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Monday, September 23, 2013

Summers cancels Citi events, while Fed chief decision pending

By P.J. Huffstutter
CHICAGO, Sept 14 | Sat Sep 14, 2013 5:07pm EDT
CHICAGO, Sept 14 (Reuters) - Former U.S. Treasury Secretary Lawrence Summers has pulled out of speaking engagements and other events involving Citigroup Inc while President Barack Obama considers whether to nominate the Harvard economist as the next chairman of the Federal Reserve, the bank said in a statement.
"Mr. Summers has withdrawn from participation in all Citi events while he is under consideration to be Chairman of the Federal Reserve," Danielle Romero-Apsilos, a spokeswoman for the third-biggest U.S. lender, said in a statement e-mailed to Reuters on Saturday.
Summers, a former economic adviser to Obama, has bowed out of a keynote address on global economic challenges at a Citigroup research seminar next month, according to a Bloomberg report.
While Summers is widely thought to be Obama's preferred choice to replace Fed Chairman Ben Bernanke when his term is up in January, an unusually vitriolic public debate has erupted over that possibility in recent months.
The White House said on Friday that the president had not yet made up his mind on who should lead the U.S. central bank - a decision that traditionally has generated little interest beyond Wall Street and academia.
But since Summers emerged as a lead contender for the job this summer, his history as a consultant to large financial institutions including Citigroup has fueled debate among critics and lawmakers about his suitability for the top Fed job.
Summers has been praised as a brilliant economist and a shrewd policymaker. But his work with financial firms has critics maintaining that his relationship with Wall Street is too cozy to maintain the Fed's vaunted independence.
The central bank plays a key role in guiding the world's largest economy and has taken on new oversight responsibilities following the worst U.S. financial crisis since the Great Depression.
Summers, who has also been paid to write a column for Reuters, was a key economic adviser to Obama in his 2008 campaign as well as during his first term. After heading the White House National Economic Council, he left the administration in 2010 to pursue a career in the private sector.
Some Democrats are not happy with Summers, who served as Treasury secretary under President Bill Clinton, because he backed banking deregulation in the 1990s, which they believe sowed the seeds for the 2007-2009 financial crisis.
The financial crisis led to a massive taxpayer bailout of Wall Street that continues to anger many ordinary Americans and could become another issue for Summers.
Four Democrats on the Senate Banking Committee are now expected to vote "No" if Obama nominates Summers as the next chair of the Federal Reserve, further complicating one of the most vital decisions of his second term.
Fed Vice Chair Janet Yellen is also a candidate for the job.
A letter urging her nomination has been signed by 20 Senate Democrats. If nominated and confirmed, Yellen would be the first-ever woman to lead the U.S. central bank.

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UPDATE 1-Drummond says Colombia mines, port to reopen after government ends strike

BOGOTA, Sept 14 (Reuters) - The Colombian operations of U.S.-based coal miner Drummond will reopen on Saturday evening, the company said, after the government intervened to end more than seven weeks of strike action that shut down its two mines and port.

The stoppage halted about one-third of production by the world's No. 4 coal exporter and was the second major strike in Colombia's coal sector this year, cutting royalty revenues for the government and crimping economic growth.

"We should be returning to normality of work from the night shift of today, September 14th," the company said in a statement, listing the different groups of workers that would cover various shifts in the coming days.

On Friday, Colombia's Labor Ministry said it was sending the case to an arbitration tribunal after the majority of the company's 5,000 direct, non-contract employees voted to resolve the dispute that way.

No one at the Sintramienergetica union, which organized the strike, answered calls to confirm members were returning to their jobs. On Friday night, a union negotiator, Cesar Flores, said no official notification had been received from the government that it was ending the strike.

The strike added to disruption in an already turbulent year for Colombia's coal sector, with a month-long strike at its biggest miner, Cerrejon, in February and logistics problems that had affected rail transport and the loading of ships.

The Drummond stoppage has had little impact on coal prices however, with the global market well-supplied, a factor that has weighed on prices for most of this year. Coal for delivery to Europe (ARA) traded at $78 a tonne on Friday.

Drummond exported 26 million tonnes of coal in 2012, about one-third of the national total. It had been expected to produce 32 million tonnes out of some 94 million tonnes of forecast national output in 2013, which would earn the nation about 900 billion pesos ($480 million) in royalties, the government has said, up from 700 billion pesos last year.

Those targets are likely to be jeopardized after two prolonged stoppages in a sector that accounts for about 2.4 percent of the Andean nation's gross domestic product.

The strike immediately shut down Drummond's exports since it included workers at its privately operated port as well as laborers at its two mines, Pribbenow and El Descanso, in the north of the country.

Workers represented by the Sintramienergetica union are demanding a pay increase above the 5 percent Drummond has offered, a fixed monthly salary instead of hourly pay and new jobs for 400 port workers who are to be made redundant next January with the introduction of direct conveyor-belt loading of ships.

In a proposed three-year pay deal posted on its website, Drummond said it was also offering workers a one-time 8.5 million peso ($4,400) bonus on signing the agreement.


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Suzuki recalls 193,936 SUVs, SX4s over air bags

WASHINGTON, Sept 14 | Sat Sep 14, 2013 8:14pm EDT

WASHINGTON, Sept 14 (Reuters) - Japan's Suzuki Motor Co is recalling 193,936 Grand Vitara SUVs and SX4s cars because of a defective air bag sensor mat in the front passenger seat, U.S. officials said.

The recall covers Grand Vitaras from the 2006 through 2011 model years and the 2007 through 2011 SX4 small cars, according to a National Highway Traffic Safety Administration letter acknowledging the recall.

Sensor mats measure passengers' weight and determine if the air bag should deploy. Children can be hurt if the sensor cannot determine who is sitting in the seat.

The letter said the sensor mat installed in the front passenger seat may fail because of repeated flexing. During a crash, the air bag will deploy regardless of whether the person is an adult or a child.

