Daily Archives: November 5, 2011
By Kate Dailey BBC News Magazine
Tucked inside the Swiss Embassy, the cocktail area celebrates the writer who made his home in CubaCuban and American politicians have celebrated together at the opening of Hemingway’s, an invitation-only bar located in a Washington, DC embassy.
It started like a typical Washington DC function. Men and women in dark suits milled around a formal room in the Swiss Embassy, crystal chandeliers sparkling overhead. Waiters carried around glasses of red and white wine while guests made polite small-talk.
But after a series of speeches, guests were led to the back of the room, and into an entirely different experience.
They had entered Hemingway’s, a bar celebrating the American writer who made his home in Cuba. There, the floors were covered in terracotta tile, while wooden fans whirred above. Bartenders poured cocktails under a brass replica of Hemingway’s signature.
Aside from the fact that it serves liquor, Hemingway’s isn’t a bar in the traditional sense. Tucked inside the embassy, where the Cuban Interests Section resides, the bar has a strict invitation-only list.
It will be used for entertaining guests of the Interest Section, so tourists hoping to catch happy hour are out of luck.
The bar’s brass sign replicates Hemingway’s signature
It’s illegal for the bar to conduct any commerce, but the embassy is free from the trade embargo that forbids importing products from the communist country. So drinks were on the house, made with Cuban rum that’s normally impossible to find in the US.
Terry McAullife, the former head of the Democratic National Committee, ordered the first drink – Havana Club Rum, straight.
Mr McAullife, who travelled to Cuba last year as part of a trade mission, thinks that doing more business with Cuba could be a key to creating American jobs.
“It’s a huge market, and every other country in the world is already there,” he says. “And Cubans love American products.”
From Versailles to Havana
But the opening of the bar wasn’t simply about facilitating Cuban-American commerce.
Instead, the night was more about celebrating Ernest Hemingway, described as a “cultural bridge” by Jennifer Phillips, the grand-daughter of Hemingway’s editor. Ms Phillips is co-founder of the Finca Vigia foundation, devoted to preserving Hemingway’s Cuban home.
She spoke before the opening of the bar, reminding the audience that Hemingway is treasured by both nations.
The chief of the Cuban Interests Section told of a fishing contest between Castro and Hemingway
Neither the US nor Cuba have official embassies in the other’s country; instead both have Interests Sections located in the Swiss embassies.
Neither group has a history of being particularly friendly towards the host nation, though Cuba-watchers hope that Hemingway’s signals a positive change.
When the Interest Section in DC was due for a renovation, the Cuban diplomats decided to reclaim a bit of the space as their own.
“The room was like the palace of Versailles,” says Juan Leon Lamigueiro, deputy chief of the diplomatic mission. “There was very little Cuban.”
“So we decided to convert the warehouse annex into a bar dedicated to Hemingway.”
While mojitos and Cuba Libras were being poured in the small back room that houses the bar, a 12-piece band played Latin music in the front of the hall.
A mural promoting Fidel Castro displayed prominently at the entrance of the embassy.
Sandra Levinson, resplendent in a sparkling black and blue blouse, spun and twirled with her partner. MS Levinson, executive director of the Center for Cuban Studies in New York City and director of the centre’s Cuban Art Space, learned to dance during her many trips to Cuba, and had travelled down to Washington specifically to attend the opening.
As the crowd subsided, the hosts brought out cigars – the famous commodity that is forbidden in the US.
Reporters, bureaucrats, and Cuban emigrants happily puffed away – but more than one skittish politico declined to have their pictures taken enjoying Cuban contraband.
“You can write this,” one conceded. “An anonymous Hill staffer said the mojitos were fantastic.”
