WSJ : U.S. Moves to Give Iran Limited Access to Dollars

U.S. Moves to Give Iran Limited Access to Dollars

Proposal on sanctions relief comes amid rising criticism from Tehran

WASHINGTON—The Obama administration is preparing to give Iran limited access to U.S. dollars as part of looser sanctions on Tehran, according to congressional staff members and a former American official briefed on the plans.

The proposed move comes amid rising Iranian criticism that the landmark nuclear agreement reached last year between global powers and Tehran hasn’t provided the country with sufficient economic benefits.

Executives at European and Asian banks have said in recent interviews that they remain reluctant to conduct any financial transactions with Iran due to fears they might run afoul of the U.S. Treasury and its regulations that ban dollar dealings with Iranian firms. Most major international trade, particularly in oil and gas, is conducted in U.S. dollars.

The Treasury is considering how to issue licenses to offshore dollar clearing houses for specific Iranian financial institutions, an approach that wouldn’t require the involvement of American banks, according to the congressional officials. The clearing houses, likely involving select foreign banks, would conduct the dollar transactions instead, shielding the U.S. financial system from any direct contact with Iran, these officials said.

“They are looking at a couple mechanisms to allow for this dollar trade, stopping short of normalizing banking transactions,” said a congressional banking official briefed by the administration on its plans, which haven’t been finalized.

Treasury action on Iran’s access to the dollar wouldn’t require congressional approval.

American law still prohibits U.S. and foreign banks from dealing in dollars with Iran, despite the July nuclear agreement. The Treasury Department designates Iran’s entire financial system as a “primary money laundering concern” due to Tehran’s nuclear and missile programs and support for international terrorist groups, such as Hezbollah in Lebanon and Hamas in the Palestinian territories.

The U.S. Treasury and State departments declined to comment Thursday on preparations to allow Iran limited access to dollars.

But Treasury Secretary Jacob Lew has stressed in recent weeks the need for the U.S. to comply with the “letter and spirit” of the nuclear agreement and help Iran gain economic relief. Congressional officials following the deliberations said they expected a Treasury action could come within weeks, though they acknowledged details of the proposal were evolving.

Since 2006, the U.S. government has imposed an escalating campaign to freeze Iran out of the global banking system in a bid to persuade Tehran to roll back its nuclear program. The sanctions crippled Iran’s economy and cut by more than half its oil exports. Under the nuclear agreement Iran consented to limit its nuclear aspirations in exchange for the lifting of most international sanctions.

Treasury and State Department officials have traveled to the Middle East, Europe and Asia in recent weeks to meet with foreign governments and private businesses to discuss ways to help Iranian commerce, according to U.S. officials, who didn’t address the proposed dollar arrangement.

On Wednesday, Mr. Lew gave an address on sanctions policy at the Carnegie Endowment for International Peace, a Washington think tank, and argued the U.S. risked losing international credibility if it didn’t follow through and provide Iran with significant relief.

“The risk that sanctions overreach will ultimately drive business activity away from the U.S. financial system could become more acute if alternatives to the United States as a center for financial activity…assume a larger role,” Mr. Lew said.

The Treasury chief refused during a March congressional hearing to answer a lawmaker’s questions about whether Iran would be granted access to the dollar. The administration will “make sure Iran gets relief,” he responded.

Members of Congress from both parties have rapped reports that the White House is preparing to provide Iran with access to the U.S. dollar.

Lawmakers argued in letters to the administration this week that such a step risked undermining U.S. sanctions campaigns around the world, which are predicated on using the heft of the U.S. financial system to punish America’s adversaries. Iran, they stressed, continues to support terrorism and is developing ballistic-missile capabilities, despite moving to scale back its nuclear program.

Republican Sens. Marco Rubio of Florida and Mark Kirk of Illinois wrote Mr. Lew on Wednesday seeking assurances that Iran wouldn’t be granted dollar access. Their offices said they haven’t received responses.

In a letter to President Barack Obama on Thursday, Rep. Brad Sherman (D., Calif.), said, “I believe this will set bad precedent, and it will not be the last time the Iranians and/or their business partners receive additional relief not contemplated” under the nuclear deal.

Senior members of Congress on Thursday also released statements voicing concern about the proposed arrangement.

House Speaker Paul Ryan said that the administration should abandon the dollar-access idea.

And House Democratic Whip Steny Hoyer, who gave qualified support to ending the sanctions regime during congressional debates, said he was opposed to granting Tehran any new relief “without a corresponding concession. We lose leverage otherwise, and Iran receives something for free.”

Iran has conducted a string of ballistic-missile tests in recent months that the Obama administration said were “inconsistent” with a United Nations Security Council resolution, though it stopped short of charging Tehran with a violation. U.S. officials also believe Iran is a major supplier of arms and funding for the Bashar al-Assad regime in Syria and the Houthi militia in Yemen.

