UPDATE 5-BP gets $4 bln from Anadarko for oil spill costs


* BP shares jump 2.2 pct; Anadarko up 3.8 pctBy Tom BerginLONDON, Oct 17 (Reuters) - Anadarko Petroleum Corp will pay BP Plc $4 billion toward clean-up of the Gulf of Mexico oil spill, far less than BP might have won in court, but the deal could reduce the overall cost of the disaster for the British group.Under the settlement announced on Monday, Anadarko said it will no longer pursue its allegations of gross negligence against BP. Anadarko was a 25 percent partner in the doomed Macondo well, and BP had sought payments to offset the costs of the spill.BP shares rose 2.2 percent in London on news of the settlement. Anadarko shares were up 3.8 percent to $73.27 in afternoon trading on the New York Stock Exchange.”We regard it as favourable for both companies,” BP Chief Executive Bob Dudley told reporters.Anadarko could have been on the hook for 25 percent of the cleanup costs, compensating those affected, and paying any government fines. It could only avoid this responsibility if it proved that BP had been grossly negligent — something which could, potentially, have added around $18 billion to the total amount of fines BP faced.Anadarko would still be liable under the deal with BP for any fines payable to the U.S. government.Fines for leaking oil into U.S waters are assessed at a level of $1,100 per barrel, or $4,300 if gross negligence is proven. The government has said the Macondo well leaked almost 5 million barrels into the sea.BP has said the total bill for the oil spill, including government fines, will be $42 billion. This suggests Anadarko could have faced a total bill well above the $4 billion it agreed to pay.LESS LIKELYInvestors have priced in a final cost to the company from the spill that is far above BP’s estimate. Analysts say deals such as the one announced Monday make the worst-case scenario — a final bill in excess of $70 billion — look less likely.”We maintain our view that the ultimate cost to BP could fall … substantially below the cost inferred by the share price fall since the accident,” said Richard Griffith, an oil analyst at Evolution Securities.In May, BP agreed to accept $1.1 billion from the third partner in Macondo, Mitsui & Co , to cover its 10 percent share of cleanup costs.BP’s lawsuits against companies it hired for the failed drilling project are among the hundreds of claims still pending before a federal judge in New Orleans. A trial date has been set for February next year.To share the cost of the spill and cleanup, BP sued Transocean , owner and operator of the sunken Deepwater Horizon rig, cement specialist Halliburton , and Cameron International Corp , which designed the blowout preventer, a device that was supposed to stop the surge of oil.Key to forcing Transocean to meet the cleanup bill — BP has sought the full amount from the drilling contractor — is convincing a court that Transocean was grossly negligent.If BP does recoup cash from Transocean or Halliburton, it will pay a portion of this — up to $1 billion to Anadarko under the terms of the deal.Two lengthy government inquiries have laid the lion’s share of the blame for the blowout at BP’s door.The rig blast killed 11 men and caused more than 4 million barrels of oil from the Macondo well to spill into the sea.The case is In re: Oil Spill by the Oil Rig “Deepwater Horizon”, U.S. District Court, Eastern District of Louisiana, No. 2:10-md-02179.


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Banpresto released the SQ figure (スペシャルクオリティフィギュア) Urushibara Ruka (漆原 るか) non-scale PVC prize figure from the visual novel “Steins;Gate” (シュタインズ ゲート) developed by 5bp. & Nitro+. Was released in April 2011. Around 180mm tall, *1,500 yen ($13.80).

*Due to the nature of prize items, you can win them in game center for 200 yen ($1.84) or just buy them off the shelf. Different stores have different prices set for them, so the price “1,500 yen ($13.80)” is for reference only.

+++ Best Forex Signal : EUR/CHF – Here is what 10 investment banks are expecting from the Swiss National Bank (SNB) today
Best Forex Signal -

Via eFX (with many, many thanks)

