Ray Dalio, Abu Dhabi Royal’s AI Firm (G42) Shelve Investment Venture - Bloomberg
Ray Dalio’s family office and Sheikh Tahnoon bin Zayed Al Nahyan’s artificial intelligence firm G42 have abandoned plans to set up an asset management venture together in Abu Dhabi, according to people familiar with the matter.
The plans fell through in part due to questions on whether Dalio — the founder of Bridgewater Associates — might use the hedge fund’s intellectual property in any tie-up, said the people, who requested anonymity as the matter is private.
The 75-year-old had signed a non-compete agreement upon departing the world’s largest hedge fund, Bloomberg News reported in July. His plans with Sheikh Tahnoon, one of Bridgewater’s top clients, put that contract under the microscope.
Representatives for G42, the Dalio Family Office and Bridgewater declined to comment. Dalio and Bridgewater have previously said there have been no discussions or conflicts between the two on those topics.
Wednesday, 2 October 2024
Global insurers fight London court battle over jets 'lost' in Russia | Reuters
Global insurers fight London court battle over jets 'lost' in Russia | Reuters
Insurers are playing "pass the liability parcel" in a desperate fight against multi-billion dollar claims over aircraft stranded in Russia since the invasion of Ukraine two years ago, lawyers for aviation lessors told a London trial on Wednesday.
Mark Howard, a lawyer for the world's largest aircraft lessor AerCap (AER.N), opens new tab, told the first day of a keenly anticipated trial that insurers must know there was no realistic prospect that Western-owned jets and engines would be returned.
"The reality is ... that the aircraft and engines are lost," he said.
In one of the largest insurance disputes to be heard in London, AerCap, Dubai Aerospace Enterprise (DAE), Merx Aviation, KDAC Aviation Finance and Falcon are pitched against insurers including AIG (AIG.N), opens new tab, Lloyd's (SOLYD.UL), Chubb (CB.BN), opens new tab and Swiss Re (SRENH.S), opens new tab.
The fast-tracked case, which is due to close by year-end, is seen as a bellwether for parallel lawsuits in Ireland and the United States over who should pay for around 400 planes, valued at almost $10 billion, left in Russia after the West imposed sanctions over the war.
The London lawsuit centres on claims related to around 140 jets, along with some engines, that were originally valued at up to around $4.7 billion. But some settlements with Russia - albeit at prices below the insured value - have trimmed the value to nearer $3.0 billion.
Insurers argue in part there is no evidence the aircraft have been destroyed or damaged, that the assets are no longer subject to lease agreements or that policies do not cover the events leading up to their failure to return.
Lessors said in court filings they had sought compensation from Russia. DAE said its president, David Houlihan, took a one-week trip to Moscow in March 2022 to meet with lessees - to no avail, documents show.
Lessors are claiming compensation under "contingent and possessed" policies that can provide cover under a broad, all-risks clause for loss or damage to aircraft or under a more specific war-risks clause.
AerCap, which says it has lost 116 aircraft and 15 engines, is suing for $2.06 billion under its all-risks insurance policy or, alternatively, $1.2 billion under its capped war-risks policy, pending further deals with Russia, court filings show.
DAE values its claim for 22 aircraft, one engine and one piece of equipment at $737.8 million. Merx is claiming $184 million for six aircraft, while Falcon is claiming $43.4 million for two aircraft and KDAC is suing for $21.5 million over the loss of one jet, court filings show.
Lessors have separately taken on reinsurers, some of which lost a battle in March to have the case moved to Moscow, and some are also tackling insurers over jets stuck in Ukraine.
"These are complex, hard fought claims where the stakes are high and the long-lasting impact could be seismic," said Garbhan Shanks, a partner at law firm Fladgate.
"Neither side will want to be left writing the cheques - and that's because the exposure is enormous."
Insurers are playing "pass the liability parcel" in a desperate fight against multi-billion dollar claims over aircraft stranded in Russia since the invasion of Ukraine two years ago, lawyers for aviation lessors told a London trial on Wednesday.
Mark Howard, a lawyer for the world's largest aircraft lessor AerCap (AER.N), opens new tab, told the first day of a keenly anticipated trial that insurers must know there was no realistic prospect that Western-owned jets and engines would be returned.
