november 14, 2014

International Trade

 

31 ships at bay

A total of 31 ships are in the bay of Puerto Cabello awaiting dock assignment to unload. There are 12 ships unloading, three of them with bulk cargo. More in Spanish: (Notitarde; http://www.notitarde.com/La-Costa/Importadores-son-los-mas-afectados-2282136/2014/11/12/388102)

 

 

Logistics & Transport

 

Puerto Cabello is operating again

After shutting down for over 30 hours due to worker protests over the lack of an agreement with the local port authority, BOLIPUERTOS, operations have started up again after they reached an agreement with Air and Aquatic Transportation Minister, General Giuseppe Gioffreda, and other authorities. More in Spanish: (Notitarde; http://www.notitarde.com/La-Costa/Reactivadas-las-operaciones-en-Bolipuertos-tras-lograr-acuerdos-Fotos/2014/11/12/384845)

 

 

Oil & Energy

 

OPEC diplomacy picks up with Iraq-to-Libya chiefs

OPEC producers are stepping up their diplomatic visits before the group’s meeting in two weeks, potentially seeking a consensus on how to react to oil prices that have plunged to a four-year low. Libyan Prime Minister Abdullah al-Thani flew to Riyadh today just as Iraqi President Fouad Masoum left the kingdom after a two-day visit where he met with King Abdullah, the official Saudi Press Agency reported. Rafael Ramirez, Venezuela’s foreign minister and representative to OPEC, held talks in Algeria and Qatar. Saudi Arabia’s Oil Minister Ali Al-Naimi toured Latin America. “The Saudis will not walk the road alone, they want to see everyone share the burden with them,” Kuwait-based analyst Kamel al-Harami said by phone. Saudi Arabia, the world’s biggest oil exporter, is trying to build consensus among fellow members of the Organization of Petroleum Exporting Countries before they meet Nov. 27 in Vienna, he said. (Bloomberg, http://www.bloomberg.com/news/2014-11-13/iraq-libya-heads-meet-saudis-ahead-of-opec-meeting.html)

 

PDVSA Industrial’s workers protested outside the plant for the government lack of compliance with labor payments that have been dragged for the last four years when the company formerly known as NORPRO was nationalized. The company’s union and management sat at a table for over a year. However, union representatives said management “stormed out.” (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=41840&idc=3)

 

 

Commodities

 

Industry expects recession and a drop in imports

Eduardo Garmendia, President of the Industry Federation, says they expect a drop of around US$ 11 billion in national income from oil exports, which will restrict availability of FOREX, and that the private sector will "suffer the consequences".  "Allocations to private companies have dropped 20% from 2013, with in turn faced a similar drop from 2012." "The industrial sector is going through recession," he said, as he recalled that by the third quarter of 2013, the industrial sector operated at 52.37% of its capacity. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/gremios/conindustria-preve-recesion-industrial-y-baja-en-l.aspx#ixzz3IqmNoCjp; El Universal, http://www.eluniversal.com/economia/141112/industria-nacional-trabaja-al-4885-de-su-capacidad; El Nacional; http://www.el-nacional.com/)

 

Production lines are now crumbling due to lack of FOREX

Industry is in critical condition. José Manuel González, President of the Packing Chamber, and Juan Pablo Olalquiaga, President of the Chemical and Petrochemical Industry Association, warn that production lines must be rebuilt since their structure has crumbled to pieces. Production is now 50% under capacity, and entire lines have shut down for lack of supplies. Further, labor legislation ties their hands with workers who do not meet their responsibilities. They are asking the government to solve underlying causes and not simply focus on immediate measures. More in Spanish: (El Nacional; http://www.el-nacional.com/)

 