Credit Suisse: We expect strong language from the SNB but no action at this stage. Although we cannot rule out the possibility that the SNB imposes a small negative interest rate, say -5bps, simply to demonstrate that it is willing to act. We thus expect the SNB’s most likely course of action to be to reiterate the 1.20 floor in EURCHF, stress its willingness to intervene, and continue to threaten negative rates. In the event that the market responds to this by testing the 1.20 floor, we would expect the SNB to intervene aggressively.
Goldman: We expect rates on hold (SNB 3-Month Libor Target Rate at 0.00%) and for the SNB to reconfirm its minimum exchange rate target against the Euro.
Morgan Stanley: Our base case is for no change in rates and maintenance of current monetary policy, including keeping the EUR/CHF floor at 1.20. This is not to say that the SNB will not defend the floor if necessary. “Indeed, the most likely scenario, in our view, would be further intervention from the SNB to keep the floor above 1.20. Inflows are unlikely to be as strong as they were during the Euro Area sovereign crisis, and therefore the central bank is certainly up to the task of making the requisite necessary balance sheet expansion to defend 1.20. We remain of the view that if EUR/CHF moves close to 1.2020/1.2010 then the SNB would come into the market and buy EUR/CHF, keeping the exchange rate close but not below 1.20.
Deutsche: We believe an SNB rate cut to negative matters more than markets appreciate. First, there is more than double the amount of excess cash in Switzerland than the Eurozone even though Euro GDP is twenty times as big. The impact of negative rates on the Swiss financial system would therefore be much bigger. Second, the Swiss yield curve is lower and flatter than Europe, so the opportunity to term out cash deposits to avoid negative rates is less. Third, many banks are already charging customers for keeping excess balances, but the costs are piecemeal and threshold-dependent…We would expect negative rates to put downward pressure on the European short-end and meaningful upward pressure on EUR/CHF in particular. As a result we like the risk reward of being long EUR/CHF with a 1.25 target
SEB: We forecast the SNB Governing Board will leave the 3 month Libor target band unchanged at 0.00%-0.25%. Furthermore, the Swiss franc’s minimum exchange rate against the euro of 1.20 will continue in place. Once again, the bank will stress that the currency remains highly valued and that its present parity will be defended with the utmost determination. While the probability that a negative deposit rate may be introduced to ease upward pressures on the Swiss franc has increased, we believe the SNB Board will refrain from doing so just yet.
UBS: We see low probability that negative rates would be the first policy choice of the central banks, but long USDCHF remains attractive. Since intervention in 2010, CHF generally weakens directly ahead of policy meetings.
BNPP: The SNB meeting will be closely watched amid discussion on whether the central bank will adopt a negative policy rate to counter appreication pressure on the CHF after the ECB’s easing. However, with the central bank still not being forced to accumulate reserves in its defense of the 1.20 EURCHF floor, the SNB may prefer to save this last bullet for now.

Credit Agricole: should the SNB indeed consider pre-emptive measures, the EUR/CHF 1.20 floor appears likely to be shifted. Regarded by policy makers as the main tool with which to steer monetary conditions, increasing pressure on the EUR/CHF floor (ie, due to the ongoing impact of the recent ECB policy shift) could force stronger intervention and/or the reconsideration of negative interest rates. In the former’s case, EUR/CHF buying appears likely to benefit GBP via rebalancing (diversification) activity, while the later case will drive an even greater ‘yield-wedge’ between GBP and CHF.
JP Morgan: It remains to be seen whether the SNB will cut the deposit rate as early as the quarterly meeting on September 18th. The dilemma for the SNB, which presumably why it has not acted on interest rates since before the floor was introduced, is that a further easing is interest rates is not necessarily appropriate for the Swiss economy, not least as this would run counter to the SNB’s efforts to ensure financial stability through a slowing in credit growth and house prices. Failure to cut this week would probably ensure an outright test of 1.20, so the stakes are high. Should the SNB cut we would raise our forecasts for EUR/CHF for a couple of quarters, albeit still retain a longer-term downward trajectory for the cross. The Swiss economy is fundamentally healthier and less deflation-prone than the Euro area, so it is not obvious to us that the SNB will be in a position to match ECB easing for as long as is necessary for the ECB to reflate the Euro area.
Barclays: The SNB is widely expected to keep its target rate at 0.0% when it meets next Thursday. This meeting is likely to be of particular interest to the market following EURCHF testing the 1.20 target last week, but quickly rebounding following the SNB’s announcement that would not preclude negative interest rates, in an attempt to fight deflationary pressures and stick to its commitment of maintaining the floor against the EUR.



