FT : Oil groups have shelved $200bn in new projects as low prices bite

Oil groups have shelved $200bn in new projects as low prices bite

The world’s big energy groups have shelved $200bn of spending on new projects in an urgent round of cost-cutting aimed at protecting investors’ dividends as the oil price slumps for a second time this year.
The sell-off in oil has been matched by a broader slump in copper, gold and other raw materials, pushing the Bloomberg commodities index to a six-year low over concerns of weaker Chinese growth and rising supplies across the board.

The plunge in crude prices since last summer has resulted in the deferral of 46 big oil and gas projects with 20bn barrels of oil equivalent in reserves — more than Mexico’s entire proven holdings — according to consultancy Wood Mackenzie.
Among companies postponing big production plans while they wait for costs to come down are UK-listed BP, Anglo-Dutch Royal Dutch Shell, US-based Chevron, Norway’s Statoil, and Australia’s Woodside Petroleum.
Research from Rystad Energy, a Norwegian consultancy, found in May that $118bn of projects had been put on hold, but the Wood Mackenzie survey shows the toll is now much greater.
The decline in Brent crude, which has more than halved in the past year, was triggered by Opec’s decision not to cut output in the face of a US supply glut and weaker-than-expected demand. After stabilising in March, oil prices have faced renewed pressure, with Brent falling below $55 a barrel this month — a 20 per cent decline from a five-month high reached in early May.
More than half the reserves put on hold lie thousands of feet under the sea, including in the Gulf of Mexico and off west Africa, where the technical demands of extracting crude and earlier inflation have pushed up the cost of projects.
Deepwater drilling rigs cost hundreds of thousands of dollars a day to hire and these projects could yet proceed if contractors’ costs fall far enough.
Canada is the biggest single region affected, with the development of some 5.6bn barrels of reserves, almost all oil sands, having been deferred.
“The upstream industry is winding back its investment in big pre-final investment decision developments as fast as it can,” Wood Mackenzie said in a report to be released on Monday. “This is partly because it is one of the quickest ways to free up capital in response to low oil prices.”

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It added that the number of major upstream projects expected to be fully approved during 2015 could probably be counted “on one hand”.
Shell, which stunned the energy industry with a £55bn agreed offer for BG Group in April, will this week set out deeper cuts to its capital spending this year, revising downwards its most recent estimate of $33bn expenditure.
France’s Total is expected to reveal it has managed greater efficiency savings than expected just a few months ago, while it is thought BP is likely to spell out the impact of falling supplier costs on its overall spending.
The Europe-based integrated oil groups should reveal second-quarter earnings about 20 per cent below those for the first three months of 2015, with Brent having averaged $63 a barrel, more than 40 per cent below levels a year ago, said Neill Morton, an analyst at Investec. Lower trading profits and seasonal maintenance could offset the impact of improved refining margins.

FT : Finmeccanica changes tack on US sale

Finmeccanica changes tack on US sale

Finmeccanica has taken down the For Sale sign it posted last year over DRS Technologies, the US electronics business it acquired for $5.2bn in 2008 just before defence spending collapsed.
A brighter outlook for defence and a better than expected performance in the first half of this year have encouraged the Italian aerospace and defence group to keep the business. Nor is the group actively looking for a US partner to take a stake in DRS, said a person close to the situation, though this could be possible for some activities in the future.

The decision marks a U-turn by Mauro Moretti, the chief executive appointed by the Italian government last year to shake up the 30 per cent state-owned group. Mr Moretti suggested last summer that all or part of the division could be sold as part of a business review and debt reduction programme. Carlyle, the US buyout group, was reported to have expressed an interest.
Mr Moretti is expected to update investors on plans for the division when Finmeccanica reports interim results after the market closes on Thursday. These are expected to show the group’s restructuring is on track, with profits likely to come in above market expectations, in part due to DRS which had annual sales of $1.87bn in 2014.
The division is expected to return to profitability this year and asset sales accounting for $200m in turnover will be announced in the coming months.
Mr Moretti has said that the group’s annual sales will shrink by 20 per cent as a result of the restructuring. At least 3,000 of its 54,000 jobs will go over the next two years, partly through disposals, including the €809m sale of its train and rail signalling division to Hitachi.
The challenge is also to restore the group’s investment-grade credit rating, a priority for the Italian government as Finmeccanica is regarded as a government-related issuer by some agencies.
The purchase of DRS left Finmeccanica with a crippling €4.1bn net debt and cost the company its investment grade credit rating. Mr Moretti said earlier this year that DRS sales had halved since acquisition, however he has been encouraged by strong trading in recent months, including orders from the Canadian Armed Forces.