There have been no reports of accidents or injuries. Suzuki will notify owners starting in October and dealers will replace mats for free, the letter said.


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UPDATE 2-Sailing-Oracle narrows gap in America's Cup after Kiwis almost capsize


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SNAPSHOT-Syria crisis at 11:10 p.m. ET/0310 GMT

Sept 14 | Sat Sep 14, 2013 11:09pm EDT

Sept 14 (Reuters) - Here is a snapshot of Reuters news about the crisis in Syria:

HEADLINES:

* The United States and Russia agreed on a proposal to eliminate Syria's chemical weapons arsenal, averting the possibility of immediate U.S. military action against President Bashar al-Assad's government. U.S. Secretary of State John Kerry and Russian Foreign Minister Sergei Lavrov announced the agreement after nearly three days of talks in Geneva.

* President Barack Obama welcomed a U.S.-Russian accord on aimed at getting control of Syrian chemical weapons and warned that if diplomacy fails, the United States remains prepared to act.

* The deal over Syria's chemical weapons will afford Assad months to "delay and deceive" while more die in that country's war, senior Republican senators John McCain and Lindsay Graham said.

* A report by U.N. chemical weapons experts will likely confirm that poison gas was used in an Aug. 21 attack on Damascus suburbs that killed hundreds of people, U.N. Secretary-General Ban Ki-moon said on Friday. The report was expected to be presented to Ban over the weekend, diplomats said.

* Syrian warplanes struck rebel-held suburbs of the capital on Saturday and government forces clashed with insurgents on the frontlines, residents and opposition activists said.

* Assad's forces have started moving some of their chemical weapons to Lebanon and Iraq in the last few days to evade a possible U.N. inspection, said Syrian rebel military leader General Selim Idris.

QUOTES:

"There's no diminution of options." - U.S. Secretary of State John Kerry

"There (is) nothing said about the use of force and not about any automatic sanctions." - Russian Foreign Minister Sergei Lavrov.

"Let the Kerry-Lavrov plan go to hell. We reject it and we will not protect the inspectors or let them enter Syria." - Qassim Saadeddine, an official of the opposition Syrian Supreme Military Council.

EVENTS:

U.N. experts studying chemical weapons use in Syria were expected to present their findings this weekend to Secretary-General Ban Ki-moon.


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RPT-In post-Lehman clean-up, top banker prosecutions stumble

By Sarah White

LONDON, Sept 13 (Reuters) - Will top bankers' behaviour ever land them in jail? Or are bad business decisions even a crime at all?

Five years on from the bankruptcy of Lehman Brothers, the debate over how to hold senior bank bosses to account for failures is far from over, but legal sanctions for top executives remain a largely remote threat.

Even as laws evolve - in Britain, the government wants to criminalise recklessness in banking - a repeat of the global financial crisis and near-collapses of 2008 would not necessarily result in many more prosecutions today, lawyers say.

At issue is the difficulty in pinning the blame on any one person for risks and decisions taken throughout a firm - one of the main obstacles to building such cases so far.

"It's a case of the confused lines of responsibility and accountability," said Judith Seddon, director in law firm Clifford Chance's business crime and regulatory enforcement unit in London. "When you're pursuing an individual, if they've delegated responsibilities ... it's much more difficult in a big organisation."

Regulators the world over stepped up their scrutiny of banks and cracked down on financial crime in the wake of public anger over costly bailouts and subsequent scandals. But that has so far translated into relatively few attempts to bring charges against those in the highest echelons of banking.

In the United States, home to Lehman Brothers, no top executives at large Wall Street or commercial banks have been convicted of criminal charges relating to the 2008 crisis.

Across Europe, the implosion of Iceland's financial sector five years ago has resulted in some of the most prominent convictions so far, with the former chief executive of failed lender Glitnir among those sentenced to jail time.

In Germany and the Netherlands there have also been isolated high-level convictions, and some landmark cases could yet materialise. The entire former executive board of German lender HSH Nordbank is being put on trial over actions taken in the run-up to the crisis.

But in Britain, where Royal Bank of Scotland and Lloyds were bailed out to the tune of 66 billion pounds ($104.37 billion), no senior bankers faced criminal charges.

Three executives at Ireland's failed Anglo Irish Bank face trial in 2014, five years after the probe into the lender began, while in Spain, around 100 people are being investigated by courts over failings at banks devastated by a property market crash, though none have gone on trial.

RECKLESS BANKERS?

The low rate of convictions partly stems from the fact that in some countries laws which could have addressed the way that banks were run simply did not exist.

Britain's Finance Minister George Osborne said in July he would adopt recommendations made by an influential body of lawmakers that bankers should face jail for a new offence of "reckless misconduct in the management of a bank".

"The regulator has got to be holding people personally accountable for their actions. They need to be frightened of the regulator, which certainly wasn't true in the past," said Mark Garnier, a Conservative member of the Parliamentary Commission on Banking Standards.

In the United States, federal prosecutors are still exploring new strategies for criminally charging Wall Street bankers who packaged and sold the bad mortgage loans behind the financial crisis, including using an old law intended to punish individuals for scamming commercial banks.

Britain's push to create a "recklessness" offence could in theory make it possible to punish senior executives for taking misguided decisions. But proving that such decisions were made recklessly at the time could still be tough.

"Board level meetings are carefully minuted and you might therefore have detailed evidence, but however reckless someone appears with the benefit of hindsight, will it stand up in court?" said Gregg Beechey, a London-based partner at law firm SJ Berwin. "You wouldn't get the whole board to vote for an acquisition if the case wasn't reasonably convincing at the time."

U.S. regulators' approach since the crisis has reflected some of these challenges. Although the Securities and Exchange Commission has charged over 150 firms and individuals in relation to the financial crisis, critics have still said it has not done enough to go after high-level bank executives.

"We go where the evidence leads," former SEC enforcement director Robert Khuzami has said in the past, noting that cases could not be brought against people merely for "bad judgment".

A perceived lack of political will in some countries to pursue senior bankers and firms could also cloud future cases.