"The reality is ... that the aircraft and engines are lost," he said.
In one of the largest insurance disputes to be heard in London, AerCap, Dubai Aerospace Enterprise (DAE), Merx Aviation, KDAC Aviation Finance and Falcon are pitched against insurers including AIG (AIG.N), opens new tab, Lloyd's (SOLYD.UL), Chubb (CB.BN), opens new tab and Swiss Re (SRENH.S), opens new tab.
The fast-tracked case, which is due to close by year-end, is seen as a bellwether for parallel lawsuits in Ireland and the United States over who should pay for around 400 planes, valued at almost $10 billion, left in Russia after the West imposed sanctions over the war.
The London lawsuit centres on claims related to around 140 jets, along with some engines, that were originally valued at up to around $4.7 billion. But some settlements with Russia - albeit at prices below the insured value - have trimmed the value to nearer $3.0 billion.
Insurers argue in part there is no evidence the aircraft have been destroyed or damaged, that the assets are no longer subject to lease agreements or that policies do not cover the events leading up to their failure to return.
Lessors said in court filings they had sought compensation from Russia. DAE said its president, David Houlihan, took a one-week trip to Moscow in March 2022 to meet with lessees - to no avail, documents show.
Lessors are claiming compensation under "contingent and possessed" policies that can provide cover under a broad, all-risks clause for loss or damage to aircraft or under a more specific war-risks clause.
AerCap, which says it has lost 116 aircraft and 15 engines, is suing for $2.06 billion under its all-risks insurance policy or, alternatively, $1.2 billion under its capped war-risks policy, pending further deals with Russia, court filings show.
DAE values its claim for 22 aircraft, one engine and one piece of equipment at $737.8 million. Merx is claiming $184 million for six aircraft, while Falcon is claiming $43.4 million for two aircraft and KDAC is suing for $21.5 million over the loss of one jet, court filings show.
Lessors have separately taken on reinsurers, some of which lost a battle in March to have the case moved to Moscow, and some are also tackling insurers over jets stuck in Ukraine.
"These are complex, hard fought claims where the stakes are high and the long-lasting impact could be seismic," said Garbhan Shanks, a partner at law firm Fladgate.
"Neither side will want to be left writing the cheques - and that's because the exposure is enormous."
The Oil Price That Matters Now Is $50 a Barrel, Not $100 - Bloomberg ht @JavierBlas
The Oil Price That Matters Now Is $50 a Barrel, Not $100 - Bloomberg
When thinking about oil, Saudi Arabia and OPEC+, the fabled $100-a-barrel target isn’t relevant any more. In truth, it hasn’t been since June, when the cartel’s announcement of a plan to boost production effectively signaled it was abandoning its quest for triple-digit prices. Now, the reference value that matters is $50 a barrel.
First, a spoiler alert. I’m not about to predict whether that new lower level will materialize, other than warning that it’s far more possible than the market seems to think1. Instead, a general observation: All things being equal2, the oil market looks oversupplied in 2025, and that means lower rather than higher prices — so given a binary choice between $100 and $50 for next year, I’d take the latter bet despite all the Middle East geopolitical risk.
While OPEC+ is typically portrayed as monolithic group, it’s plagued with factionalism. Therefore, the cartel doesn’t have just a single reaction function, but instead two layers. One represents how it responds as a group to external events — the growth of the US shale industry, say — with the second depending on how each OPEC+ member reacts to the actions of its fellow affiliates.
The second layer is unimportant when the cartel as acting in unison with little, if any, dissidence. But there are times — and I believe now is one of those — when internal politics matter more, which can dramatically alter OPEC+’s reaction function.
For the last three years, OPEC+ has focused on keeping oil prices as close to $100 as it could by keeping global inventories tight. I called it the “Saudi First” strategy. Whether one calls it an unofficial target, a goal, a hope, an aim or an aspiration doesn’t matter. By its actions, including cutting output when prices were close to $90 a barrel, the bloc showed its hand: It wanted triple-digit values, making other considerations secondary.