Since the agreement went into force in January, Iran has scaled back its nuclear activities. The U.S., however, has maintained penalties on Iranian defense and missile firms and individuals allegedly involved in human-rights abuses.

Iranian officials have increasingly complained that the ongoing U.S. penalties are prohibiting Iran from conducting normal business with a flood of European, Asian and Middle East companies that have sought to enter the Iranian markets.

Iran’s Supreme Leader Ayatollah Ali Khamenei sharply criticized the Obama administration during a Persian New Year’s speech for allegedly misleading Tehran’s nuclear negotiators during the talks.

“Our banking trade, our efforts to return wealth from their banks, various kinds of businesses that require financial services, all of these are still facing problems,” Mr. Khamenei said. “When we investigate the issue, it becomes obvious that [the banks] are afraid of the United States.”

Mr. Lew and other U.S. officials said in the months after the nuclear agreement that Iran would continue to be denied any access to the U.S. financial system. This included blocking Iranians from establishing accounts at American banks or conducting dollar trade through European or Asian banks.

“Iranian banks will not be able to clear U.S. dollars through New York, hold correspondent account relationships with U.S. financial institutions, or enter into financial arrangements with U.S. banks,” Mr. Lew said last summer.

>>> Europe : Brokers Upgrades & DOwngrades - 1st of April 2016

>>> Up
*CAPITAL ONE RAISED TO OVERWEIGHT AT JPMORGAN
*OSRAM LICHT RAISED TO NEUTRAL VS SELL AT UBS
*SOCGEN RAISED TO OVERWEIGHT VS EQUALWEIGHT AT BARCLAYS
*TDC A/S RAISED TO BUY VS HOLD AT BERENBERG
*WENDEL RAISED TO BUY VS HOLD AT SOCGEN

>>> Down
*EDISON INTERNATIONAL DOWNGRADED TO NEUTRAL/NEUTRAL AT GOLDMAN
*INCHCAPE CUT TO HOLD VS BUY AT BERENBERG
*K+S CUT TO REDUCE AT HSBC
*NOVARTIS CUT TO NEUTRAL VS BUY AT UBS
*SPIRAX-SARCO CUT TO UNDERPERFORM VS NEUTRAL AT EXANE
*RAIFFEISEN CUT TO NEUTRAL VS OUTPERFORM AT EXANE
*ULKER CUT TO NEUTRAL VS BUY AT GOLDMAN

>>> PT Change


>>> Initiation
*ENEL RESTARTED AT NEUTRAL AT MEDIOBANCA; PT EU4.20
*MOTOR OIL RATED NEW OUTPERFORM AT CREDIT SUISSE, PT EU15
*NESTE RATED NEW NEUTRAL AT CREDIT SUISSE, PT EU27.5
*SARAS RATED NEW OUTPERFORM AT CREDIT SUISSE, PT EU2

>>> Call
>> Sector
*EUROPE HEALTH-CARE SECTOR RAISED FROM UNDERWEIGHT RO NEUTRAL AT CITI

>>> Asian Update

Asian Market Update: Q1 Japan Tankan plummets, sending Nikkei down 3%; China manufacturing recovers, returning to expansion

***Economic Data***
- (CN) CHINA MAR CAIXIN PMI MANUFACTURING: 49.7 V 48.3E; 13-month high
- (CN) CHINA MAR MANUFACTURING PMI: 50.2 V 49.4E(1st expansion in 8 months); Non-manufacturing (services) PMI: 53.8 v 52.7 prior
- (JP) JAPAN Q1 TANKAN LARGE MANUFACTURING INDEX: 6 (lowest since June 2013) V 8E; MANUFACTURERS OUTLOOK: 3 v 7E; All-industry CAPEX: -0.9% v -0.7%e
- (JP) JAPAN MAR FINAL PMI MANUFACTURING: 49.1 V 49.1 PRELIM
- (KR) South Korea Mar PMI Manufacturing: 49.5 v 48.7 prior; 3rd straight month in contraction
- (KR) SOUTH KOREA MAR TRADE BALANCE: $9.8B V $8.5BE
- (KR) SOUTH KOREA FEB CURRENT ACCOUNT BALANCE: $7.5B V $6.8B PRIOR
- (AU) AUSTRALIA MAR AIG MANUFACTURING INDEX: 58.1 V 53.5 PRIOR; 9th straight month of expansion, highest since 2004
- (AU) Australia Mar Corelogic RPData House Prices M/M: 0.2% v 0.5% prior

***Index Snapshot (as of 03:30 GMT)***
- Nikkei225 -2.8%, S&P/ASX -1.8%, Kospi -0.7%, Shanghai Composite -1.4%, Hang Seng -1.3%, Jun S&P500 -0.2% at 2,046