- U.S. & Cuba work together to preserve Hemingway’s Havana home (repeatingislands.com)
- Hemingway’s Bar: Propaganda Genius? (toinformistoinfluence.com)
by Scott Rubin
Benzinga Staff Writer
Money managers who are looking for leveraged exposure to a recovery in the Gulf of Mexico deepwater drilling space have been reaching for shares of small-cap name Hornbeck Offshore Services (NYSE: HOS) in recent months. The stock hit a new 52-week high on Friday of $35.00 and continues to run after releasing a very bullish earnings report on Thursday morning. Over the last month, HOS shares have surged around 45% and are up better than 66% in 2011 compared to a loss for the S&P 500 of 1%.
The company is a play on the rebound in deepwater drilling services in the U.S. Gulf of Mexico. Hornbeck Offshore, through its subsidiaries, operates offshore supply vessels (OSVs), multi-purpose support vessels (MPSVs) and a shore-base facility to provide logistics support and specialty services to the offshore oil and gas exploration and production industry.
Hornbeck also operates ocean-going tugs and tank barges which provide transportation of petroleum products. In addition to the U.S. Gulf of Mexico, Hornbeck has operations in the northeastern United States, Puerto Rico, Latin American and the Middle East. The company currently has a market cap of $937 million and employs around 1,000 people. Hornbeck Offshore is located in Covington, Louisiana. In the fiscal third quarter, HOS reported a surprise profit of $0.10 per share versus Street consensus estimates of a $0.23 per share loss.
Revenues also beat Wall Street expectations. The company posted revenue of $105.8 million compared to analysts’ consensus estimates of $96.1 million. Hornbeck is currently capitalizing on improved fleet utilization and higher dayrates for its vessels in the wake of a rebound in deepwater drilling activity in the Gulf of Mexico, which had been severely scaled back after the Macondo oil spill in April 2010.
According to analysts at Jefferies (NYSE: JEF [FREE Stock Trend Analysis]), “the recovery appears underway with deepwater vessel supply/demand tightening and leading-edge rates for deepwater vessels heading back to 2008 peak/pre-Macondo levels.” The firm, however, currently has a Hold rating on the stock, believing that “the recovery is largely priced in following the approx. 70% increase” in HOS shares over the last couple of months. While an increase in vessel rates is expected to continue in 2012, higher costs could potentially offset some of the upside for HOS as management raised its cost guidance for Q4 during this week’s earnings call.
While maintaining their Hold rating on HOS, Jefferies did substantially boost their price target on the name from $27.00 to $38.00. The mean Wall Street price target for HOS is $33.00 with a high target of $39.00. Hornbeck trades at a forward P/E of 24.55 and at 7.9x Jefferies’ 2012 EV/EBITDA estimates. Book value per share is $30.81. Hornbeck trades at roughly a 14% EV/EBITDA premium to competitors GulfMark (NYSE: GLF) and Tidewater (NYSE: TDW).
Potential forward looking risks to HOS’ share price include Gulf of Mexico permitting delays, oil and gas prices and regulatory uncertainty in the GoM which still persists in the wake of the Macondo spill. Shares have traded in a range between $19.80 and $35.00 in 2011. The stock is trading above both its 50 and 200 day moving averages of $28.81, and $26.62, respectively. Given the sharp run up in the share price, a pullback to the 50-day would be an ideal entrance point for bullish investors.
- HOS Centerline gives new meaning to multi-purpose vessel (mb50.wordpress.com)
- Offshore Vessel Operators Suffer As Gulf Oil Output Sags (mb50.wordpress.com)
- Genesis Energy to Buy U.S. Gulf of Mexico Pipelines from Marathon (mb50.wordpress.com)
- USA: EMAS Wins Gulf of Mexico Subsea Contract from BP (mb50.wordpress.com)
- Gulf of Mexico: Vector Lands Cascade Chinook Field Job (mb50.wordpress.com)
- Hornbeck Offshore and Marine Spill Response Corporation Announce Long-term Contract in Gulf of Mexico (gcaptain.com)
by Jim Lobe
WASHINGTON, Nov 4, 2011 (IPS) – With a giant deep-water oil rig steaming slowly toward the Gulf of Mexico and the waters just off Cuba, the administration of President Barack Obama is being pushed and pulled by different interests over what, if anything, to do about it.
