The presidents of the Federal Reserve banks of Boston and Dallas are stepping down, after recent reports of potentially unethical investments in 2020 drew criticism and prompted the Fed to launch an ethics review.
Robert Kaplan of Dallas followed Eric Rosengren of Boston in announcing an early retirement on Monday. Both executives are 64, a year short of the mandatory retirement age at the Fed.
Rosengren said he would retire on Thursday, rather than in July 2022, citing health reasons – an upcoming kidney transplant to help him deal with a chronic condition, specifically. Kaplan will also retire effective October 8, because “the recent focus on my financial disclosure risks becoming a distraction” to the “vital” work of deliberating future monetary policy at “a critical point in our economic recovery,” he said.
The early retirements come following last week’s disclosures that Kaplan traded stocks of Amazon, Facebook and Johnson & Johnson – among others – in 2020, even while the Fed’s measures to deal with the economic fallout of the coronavirus pandemic boosted their profits and shares. Rosengren, meanwhile, invested in real estate trusts that dealt with mortgage-backed bonds the Fed was buying up to influence borrowing rates.
Fed chair Jerome Powell said the trades were technically legal under existing rules, but vowed to tighten ethics regulations in order to ensure the credibility of the Federal Reserve, the quasi-private institution that functions as the de facto central bank of the US.
The Fed has 12 regional banks and their presidents serve on the Federal Open Market Committee, with a rotating vote every three years. Rosengren was scheduled to be a voting member of the FOMC in 2022.
Today, something very rare happened: 2 Federal Reserve leaders “retired” early.
This happened largely b/c @michaelsderby of the WSJ put a big spotlight on the personal trades the Dallas and Boston Fed presidents did in 2020. Other stories soon followed.
Journalists hastened to claim credit for the highly unusual departure of two regional bank chairs, with a Washington Post economics correspondent citing the work of her colleague at the Wall Street Journal as key to this turn of events.
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The Brent crude oil price for November exceeded $80 per barrel for the first time in three years, trading data shows. The rally comes as energy demand runs ahead of supply amid post-pandemic recovery of the global economy.
As of 5am GMT, the price of December Brent futures grew by 0.85% to $79.36 per barrel, while November futures jumped by 0.83%, to $80.19, reaching $80.35 earlier on Tuesday. US benchmark West Texas Intermediate (WTI) November futures were also up, gaining 0.85% to $76.09 a barrel.
The rise in oil prices comes amid signs of an improving outlook for global energy demand. At the same time, global refineries are failing to keep up, as supply is growing at a slower pace despite the efforts of OPEC. The group and its allies, including Russia, have been easing supply curbs initially introduced at the height of the Covid-19 pandemic. Markets are also awaiting a new OPEC forecast on global oil outlook later on Tuesday, which will detail the group’s views on market fundamentals.
Market experts say prices could continue to grow, with fuel demand projected to reach pre-pandemic levels by early next year.
“Oil demand could rise by 500,000 barrels a day as high gas prices are forcing consumers to switch to other feedstocks,” Vivek Dhar, a commodities analyst at Commonwealth Bank of Australia, told Bloomberg. The expert says this will increase the supply deficit in the markets, especially given the fact that OPEC and allies’ production increase of 400,000 barrels a day each month will add only about 2% to the world’s supply by the end of the year.
A long-term contract for the transit of Russian gas is crucial for Ukraine, which needs money to maintain its pipeline network, the country’s gas transmission system (GTS) operator says.
“We need a long-term contract that will cover our operational needs,” head of GTS Ukraine Sergei Makogon said on Tuesday.
Makogon stressed that servicing the country’s gas transmission system is expensive, being an enormous infrastructure with thousands of workers. Therefore, it will be difficult for Ukraine to maintain it “without significant long-term commitments,” he stressed.
Kiev strongly opposes the launch of Russia’s newly constructed Nord Stream 2 pipeline, fearing Moscow could scrap the transit contract with Ukraine and switch entirely or in part to the new system.
“Nord Stream 2 and Turkish Stream 2. What should Europe do? Investigate the abuse of dominance. Show solidarity. Answer resolutely. Protect transit through Ukraine. Do not give exceptions to EU rules,” read the presentation to Makogan’s speech at the conference.
Russia, however, repeatedly stated that it will respect commitments under the gas transit deal with Kiev. At the end of 2019, Russia and Ukraine signed a raft of agreements on the continuation of gas transit through Ukraine’s territory, including a five-year transit contract, according to which Russia’s state energy major Gazprom guaranteed the pumping of 65 billion cubic meters of gas during the first year and 40 billion cubic meters of gas annually over the next four years.
The head of Gazprom, Alexey Miller, recently said that the company is ready to continue gas transit through Ukraine after 2024, depending on economic feasibility and the technical condition of Ukraine’s gas transportation network. At the same time, he pointed out that the volumes of transit will have to be adjusted to the new volumes of purchases of Russian gas by EU states with consideration of Nord Stream 2 contracts.
The new Russian pipeline is awaiting EU certification to launch deliveries. The process could take up to four months due to bureaucratic procedures in Brussels as well as opposition to the project from Washington and some Eastern European states.
Natural gas prices in Europe hit record highs in Tuesday’s trading, exceeding $1,000 per 1,000 cubic meters for the first time in history, data from the Intercontinental Exchange (ICE) shows.
The price of October futures on the Dutch TTF exchange surged to $1,031.30 per 1,000 cubic meters, with the overall increase in gas prices since the beginning of the trading day exceeding 11%. The price of November futures on the TTF has reached almost $1,040 per 1,000 cubic meters.
European gas prices may continue to rise and break new records in the event of a cold winter and a physical shortage of gas on the market, according to international rating agency Fitch.
“The main test for gas prices and consumers will be in winter – in case of cold weather and physical shortage, prices may soar even higher than now,” Dmitry Marinchenko, the senior director of the group for natural resources and commodities at Fitch, told TASS.
Russian experts had warned that gas prices could surge due to a number of factors, including demand in Asia, the weather in Europe and the coming winter season, as well as the timing of the launch of Russia’s Nord Stream 2 pipeline. Low gas-storage volumes across the continent and unusually high demand for the current season also add to the prospects of record highs on the European gas market.
According to the chairman of Russia’s Gazprom, Alexey Miller, growing demand in Europe and a lag in filling underground storage facilities will continue to push natural gas prices higher.
Sergey Komlev, the department head at Gazprom Export, said that pipeline gas supplies from Russia to Europe this year are at historic highs, with Gazprom increasing gas production by 18.4% year-on-year.
At the same time, the European gas market in the first half of 2021 faced an outflow of liquefied natural gas (LNG) to the Asia-Pacific and South American markets, with its share in imports dropping from 41.5% to 31%. In absolute terms, LNG supplies to Europe during this period decreased by 10.74 billion cubic meters (15.9%).
The new AUKUS submarine pact between the US, UK and Australia, which saw France lose a major ship-building deal with Canberra last week, has led to a verbal fire exchange and diplomatic snubbing between Washington and Paris.
On the Keiser Report, Max and Stacy discuss the possible outcome of the standoff, predicting France to come out as a winner, backed by the whole European Union, while the post-Brexit UK and “bad crazy island” of Australia don’t stand a chance, even with the US behind them.