Now, that’s changed, due to a combination of factors. First, OPEC+ has tacitly recognized that its $100 policy was boosting annual non-OPEC+ supply growth above trend demand. Sticking to its high prices strategy meant accepting an ever-declining market share. Second, the cartel accepts that elevated crude levels hurt demand growth, and sustaining consumption is important in the face of the energy transition. Third, the global economic cycle has turned, and oil, just like every other commodity, is sensitive; lower prices are the natural consequence of weaker growth. Fourth, several OPEC+ members have invested billions of dollars in new production capacity and have pushed to pump more, challenging the strategy. To avoid a schism, the group has had to change its overall reaction function.
That’s the main explanation for why OPEC+ in June agreed to a complex plan to hike production from September until late 2025 that would eventually boost output by more than 2 million barrels a day. Granted, OPEC+ said the increases would be conditional on the health of the market, making the deal a statement of intent. With prices falling, the build up has already been delayed by two months, until December.
What comes next? I don’t think Saudi Arabia has made up its mind, and what occurs in 2025 will be decided by what other OPEC+ members do in October and November. The most crucial factor is whether the cheaters stop cheating. That will inform what Riyadh does. So will events in the Middle East. I remain convinced, as I have been for the past year, that neither Israel nor Iran want to involve oil in their attacks. Likewise, the world’s two largest oil consumers — the U.S. and China — surely will have told both sides that oil is off limits. But I must admit that the risk of miscalculation grows by the day.
At the same time, everyone at OPEC+ is waiting to see who will occupy the White House next year. The current plan to increase output in monthly increments is problematic, nonetheless. Simply put, I don’t see demand for those extra barrels in 2025 — unless the cartel is prepared to accept a very visible increase in inventories and thus much lower prices. Here are the options I see:
1) OPEC+ cheaters stop their over-production and Saudi Arabia and others in the cartel have a change of heart, fearing a price slump. Rather than increasing production, they cut output in early 2025. Wrongfooting most traders, the cartel sends oil prices back into the $80-$100 range. Never say never, but I would be shocked if that scenario materialized as I believe OPEC+’s reaction function has changed.
2) OPEC+ compliance improves dramatically, including via compensation cuts by the cheaters. The group delays the monthly production increases for six months, in turn avoiding a jump in inventories in early 2025. In that scenario, oil finds a floor around $70 and moves back toward $80. I don’t think Riyadh is contemplating delaying the output increases forever, but I see some scope for the kingdom agreeing to wait until the second half of next year. One reason is a bet that US shale growth is moderating; another is the hope that Beijing will successfully refloat its economy, boosting oil demand. This scenario gets a maybe from me.
3) The cartel sticks to its plan to boost output in monthly increases from December onward as compliance improves somewhat. The Saudis cut spending to weather a period of low prices — something already flagged in the preview of the country’s 2025 budget. In that scenario, the oil market would be oversupplied next year, particularly during the second quarter, when seasonally demand is lower. The resulting inventory build-up pushes oil prices toward $60 and perhaps — even if only briefly — even lower toward $50 during the second quarter of next year, before recovering later in the year as US shale production growth slows down due to low prices. To me, this is the most likely scenario.
4) OPEC+ compliance doesn’t improve at all. In response, the cartel not only goes ahead with the monthly output increase from December, but Saudi Arabia pushes the group into accelerating production of those extra barrels. As a result, the market is hugely oversupplied, and oil prices drop to $50 and even lower. The market doesn’t crash, however, because Riyadh stops shorts of launching a full price war. I sense that this outline, whispered by some OPEC+ officials and echoed by oil traders who say they’ve been told about it, is a not-so-quiet Saudi campaign of verbal threats so the cheaters improve compliance. As such, I don’t consider it as likely.
5) A full-scale price war. Compliance doesn’t improve at all and gets even worse. Saudi Arabia raises production to its maximum capacity of 12.5 million barrels a day, up from today’s output of 9 million. Every other OPEC+ country follow suit. The market faces a huge glut similar to what was witnessed in 2020 — and prices crash. If history is any guide, the $50-a-barrel level won’t act as a floor, and prices would likely plunge much, much lower. (Remember that during the last price war in 2020, zero wasn’t the floor either; minus $40 was.) As things stand, this final scenario looks extremely unlikely to unfold. But Saudi Arabia has fought two price wars in the past decade, so we should at the very least entertain the possibility of it occurring.