Despite costly state rescues in Spain for example, mainstream politicians have shied away from calling for investigations into various failures in the same way as British ones, after the UK government came under pressure from an intense public backlash in the wake of the crisis.

"(In Spain) it's more an absence of any willingness to pursue the cases than because of a lack of tools, as some cases could be proved without much difficulty," said Juan Torres, an economics professor at the University of Seville, adding that some related to clear instances of fraud.

Claims from customers and activist groups have instead led Spain's High Court to investigate several high-profile failures, including that of Bankia, which was bailed out in 2012 less than a year after listing on the stock market.

Frustrations over the slow progress of legal probes in Spain is even leading some activist groups to consider lobbying the United Nations to list economic crimes as a crime against humanity, even though they admit it is unlikely to happen.

If the scope for legal prosecutions of senior bankers has not broadened drastically in the past five years, however, some argue that life at the top is much harder than it used to be, in part as countries pursue other lines of action.

"Regulatory tools can be more powerful than criminal law, although whether or not it's what the public want to see is another question," Beechey at SJ Berwin said.

"There's more of a sense with regulators that they can do things without fulfilling the burden of proof, and they are definitely working to try and pursue senior management more and more."

For a story on what has happened to risk in banking five years on from the Lehman collapse, click on


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Sunday, September 22, 2013

Hedge funds reap rewards from bet on Lehman Europe carcass

By Steve Slater and Tommy Wilkes

LONDON, Sept 15 | Sat Sep 14, 2013 7:00pm EDT

LONDON, Sept 15 (Reuters) - Hedge funds which gambled on how much money would be recovered from the bankrupt carcass of Lehman Brothers are set to make hundreds of millions of pounds from a full payout to creditors of the European arm.

Five years on from the collapse, payouts to Lehman's creditors in Europe are on course to top 100 percent some time next year, following a recovery of assets by administrators and legal victories over other parts of the ex-U.S. investment bank.

"We were reasonably confident there would be some significant funds, but never in our wildest dreams would we have thought it would be 100 pence in the pound," said Tony Lomas, joint administrator for Lehman Brothers International Europe (LBIE) and partner at PricewaterhouseCoopers.

The collapse of Lehman Brothers on Sept. 15, 2008, plunged the global financial system into chaos. Its European arm, headquartered in London, was the largest and most complex part of the group because it was a hub for trading and investments, spanning asset classes and dozens of countries.

Closing down the business and trying to recover assets for creditors has involved unwinding thousands of derivatives contracts and share trades and figuring out who owns what, making it the most complex bankruptcy of a single entity ever.

Creditors' claims now trade between 120 and 135 percent in a secondary or "grey" market for their value, compared to as low as 10 percent in the weeks after the collapse, reflecting an expectation that a premium will be paid.

After creditors are fully paid, LBIE should also have cash left over to pay interest to unsecured creditors - who can get 8 percent a year under UK law - or subordinated bondholders.

Original creditors, including hedge funds which had Lehman as their prime broker, banks, and trade suppliers such as a photocopying or legal firms, may not all be winners, however.

"A lot (of original creditors) have sold their claims, particularly as pricing improved and got towards 100 percent,"

said Alyson Lockett, partner at UK law firm Simmons and Simmons, who has advised over 100 original creditors and also worked for distressed debt investors trading the claims.

LUCRATIVE TRADE

The list of hedge funds which bought Lehman paper after the bank's demise reads like a Who's Who of so-called "distressed debt" funds, and includes Baupost Group, Elliott Management, King Street Capital and Paulson & Co, industry sources said.

The sources said it was hard to quantify how many of the claims were held by distressed debt specialists, but it could be half or more.

"A significant proportion of these claims is now in the hands of a small collection of distressed debt investors," Lomas said.

The bankruptcy has turned into one of most lucrative trades since the financial crisis for these largely New York-based funds which pride themselves on snapping up debt when panicked sellers have rushed for the exit.

Paulson, which led an investor group pushing for a better payout for creditors, started buying Lehman bonds the day it filed for bankruptcy, paying as little as 7.5 cents on the dollar in late 2008, according to news reports citing U.S. court papers.

Others got in later and the trade became the largest position on some funds' books, topping 10 percent of their assets.

"It was a big bankruptcy and if you had the patience and did the work, it was a great trade," said one fund executive.

All the named funds declined to comment or could not immediately be reached.

PwC expects about 40 billion pounds ($63.3 billion) to be returned to LBIE's creditors, including near 23 billion pounds for trust claimants and about 16 billion pounds for up to 3,400 unsecured creditors.

Two dividends worth a combined 68.5 percent of claims have already been paid to unsecured creditors and another dividend in November should take the tally towards 100 percent, Lomas said.

Legal wins against other defunct Lehman units and past settlements with the bank's trading counterparties has freed up cash for distribution. More payouts will be made, but the final dividend may take more than a decade because of legal wrangling.

"It's not inconceivable that it could be 10 or 20 years," said Lockett.

LBIE has had about 500 staff working on the wind-down, complemented by 200 PwC staff, all under Lomas in a Canary Wharf tower that has sight of the former Lehman European headquarters. More than 350 staff are former Lehman employees.

Costs including wages, rent, systems and legal advice, are running at about 300 million pounds a year, and PwC's fees had reached about 600 million pounds by March.

Lomas, 56, who has previously worked on the bankruptcies of MG Rover and the European arm of Enron, said LBIE was likely to keep him busy until he retires in four years.

"It's 20 times as complex and big as Enron. It's unparalleled," he said.

For other stories on Lehman Brothers:

Five years after Lehman, risk moves into the shadows

In post-Lehman clean-up, top banker prosecutions stumble

"You work for Lehman? I thought that went bust"


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"You work for Lehman? I thought that went bust"

By Steve Slater

LONDON, Sept 15 | Sat Sep 14, 2013 7:00pm EDT

LONDON, Sept 15 (Reuters) - From his 23rd floor office of Citi's Canary Wharf tower, Tom Bolland can see the old European HQ of Lehman Brothers, where five years ago hundreds of his former colleagues were abruptly turfed out onto the street carrying their belongings in boxes.

