David Fuller and Eoin Treacy's Comment of the Day
Category - General

    Canada Faces Era of Pipeline Abundance After Keystone Move

    This article by Robert Tuttle for Bloomberg may be of interest to subscribers. Here is a section:

    More pipelines from Canada would also “generate greater competition for crudes of comparable quality such as those imported from Mexico or Venezuela,” Harry Tchilinguirian, head of commodity-markets strategy at BNP Paribas SA in London, said in an instant message.

    The administration moved to expedite approval and construction of the Keystone XL pipeline as well as the Dakota Access line through North Dakota. Trump said he wanted to renegotiate terms to get a better deal for the U.S., including more U.S.-made materials in the lines.

    The 830,000-barrel-a-day Keystone XL has been blocked since it was first proposed in 2008. TransCanada said in a statement it will reapply for the project.


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    Chan Zuckerberg Initiative's AI Acquisition Will Make Science Free for All

    This article from Futurism.com may be of interest to subscribers. Here is a section:

    But the importance of Meta in the context of making science accessible to everyone is anchored in its AI-driven technology. Thousands of scientific papers are published every day, and the sheer volume of available data means it’s hard to whittle it down to what’s most important to individual studies. Ultimately, access is just one part of the challenge. For access to information to truly empower the scientific community, one has to be able to systematically analyze and review all the available data available. That’s where Meta comes in. It can easily find the most relevant material that will further the research in a fraction of the time it would take a human.

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    Fed Debate Over $4.5 Trillion Balance Sheet Looms in 2017

    This article by Christopher Condon for Bloomberg may be of interest to subscribers. Here is a section:

    The dollar is a particular source of worry for U.S. policy makers, having appreciated 23 percent since mid-2014. The Fed expects to keep tightening while central banks in Japan and Europe hold steady or consider more accommodation. That could further strengthen the greenback and introduce a headwind for U.S. growth.

    “Slowing down the economy a little bit at the long end of the market has some benefits if you think primarily that exchange rates are driven by short-term interest rates,” Rosengren said. “You might want some of the removal of accommodation to come at the long end, which would be done by the balance sheet.”

    The Boston Fed released research on Jan. 19 that backs up this view of exchange rates and the yield curve. Former Fed economist Roberto Perli was more skeptical, pointing to global demand for longer-term U.S. Treasuries.

    “If long U.S. rates were to increase significantly as a result of balance sheet shrinking, there would still be large inflows into U.S. assets, which would support the dollar,” said Perli, a partner at Washington consulting firm Cornerstone Macro LLC.


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    Europe Learns To Like Hard Brexit and a Good British Ally

    The Brexit drama has taken an unexpected twist. Britain's strategy of full withdrawal from the single market and from the EU institutions has been remarkably well-received.

    Contrary to fears in some quarters in Britain, the pursuit of a 'clean and hard' Brexit has if anything helped to clear the air, greeted with a degree of relief by political and business leaders in Europe.

    What has changed the mood - apart from the passage of time - is the parallel pledge by Britain's leaders to stand beside Europe as a close strategic and military ally, playing its full part in upholding a rules-based global architecture. 

    There were signs at the World Economic Forum in Davos that the anger of recent months is slowly draining away, replaced by an acknowledgement of Britain's distinctive history and character. The imperative now is to limit the damage for all sides and find a way to make the new arrangement work. Not all divorces end in hostility.

    Emma Marcegaglia, head of the pan-EU federation BusinessEurope, said the no-nonsense nature of Britain's decision may prove to be the best outcome even if it is hard to accept on an emotional level.  

    "When I first saw Theresa May's speech my reaction was very bad, and I thought this is going to cause serious problems for British companies and for the rest of us," she said.

    "But after thinking about it I now feel that her position is very straight and clear. In a certain sense it clarifies the situation. There could now be a good free trade agreement, like the Canadian arrangement with access for both sides and social protection," she told the Telegraph. 

    "It is all so sad. We're going to miss the role of the UK in defending free trade and competition. The British commissioner was always a crucial ally for us in Brussels. But it is done now, and we just have to accept it," she said. 