Reuters : Iran launches charm offensive among wary Gulf Arabs

Iran launches charm offensive among wary Gulf Arabs

Iran's foreign minister called on Sunday for a united front among all Middle Eastern nations to fight militancy, in his first regional trip after reaching a nuclear deal with world powers that raised concerns among Iran's Gulf Arab neighbors.

"Any threat to one country is a threat to all... No country can solve regional problems without the help of others," Mohammad Javad Zarif said at a news conference hosted by the Iranian embassy in Kuwait.

Zarif earlier met Emir Sheikh Sabah al-Ahmed al-Sabah and his Kuwaiti counterpart, Sheikh Sabah al-Khaled al-Sabah, who was not present at the press conference.

Zarif began the one-day, three-country tour by visiting Kuwait. He was due to go on to Qatar and then Iraq.

Most Gulf Arab states are worried that Iran's July 14 accord will hasten detente between Tehran and Washington, emboldening Tehran to increase backing for Middle Eastern allies at odds with Gulf Arab countries.

"Iran stands behind the people in the region to fight against the threat of extremism, terrorism and sectarianism... Our message to the regional countries is that we should fight together against this shared challenge," Zarif added.

Most Sunni Muslim-ruled Gulf Arab states have long accused Tehran of interference in Arab affairs, alleging financial or armed support for political movements in countries including Bahrain, Yemen and Lebanon.

Shi'ite power Iran denies interference but says the nuclear deal will not change its policies in the region.


"OPPRESSED NATIONS"

Ahead of his Gulf visit, Zarif said in a statement posted on his ministry's website late on Friday that Tehran would continue supporting its allies in Syria and Iraq to fight against militant group Islamic State.

Echoing that message in a speech earlier on Sunday, Iranian President Hassan Rouhani said on a visit to Iran's Kurdistan Province: "The Iranian nation supports all oppressed nations."

"If it wasn't for Iran, Erbil and Baghdad would have also fallen to the terrorists (of Islamic State) ... Just as we defended Dahuk, Erbil and Sulaymaniyah (in Iraqi Kurdistan), if any country in the whole region is a victim of aggression, the Iranian nation will defend the oppressed," Rouhani added.

Bahrain said on Saturday it had foiled an arms smuggling plot by two Bahrainis with ties to Iran and announced the recall of the Gulf island kingdom's ambassador to Tehran for consultations after what it said were repeated hostile Iranian statements.

Commenting on the allegation, Iranian deputy foreign minister Hassan Ghashghavi noted Bahrain's government disagreed with Iran's "support of oppressed people in their country".

"However we will continue doing so and we insist that the oppressed people of Bahrain need attention," he said.

FT : China car market braces for abnormal era of flat sales

China car market braces for abnormal era of flat sales

On the eve of China’s largest car show in April, executives and analysts braced themselves for a “new normal”: single-digit sales growth after two fat years. Yet some are beginning to wonder if the world’s largest car market is actually entering an abnormal era of flat or even falling sales.
The catalyst for this pessimism was a sharp fall-off in year-on-year sales — 9.4 per cent higher in March, but 3.4 per cent lower by June than the same month last year, according to wholesale figures compiled by the China Association of Automobile Manufacturers. It was the industry’s first decline since early 2013.

Coupled with an economy growing at its slowest annual rate in 25 years and the recent crisis on China’s stock markets, the outlook appears bleak for an industry that has been a cash cow for mass market and premium car brands for the past five years.
“It will be quite challenging for carmakers because the market is cooling and the trend will not be reversed anytime soon,” says Teng Bingsheng, a professor at the Cheung Kong Graduate School of Business in Beijing.
Analysts at Barclays recently revised their 2015 outlook for passenger car sales growth sharply downward, from 8.5 per cent to 1.7 per cent.
Bernstein Research warned that “we’ll need a stronger word than ‘moderation’” to describe the industry’s challenges.”
Marques as diverse as BMW and Volkswagen have reported falling sales. VW experienced a 3.9 per cent fall in first-half group sales to 1.7m units — the first decline in nine years. BMW also caved in to dealer demands for bigger subsidies — a concession since made by others — while its Chinese joint venture partner issued a profit warning on July 13.
For VW the pain is exacerbated by having just one mass-market SUV on offer in China at a time when the fast-growing segment accounts for one-third of all passenger car sales.
“That’s clearly been a huge miss on their part,” says Janet Lewis, analyst at Macquarie in Hong Kong. “A lot of first-time buyers are in central and western China where road quality is not as good and there’s more focus on the higher ride that you get with an SUV.”
GM, however, bucked the trend with a 2.6 per cent rise in first-half China sales, helping to send its shares up more than 4 per cent after it reported second-quarter earnings on Thursday.
Chart: China car sales growth
The US automaker bolstered the view of analysts who say China’s car industry is simply maturing, with growth shifting to smaller cities in the country’s vast interior and increasingly driven by new model launches. The market is merely becoming more competitive with lower profit margins, more in line with those in the US and Europe.
Chinese brands regain market share