The investment bank's collapse was the symbolic moment of the financial crisis, and it is a surprise to many that Lehman Brothers in Europe still lives on. It is under administrators, but two-thirds of its 500 staff are former Lehman employees helping to clear up the mess that is left.

"You work for Lehman? I thought that went bust," Bolland laughs at the typical response when he tells people he works for Lehman Brothers. "Most people are still surprised."

Bolland is the most senior of the "ex-Lehmanites" and recently celebrated 20 years with the bank - including 15 years pre-crash in a range of senior roles, which included overseeing its expansion in Russia, Turkey and the Middle East.

Now chief operating officer for Lehman Brothers International Europe (LBIE), he and more than 350 others were drafted in by Tony Lomas, joint administrator and PwC partner, to accelerate the wind-down of the business and maximise the assets that can be recovered.

"Yeah, you are working yourself out of a job. But you go out with an enhanced CV. And if you were at Lehman before you go out with your head held high, because you stayed and returned this money to the creditors," Bolland told Reuters.

Lomas expects to repay creditors fully and said the integration of LBIE staff with 200 PwC employees has been crucial to that success.

They take up three floors in Citigroup's London tower, less than 200 metres from the site Lehman occupied from April 2004 and now home to JPMorgan.

"A lot of people walked out with the cardboard box, but were back in two days later," Bolland said. Many had not realised the skills that administrators would need to unravel thousands of complex trades across dozens of countries and legal entities.

That has included disputes with other parts of the former Lehman group. In bankruptcy, each entity fights for itself.

"In the beginning it was a bit strange. People you had worked with, you were disagreeing with and over time you were negotiating with. There was no fundamental ill-will and if you win a legal argument you win it, that's life. It's commercial, not personal," Bolland said.

Finance, operations, legal, risk and asset valuation experts all stayed, or were hired in the months after collapse.

Lehman's operations had also shared an IT system, but that had to be separated and rebuilt.

"It was the biggest IT project Lehman had ever undertaken, and we had to do inside the administration. It has been an enormous task operationally, apart from the legal and valuation issues and negotiations," Bolland said.

Staff have been paid at commercial rates. They know fewer people will be needed as the major work slows and Bolland said LBIE will have a lot fewer staff by the end of next year.

He said the work has been good experience for mid-level staff, and "rewarding and satisfying" for the senior people.

"People were proud to work for Lehman. A lot of the people who stayed on, part of the reason was to do the right thing."

For other stories on Lehman Brothers:

Five years after Lehman, risk moves into the shadows

In post-Lehman clean-up, top banker prosecutions stumble

Hedge funds reap rewards from bet on Lehman Europe carcass


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Canadian union and General Motors reach tentative deal

By P.J. Huffstutter

CHICAGO, Sept 14 | Sat Sep 14, 2013 6:03pm EDT

CHICAGO, Sept 14 (Reuters) - The union representing Canada's auto workers said on Saturday it has reached a tentative agreement with General Motors for production and skilled trades workers at its assembly plant in Ingersoll, Ontario.

Unifor, which represents approximately 2,700 workers at the CAMI-GM plant, said details of the four-year contract will be withheld until after the ratification vote on Sunday in London, Ontario.

The outcome of Sunday's vote is expected to be released on Sunday evening, said a statement from Unifor. The recently formed union is a merger of the Canadian Auto Workers and the Communications, Energy and Paperworkers Union of Canada.

General Motors could not be reached for comment Saturday evening.

The workers at the CAMI plant are represented by Unifor Local 88, and manufacture the Chevrolet Equinox and GMC Terrain vehicles, Unifor said.

Contract talks had started earlier in February, but union officials told reporters last spring that the negotiations required more time. The existing contract was scheduled to expire on Monday, according to media reports.


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France calls Syrian chemical weapons deal an important first step

BEIJING, Sept 15 | Sun Sep 15, 2013 2:52am EDT

Fabius made the comments to reporters in Beijing after meeting Chinese Foreign Minister Wang Yi.

After three days of talks in Geneva, U.S. Secretary of State John Kerry and Russian Foreign Minister Sergei Lavrov on Saturday demanded Assad account for his secret stockpile within a week and let international inspectors eliminate all the weapons by the middle of next year.


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China welcomes Russia-U.S. accord on Syria chemical weapons

BEIJING, Sept 15 | Sun Sep 15, 2013 12:45am EDT

"We believe that this framework agreement has ameliorated the present explosive and tense situation in Syria," Wang told visiting French Foreign Minister Laurent Fabius.


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URGENT-Netanyahu hopes U.S.-Russia deal will lead to destruction of Syria's chemical weapons

JERUSALEM, Sept 15 | Sun Sep 15, 2013 5:01am EDT

"We hope the understandings reached between the United States and Russia regarding the Syrian chemical weapons will yield results," he said in a speech at a memorial ceremony for Israeli soldiers killed in the 1973 Middle East war.

"These understandings will be judged by their result - the complete destruction of all of the chemical weapons stockpiles that the Syrian regime has used against its own people," he said.


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Saturday, September 21, 2013

CORRECTED-UPDATE 2-Sailing-Oracle narrows gap in America's Cup after Kiwis almost capsize

(Changes next race day to Sunday in paragarph 7)

By Noel Randewich

SAN FRANCISCO, Sept 14 (Reuters) - Billionaire Larry Ellison's Oracle Team USA scored a desperately needed win in the America's Cup finals on Saturday, chipping away at Emirates Team New Zealand's extensive lead after the Kiwis nearly capsized their yacht.

New Zealand began the eighth match in the best-of-17 Cup finals with a lead over Oracle, but in a maneuver during an upward leg skipper Dean Barker briefly lost control when the boat's hydraulically controlled, 135-foot-tall wing sail got stuck. The AC72 catamaran teetered on one hull for several seconds before dropping back in the water.