On the one hand, anti-Castro Cuban-American and other right-wing lawmakers here are expressing growing exasperation over what they see as Washington’s failure to do whatever it can to prevent the new, 750-million-dollar Scarabeo 9 from fulfilling its mission to begin exploratory drilling off the island’s northwest coast by early next year.
They appear increasingly worried that the rig, which will be operated initially by the Spanish oil company, Repsol-YPF, may find commercially exploitable quantities of oil under Cuba’s waters and thus provide a “windfall” for Havana that will be used to help sustain the Communist government led by President Raul Castro.
On the other hand, some environmental and anti-embargo groups, including business associations that want to increase trade with Havana, are calling on Obama to engage the Cuban government more directly in the interests of both protecting the Gulf’s ecology from a possible spill and ensuring that U.S. oil service companies will be able to help contain the damage should such an accident take place.
Less than 18 months after the Deepwater Horizon blow-out that sent nearly five million barrels of oil pouring into the Gulf over a three-month period, they argue that Washington should work closely with both the Cuban government and Repsol, as well as other third- country companies that will operate the rig, to both minimise the risk of a similar accident and contain its impact if there is one.
So far, the administration appears to be trying to steer a middle course, satisfying neither side.
The U.S. Geological Service estimates that there could be undiscovered reserves of up to six billion barrels of oil under Cuban waters only 100 kms from the Florida Keys, while others have suggested there could be as much as several times that amount.
And while it would take at least a couple of years before those reserves could be tapped commercially, they would provide a huge boost to the struggling Cuban economy, which currently depends on the largess of Venezuelan President Hugo Chavez for more than two-thirds of its daily crude oil requirements.
“We are extremely concerned over what seems to be a lack of a coordinated effort by the Administration to prevent a State Sponsor of Terrorism, just 90 miles form our shores, from engaging in risky deep sea oil drilling projects that will harm U.S. interests as well as extend another economic lifeline to the Cuban regime,” complained four Cuban-American congressmen in a letter to Obama earlier this week.
They demanded, among other things, that the administration investigate whether any part of the Scarabeo has been made with U.S.- origin parts in violation of the 49-year-old U.S. trade embargo, and whether Obama’s own Interior Department may itself be violating the law by providing Repsol with technical advice.
“The administration needs to provide answers and change course,” said Rep. Ileana Ros-Lehtinen, one of the four lawmakers and chair of the House Foreign Affairs Committee, who in September also helped persuade 35 of her House colleagues to sign a letter to Repsol’s chairman urging him to immediately halt the company’s plans to drill.
The signatories included most lawmakers from Florida whose Gulf coast would almost certainly be affected by any spill originating in the drilling area.
Repsol has become the main target of Congressional opposition to the project primarily because it is the only publicly-traded company with substantial investments in the U.S. in a multinational consortium that includes the state oil companies of Malaysia, Brazil, Norway, Angola, and several other countries.
Repsol, which has issued repeated assurances that the rig’s operation and equipment will meet U.S. standards, has agreed to permit a team from the U.S. Coast Guard and the Interior Department’s Bureau of Safety and Environmental Enforcement (BSEE) to inspect the Scarabeo and its drilling equipment when it reaches Trinidad and Tobago later this month.
While that inspection won’t be as comprehensive as Washington would like, BSEE director Michael Bromwich told a hearing of the House Subcommittee on Energy and Mineral Resources Congressional Wednesday, “In our judgement, it’s a lot better than nothing.”
The administration is also using the multilateral International Maritime Organisation (IMO) to have its Coast Guard officers sit down with Cuban and other officials from the northern Caribbean next month to discuss measures for dealing with spills under the 1990 International Convention on Oil Pollution, Preparedness, Response and Cooperation (OPRC).
In fact, the 750-million-dollar Scarabeo is considered pretty much state of the art. It was designed by Norwegian engineers; its structure was built in China; and it was fitted with the latest deep- water drilling technology in Singapore.