A Geely GX7 car on display at the China International Exhibition Center during the "Auto China 2014" Beijing International Automotive Exhibition in Beijing on April 20, 2014, Leading automakers are gathering in Beijing for the kickoff of China's biggest car show, but lackluster growth and environmental restrictions in the world's largest car market have thrown uncertainty into the mix. More than 1,100 vehicles are being showcased at the auto show, which opens to the public on April 21. CHINA OUT AFP PHOTO
Traditional laggards including Mercedes-Benz, Japan’s ‘big three’ automakers and local heroes Geely and Great Wall have been reclaiming market share.
“It’s easy to be pessimistic when you start to see some year-on-year developments that are negative,” says Bill Russo, a Shanghai-based consultant who notes that car sales also grew less than 5 per cent in China in 2011 and 2012. “But we went through a softening a few years back and I remember having similar conversations about whether this was the big down cycle. It wasn’t.”
“Supply has caught up to demand,” he adds. Companies “are going to be giving away some of those very good margins they have enjoyed for quite a long time”.
That may squeeze shareholder payouts too. VW, for example, has seen an almost eightfold increase in the annual dividend it receives from its China joint ventures over the past five years, from €400m in 2009 to €3bn last year.

Mr Russo’s less gloomy big picture is also supported by basic demographics, with only 52 passenger vehicles per 1,000 people compared with a global average of 150.
Incomes are improving too. According to GaveKal Dragonomics, a Beijing consultancy, the annual income of some 15m Chinese households will exceed $20,500 this year for the first time. Another 19m households will break through the $13,500 level.
As a result, Macquarie has adjusted its 2015 China car sales forecast only moderately, from 10 per cent from 7 per cent, and thinks the overall market will grow from 19.7m units last year to at least 32m by 2020.
But as competition intensifies, the biggest rewards will flow to the most cost-efficient carmakers with the quickest model cycles — just as they do in other markets. “It’s harder to sell something that’s older in China, particularly if people know the next model is coming,” says Ms Lewis.
Chinese brands regain market share

July began as June ended for the likes of BMW and Volkswagen, according to analysts at Bernstein Research, with falling year-on-year sales for the two German groups as well as General Motors and Ford’s China joint ventures.

Unexpectedly, traditional laggards including Mercedes-Benz and Japan’s “big three” automakers have been reclaiming market share.
Chinese brands have also seen their share of total sales — currently 41.5 per cent — start to grow again after four consecutive annual declines.
BAIC Motor, Daimler’s main China joint venture partner, is planning on a 29 per cent increase in sales of its own brand cars this year, to 400,000 units. “Our domestic brand business is growing substantially and has exceeded our expectations,” Xu Heyi, BAIC chairman, said last week.
In one sense, Chinese brands simply endured their “correction” a year early, after experiencing steep year-on-year declines in 2014. Like the Japanese companies, whose sales were affected by spats between Beijing and Tokyo in 2012 and 2013, they are improving from a low base.
Mercedes, meanwhile, is reaping the fruits of a restructuring begun two years ago by Hubertus Troska, the China head of its Daimler parent unit, as it begins to catch up with traditional leaders Audi and BMW. Mr Troska’s changes unified a fragmented sales and marketing structure, bringing together separate channels for imported and domestically produced vehicles.
On Thursday, Daimler reported better-than-expected second-quarter results with an underlying margin of 10.7 per cent. “Mercedes now looks to be the most profitable of the Big Three German premium brands, something inconceivable a few years ago,” said Bernstein’s Max Warburton in a research note. “Daimler management . . . must feel vindicated and delighted.”
Mercedes is also benefiting from a series of new product launches at a time when a refreshing the model line-up is becoming essential in the world’s largest car market.
Macquarie’s Ms Lewis says the German company is in “about the sixth inning” of a strong new product cycle in China, with new GLC SUV and E-class sedans in its pipeline.
“Products tend to have a very short life cycle in China,” adds Mr Russo. “If it didn’t launch in the past 18 months, it’s unlikely to be hot. You’ve got to rake it in while you can.”

(BFW) Syngenta CEO Says Nothing to Negotiate With Monsanto: SamS



Syngenta CEO Says Nothing to Negotiate With Monsanto: SamS
2015-07-26 10:33:04.226 GMT


By Catherine Bosley
(Bloomberg) -- “Monsanto may not like the answer, but
there’s nothing more to say,” Mike Mack tells Schweiz am
Sonntag in response to question about would happen if Monsanto
made higher offer.