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EUR/CHF – Here is what 10 investment banks are expecting from the Swiss National Bank (SNB) today

Via eFX (with many, many thanks)


Credit Suisse: We expect strong language from the SNB but no action at this stage. Although we cannot rule out the possibility that the SNB imposes a small negative interest rate, say -5bps, simply to demonstrate that it is willing to act. We thus expect the SNB’s most likely course of action to be to reiterate the 1.20 floor in EURCHF, stress its willingness to intervene, and continue to threaten negative rates. In the event that the market responds to this by testing the 1.20 floor, we would expect the SNB to intervene aggressively.

Goldman: We expect rates on hold (SNB 3-Month Libor Target Rate at 0.00%) and for the SNB to reconfirm its minimum exchange rate target against the Euro.

Morgan Stanley: Our base case is for no change in rates and maintenance of current monetary policy, including keeping the EUR/CHF floor at 1.20. This is not to say that the SNB will not defend the floor if necessary. “Indeed, the most likely scenario, in our view, would be further intervention from the SNB to keep the floor above 1.20. Inflows are unlikely to be as strong as they were during the Euro Area sovereign crisis, and therefore the central bank is certainly up to the task of making the requisite necessary balance sheet expansion to defend 1.20. We remain of the view that if EUR/CHF moves close to 1.2020/1.2010 then the SNB would come into the market and buy EUR/CHF, keeping the exchange rate close but not below 1.20.

Deutsche: We believe an SNB rate cut to negative matters more than markets appreciate. First, there is more than double the amount of excess cash in Switzerland than the Eurozone even though Euro GDP is twenty times as big. The impact of negative rates on the Swiss financial system would therefore be much bigger. Second, the Swiss yield curve is lower and flatter than Europe, so the opportunity to term out cash deposits to avoid negative rates is less. Third, many banks are already charging customers for keeping excess balances, but the costs are piecemeal and threshold-dependent…We would expect negative rates to put downward pressure on the European short-end and meaningful upward pressure on EUR/CHF in particular. As a result we like the risk reward of being long EUR/CHF with a 1.25 target

SEB: We forecast the SNB Governing Board will leave the 3 month Libor target band unchanged at 0.00%-0.25%. Furthermore, the Swiss franc’s minimum exchange rate against the euro of 1.20 will continue in place. Once again, the bank will stress that the currency remains highly valued and that its present parity will be defended with the utmost determination. While the probability that a negative deposit rate may be introduced to ease upward pressures on the Swiss franc has increased, we believe the SNB Board will refrain from doing so just yet.

UBS: We see low probability that negative rates would be the first policy choice of the central banks, but long USDCHF remains attractive. Since intervention in 2010, CHF generally weakens directly ahead of policy meetings.

BNPP: The SNB meeting will be closely watched amid discussion on whether the central bank will adopt a negative policy rate to counter appreication pressure on the CHF after the ECB’s easing. However, with the central bank still not being forced to accumulate reserves in its defense of the 1.20 EURCHF floor, the SNB may prefer to save this last bullet for now.


Credit Agricole: should the SNB indeed consider pre-emptive measures, the EUR/CHF 1.20 floor appears likely to be shifted. Regarded by policy makers as the main tool with which to steer monetary conditions, increasing pressure on the EUR/CHF floor (ie, due to the ongoing impact of the recent ECB policy shift) could force stronger intervention and/or the reconsideration of negative interest rates. In the former’s case, EUR/CHF buying appears likely to benefit GBP via rebalancing (diversification) activity, while the later case will drive an even greater ‘yield-wedge’ between GBP and CHF.

JP Morgan: It remains to be seen whether the SNB will cut the deposit rate as early as the quarterly meeting on September 18th. The dilemma for the SNB, which presumably why it has not acted on interest rates since before the floor was introduced, is that a further easing is interest rates is not necessarily appropriate for the Swiss economy, not least as this would run counter to the SNB’s efforts to ensure financial stability through a slowing in credit growth and house prices. Failure to cut this week would probably ensure an outright test of 1.20, so the stakes are high. Should the SNB cut we would raise our forecasts for EUR/CHF for a couple of quarters, albeit still retain a longer-term downward trajectory for the cross. The Swiss economy is fundamentally healthier and less deflation-prone than the Euro area, so it is not obvious to us that the SNB will be in a position to match ECB easing for as long as is necessary for the ECB to reflate the Euro area.

