customers, and only involved a portion of Qatar based customers.

The statement did not mention the identity of the hackers.

QNB said some of the data released may be accurate but much of it was constructed and “contains a mixture of information from the attack as well as other non-QNB sources, such as personal data from social media channels.” Which is merely another word for damage control.

A copy of the leaked content seen by Reuters contained transaction data of QNB customers that showed overseas remittance data from as recently as September 2015. One file had information on what appeared to be 465,437 QNB accounts, although only a fraction of these accounts had anything resembling full account details.

Several known Qatari figures in the government and media whose names appeared on the list confirmed to Reuters that their account details were accurate.  Middle Eastern banks are attractive targets for cyber criminals because of the high levels of wealth in the oil-rich region. Qatar is the wealthiest country in the world on a per-capita basis, according to the World Bank.

As Security Affairs reports, “one researcher, speaking on condition of anonymity, also confirmed that he had successfully used leaked customer internet banking credentials from the data dump to begin logging in to the customer’s account, purely for research purposes. But he said the bank’s systems then sent a one-time password to the customer’s registered mobile number, which would serve as a defense against any criminals who might now attempt to use the leaked data to commit fraud.”

But perhaps the most notable information contained in the leak a folder listed as “SPY, Intelligence” that quickly catches the eye. As IBT wrties, it contains a slew of records listed as Ministry of Defence, MI6 (the UK foreign intelligence service) and Qatar’s State Security Bureau, also known as “Mukhabarat”.

The MI6 file, which sits alongside similar documents reportedly from Polish and French intelligence, opens up an in-depth report on an alleged agent. This includes names of close relations, phone numbers, social media accounts and credit card data. Furthermore, in one instance, a file marked “wife”, opens a photo showing a woman and two children. There are roughly a dozen of these intelligence dossiers included in the Qatar data dump.

As noted above, the alleged banking leak also openly lists a folder marked “Al Jazeera” that stores nearly 30 separate profiles alongside an Microsoft Excel file that holds more than 1,200 records – including national ID numbers, telephone numbers and home addresses. Much like the intelligence files, the Al Jazeera disclosure contains a number of entries labelled “SPY” and also includes images of the person alongside social accounts, banking data and passwords.

The massive leak was initially uploaded at Global-Files.net however was quickly removed without explanation. Then, the website Cryptome mirrored the entire data dump in an easily-accessible format.

1/2 As @aljazeera______ tweeted, Qatar National Bank hacked. 15,460 files 100Ks accounts, pwds, PINs, “Spies” http://pic.twitter.com/cnjdumTlJu

— Cryptome (@Cryptomeorg) April 25, 2016

2/2 QNB hack: 15.4K docs, 1.4GB, most tiny, dozens big. Zip (431MB): https://t.co/R4jiU8iXEy (RU?) /@aljazeera______ http://pic.twitter.com/KXjI2ELvzi

— Cryptome (@Cryptomeorg) April 25, 2016

If the QNB hack https://t.co/R4jiU8iXEy site goes down, we’ll offer the Zip. Unless irresistably bribed to dribble, redact and talk big.

— Cryptome (@Cryptomeorg) April 25, 2016

 

After analysing the data Simon Edwards, cybersecurity expert with Trend Micro, told IBT that “the breach seems to be a classic attack on a bank, with the majority of data leaked online exposing customers’ bank account details, such as account numbers, credit cards and addresses.

“There’s also a lot of information on banking transactions, suggesting that the perpetrators were trying to expose specific transactions. This theory can be further strengthened by the hacker’s attempts to profile the bank’s customers into different categories, mostly focusing on Qatar’s TV network along with other foreign agencies, some of which are categorised as ‘spies’.”

He added: “Interestingly, there is also additional data about mainly foreign bank account holders, which includes information such as their Facebook and LinkedIn profiles, along with ‘friends’ associated through those social networks. This data doesn’t appear to have come directly from the bank itself, rather the perpetrator used the data held by the bank to then build up profiles of further targets.”

Unlike the Panama Papers which were greeted to resounding global media fanfare, virtually no outlets have reported on the Qatar bank’s hack, which suggests to us that the data contained there is much more relevant and sensitive, and public attention will be diverted at all costs.

We are currently going through the source data.

via http://ift.tt/1TexOl5 Tyler Durden