* Says there are 6 products in pipeline for market: SamS
* NOTE: July 23: Syngenta Says Profit, Pipeline Show Company
Can Stand Alone


For Related News and Information:
First Word scrolling panel: FIRST<GO>
First Word newswire: NH BFW<GO>

To contact the reporter on this story:
Catherine Bosley in Zurich at +41-44-2244134 or
cbosley1@bloomberg.net
To contact the editors responsible for this story:
Fergal O’Brien at +44-20-3525-7152 or
fobrien@bloomberg.net
James Boxell, Patricia Lui

FT : More than half of FTSE 350 companies have risky pensions

More than half of FTSE 350 companies have risky pensions

The defined benefit pension schemes of more than half of FTSE 350 companies are invested heavily in high-risk assets, potentially jeopardising employees’ savings.
The risky investments taken by 225 corporate DB schemes could leave the companies that support them collectively exposed to losses of £100bn, according to a report by Lincoln Pensions, an investment advisory business.

These potential losses could create additional problems for the FTSE 350 companies, which are already attempting to reduce a £72bn funding shortfall across their pension schemes.
The 225 companies would be responsible for bailing out the schemes if their investments in risky areas such as equities, hedge funds and property went wrong, finds the report.
Matthew Harrison, managing director at Lincoln Pensions, said these companies needed to think carefully about whether they are taking appropriate risks. The larger companies with the biggest liabilities are taking on the most risk, which he said was “counterintuitive”.
He added: “Some of those companies are disproportionately relying on investment returns to close their pension deficit. This could go well and they could close the deficit, or it could go wrong and the deficit could widen.”
Taking on excess risk to tackle deficits goes directly against guidelines set out by the Pensions Regulator, which prefers companies to use cash injections to prop up underfunded DB schemes.
Peter Bradshaw, national accounts director at Selectapension, a pensions-focused data provider, said corporate pension schemes were already under pressure following the introduction of pension freedoms, which enable retirees to withdraw their savings as a lump sum.
“The schemes are in deficit, so this calls into question whether the companies will be able to meet their liabilities,” he said.
Of the 172 companies that reported a deficit on their most recent balance sheets, 15 companies accounted for more than three-quarters of the £72bn funding shortfall.
The advisory company estimated that there was a 5 per cent chance that these investments could lose their value entirely.

FT : Worst-performing hedge funds of the year revealed

Worst-performing hedge funds of the year revealed

Hedge funds run by Odey Asset Management and Fortress Investment are among some of the worst performing this year, with the Greek crisis, China’s stock market rout and uncertainty over US monetary policy catching many large managers off guard.
The €2.7bn Odey European fund, run by Crispin Odey, the billionaire financier, is the third-worst performing hedge fund of 2015, down 14.8 per cent to mid-July, according to analysis of 500 funds compiled by HSBC’s Alternative Investment Group.

New York’s Fortress Investment also featured in HSBC’s list of the 20 worst-performing hedge funds, with its $1.2bn Macro fund down 10.6 per cent to the end of June.
Both hedge fund companies declined to comment. In a letter to investors in April, Mr Odey described the fund’s performance that month as “bloody”, adding: “Nobody likes looking foolish. Nobody likes losing money.”
Alper Ince, managing director at Paamco, a California-based fund of hedge funds with $9.5bn of assets, said many trend-following hedge funds — also known as managed futures funds or commodity trading advisers — have struggled this year.
Many of these funds, which make bets across currencies and interest rates based on the direction of the global economy, unsuccessfully shorted the euro against the dollar in the expectation that the US Federal Reserve would raise interest rates, according to Mr Ince.
“People are now scratching their heads as to whether the Fed will be as aggressive as [was anticipated] earlier in the year,” he said.
Trend-following funds suffered their worst month of performance since July 2008 in June, down 2.4 per cent, according to HFR, a data provider. HFR attributed the drop to a sharp fall in China’s stock market and an escalation of the political crisis in Greece.
Overall, CTAs were down 0.2 per cent to the end of June, significantly underperforming hedge funds generally, which have made 3.36 per cent, according to Barclay Hedge, the data provider. The S&P 500, meanwhile, is up 3.25 per cent in 2015.
David Walker, a director at Cerulli Associates, the research company, said: “The degree of underperformance versus equity markets this year may disappoint some clients, who can put their money to work in a rising share market very cheaply.”
The worst-performing fund this year is the HiQ Invest Market Neutral fund, which is down 17.62 per cent to the end of May.
Amsterdam-based asset manager HiQ Invest did not respond to requests for comment. The fund’s assets nearly halved, to $45m, since January.
“It will be difficult for them to recover,” Mr Ince said.
Four of the seven best-performing funds so far this year are focused on China.
The $118m China Focus fund, run by Quam, the Hong Kong asset manager, is up 30 per cent to mid-July, while Shanghai-based Greenwoods Asset Management’s $2.1bn Golden China fund is up 20.2 per cent.
Anthony Lawler, portfolio manager at GAM, the Swiss fund house, said Chinese funds could suffer a reversal in performance following last month’s stock market slide, which caused more than half of the country’s 2,808 listed companies to suspend trading.
He added that July has been a “very positive” month for trend-following funds after Greece moved towards resolving a stand-off over debt repayments with its creditors. “CTAs have made meaningful ground back,” he said.