That gave Oracle a chance to get out in front and it went on to win the race by 52 seconds, just its second victory in the 17-match series in San Francisco Bay.

"We didn't get the hydraulics and if the wing doesn't tack when the boat does, you're in trouble," Barker said. "Fortunately the boat came up and no collision with the other guys."

Due to rising winds, organizers abandoned a second scheduled race, which New Zealand had been winning.

Aggressive tactics and solidly executed maneuvers have helped the Kiwis dominate racing since the final series of races for the 162-year old trophy began last week. Barring a catastrophic misstep by New Zealand, which its near-capsize easily could have become, experts say Oracle has little chance of catching up.

The Kiwis, backed by the New Zealand government, have scored six victories against Oracle and need only three more to win. The next two races are scheduled for Sunday.

Ellison's Oracle, slapped with a jury-imposed two-race penalty, has won only two races and still needs to win another nine to keep the Cup, which the yachting world refers to as the Auld Mug.

Since the teams began competing a week ago, Oracle has suffered against New Zealand on upwind legs, where it has repeatedly forfeited early leads. The Kiwis have maneuvered Oracle into disadvantaged positions near race-course boundaries and forced Skipper Jimmy Spithill to perform extra maneuvers as the huge catamarans zigzagged across the bay.

But in Saturday's match Oracle had closed distance in the upwind tacking duel, and was close to crossing ahead before the Kiwi mishap.

Oracle on Thursday replaced tactician John Kostecki with British sailing superstar Ben Ainslie, but that change has done little to turn the tide of the team's floundering Cup defense.

"It doesn't mean it can't be turned around, but it would take some sort of brilliant swordsmanship on the part of Oracle, some flash of fire from the heavens," said Kimball Livingston, a competitive sailor and writer at blueplanettimes.com.

Oracle started the regatta two points behind because of an unprecedented jury-imposed punishment for illegally modifying the team's smaller, prototype boats sailed in warm-up races.

Though Oracle flies the American flag, substituting Ainslie for Kostecki left only one U.S. sailor on the team, trimmer Rome Kirby. All but two of the Kiwi sailors hail from New Zealand.

The international jury that punished Oracle in the biggest cheating scandal in Cup history also expelled Kostecki's brother-in-law, first-choice Oracle wing trimmer Dirk de Ridder for making illegal boat alterations.

When Ellison's team won the America's Cup in 2010, it gained the right to set the rules and chose windy San Francisco Bay for this year's competition.

Oracle also came up with the AC72 yachts, which can hydrofoil across the waves at 50 miles per hour. In May it became tragically clear how dangerous the twin-hulled yachts were, when a sailor was killed in the capsize of the AC72 sailed by Artemis Racing.

In response to that accident, organizers created additional rules, including the more conservative wind limits that affected Saturday's racing, in order to make the AC72s safer.

The Kiwis first won the America's Cup in 1995 and successfully defended it in 2000 before losing the trophy three years later to Swiss biotechnology billionaire Ernesto Bertarelli's Alinghi in a disastrous campaign that left the team in shambles. (Editing by Alden Bentley)


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Brazil's Rousseff urged by top advisers to cancel U.S. visit

By Brian Winter

SAO PAULO, Sept 14 | Sat Sep 14, 2013 5:33pm EDT

SAO PAULO, Sept 14 (Reuters) - Top advisers to Brazilian President Dilma Rousseff are urging her to cancel her planned state visit to the White House next month after revelations the U.S. National Security Agency spied on her and other Brazilians.

Among those now encouraging Rousseff to cancel the trip is former President Luiz Inacio Lula da Silva, a senior government official told Reuters on Saturday on condition of anonymity. Lula preceded Rousseff in office and remains enormously influential in important government decisions.

A former Cabinet minister under Lula, Franklin Martins, who also remains influential with Rousseff, previously urged her to cancel the trip, the official said.

The official told Reuters that Rousseff had not yet made up her mind and would only do so after a meeting scheduled for Tuesday with her foreign minister, Luiz Alberto Figueiredo.

Figueiredo traveled to Washington this week to hear U.S. officials' explanation for the espionage, and is due to provide Rousseff with his official report.

Recent disclosures that the United States spied on Brazil, based on documents leaked by former NSA contractor Edward Snowden, have complicated years of diplomatic efforts to improve relations between the two biggest economies in the Americas.

Rousseff's state visit, scheduled for Oct. 23, was the only event of its kind scheduled in Washington this year. The trip was to serve as a platform for deals on oil exploration and biofuels technology, as well as Brazil's potential purchase of fighter jets from Chicago-based Boeing Co.

But Rousseff, a moderate leftist, has been enraged by revelations that the NSA monitored communications between her and her top aides, as well as those of other Brazilians.

Earlier this month, Rousseff met U.S. President Barack Obama for nearly 45 minutes on the sidelines of an international summit in Russia. Afterward, Obama promised to address her concerns and said the U.S. government needed to "step back and review what it is that we're doing" when gathering intelligence.

After Figueiredo's meeting this week with U.S. national security adviser Susan Rice, Washington issued a statement saying that recent reports had raised "legitimate questions for our friends and allies" about U.S. intelligence.

Rousseff has rejected Washington's contention that it only gathers information critical to U.S. national security. Brazil is a peaceful democracy with no history of international terrorism or access to weapons of mass destruction.


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WRAPUP 6-U.S., Russia agree on Syria weapons, Obama says force still option

* Goal is destruction of chemical weapons by mid-2014

* Opposition says will not stop Syria war

* Pact marks new Moscow-Washington cooperation

By Warren Strobel and Mariam Karouny

GENEVA/BEIRUT, Sept 14 (Reuters) - Russia and the United States put aside bitter differences over Syria to strike a deal on Saturday that by removing President Bashar al-Assad's chemical arsenal may avert U.S. military action against him.