Whatever happens, oil prices look set to be nearer $50 a barrel than $100 for the foreseeable future. Only an all-out war in the Middle East can change that outlook.
When thinking about oil, Saudi Arabia and OPEC+, the fabled $100-a-barrel target isn’t relevant any more. In truth, it hasn’t been since June, when the cartel’s announcement of a plan to boost production effectively signaled it was abandoning its quest for triple-digit prices. Now, the reference value that matters is $50 a barrel.
First, a spoiler alert. I’m not about to predict whether that new lower level will materialize, other than warning that it’s far more possible than the market seems to think1. Instead, a general observation: All things being equal2, the oil market looks oversupplied in 2025, and that means lower rather than higher prices — so given a binary choice between $100 and $50 for next year, I’d take the latter bet despite all the Middle East geopolitical risk.
While OPEC+ is typically portrayed as monolithic group, it’s plagued with factionalism. Therefore, the cartel doesn’t have just a single reaction function, but instead two layers. One represents how it responds as a group to external events — the growth of the US shale industry, say — with the second depending on how each OPEC+ member reacts to the actions of its fellow affiliates.
The second layer is unimportant when the cartel as acting in unison with little, if any, dissidence. But there are times — and I believe now is one of those — when internal politics matter more, which can dramatically alter OPEC+’s reaction function.
For the last three years, OPEC+ has focused on keeping oil prices as close to $100 as it could by keeping global inventories tight. I called it the “Saudi First” strategy. Whether one calls it an unofficial target, a goal, a hope, an aim or an aspiration doesn’t matter. By its actions, including cutting output when prices were close to $90 a barrel, the bloc showed its hand: It wanted triple-digit values, making other considerations secondary.
Now, that’s changed, due to a combination of factors. First, OPEC+ has tacitly recognized that its $100 policy was boosting annual non-OPEC+ supply growth above trend demand. Sticking to its high prices strategy meant accepting an ever-declining market share. Second, the cartel accepts that elevated crude levels hurt demand growth, and sustaining consumption is important in the face of the energy transition. Third, the global economic cycle has turned, and oil, just like every other commodity, is sensitive; lower prices are the natural consequence of weaker growth. Fourth, several OPEC+ members have invested billions of dollars in new production capacity and have pushed to pump more, challenging the strategy. To avoid a schism, the group has had to change its overall reaction function.
That’s the main explanation for why OPEC+ in June agreed to a complex plan to hike production from September until late 2025 that would eventually boost output by more than 2 million barrels a day. Granted, OPEC+ said the increases would be conditional on the health of the market, making the deal a statement of intent. With prices falling, the build up has already been delayed by two months, until December.
What comes next? I don’t think Saudi Arabia has made up its mind, and what occurs in 2025 will be decided by what other OPEC+ members do in October and November. The most crucial factor is whether the cheaters stop cheating. That will inform what Riyadh does. So will events in the Middle East. I remain convinced, as I have been for the past year, that neither Israel nor Iran want to involve oil in their attacks. Likewise, the world’s two largest oil consumers — the U.S. and China — surely will have told both sides that oil is off limits. But I must admit that the risk of miscalculation grows by the day.
At the same time, everyone at OPEC+ is waiting to see who will occupy the White House next year. The current plan to increase output in monthly increments is problematic, nonetheless. Simply put, I don’t see demand for those extra barrels in 2025 — unless the cartel is prepared to accept a very visible increase in inventories and thus much lower prices. Here are the options I see:
1) OPEC+ cheaters stop their over-production and Saudi Arabia and others in the cartel have a change of heart, fearing a price slump. Rather than increasing production, they cut output in early 2025. Wrongfooting most traders, the cartel sends oil prices back into the $80-$100 range. Never say never, but I would be shocked if that scenario materialized as I believe OPEC+’s reaction function has changed.