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    Email of the day

    On Theresa May’s recent statement at Davos:

    Theresa May's recent statement, presumably timed for the Davos gathering, appears to have had the desired effect.
    Today's FT includes an article (attached) with some very positive statements from German Finance Minister Wolfgang Schauble.
    The heading is: Schäuble says post-Brexit trade deal with UK can be done quickly.

    Of course, there are elections ahead in Germany and his role afterwards isn't guaranteed, but let's hope he is still influential, when required. 

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    The Special Relationship Is Our Only Indispensable Alliance. Theresa May and Donald Trump Must Renew It

    In foreign affairs, symbolism matters. Theresa May’s arrival at the White House on Friday as the first foreign leader to visit President Trump sends a clear message to the world about the intimacy of the ties between London and Washington DC. It also shows that our sometimes derided diplomats have done their job well, and puts to bed the idea that Nigel Farage or anyone else was needed as a go-between.

    When the Prime Minister arrives, she will be fresh from addressing congressional Republicans – another privilege that would be accorded to few other foreigners – and I predict she will get on well with Trump, even though their personal traits are as different as is possible among members of the same species.

    Try to imagine our PM sending out angry tweets at three in the morning, or savaging our own intelligence agencies. Picture Donald Trump reading files quietly for hours, then asking for more information and refusing to give any commentary on his thoughts. Both defy the imagination. It is the greatest contrast in styles between the holders of these offices, at least since Ulysses S Grant overlapped with Gladstone – and they didn’t have to meet.

    Yet Trump evidently is predisposed to find his “Maggie” and he will probably warm to her clarity and firmness. For her part, Theresa May is highly skilled at creating a warm relationship with colleagues when she really wants to, and never in her life will she have been more determined to do so than on Friday.

    She knows, as does anyone who has seen government in Britain from the inside at the top, that leaving the EU is a risk, but estrangement from the United States would be a certain disaster. Our nuclear deterrent may be the subject of controversy this week, but we only have missiles that work at all because America is happy to sell them to us – something it does for no one else. Our ability to detect potential terrorist attacks is as strong as it is because British security and intelligence-gathering is tightly integrated with the US.

    Every day, all over the world, whatever our ambassadors and soldiers are doing, they are usually doing it in concert with our transatlantic cousins. And our business with America is greater than that with any other single country, even before attempting a special trade deal. The alliance with the USA is the one relationship the UK has that is truly indispensable.

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    CBI Boss Says Theresa May Speech Sent Shockwaves Through EU Businesses

    Businesses in Britain and across the EU are reeling from the "shockwaves" sent by Theresa May when she announced the UK will leave the single market, the CBI's director general has warned.

    Carolyn Fairbairn told an audience of French businesses in London that they should unite with British companies to stand up for continued links with the EU post-Brexit.

    She said that continued access to skilled workers and to European markets are crucial to future prosperity.

    "By leaving the single market, the Prime Minister has reduced the available options," the director general said in a speech to the French Chamber of Great Britain, at the French ambassador's residence in London.

    She was present in the audience when Theresa May made the announcement last week: "I know the shockwaves it sent around the room and the continent."

    She wants to see a comprehensive, wide-ranging free trade agreement negotiated to give the UK and EU sustained access to each others' markets.

    "Nobody is saying it will be easy... we know it could end up without a deal, falling back on the World Trade Organisation rules, and we should be under no illusion about what that would mean," Ms Fairbairn.

    Those WTO rules would result in tariffs on imports and "almost inevitable" border delays, she said, giving the example of car manufacturers which import parts from across the EU.

    "It is time for firms from all over Europe to work together for a deal that works for everyone," she said, calling on companies to "defend openness".

    "Let's not take this openness for granted. Let's stand up and say why access to people matters, why access to markets matters. It is not the time to close the door."

    Ms Fairbairn also called on the Prime Minister to unilaterally guarantee EU workers currently in Britain the right to remain after Brexit takes place.

    "There has been progress and the Prime Minister made encouraging noises last week in Davos," she said.

    "But a unilateral commitment is the right thing to do."

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