After three days of talks in Geneva, U.S. Secretary of State John Kerry and Russian Foreign Minister Sergei Lavrov demanded Assad account for his secret stockpile within a week and let international inspectors eliminate all the weapons by the middle of next year - an "ambitious" target, Kerry said.

The accord leaves major questions unanswered, including how feasible such a major disarmament can be in the midst of civil war and at what point Washington might yet make good on a continued threat to attack if it thinks Assad is reneging.

Under the Geneva pact, the United States and Russia will back a U.N. enforcement mechanism. But its terms are not yet set. Russia is unlikely to support the military option that President Barack Obama said he was still ready to use.

"If diplomacy fails, the United States remains prepared to act," Obama said. "The international community expects the Assad regime to live up to its public commitments."

To that end, the Pentagon said U.S. military forces were still positioned to strike, if ordered.

But for Assad's opponents, who two weeks ago thought U.S. missile strikes were imminent in response to a gas attack on rebel territory, the deal was a blow to hopes of swinging the war their way. Kerry and Lavrov said it could herald broader peace talks, as warplanes hit rebel positions again near Damascus.

The accord, however, was as much about U.S.-Russian ties as it was about Syria. The conflict has chilled relations to levels recalling the Cold War.

In reaching a bilateral deal after what one U.S. official described as three days of "hard-fought" debate, Moscow and Washington can each count benefits.

For Russian President Vladimir Putin, it brings management of the Syrian crisis back to the United Nations. For Obama, it solves the dilemma created by Congress's reluctance to back military strikes that he was preparing without a U.N. mandate.

Lavrov told a joint news conference in Geneva, "It shows that when there is a will ... Russia and the United States can get results on the most important problems.

"The successful realisation of this agreement will have meaning not only from the point of view of the common goal of eliminating all arsenals of chemical weapons, but also to avoid the military scenario that would be catastrophic for this region and international relations on the whole."

China, which has opposed military intervention in Syria all along, welcomed the deal.

"We believe that this framework agreement has ameliorated the present explosive and tense situation in Syria," Foreign Minister Wang Yi told visiting French Foreign Minister Laurent Fabius.

Kerry acknowledged that further success was far from guaranteed: "The implementation of this framework, which will require the vigilance and the investment of the international community, and full accountability of the Assad regime, presents a hard road ahead," he said.

Despite a measure of camaraderie on display in banter between the two men during the presentation of the two-page framework agreement, they remained openly at odds over the U.S. willingness to use force in Syria without U.N. backing.

REBELS DISMISSIVE

In Istanbul, the head of the Syrian rebel Supreme Military Council, General Selim Idris, called it a blow to opposition hopes of overthrowing Assad and accused the Syrian president of circumventing any disarmament by already sending chemical weapons to allies in Lebanon and Iraq in recent days.

Qassim Saadeddine, a rebel commander in northern Syria, told Reuters: "Let the Kerry-Lavrov plan go to hell. We reject it and we will not protect the inspectors."

Idris said, however, his forces would help the inspectors. A U.S. official said Washington believed all Syria's chemical weapons remained in areas under government control.

Assad, backed by Iran, crushed demonstrations demanding democracy in 2011 and, while losing territory, has withstood a full-blown uprising supported by Arab states and the West.

Prodded by Russia, he has now agreed to abide by a global chemical weapons ban and submit to controls by the U.N.-backed Organisation for the Prohibition of Chemical Weapons, or OPCW.

That will deprive him of arms he denies having used and spares him, at least for now, what were likely to be heavy U.S. and French missile strikes and bombing raids.

The United Nations said on Saturday it had received all documents necessary for Syria to join the chemical weapons convention. Syria would come under the treaty starting on Oct. 14, it said.

Assad's opponents criticise the United States and its allies for the focus on chemical weapons, which account for a very small number of the more than 100,000 dead in the war, and of abandoning them to face a deadly, Russian-armed enemy.

On Saturday, as government jets struck rebel-held suburbs of the capital and troops fought rebels on the ground, one opposition activist in Damascus voiced anger and resignation

"The most important point is the act of killing, no matter what is the weapon," said Tariq al-Dimashqi. "The killing will continue. No change will happen. That is it."

Syrian state media broadcast the Geneva news conference live, indicating that Damascus was satisfied with the deal.

DEAL OFFERS WAY OUT

Having taken the surprise decision two weeks ago to seek congressional approval for strikes to punish Assad for using poison gas, Obama faced a dilemma when lawmakers appeared likely to deny him authorisation.

They cited unease about inadvertently helping Islamist militants among the rebels and a wariness of new entanglements in the Middle East after wars in Iraq and Afghanistan.

The weapons deal proposed by Putin, a former KGB agent intent on restoring some of the influence Moscow lost with the Soviet collapse two decades ago, offered Obama a way out.

But Obama has been bombarded with criticism for his handling of Syria and a muddled message, moving the United States toward, and then back from the brink of striking Syria over an Aug. 21 poison gas attack that Washington blames on Assad.

Republican Senators John McCain and Lindsey Graham, who advocate deeper U.S. involvement in Syria's civil war, blasted the deal, saying it would effectively allow Assad months to "delay and deceive."

"It requires a wilful suspension of disbelief to see this agreement as anything other than the start of a diplomatic blind alley, and the Obama administration is being led into it by Bashar Assad and Vladimir Putin," they said.

Carl Levin, a Democrat aligned with Obama and head of the Senate Armed Services Committee, hailed the agreement and noted it did not restrict the United States from supporting the moderate Syrian opposition or acting unilaterally, if needed.

Under the terms of the U.S.-Russian agreement, the U.N. Security Council - on which Russia has a veto - will oversee the process. Syria must let the OPCW complete an initial inspection of its chemical weapons sites by November.

Kerry said Assad must produce a "comprehensive listing" of its chemical weapons within a week. The goal is to complete destruction of Syria's arsenal in the first half of 2014.

The agreement states that a Security Council resolution should allow for regular assessments of Syria's behaviour and "in the event of non-compliance ... the UN Security Council should impose measures under Chapter VII of the UN Charter".