2) OPEC+ compliance improves dramatically, including via compensation cuts by the cheaters. The group delays the monthly production increases for six months, in turn avoiding a jump in inventories in early 2025. In that scenario, oil finds a floor around $70 and moves back toward $80. I don’t think Riyadh is contemplating delaying the output increases forever, but I see some scope for the kingdom agreeing to wait until the second half of next year. One reason is a bet that US shale growth is moderating; another is the hope that Beijing will successfully refloat its economy, boosting oil demand. This scenario gets a maybe from me.
3) The cartel sticks to its plan to boost output in monthly increases from December onward as compliance improves somewhat. The Saudis cut spending to weather a period of low prices — something already flagged in the preview of the country’s 2025 budget. In that scenario, the oil market would be oversupplied next year, particularly during the second quarter, when seasonally demand is lower. The resulting inventory build-up pushes oil prices toward $60 and perhaps — even if only briefly — even lower toward $50 during the second quarter of next year, before recovering later in the year as US shale production growth slows down due to low prices. To me, this is the most likely scenario.
4) OPEC+ compliance doesn’t improve at all. In response, the cartel not only goes ahead with the monthly output increase from December, but Saudi Arabia pushes the group into accelerating production of those extra barrels. As a result, the market is hugely oversupplied, and oil prices drop to $50 and even lower. The market doesn’t crash, however, because Riyadh stops shorts of launching a full price war. I sense that this outline, whispered by some OPEC+ officials and echoed by oil traders who say they’ve been told about it, is a not-so-quiet Saudi campaign of verbal threats so the cheaters improve compliance. As such, I don’t consider it as likely.
5) A full-scale price war. Compliance doesn’t improve at all and gets even worse. Saudi Arabia raises production to its maximum capacity of 12.5 million barrels a day, up from today’s output of 9 million. Every other OPEC+ country follow suit. The market faces a huge glut similar to what was witnessed in 2020 — and prices crash. If history is any guide, the $50-a-barrel level won’t act as a floor, and prices would likely plunge much, much lower. (Remember that during the last price war in 2020, zero wasn’t the floor either; minus $40 was.) As things stand, this final scenario looks extremely unlikely to unfold. But Saudi Arabia has fought two price wars in the past decade, so we should at the very least entertain the possibility of it occurring.
Whatever happens, oil prices look set to be nearer $50 a barrel than $100 for the foreseeable future. Only an all-out war in the Middle East can change that outlook.
#Qatar wealth fund to merge domestic fibre network with cable business | Reuters
Qatar wealth fund to merge domestic fibre network with cable business | Reuters
Qatar's sovereign wealth fund said on Wednesday it plans to merge the telecommunications businesses of Qatar National Broadband Network (QNBN) and Gulf Bridge International (GBI), to build a national leader as competition intensifies with regional peers.
The Qatar Investment Authority (QIA) is seeking to combine QNBN’s domestic fibre network with GBI’s international submarine and terrestrial cables, which it said would create a digital and AI infrastructure leader.
Gulf states, flush with cash from high oil prices in recent years, are directing their state-backed companies to advance their strategic interests and build national champions to help diversify their economies away from hydrocarbons.
QIA's plans to position Qatar "as a leading digital hub both regionally and globally and connect Qatar to the world," chief executive Mansoor Ebrahim Al-Mahmoud said in the statement.
"Our long-term vision is to create a digital infrastructure champion, unlocking new opportunities, ”chairman of QNBN and GBI, was quoted as saying.
The value of the deal was not disclosed. The transaction, expected to close in the fourth quarter, is subject to regulatory approvals and other statutory procedures.
Qatar's sovereign wealth fund said on Wednesday it plans to merge the telecommunications businesses of Qatar National Broadband Network (QNBN) and Gulf Bridge International (GBI), to build a national leader as competition intensifies with regional peers.
The Qatar Investment Authority (QIA) is seeking to combine QNBN’s domestic fibre network with GBI’s international submarine and terrestrial cables, which it said would create a digital and AI infrastructure leader.
Gulf states, flush with cash from high oil prices in recent years, are directing their state-backed companies to advance their strategic interests and build national champions to help diversify their economies away from hydrocarbons.
QIA's plans to position Qatar "as a leading digital hub both regionally and globally and connect Qatar to the world," chief executive Mansoor Ebrahim Al-Mahmoud said in the statement.