Venezuela applies price controls to Barbies, because of Socialism

Socialism has embraced Barbie, just in time for Christmas. Mothers, grandmothers and beaming little girls are grabbing armfuls of the dolls in toy stores across Caracas, taking advantage of the government's order that large chains sell the plastic figurines at fire-sale prices during the holiday shopping season. Venezuela's socialist government has long imposed price caps on essential products, from milk to laundry detergent, and threatened merchants who hoard goods or sell them at unfairly high margins with jail time. Now President Nicolas Maduro is making the Barbie doll, often derided by leftists as a training tool for capitalist consumerism, a highlight of this year's "Operation Merry Christmas," which he presented as an effort to prevent speculators from ruining the holidays. The toy isn't the only product affected by the initiative. Across town from the Barbie bonanza, the government is selling big-ticket products directly to shoppers at a fraction of what they usually cost. Business leaders say that mandatory discounts on products sometimes force retailers to sell at a loss, discouraging imports and feeding shortages; but for shoppers contending with chronic shortages, hour-long checkout lines and the world's highest inflation, the sporadic price cuts are a rare bright spot that even critics of Chavez's socialist ideology can enjoy. (Huffington Post, http://www.huffingtonpost.com/2014/11/12/venezuela-barbie_n_6145524.html)

 

 

Economy & Finance

 

International reserves at US$ 19.64 billion

As of November 7, Venezuela's international reserves hit US$ 19.64 billion, the lowest level reported since March 18, 2003, when reserves stood at US$ 19.74 billion, according to figures provided by the Central Bank of Venezuela (BCV).

In its most recent report, think tank Síntesis Financiera highlighted that cash reserves ended at US$ 1.3 billion in October, a US$ 706 million-decline over a month. As of October 31, total gross reserves ended at US$ 20.5 billion, dropping US$ 870 million compared to September 31. Most of Venezuela's reserves are gold ingots. (El Universal, http://www.eluniversal.com/economia/141112/venezuelas-international-reserves-at-usd-1964-billion)

 

Venezuela bond exodus accelerates on spurned devaluation

Bond investors are abandoning Venezuela as President Nicolas Maduro’s administration signals the nation doesn’t intend to devalue the currency with sinking oil prices undermining its ability to pay debt. The country’s US$ 4 billion of dollar-denominated debt due 2027 plummeted to an almost six-year low of 55.10 cents on the dollar yesterday after Finance Minister Rodolfo Marco Torres said this week that there’s “no devaluation planned.” The securities have fallen 14.1% this month, posting the biggest drop in emerging markets over that span. (Bloomberg, http://www.bloomberg.com/news/2014-11-13/venezuelan-bond-exodus-deepens-on-spurned-devaluation.html)

 

BOFA concludes low state capacity introduces a significant risk for bondholders

In his  most recent report on Venezuela, Francisco Rodriguez, Andean Region Chief Economist for Bank of America Merrill Lynch says: "Much of the recent discussion regarding the likelihood of a Venezuelan default has highlighted that defaulting would be a mistake for Venezuela, given the high costs and limited benefits to the Venezuelan government. It has not shown that the Venezuelan government can be counted on not to make that mistake." (BAML Venezuela: Low Bandwidth Government 12 November 2014)

 

Moody's believes Venezuela's fiscal imbalance does not jeopardize debt service

Moody's reports that the total public sector deficit for Venezuela is over 10% GDP, which would normally be considered a serious solvency risk for any nation. "But persistent high inflation, controls on capital movement, and highly restrictive changes have created an environment in which the government can easily obtain domestic financing at manageable rates without creating a debt spiral." More in Spanish: (Notitarde; http://www.notitarde.com/Economia/Desajuste-fiscal-de-Venezuela-no-plantea-riesgo-para-pago-de-deuda-Moodys/2014/11/13/388208/; El Mundo, http://www.elmundo.com.ve/noticias/economia/mercados/moodys--desajuste-fiscal-de-venezuela-no-plantea-r.aspx)

 

No official information on inflation for the past two months

Nicolás Maduro’s government has again failed to provide statistics on inflation on October as required by law. The last report, provided in September, showed inflation between January and August was 39% while inflation between August 2013 and August 2014 was 63.4%. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=41843&idc=2)

 

...nor is there data on GDP results for 2014, or balance of payments information since the 3rd quarter of 2013, nor the Scarcity Index since February, among other figures. Last month, the World Bank said delays in publishing official statistics remind of old practices in Latin America and affect the capacity of international bodies to assess a country’s performance. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=41842&idc=2)

 