Chapter VII can include force but can be limited to other kinds of sanction. When Kerry said the council "must" impose measures under Chapter VII, Lavrov interrupted to point out that the agreed text says only it "should" impose penalties.

"There's no diminution of options," Kerry said, noting Obama's right under U.S. law to order military action, with or without support from Congress or any international body.

The Pentagon said it had made no change to the forces it had lined up. A spokesman said, "The credible threat of military force has been key to driving diplomatic progress."

Lavrov said of the agreement, "There is nothing said about the use of force and not about any automatic sanctions."

Putin has supported Assad's contention that the sarin gas attack on Aug. 21, which Washington says killed over 1,400 civilians, was the work of rebels trying to provoke Western intervention.

Lavrov said, however, that Russia would support U.N. punishment for anyone whose guilt was clearly proven.

A new round of argument about responsibility for the Aug. 21 deaths is likely in coming days, once U.N. inspectors deliver their report on the incident to the world body.

PEACE NEGOTIATIONS?

In two weeks, when the U.N. General Assembly convenes in New York, Lavrov and Kerry have said they will meet the U.N. Syria envoy to see if they can push forward a plan for an international peace conference to negotiate an end to the war.

An effort last year for a political solution, dubbed the "Geneva Plan" and calling for a transitional government, went nowhere as Assad refused to cede power and the opposition insisted he could not be a part of any new political order.

Kerry said Saturday's chemical weapons deal could be "the first concrete step" toward a final settlement. Lavrov said he hoped all parties to the conflict could attend a conference in October, without setting pre-conditions for their attendance.

There is little sign of softening among Syrians, however, or among rival backers in the Middle East, where the conflict is part of a broader regional confrontation with sectarian elements between Shi'ite Iran and Sunni Muslim Arab leaders.

The opposition Syrian National Coalition in Istanbul elected a moderate Islamist, former political prisoner Ahmad Tumeh, as its provisional prime minister on Saturday. Members said they hoped Tumeh could help make the often fractious opposition's case in negotiations to achieve their demands.

Senior Kerry aides involved in the talks said that the United States and Russia agreed that Syria has 1,000 tonnes of chemical agents, including nerve gas sarin and mustard gas - one of the world's largest stockpiles of such material.

But the officials said there was no agreement on how many sites must be inspected. Washington thinks it is at least 45.

One U.S. official called the task "daunting to say the least". Another noted there were "targets ... not a deadline".

The weapons are likely to be removed through a combination of destroying them in Syria and shipping some for destruction elsewhere, U.S. officials said. Russia is one possible site for destruction, but no final decisions have been made.

The Hague-based OPCW has never moved weapons across borders before, because of the risk, and never worked in a war zone.


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UPDATE 1-China welcomes Russia-U.S. accord on Syria chemical weapons

BEIJING, Sept 15 (Reuters) - China on Sunday welcomed a deal reached by the United States and Russia to eliminate Syria's chemical weapons arsenal, saying it would help promote a peaceful resolution of the crisis.

After three days of talks in Geneva, U.S. Secretary of State John Kerry and Russian Foreign Minister Sergei Lavrov on Saturday demanded Syrian President Bashar al-Assad account for his secret stockpile within a week and let international inspectors eliminate all the weapons by the middle of next year.

"We believe that this framework agreement has ameliorated the present explosive and tense situation in Syria and has opened a new perspective on using peaceful methods to resolve the Syrian chemical weapons issue," Chinese Foreign Minister Wang Yi told his visiting French counterpart, Laurent Fabius.

"China upholds the finding of an appropriate resolution to the Syrian issue, including that of the chemical weapons, under the framework of the United Nations," Wang added.

"The U.N. Security Council should play an important role in this ... Military methods cannot resolve the Syria issue."

France has called the deal to destroy the arsenal an "important step forward" and said that talks on Monday in Paris would focus on implementation.

China has called for a full and impartial investigation by U.N. chemical weapons inspectors in Syria, and warned against pre-judging the results, though it has also said that whoever uses chemical weapons had to be held accountable.


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Merkel hopes for re-election boost from Bavarian vote

* Bavaria holds regional vote one week before federal poll

* Merkel's allies seen restoring absolute majority

* Strong conservative result can boost Merkel, FDP a worry

By Christiaan Hetzner

MUNICH, Sept 15 (Reuters) - Angela Merkel's allies look set to win almost 50 percent of the vote in the rich southern state of Bavaria on Sunday, helping the German chancellor and her conservatives with a show of strength a week before a federal election.

The Christian Social Union (CSU) - sister party of Merkel's Christian Democrats (CDU) - has governed Bavaria for 56 years, styling itself the natural ruler of a state that is proud of its "laptop and lederhosen" economy and traditions.

"Dear Angela, we'll put the ball on the penalty spot, you just have to kick it in," CSU leader Horst Seehofer said.

Polls predict the CSU will get at least 47 percent, allowing it an absolute majority in the regional assembly in Munich and cheering conservatives nationwide. First exit polls are due at 6 p.m. (1600 GMT).

Seehofer wants to put behind him the 2008 election, when the CSU scored its worst result in six decades, 43 percent. That forced it into an alliance with the Free Democrats (FDP), who are also Merkel's coalition partners in Berlin.

The combined CDU/CSU bloc has about 40 percent support nationwide, meaning that if they do win on Sept. 22 they will need a partner to form a government, be it the FDP or the Social Democrats (SPD) with which she ruled in a 'grand coalition' from 2005 to 2009.

In Bavaria and in the Bundestag lower house of parliament, the FDP risks falling short of the 5 percent threshold for a seat in parliament, though their poll results have improved in recent months.

A weak FDP showing in Bavaria might even scare conservatives elsewhere into giving their second vote to the FDP, potentially weakening the share of votes that go to Merkel's CDU.

Bavaria, home to 12.5 million of Germany's 80.5 million people, is the only state with a regional party - the CSU - in the federal parliament.