"Our long-term vision is to create a digital infrastructure champion, unlocking new opportunities, ”chairman of QNBN and GBI, was quoted as saying.
The value of the deal was not disclosed. The transaction, expected to close in the fourth quarter, is subject to regulatory approvals and other statutory procedures.
Most Gulf markets retreat on heightened regional tensions | Reuters
Most Gulf markets retreat on heightened regional tensions | Reuters
Most stock markets in the Gulf ended lower on Wednesday after Iran's ballistic missile strike on Israel stoked fears of a wider regional conflict, with the Saudi index falling the most.
Saudi Arabia's benchmark index (.TASI), opens new tab dropped 1.7%, weighed down by a 4% decline in aluminium products manufacturer Al Taiseer Group (4143.SE), opens new tab and a 2.9% decrease in Al Rajhi Bank (1120.SE), opens new tab.
Hezbollah said its fighters were engaging Israeli forces inside Lebanon on Wednesday, reporting ground clashes for the first time since Israel began pushing into its northern neighbour in a campaign to hammer the Iran-backed armed group.
The Israeli military said regular infantry and armoured units were joining its ground operations in Lebanon, a day after Israel was attacked by Iran in a strike that raised fears the oil-producing Middle East could be engulfed in a wider conflict.
An Israeli team commander was killed in Lebanon, the Israeli military said.
Dubai's main share index (.DFMGI), opens new tab dropped 0.8%, hit by a 1.7% fall in blue-chip developer Emaar Properties (EMAR.DU), opens new tab. Among other losers, budget airline Air Arabia (AIRA.DU), opens new tab was down 0.7%.
According to George Pavel, general manager at Capex.com, the market may continue its downward trajectory if current conditions persist.
In Abu Dhabi, the index (.FTFADGI), opens new tab retreated 1.1%.
On the other hand, oil prices - a catalyst for the Gulf's financial markets - climbed more than 3% as Israel and the U.S. vowed retribution over Iran's biggest ever direct attack on its regional adversary, firing more than 180 ballistic missiles.
Outside the Gulf, Egypt's blue-chip index (.EGX30), opens new tab lost 1.7% with most of its constituents in negative territory, including Talaat Mostafa Holding (TMGH.CA), opens new tab, which was down 3.5%.
Most stock markets in the Gulf ended lower on Wednesday after Iran's ballistic missile strike on Israel stoked fears of a wider regional conflict, with the Saudi index falling the most.
Saudi Arabia's benchmark index (.TASI), opens new tab dropped 1.7%, weighed down by a 4% decline in aluminium products manufacturer Al Taiseer Group (4143.SE), opens new tab and a 2.9% decrease in Al Rajhi Bank (1120.SE), opens new tab.
Hezbollah said its fighters were engaging Israeli forces inside Lebanon on Wednesday, reporting ground clashes for the first time since Israel began pushing into its northern neighbour in a campaign to hammer the Iran-backed armed group.
The Israeli military said regular infantry and armoured units were joining its ground operations in Lebanon, a day after Israel was attacked by Iran in a strike that raised fears the oil-producing Middle East could be engulfed in a wider conflict.
An Israeli team commander was killed in Lebanon, the Israeli military said.
Dubai's main share index (.DFMGI), opens new tab dropped 0.8%, hit by a 1.7% fall in blue-chip developer Emaar Properties (EMAR.DU), opens new tab. Among other losers, budget airline Air Arabia (AIRA.DU), opens new tab was down 0.7%.
According to George Pavel, general manager at Capex.com, the market may continue its downward trajectory if current conditions persist.
In Abu Dhabi, the index (.FTFADGI), opens new tab retreated 1.1%.
On the other hand, oil prices - a catalyst for the Gulf's financial markets - climbed more than 3% as Israel and the U.S. vowed retribution over Iran's biggest ever direct attack on its regional adversary, firing more than 180 ballistic missiles.
Outside the Gulf, Egypt's blue-chip index (.EGX30), opens new tab lost 1.7% with most of its constituents in negative territory, including Talaat Mostafa Holding (TMGH.CA), opens new tab, which was down 3.5%.
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