But the fear of a major accident has prompted a number of environmental groups and independent experts to urge the administration to become significantly more engaged with both the Cuban government and all of the companies that will be operating the rig.
In particular, they want the administration to issue a general license for U.S. oil services companies to work in Cuba, which would permit them to respond quickly to any spill or related emergency resulting from drilling operations. Under the trade embargo, each company would have to apply for a special license to do so.
“We are very naïve to think that, in the case of Cuba, a handful of individual exports licenses could prevent and contain a deepwater oil exploratory well blow-out,” Jorge Pinon, a former oil executive and consultant at Florida International University, told the Subcommittee.
“A general license to export and supply equipment, personnel and services to international oil companies operating in Cuba in the case of an emergency is urgently needed,” he stressed, noting that more than 5,000 vessels, millions of metres of booms; and nearly eight million litres of dispersant were deployed to contain the Deepwater Horizon spill.
That message was echoed by Daniel Whittle, who directs the Cuba programme at the Environmental Defense Fund and who organized a delegation headed by President George H.W. Bush’s environment chief, William Reilly, that visited Cuba earlier this year. Reilly was the co-chairman of the national commission that investigated the Deepwater disaster.
“First and foremost, the administration should take steps now to ensure that U.S.-based companies are pre-authorized to assist in preventing and containing major oil spills in Cuban waters,” he testified.
“It’s critical to get U.S. companies into the act because of their technology, know-how, and proximity,” agreed Jake Colvin, vice president of the National Foreign Trade Council (NFTC), a business lobby that represents major multi-national corporations here. “While the administration has the authority to license a rapid response by those companies in the event of an accident, it hasn’t yet authorized it.”
“The reason they’re not issuing a general license is entirely political,” according to Sarah Stephen, the director of the Washington-based Center for Democracy in the Americas, which has lobbied against the embargo and last summer published a booklet on Cuba’s drilling plans.
“The administration clearly understands the urgency here, but it’s worried about the pressure from Congress, especially from the Floridians,” she said.
*Jim Lobe’s blog on U.S. foreign policy can be read at http://www.lobelog.com.
- Chinese-built oil rig setting sail for Cuban waters (mb50.wordpress.com)
- Chinese-made drilling rig to be in Cuba by year’s end (mb50.wordpress.com)
- U.S. Legislators Want Repsol to Leave Cuba (mb50.wordpress.com)
- Want to drill in Cuban waters? Perhaps forget doing business in the United States then… (gcaptain.com)
- Drill, Bebé, Drill (mb50.wordpress.com)
- Don’t talk oil with Cuba, lawmaker warns (mb50.wordpress.com)
- Washington raises a glass to Cuba (bbc.co.uk)
Image: Mark J. Perry
Of course, people are going to try to draw all kinds of different lessons from this chart. For example, some will see it as a sign that we’re in a golden-age of technological productivity, that’s allowed the overall economy to prosper, while a cohort of unemployable, skill-less workers suffer.
There’s also a political angle, namely that the needs of workers are obviously not in alignment with the interests of corporate America: Remember, the corollary to that record GDP is record corporate profits, as seen here.
Regardless of the root cause of the disconnect, this is a real and growing problem, as the lack of jobs translates into political strife, and perhaps even unrest.
- Income Inequality, Economic Mobility, and Investment (thewesternexperience.com)
- Kevin L: The “Imaginary Hobgoblin” of Income Inequality (mjperry.blogspot.com)
- CHART OF THE DAY: Keep This Chart Handy, And You’ll Know When Greece Is About To Blow Up (businessinsider.com)
- Recession? No. We’re In The Second Great Contraction (businessinsider.com)
A super-cool chart from Morgan Stanley, which basically examines different kinds out potential outcomes in Europe (with the top-right quadrant being the best, and the bottom-left quadrant being the worst), with some ideas about what kinds of policies get you to where.