>>> Pearson in talks to sell The Economist stake; deal could be worth c.GBP 500m

Pearson in talks to sell The Economist stake; deal could be worth c.GBP 500m 
Pearson is negotiating to potentially shed its 50% share of The Economist, the media company said Saturday.

"Pearson confirms it is in discussions with The Economist Group board and trustees regarding the potential sale of our 50% share in the group. There is no certainty that this process will lead to a transaction," a company spokesman said in a statement. Pearson said it will make further announcements if and when appropriate.

The Sunday Times reported that the deal could be worth as much as GBP 500m (USD 776m).

It noted a Financial Times report which suggested yesterday, 25 July, that Pearson’s Economist stake would be acquired by a group of the magazine’s employees, wealthy individual investors and several trusts. However, Pearson is thought also to have been discussing a deal with a media major and some City sources think the German-listed publisher Axel Springer could be interested, the item reported.

Reuters reported that Pearson wants to sell its half of the weekly magazine to other owners, and that the Agnelli family of Italy confirmed it wanted to expand its position in the group, through its investment company Exor.

The Sunday Times item noted that The Economist is under the control of several trustees with the power of veto over any deal, as well as over the choice of editor.

Pearson announced a few days earlier plans to sell the FT Group to Nikkei Inc. for the equivalent of USD 1.3bn.

The Sunday Times report appeared in print: Business section,

FT : DHL braced for home turf fight with FedEx after TNT deal


DHL braced for home turf fight with FedEx after TNT deal
Each night, by the time most people in Leipzig are asleep, about 60 aircraft in DHL’s distinctive canary yellow livery come in to land at the city’s airport.
From mobile phones to refrigerated vaccines, goods are transferred between jets for onward journeys to distant airports such as Bahrain and Singapore, or sorted for transport by road or rail within Europe.

DHL’s hub at Leipzig, where about 100,000 parcels and documents are processed each hour, highlights the vast scale and reach of the German logistics group – one of four companies that dominate the fast delivery of packages around the world.
But the four may soon become three, if regulators approve the €4.4bn takeover of Netherlands-based TNT Express by the US logistics giant FedEx. TNT reports second-quarter results on Monday.
The deal poses a formidable challenge to DHL in Europe, where it is market leader, by combining the US company’s global reach with TNT’s road network in the EU, according to analysts.
FedEx intends to gain European market share from both DHL and UPS by winning contracts from multinational business clients that it already serves on other continents, say Credit Suisse analysts. FedEx is also seeking to gain share in the fast-growing ecommerce market from smaller European competitors.
“A key premise of the planned merger is to reduce FedEx delivery costs within Europe,” says Robert Salmon, analyst at Deutsche Bank. “Right now FedEx is uncompetitive [within Europe], they have a high relative cost to move a package as they don't have a footprint on the continent.”
The TNT deal should fix this problem because the Dutch company’s network of delivery depots and lorries is expected to reduce pickup and drop-off costs for the US group in Europe.

In ecommerce, these first and last-mile costs are often disproportionately high for logistics providers, and this expense has been exacerbated by the rising number of people living alone because often packages cannot be delivered at the first attempt.
Though DHL, part of Deutsche Post, would remain the market leader, with 19 per cent of Europe’s courier express parcel market, the enlarged FedEx group involving TNT would have 17 per cent, based on 2013 figures from TNT.
But analysts do not expect a combined FedEx/TNT to try and close the gap on DHL through a price war. After DHL lost nearly $10bn in five years in a failed attempt to enter the US domestic market, abandoned in 2008, its competitors are unlikely to pursue a price-cutting strategy on the German company’s home turf.
Instead, analysts expect FedEx will aim to compete on superior quality of service.
Furthermore, the threat to DHL posed by an enlarged FedEx is not likely to be an immediate one. Integrating TNT into FedEx will take time, and rivals will be quick to exploit any blunders.

In an interview with the Financial Times, Deutche Post DHL chief executive Frank Appel says the company is looking forward to picking up customers.
“Uncertainty is always good for the companies who are not looking for M&A,” he adds. “Of course customers are concerned [about] what it means for the service in particular for this area . . . any service disruption has significant impact.”
Mr Appel also points out that while the impact of FedEx’s takeover of TNT will be felt principally in Europe, DHL is also the market leader for express courier services in Asia and Africa.
Analysts agree there is probably a short-term advantage for DHL as companies that already have contracts with both TNT and FedEx are expected to seek an alternative logistics provider, to avoid concentrating such work in the hands of one group.
FedEx will need to make a substantial investment in the combined business.