Government claims unemployment here stands at 7% in September

According to the National Statistics Institute (INE), Venezuela's unemployment rate was 7% by the end of September, meaning that 1,004,273 people are unemployed, either because they lost their jobs or they could not find a job for the first time. INE statistics count all those receiving monthly payments from certain government welfare missions as employed. (El Universal, http://www.eluniversal.com/economia/141112/unemployment-in-venezuela-stands-at-7-in-september)

 

Law on Foreign Investment to be enacted via expiring enabling law

A Law on Foreign Investment and an Anti-monopoly Law are slated to be enacted by the government via the enabling law currently in force, according to lawmakers at the National Assembly. At hearings held by the Assembly's Finance Committee, Henry Navas, a director of the Ministry of Commerce, noted that several regulations, including the Law on Foreign Investment, are to be enacted via the enabling law, which is expiring later this month. (El Universal, http://www.eluniversal.com/economia/141113/law-on-foreign-investment-to-be-enacted-via-enabling-law-in-venezuela)

 

 

Politics and International Affairs

 

Judge rejects UN plea for Leopoldo López

Judge Susana Barreiros rejected a petition by the UN Working Group on Arbitrary Detentions for the liberation of opposition leader Leopoldo López.  She said: "The Working Group was not created by the International Agreement on Civil and Political Rights, which the nation signed, but rather by a resolution of the UN Human Rights Council, and is therefore not one of the institutions it is required to obey under article 31 of the Constitution". López will remain in a military prison. More in Spanish: (El Universal, http://www.eluniversal.com/nacional-y-politica/141114/jueza-desestima-peticion-de-la-onu-a-favor-de-lopez; El Nacional; http://www.el-nacional.com/)

 

Colectivos: one of many problems for Maduro

A recent dispute between the Venezuelan government and members of a pro-government political patronage group, known as a "colectivo", has exposed potential problems for President Nicolas Maduro. The incident demonstrated Maduro's inability to exercise definitive control over the "colectivos", which function as auxiliary security forces for the state. Fortunately for Maduro, he still has the approval of the country's armed forces, which have so far ensured his continued rule. However, the deteriorating national economy, Maduro's low public approval and potential splits within the ruling party will all pose threats to the government over the next several years. Unable to address any of these issues conclusively, Maduro is likely to mitigate the threats by maintaining military support through political appointments and direct benefits. And even though the military has acquiesced to Maduro's rule for now, the degree of political unrest caused by Venezuela's economic decline will define the future of his presidency. (Stratfor, http://www.stratfor.com/analysis/venezuelas-colectivos-one-many-problems-maduro#axzz3J2q7qm6j)

 

Regime sets up hotline to nab 'infiltrators'

Venezuela's rulings socialists have set up a telephone hotline to denounce "infiltrators" they say are jeopardizing the legacy of beloved late leader Hugo Chavez by seeking to destroy the socialist government. "The enemy who most harms us is the enemy within our ranks. It's the one who calls himself 'Chavista' but is not 'Chavista,'" said Francisco Ameliach, governor of the state of Carabobo and a high-ranking member of the ruling PSUV party. "Militants who foment disunity must be denounced," he said, giving out a telephone number and email address that begins with the words "denounce infiltrators." (Reuters, http://www.reuters.com/article/2014/11/13/us-venezuela-hotline-idUSKCN0IX1YP20141113)

 

Colombia's FM rejects ambassador's statements on Deputy Serra's case

Colombian Foreign Minister María Ángela Holguín said Colombian ambassadors were not allowed to speak to the media, in reference to statements made by Colombian ambassador to Venezuela, Luis Eladio Pérez, concerning the murder in October of Venezuelan Deputy Robert Serra. Pérez said Leiver Padilla Mendoza, aka "El Colombia," the alleged murderer of Serra, was not a Colombian national, and added that the Venezuelan government had aired unconfirmed information about the case. (El Universal, http://www.eluniversal.com/nacional-y-politica/141113/colombias-fm-rejects-ambassadors-statements-on-deputy-serras-case)

 

 

The following brief is a synthesis of the news as reported by a variety of media sources. As such, the views and opinions expressed do not necessarily reflect those of Duarte Vivas & Asociados and The Selinger Group.