Barclays: The SNB is widely expected to keep its target rate at 0.0% when it meets next Thursday. This meeting is likely to be of particular interest to the market following EURCHF testing the 1.20 target last week, but quickly rebounding following the SNB’s announcement that would not preclude negative interest rates, in an attempt to fight deflationary pressures and stick to its commitment of maintaining the floor against the EUR.







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Dow Hits New Record Intraday-High Ahead Of Fed & Scottish Uncertainty

Overnight weakness in Asia and Europe was shrugged off. The Dow hit all-time record highs (first since July) and the S&P broke back above 2,000 following headlines proclaiming a “stealth QE” from China (which actually hit the news during the Asia session) and chatter from WSJ’s Hilsenrath that The Fed will leave the words “considerable period” in the statement tomorrow. Early weakness in stocks was ripped 25 points higher in the S&P on the back of a 97% correlation to AUDJPY (China-driven), the USD dumped to unch for the week (worst day since May), commodities all took off higher (led by Copper and Oil), and Treasuries flip-flopped to end steeper (5Y -5bps, 30Y +1bp on the week). “Most Shorted” stocks squeezed higher. HY credit compressed with stocks rally but decoupled later in the day. The Nasdaq and Russell (nearing death-cross) remain red on the week despite today’s exuberance. VIX was smashed back under 13 (which makes perfect sense because there is no uncertainty this week at all). S&P closed below 2,000 and The Dow “off the highs”.

AUDJPY was all that matters today…

Stocks ramped from the moment the China headline hit…

With S&P tagging 2,000…

As “Most Shorted” was squeezed into lunch…

But it was not enough to get Nasdaq and Russell green on the week… (note, just like yesterday, we had a sudden vertical ramp early in the morning before all the China/Fed exuberance)

With The Russell 2000 nearing the death-cross (50DMA crossing below the 200DMA)…

US financials push on to new cycle highs (and the meme is that all is clear) except that financial credit is notably divergent and flashing orange for now (just as it did in 2007)

HY credit tracked stocks as they ramped higher but decoupled in the last hour…

VIX also decoupled but to the upside…

Treasuries were mixed with 5Y outperforming… but steepened on the week…

As The Dollar tumbled on the China news… USD’s worst day since May

And commodities surged… but PMs gave some back…

With Brent-WTI collapsing to around $4 as WTI outperforms…

We leave it to Diapason’s Sean Corrigan to put a different perspective (as the chart below suggests last time China did this)…

…on today’s exuberance about China QE…

The commodity move today is more a testament to short term oversold condition and proximity of various key technical supports than anything real…

Note that news about this came out before Europe and US were out of bed (and pretty much while Shanghai equities were getting hosed - go figure!)

…but our markets only reacted to it when Goldman helpfully ‘explained’ its supposed importance to the rest of us dullards….

Even if this WERE ‘equivalent’ to a 50bps RRR cut, that might only be a domestic offset to the base money destroying FX-drain which has been underway for the last couple of months and so would only imply neutrality, not renewed stimulus.

Charts: Bloomberg










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4

Good Smile Company released the Nendoroid No.149 Makise Kurisu (牧瀬 紅莉栖) White Coat ver. (白衣Ver.) action figure from the visual novel “Steins;Gate” (シュタインズ ゲート) developed by 5bp. & Nitro+. Was first released in “Wonderful Hobby Life for You 13″at WF2011[Winter] on February 6, 2011. Was released in late June 2011. Around 100mm tall, 3,000 yen ($27.63) (taxed in).

4

Banpresto released the SQ figure (スペシャルクオリティフィギュア) Shiina Mayuri (椎名 まゆり) non-scale PVC prize figure from the visual novel “Steins;Gate” (シュタインズ ゲート) developed by 5bp. & Nitro+. Was released in April 2011. Around 180mm tall, *1,500 yen ($13.80).

*Due to the nature of prize items, you can win them in game center for 200 yen ($1.84) or just buy them off the shelf. Different stores have different prices set for them, so the price “1,500 yen ($13.80)” is for reference only.

+++ Best Forex Signal : What can we expect from the SNB today?
Best Forex Signal -

Here’s what a few of the banks are looking for this morning, courtesy of Efxnews

Credit Suisse: We expect strong language from the SNB but no action at this stage. Although we cannot rule out the possibility that the SNB imposes a small negative interest rate, say -5bps, simply to demonstrate that it is willing to act. We thus expect the SNB’s most likely course of action to be to reiterate the 1.20 floor in EURCHF, stress its willingness to intervene, and continue to threaten negative rates. In the event that the market responds to this by testing the 1.20 floor, we would expect the SNB to intervene aggressively.