TNT has been reeling since the European Commission blocked UPS’s €5.16bn takeover of the Dutch company two years ago.
TNT lost market share to DHL and UPS during and after the failed takeover, and its net loss widened from €122m in 2013 to €195m last year. The company is cutting costs and upgrading information technology systems as it seeks to compete more effectively.
TNT is geared towards business-to-business logistics rather than residential parcel delivery — a market dominated by DHL and UPS in Europe. Business-to-business delivery is more profitable, but the rise of ecommerce means logistics companies are looking to residential deliveries for sales growth.
Joel Ray, analyst at Transport Intelligence, a consultancy, says: “FedEx would have to spend a lot of money on new depots if they want to reorient the business in Europe towards ecommerce.”

FT : Lunch with the FT: The Fat Jew

He’s a superstar online, yet you may never have heard of him. Over cocktails at a New York strip club, he explains why big brands want to cash in on his style of profane humour — and why he’d ‘like to get dirty rich’
The Fat Jew©James Ferguson
Lunch with the man described as “Instagram’s first comedy superstar” has been booked at Rick’s Cabaret, a strip club and steakhouse in midtown Manhattan. Josh Ostrovsky, 33, and professionally known as the Fat Jew, assures me that he didn’t pick the venue for the naked girls: “I come for the Caesar salad,” he tells me.
It’s 1pm on a beautiful summer’s day but inside the club, in near darkness, electronic music is blaring and it’s already filling up quickly. Men arrive in groups. A slightly built young woman wearing black lingerie under a transparent robe is working the pole that rises floor-to-ceiling on the stage next to the bar. Anastasia’s particular trick is to bend over backwards at the waist so far that her face appears again between her legs. Then she looks up and winks at the silver-haired punter sitting in front of her, who likes what he sees and throws dollar bills up in the air — “making it rain” in strip club parlance.
No one here is likely to attract as much attention as the strippers but even the man with silver hair looks away from his lap dance to gawp when the Fat Jew turns up wearing a onesie with the zip undone to his belly button (revealing a gold medallion and a tattoo bearing New York magazine’s logo) and his hair styled in a vertical ponytail he calls his “Jew unicorn” or “hair erection”.

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Pulling up a stool, he greets me in a thick New York accent: “John! What’s up, how you doin’?” Turning to the barmaid, he requests she “Mix me up something slutty, please. Something with peach. Know what I’m saying?” Anxious but keen to jolly things along, I finish my beer and say I’ll have what he’s having.
More than 5.2m people follow the Fat Jew’s Instagram account, which consists chiefly of photos of animals, babies and the rich and famous presented with wry, profane captions. The only people with more followers than him are either traditional celebrities or those related to the Kardashians. Yet, if you don’t use the social photo-and video-sharing app, which was bought by Facebook in 2012 for $1bn and today has more than 300m users, his name probably means nothing to you. At once hugely famous and totally unknown, the Fat Jew’s rise reflects the increasingly disparate ways in which we consume comedy.
“I want as many people as possible to know that I’m very f-ncking funny,” says the Fat Jew, “but why would I fly around the world to do a stand-up show to hundreds, maybe thousands of people when I can reach far bigger numbers through my Instagram?” As we all spend more time on our phones, he reasons, it’s there, too, that we laugh. “And because we live life in fast forward,” he says, “for a joke to be funny, it has to be fast.”