***Commodities/Fixed Income***
- Jun gold -0.3% at $1,232/oz, May crude oil -0.7% at $38.09/brl, May copper +0.2% at $2.19/lb
- (CN) PBOC to inject CNY140B in 7-day reverse repos; Injects net CNY15B this week v injected CNY180B prior
- (CN) PBOC SETS YUAN MID POINT AT 6.4585 V 6.4612 PRIOR; 4th straight stronger setting; Strongest Yuan setting since Dec 15th
- (JP) BOJ offers to buy ¥70B in JGBs with maturity less than 1-yr and ¥450B in 5-10yr JGBs
- (AU) Australia MoF (AOFM) sells A$800M in 1.75% 2020 Bonds; avg yield: 2.0315%; bid-to-cover: 4.57x

***Market Focal Points/FX***
- Asian equity markets are notably lower across the board, as the typically uneventful Asia session on the eve of the US non farm payrolls saw an unusual amount of volatility. Nikkei225 is the worst performer by far, shedding about 3% in the afternoon trade in the wake of the lowest Manufacturing Tankan figure in nearly 3 years. China markets were also pressured despite stronger manufacturing PMIs, as investors expressed concern over less aggressive fiscal stimulus and also responded to S&P cut of China outlook to Negative overnight. In FX, USD/JPY fell about 50pips toward 112, though the 112.00-70 2-day range is holding going into volatile NFPs. AUD/USD spiked up 30pips to 0.77 after China PMIs but then erased those gains, and NZD/USD fell over 40pips below 0.6890. Yuan fix was set stronger for the 4th straight day in a catch-up move to weaker greenback.

- China official manufacturing PMI expanded above the 50-threshold for the first time in 8 months, and non-manufacturing improved to 53.8 from 52.7 - a 3-month high. Key components New export orders and Input Prices jumped to 50.2 and 55.3 from 47.4 and 50.2 respectively, portending better exports demand and higher inflation. Caixin manufacturing PMI surveying smaller firms also rose to a 13-month high, but remained in contraction. Resident economist said output and new order categories indicate that the stimulus policies the government has implemented have begun to take hold. In the property secror, China Index Academy reported continued price increases in March with top-100 city average rising to +1.90% v +0.60% m/m and +7.41% v +5.25% y/y.

- In Japan, Q1 Tankan survey undershot already soft expectations, coming in at the lowest level since June 2013 of +6 with outlook an even more feeble +3. Closely watched Capex projections component was revised sharply lower to -0.9% from +10.8%. Japan Fin Min Aso attempted to downplay the soft numbers, stating that more leading indicators show capex is rising, though acknowledging that there is some weakness in sentiment. With an eye on the BOJ policy decision in late April that will include an update on growth and inflation targets, Gov Kuroda said monetary policy has already been adjusted a lot in past 3 years.

***Equities***
US equities / ADRs:
- URBN: Sees comparable retail segment net sales "thus far in Q1 low single-digit positive which includes the benefit of a leap year" - 10K filing; +2.0% afterhours
- TROX: Increases TiO2 price by $175/metric ton; -1.1% afterhours
- MRVL: Delays 10K filing due to delay caused by audit committee investigation; expect FY16 revenue down significantly y/y; -1.6% afterhours
- HOT, MAR: Reportedly Anbang to drop its proposed takeover offer for Starwood - press; HOT -4.4%, MAR -5.9% afterhours
- SUNE: Discloses subpoena from DOJ seeking information related to acquisition of Vivint Solar and intercompany transactions with TERP and GLBL - filing; -9.3% afterhours

Notable movers by sector:
- Consumer discretionary: Gome Electrical Appliances Holdings 493.HK +2.7% (FY15 result); Beijing Enterprises Hldgs 392.HK -5.7% (FY15 result); Recall Holdings REC.AU +7.1% (divestment speculation); Panasonic Corporation 6752.JP -11.0% (cuts guidance)
- Financials: Guosen Securities 002736.CN -2.1% (clarification on dim sum bond default); Agricultural Bank of China (ABC) 601288.CN -1.3% (FY15 result)
- Industrials: Baoxin Auto 1293.HK -0.8% (FY15 result); Sound Global 967.HK -7.4% (FY15 result)
- Technology: Mesoblast Ltd MSB.AU -3.1% (update on trial)
- Materials: China Daye Non-Ferrous Metals Mining 661.HK -10.7% (FY15 result)

>>> US After Hours Summary: SUNE -7% following receipt of subpoena fro


After Hours Summary: SUNE -7% following receipt of subpoena from DOJ

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: VJET 7%, URBN 2.9%

After Hours Losers:

Companies trading lower in after hours in reaction to news: SUNE -7.4% (discloses receipt of subpoena from the DOJ, informal inquiry from SEC), GNCA -5.9% (cautious commentary from Biotech blogger Adam Feuerstein), HOT -4.1% (Anbang-J.C. Flowers-Primavera consortium confirms decision not to proceed with its proposal to acquire Starwood), MRVL -2.5% (files to delay Form 10-K, expects to incur a net loss for fiscal 2016)

>>> Pfizer - Issues statement regarding earlier false press release attributed t

Issues statement regarding earlier false press release attributed to Pfizer A false press release related to drug pricing and linking to a fake web site was anonymously issued earlier today. It was erroneously attributed to Pfizer and should be disregarded. Pfizer is investigating this matter and evaluating its legal options against the parties responsible. Pfizer is committed to engaging in an honest discussion and real dialogue about the issues that matter to patients.

NY Post : Newell poised to wrap up $15B deal for Jarden

Newell poised to wrap up $15B deal for Jarden

Household products giants Newell Rubbermaid and Jarden Corp. will be under the same roof sooner than the companies had hoped, The Post has learned.

Newell is on track to complete its proposed $15 billion deal for Jarden by April 15, which is earlier than the mid-2016 closing it had targeted, according to a source.

The deal struck in December will create a consumer products colossus with about $16 billion in annual revenue and brands ranging from Sharpie pens and Graco baby strollers to Sunbeam appliances and Rawlings baseball gloves.

While regulators were expected to eventually sign off on the deal, they are moving faster than the companies anticipated, said a source close the process.

The deal needs approval from the Federal Trade Commission and regulators in other countries where the firms do business. The FTC is also busy trying to block Staples from buying rival Office Depot, as well as reviewing the Pfizer-Allergan proposed merger, sources said.

While there would seem to be little overlap between ballpoint pens and baseball gloves, the combined company will have more pricing power when it comes to big chains like Walmart and could cross-sell its products in stores.

The companies declined to comment.

Newell will be paying $59.18 a share for Jarden based on Thursday’s closing price. Jarden shares rose 9 cents to close at $58.95.

WSJ : China’s Anbang Tells Starwood It Is Walking Away

China’s Anbang Tells Starwood It Is Walking Away

Hotel operator seen returning to Marriott’s previous takeover offer

China’s Anbang Insurance Group Co. has informed Starwood Hotels & Resorts Worldwide Inc. that it is withdrawing its $14 billion bid for the hotelier, according to people familiar with the matter.

The surprise move comes as Anbang appeared close to securing Starwood’s agreement for a deal that would have trumped an earlier merger pact between Marriott International Inc. and Starwood, the people said. Starwood now plans to revert to Marriott’s most recent offer, which valued Starwood at $79.53 a share, or $13.6 billion, according to one of the people.

Last November, Marriott signed a $12.2 billion deal for Stamford, Conn.-based Starwood, which has popular brands including W Hotels, St. Regis and Westin.

WSJ : Airbnb, Paris Agree to Warnings on Illegal Rentals

Airbnb, Paris Agree to Warnings on Illegal Rentals

French capital continues to crack down on tourist apartments that may be squeezing out residents

PARIS—Airbnb Inc. will start warning members who appear to be violating housing laws in the French capital, a new step by the home-sharing firm to crack down on tourist apartments that cities say are squeezing out local residents.

The California-based firm said Thursday that it has agreed with the city officials to launch a four-month pilot program in April. It will warn any host who is renting out his or her apartment for more than 120 days a year, or who appears to be renting out an apartment that is not his or her primary residence, that it may be a violation of city rules that can bring fines as high as €25,000 ($28,500).

While Airbnb won’t disclose the names of hosts that receive the warnings, a spokesman for the Paris mayor’s office said the city eventually wants to move toward a system that would prevent residents from renting outside legal limits if they cannot prove they have authorization.

“We’re moving step by step,” said Matthieu Lamarre, the mayor’s spokesman. “Eventually we will have to go further.”

The warnings mark a new step in Airbnb’s efforts to woo municipal governments worried about its impact. The company last year began striking deals with cities to pay tourist taxes, and last fall promised that it would start to work with them to resolve their concerns over affordable housing.

The issue has been a divisive one in cities ranging from New York to Berlin. But Paris, which is Airbnb’s largest single market with 60,000 listings, has been a case in point.

Paris officials say there are tens of thousands of tourist apartments in the city, with many operating illegally in dense tourist areas like the Marais. In a sweep of 2,000 apartments in that neighborhood in December, for instance, officials found roughly 100 tourist apartments that were being rented in violation of local law, the city says.

Rules in Paris allow apartment owners and some renters to sublet their primary residence for up to 120 days a year without any authorization. But anyone renting more for longer than that, or renting an apartment where they don't live, must get approval from the city. Such approval generally entails putting another apartment back into the long-term rental market to replace the one being used primarily for tourists.