Goldman: We expect rates on hold (SNB 3-Month Libor Target Rate at 0.00%) and for the SNB to reconfirm its minimum exchange rate target against the Euro.

Morgan Stanley: Our base case is for no change in rates and maintenance of current monetary policy, including keeping the EUR/CHF floor at 1.20. This is not to say that the SNB will not defend the floor if necessary. “Indeed, the most likely scenario, in our view, would be further intervention from the SNB to keep the floor above 1.20. Inflows are unlikely to be as strong as they were during the Euro Area sovereign crisis, and therefore the central bank is certainly up to the task of making the requisite necessary balance sheet expansion to defend 1.20. We remain of the view that if EUR/CHF moves close to 1.2020/1.2010 then the SNB would come into the market and buy EUR/CHF, keeping the exchange rate close but not below 1.20.

Deutsche: We believe an SNB rate cut to negative matters more than markets appreciate. First, there is more than double the amount of excess cash in Switzerland than the Eurozone even though Euro GDP is twenty times as big. The impact of negative rates on the Swiss financial system would therefore be much bigger. Second, the Swiss yield curve is lower and flatter than Europe, so the opportunity to term out cash deposits to avoid negative rates is less. Third, many banks are already charging customers for keeping excess balances, but the costs are piecemeal and threshold-dependent…We would expect negative rates to put downward pressure on the European short-end and meaningful upward pressure on EUR/CHF in particular. As a result we like the risk reward of being long EUR/CHF with a 1.25 target

SEB: We forecast the SNB Governing Board will leave the 3 month Libor target band unchanged at 0.00%-0.25%. Furthermore, the Swiss franc’s minimum exchange rate against the euro of 1.20 will continue in place. Once again, the bank will stress that the currency remains highly valued and that its present parity will be defended with the utmost determination. While the probability that a negative deposit rate may be introduced to ease upward pressures on the Swiss franc has increased, we believe the SNB Board will refrain from doing so just yet.

UBS: We see low probability that negative rates would be the first policy choice of the central banks, but long USDCHF remains attractive. Since intervention in 2010, CHF generally weakens directly ahead of policy meetings.

BNPP: The SNB meeting will be closely watched amid discussion on whether the central bank will adopt a negative policy rate to counter appreication pressure on the CHF after the ECB’s easing. However, with the central bank still not being forced to accumulate reserves in its defense of the 1.20 EURCHF floor, the SNB may prefer to save this last bullet for now.

Credit Agricole: should the SNB indeed consider pre-emptive measures, the EUR/CHF 1.20 floor appears likely to be shifted. Regarded by policy makers as the main tool with which to steer monetary conditions, increasing pressure on the EUR/CHF floor (ie, due to the ongoing impact of the recent ECB policy shift) could force stronger intervention and/or the reconsideration of negative interest rates. In the former’s case, EUR/CHF buying appears likely to benefit GBP via rebalancing (diversification) activity, while the later case will drive an even greater ‘yield-wedge’ between GBP and CHF.

SNB – will they, won’t they?

JP Morgan: It remains to be seen whether the SNB will cut the deposit rate as early as the quarterly meeting on September 18th. The dilemma for the SNB, which presumably why it has not acted on interest rates since before the floor was introduced, is that a further easing is interest rates is not necessarily appropriate for the Swiss economy, not least as this would run counter to the SNB’s efforts to ensure financial stability through a slowing in credit growth and house prices. Failure to cut this week would probably ensure an outright test of 1.20, so the stakes are high. Should the SNB cut we would raise our forecasts for EUR/CHF for a couple of quarters, albeit still retain a longer-term downward trajectory for the cross. The Swiss economy is fundamentally healthier and less deflation-prone than the Euro area, so it is not obvious to us that the SNB will be in a position to match ECB easing for as long as is necessary for the ECB to reflate the Euro area.

Barclays: The SNB is widely expected to keep its target rate at 0.0% when it meets today. This meeting is likely to be of particular interest to the market following EURCHF testing the 1.20 target last week, but quickly rebounding following the SNB’s announcement that would not preclude negative interest rates, in an attempt to fight deflationary pressures and stick to its commitment of maintaining the floor against the EUR.



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