Rick’s Cabaret

50 West 33rd St, New York
Set menu x 2 $20
Rum punch x 2 $50
Beer $8
‘Slutty’ cocktail x 4 $32
Total, with service $135 
The barmaid places two cocktails on the counter in front of us and declares: “Boys, I made them extra special for you. They’re a fruity floral combination of chartreuse, gin, peach schnapps, cranberry/pineapple punch and a splash of tonic. Is that slutty enough?”
“Damn, yes!” the Fat Jew replies, before sampling the bright pink liquid through a straw. “So. F-ncking. Good. Tastes like air freshener!”
You can’t eat at the bar, so we move to a table in the corner of the room. Once settled in, the Fat Jew explains how, each day, from an office he rents in the back of a nail salon in Queens, he and three interns search the bowels of the web for unusual, often slightly ridiculous images — so long as they haven’t already gone viral — to post to his followers.
Last month, celebrating the Supreme Court’s decision to approve same-sex marriage across the US, he posted a Photoshopped picture of rapper Kanye West kissing his double. Below it, the Fat Jew wrote: “Finally, Kanye can legally marry himself absolutely anywhere in this great nation.” The picture gained almost 238,000 likes.
Outlandish taste runs through his comedy — in one picture two pizza slices are positioned together so that they look like the Star of David, with the caption “This is my religion” typed below. He also mocks our dependence on the internet. Take the picture showing a message saying: “Home is where your WiFi connects automatically,” beneath which a caption reads: “Meaning not my parents’ house, where the WiFi password is RHXFGJIJ0000055$T.”
With this sort of content, which people seem unable to resist regramming or telling their friends about, the Fat Jew has found fame and financial success. Still, he says, it’s difficult to explain to “proper adults” what he does.
“Not getting all high and mighty about it but it’s more like performance art than comedy,” he says, draining his cocktail. “I won’t ever open a soup kitchen but what I do is the next best thing. Pictures are what I can give back to the world. A lot of people have steady careers, health insurance, a pay cheque at the end of the month, a wife and three kids. But that kind of life can get boring; sometimes you need to see a fat guy sitting in a giant bowl of chilli.
“Because being an adult sucks. It f-ncking sucks, man. You have responsibilities. You can’t go out and do a ton of coke, spiral out of control. So if I can make your day a little less shitty, help you 0.001 per cent while your life is falling apart, that feels like a noble undertaking to me. It makes me middle of the pack. Maybe I won’t go to hell after all.”
 . . . 
The Fat Jew's Instragram posts
A stripper comes over and asks me if I would like a lap dance. “He loves you but no thanks,” the Fat Jew replies before I can muster a response. “Just the menu.”
When it comes, there’s unexpected news: the Caesar salad has sold out. “Three courses for $10 — you can’t complain,” says my guest philosophically. For that price, I dread to think what the food will taste like but we are meeting for lunch so I order tortilla soup to start, followed by steak frites and a chocolate mousse. The Fat Jew also orders the soup and the mousse, though chooses crispy shrimp for his main. “And two more of the same,” he says, pointing to our empty glasses.
Instagram has tolerated his profane humour — up to a point. Since he started his account in 2009, he has been kicked off the app three times for posting content deemed inappropriate — most recently in 2013. “But that time I wasn’t given any reason why,” he claims.
In protest, he chained himself to the Instagram and Facebook offices, then located in Manhattan. His sandwich board read: “They’ve stolen my memories, my freedom of speech and the joy of those I bring laughter to every single day . . . Join the fight, use the hashtag #freefatjew and demand they return my Instagram to me. Freedom!!!!”
According to the Fat Jew: “Suddenly the street was packed. I struck a nerve as I was prepared to go to jail for literally forever. I’m like Nelson Mandela in so many ways except fat, white and Jewish.” The hashtag started trending and the protest was live-blogged by media companies such as Vice. Within 15 minutes his account was reinstated.
“Back then,” he recalls fondly, “Instagram was definitely my bitch. But recently I’ve been happy to tone it down, play by the rules. Instagram is helping me move into the mainstream. Mark Zuckerberg, I come in peace.”
For the past few years, companies have started to pay for exposure to his audience. Clients ranging from Burger King to Virgin Mobile to Stella Artois have all hired him as an “influencer” to feature product placement in his posts.
I’m all about no boundaries but people like Lena Dunham are “confessional” in a way they know people will like. Her kind of “honesty” feels really PC
Advertisers are said to be willing to pay around $6,000 for each mention of their product in an Instagram post (it costs roughly the same for a shout-out on Twitter). The Fat Jew tells me he doesn’t like to talk about how much he earns but, based on the rates commanded by other successful Instagrammers, his income from advertising alone could now be running at a rate of several hundred thousand dollars a year.
How does corporate sponsorship fit with his edgy ethos? “It’s snowballed recently, although it’s not about the money for me. I could be earning a lot more but I like to have complete creative control over whatever I do, so the brands aren’t as trusting yet. They know I won’t go along with their ideas. Yes, I’d like to get dirty rich and buy some exotic animals, but only if the content stays good.”
By “good”, he means he is willing to take more risks than other Instagrammers. He recently starred in a Bud Light campaign for the Super Bowl. Playing up to the beer’s motto, “Up for whatever”, he took his grandmother to a party and got a friend to tattoo her lower back. “I could have taken the brand’s money and posed in a photo holding a beer. That’s the kind of thing other big Instagrammers would have done. But I was like, ‘Let’s do this for real, let’s make this memorable’. I take the time to make this shit really good. I’m a giver.”