Click Here – Morgan Stanley
- A Closer Look At Leverage At MF Global And Jefferies (businessinsider.com)
- Banking time bomb – banks’ balance sheet risks are increasing (tradingfloor.com)
- Morgan Stanley Presents Everything You Need To Know About Europe (MS) (businessinsider.com)
- CHART OF THE DAY: The Decline And Fall Of Morgan Stanley (businessinsider.com)
- Mapping Out The European Crisis In One Gigantic Chart (businessinsider.com)
It published a long-awaited list of “systemically important” banks Friday. Banks on the list will have to cooperate with regulations imposed by the agency as well as the Basel Committee of Banking Supervision.
Here are some of those new rules (via WSJ):
– By the end of 2012, all banks will have to map out a plan to unwind their businesses in the case of a collapse.
– By 2016 they have to hold more capital than other banks. They’ll be sorted into five different “buckets,” based on which they’ll be required to maintain 1%-3.5% more capital than less significant banks.
– By 2019, that capital requirement will be an added 3.5% on top of other regulations.
The list will be updated every November and the methodology to choose the banks will be reviewed every three years.
- Global regulators publish list of too-big-to-fail banks (business.financialpost.com)
- Why the big banks aren’t sweating Bank Transfer Day (blogs.reuters.com)
- Here’s Your Official List of 29 ‘Too Big to Fail’ Banks [Banksters] (gawker.com)
- ICBA Statement on Conclusion of House-Senate Conference on the Financial Reform Bill (prweb.com)
- 2 Big 2 Fail (maxredline.typepad.com)
- Saturday, November 5th is Bank Transfer Day – Move Your Money Out of ‘Too Big to Fail’ (crooksandliars.com)
- ‘Too big to fail’ Barclays, RBS, Lloyds and HSBC will be forced to increase capital buffers (telegraph.co.uk)
- Megabanks may face new international rule (search.japantimes.co.jp)
For readers of Wall Street research, we’re getting close to the most exciting time of the year: Forecasters will start making their big predictions for the coming year and beyond.
Of course, that will really start heating up in December, but it’s already beginning.
Recently UBS‘ economics team of Larry Hathaway, Paul Donovan, Andrew Cates, and Christine Li came out with their forecasts and themes for 2012 and 2013.
First, they identify three big themes:
- Sovereign stress: This means a range of things, not just the crisis in Europe, but also the emergence of groups like the Tea Party and Occupy Wall Street, which have coincided with a collapse in support for elected officials. Weak governments will wind up producing bad policies, which of course have all kinds of economic ramifications.
- Excess capacity: The world is beset with “swathes” of excess capacity, most notably seen via high unemployment in developed nations. Simple manufacturing capacity remains weak, which is a hindrance to growth and high wages, and it means that growth will be uneven. It also means inflation, mostly, won’t be much of an issue.
- An emerging world: As they put it, it’s the most obvious of the three. But the bottom line is that stronger balance sheets and better fundamentals will continue to bolster the emerging world.
Now, as for specific predictions for the economy in 2012 and 2013…
- Global GDP growth of 3.1% in 2012 and 3.4% in 2013.
- The eurozone will be in a recession in early next year. 2013 will see eurozone growth of just 1%.
- The US will avoid recession, growing 2.3% in 2012 and 2.7% in 2013.
- Emerging economies will engage in more monetary and fiscal stimulus, and maintain their trend growth rates.
- Central banks around the world will keep monetary policy very loose. The Fed will lift interest rates in the second half of 2013.
- The biggest downside risk is an intensification of the eurozone crisis.
- The biggest upside risk is much better coordinated global economic policy.
Anyway, as we said, this is just the tip of the iceberg for Predictions Season. We’ll be bringing you a lot more.
- UBS On The 3 Major Factors Impacting Global Growth (businessinsider.com)
- The Bleak Truth About The Latest Statements From The Fed (businessinsider.com)
- UBS Board to Focus on Postscandal Plan (online.wsj.com)