What does he think about the oversharing — or TMI (too much information) — that people now do online? “I’m all about having no boundaries and I’ve been putting it all online for years. But a lot of people — like Lena Dunham, let’s say — are ‘confessional’ in a way they know people will like. Her kind of ‘honesty’ feels really PC. She is pandering a little bit. Whereas nothing is too embarrassing for me. I’ll make fun of myself and I’ll make fun of others.”
But never, I’ve noticed, his wife, Katie Sturino, a publicist whom he married in late 2014. Why not? “The internet is beautiful, my favourite place on earth. And yet it’s also a f-ncking trash can, an endless ocean of horrendousness. And some people aren’t ready for it. I’m not hiding my wife — she has a nice symmetrical face — but if people say horrible shit about her online, she’ll take it personally. She’s an internet amateur.
“Me, on the other hand: I’m the president and first lady of the internet. I can troll better than anyone in the world!”
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The Fat Jew's Instragram posts
Our second cocktails arrive and conversation turns to the opportunities the Fat Jew has to build an offline career. Now, he explains, is the time to translate his huge web presence and smartphone success into an old-fashioned entertainment career. Everywhere you go in New York, there he is: plastered all over buses eating a hot dog in advertisements for Seamless, an online food ordering service; appearing on Bloomberg News every few weeks to talk about “how to market to ‘millennials’ and use the internet to promote your brand, boring stuff like that”. And now, he continues, he has sold scripted TV shows to Comedy Central and Amazon; and last month he signed a plus-size modelling contract with One Management; and Money Pizza Respect, a collection of personal essays and images, will be published by Grand Central Publishing in October. Writing a book, though, felt too much like hard work, he says. He rented a cabin in the woods in Connecticut but spent more time at the local bar than he did writing.
Surprisingly, for someone who lives so much of his life online, he thinks “IRL” (in real life, i.e., stuff that happens not on the internet) will make a comeback in the next five years. And he has elevated aims: “I’m doing Money Pizza Respect to become the book industry’s accidental hero, to reinvigorate reading on a mass scale!”
Soups, steak and shrimp are brought to the table all at once. The soup is almost inedible — lumpy and salty — but I tuck into the steak with enthusiasm after all the sugary booze. “I told you the food here’s the best,” says the Fat Jew, signalling for the waitress to come over and ordering us both another cocktail — rum punch this time.
We also have an uninvited guest. “I’ve been dying to come over!” Anastasia the pole dancer tells the Fat Jew, sitting down next to him. She is 21, from Russia, and her friends back home are fans. She is new to dancing, and enrolled at university, but won’t say which, studying for a degree in human resources management. “Keep living the dream, girl,” the Fat Jew tells her.
Anastasia has been sitting with us for 15 minutes, and has pertinent questions of her own. She’s midway through asking him about growing up in New York when the DJ calls her to the stage over the loudspeakers — it’s time to dance again. The Fat Jew agrees to reconvene on the roof terrace for a photo once the interview has finished.
We continue talking about his upbringing. He was raised in the well-off surroundings of the Upper West Side. Taking out his iPhone neither for the first time nor the last, he shows me pictures of his mother, Rebecca, who formerly worked as a nutritionist and his father, Saul, a radiologist. He was sent to private school where, he says, he was exposed from a young age to the glamour — and hedonism — of the moneyed elite. “Comparatively, to the rest of the world, we were rich. But the New York private school scene is such a bubble. The money was crazy but we were at the lower end.
“I mean, I was going to school with the kids of international business moguls, kids that took helicopters to school, that did coke at 15. Kids going hard. Totally f-ncked by the time they turned 22 but, whatever, it was awesome and ridiculous. Kids that grow up in big cities are always ahead of the curve.”
The Fat Jew's Instragram posts
He says he dropped out of New York University because it was “boring” and got kicked out of another college before enrolling in 2004 at State University of New York Albany to study journalism. It was here he decided to forge a career in being “professionally ridiculous”, joining a rap group described by one newspaper as a cross between Barbra Streisand and the Wu-Tang Clan. In 2009, he began focusing solely on comedy and founded his social media business. What did his parents think?
“They were hard workers. Very focused. My dad was born in Russia. He had a beard and a factory job by the time he was 13. They found what I did funny but it blew their f-ncking minds how I’d ever make money from it. At first, they were right. But I was doing it all for the notoriety then. Now that I’m able to monetise it, they’re feeling it.”
So how Jewish is he? “Religiously, hmmm — I used to go to the synagogue to pick up girls; culturally, very much so — I have so much unfounded anxiety; genetically, 100 per cent — my pubic hair’s longer than my penis. Seriously, though, when Jewish kids come up to me to say thanks for making being Jewish cool again, that makes me proud.”
His conversation, while often verging on hyperbole, is never less than engaging. I drink the last of my rum punch, a final jolt of sugar, and we head up three flights of stairs — past four stages and private VIP suites — to the roof. Anastasia has taken off her vicious metal stilettos and is removing the wad of dollar bills secured to her ankle with a rubber band. The manager of the strip club has also joined us for the impromptu shoot.
Lighting a cigarette and posing for more selfies with fans, the Fat Jew gives one final insight into his happy-go-lucky philosophy. “Social media platforms come and go. Look at Facebook, it’s not cool any more. So I’m getting ready for life beyond Instagram,” he says. “I can still be cool from the mainstream. And if I get rich along the way, I’ll buy a giraffe — and comprehensive dental insurance. That’s the Jew in me.”