When other regional conservative parties joined to form the CDU, the CSU remained separate, reflecting Bavaria's strong regional identity. CSU lawmakers make up nearly a quarter of Merkel's conservative bloc.

If Bavaria were a country it would have the euro zone's sixth largest population and economy, which allows it to exert pressure on national policy on issues ranging from energy and the family to the euro zone.

Bavarians consider themselves dedicated Europeans who have benefited from the single currency. Calls within the CSU for Greece to leave the euro zone or to pay its civil servants in drachmas have not prevented it from backing Merkel on bailouts - which one leader likened to "watering flowers in the desert".


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Friday, September 20, 2013

Kerry-Lavrov rapport smoothed path to Syria deal

By Warren Strobel

GENEVA, Sept 15 | Sun Sep 15, 2013 1:00am EDT

GENEVA, Sept 15 (Reuters) - The deal between the United States and Russia on Syrian chemical weapons was due in no small part to the labors of foreign policy veterans with contrasting styles: Secretary of State John Kerry and Russian Foreign Minister Sergei Lavrov.

While their bosses, presidents Barack Obama and Vladimir Putin, get on poorly and can stoop to point scoring, the two ministers have what diplomats like to call "a good working relationship."

"We've had our differences here and there on certain issues," Kerry said of recent tensions that have brought U.S.-Russian ties to some of their lowest points since the Cold War.

Throughout it all, "Sergei Lavrov and I have never stopped talking," Kerry told a news conference on Saturday when he announced the Syria agreement after nearly three days of round-the-clock negotiations.

The pair have helped keep the U.S.-Russia relationship from hitting even worse lows as Moscow and Washington argued not only over Syria but also about American fugitive spy contractor Edward Snowden and human rights in Russia, U.S. officials say.

Just 10 days ago, Putin publicly called Kerry a liar for suggesting that Syrian rebels were not dominated by radical Islamists.

To smooth things over, Lavrov apologized - or at least explained - to Kerry in a phone call, a senior State Department official said. The Kremlin got a bad translation of the secretary of state's remarks, Lavrov told Kerry.

The Geneva accord to take away Syria's chemical arsenal leaves major questions unanswered, including how to carry it out in the midst of civil war and at what point the United States might make good on a threat to attack Syria if it thinks President Bashar al-Assad is reneging.

But it was a rare common effort between Moscow and Washington and the product of the most significant direct U.S.-Russia diplomacy on a global crisis in years.

The Syria agreement "shows how important it is for us to go beyond those things ... some people try to make them as obstacles in our relations, some suspicions or concerns that are created artificially," Lavrov said on Saturday when asked whether the United States and Russia might again try to "reset" their relations.

After the Russian wound up his long-winded answer, Kerry, a former U.S. senator, teased him: "I was just thinking Sergei, you could be a senator."

UNLIKELY COUPLE

Lavrov and Kerry might be diplomatic partners and able to rib one another in public, but they are cut from different cloth.

The Russian foreign minister has an often-dour public visage and can be prickly and sharp-tongued. Those who have negotiated with him say he has a razor-sharp mind, honed over four decades of diplomatic service since his 1972 graduation from the then-Soviet Foreign Ministry's international relations institute.

By contrast, Kerry is a former politician and presidential candidate with a deep belief in personal diplomacy and his own powers of persuasion.

Lavrov does not wander off message; Kerry's former independence as a senator shows in the occasional remark that goes beyond the White House script.

While their relationship helped the Syria talks, ultimately foreign policy is dominated in Moscow by Putin, and to a lesser extent by the White House in Washington.

The Syria chemical weapons plan, first put forward last week by Lavrov, would not have been announced without Putin's approval.

"The Russian foreign minister does not have an independent political identity in the way that senators-turned-secretaries of state like (Hillary) Clinton or Kerry do," said Matthew Rojansky of the Woodrow Wilson International Center for Scholars.

"This is a strong system and Putin is very much in control and Lavrov serves that system," said Rojansky, director of the center's Kennan Institute.

Lavrov left the Intercontinental Hotel talks venue twice on Friday to field calls from Putin he took at Russia's mission to U.N. organizations in Geneva.

MOVING BEYOND THE 'RESET'

The Intercontinental was where Kerry's predecessor Clinton gave Lavrov a peace offering in March 2009 in the form of a box with a large red "reset" button.

The reset in U.S.-Russia ties did not last long, foundering over disputes on Iran, Syria and Snowden.

Lavrov, Russia's top diplomat since 2004, appears to get on better with Kerry than he did with either Clinton or former Secretary of State Condoleezza Rice.

Dimitri Simes, president of the Washington-based Center for the National Interest think tank, said he last saw Lavrov in July. "It was quite clear that Lavrov was concerned about the status of the U.S.-Russian relationship, was not happy with the U.S. position on Syria. But my impression was that he felt that he had a good working relationship with Secretary Kerry."

Kerry and Lavrov have spoken by phone 11 times since the Aug. 21 gas attack outside Damascus that sparked U.S. threats to use force, according to a State Department tally.

Their struggle with the Syria issue began in early May, when Kerry traveled to Moscow, met with Putin and pressed the Russians to become more involved in efforts to end Syria's civil war, which has killed more than 100,000 people.

"Just work with Lavrov on it," Putin said near the end of the more than hour-long meeting, according to the State Department official.

The two ministers took a long walk - a favorite Kerry tactic - then huddled with a small group of advisers in a backroom, where they drew up an announcement for a meeting in Geneva aimed at a political transition in Syria. But that conference has yet to be held.

After a midnight news conference to announce the peace conference plan, they had dinner. Lavrov brought out a bottle of wine from the late 1940s, the senior official said.

"They talked about hockey. They both love sports," the official said. "Lavrov loves soccer. Kerry played soccer."

Kerry's personal diplomacy with Lavrov continued in Geneva this week, with a dinner of salad and fish on Thursday night that included only one aide each, and a ride in his limousine on Friday morning en route to the U.N.'s Geneva headquarters.

Those personal touches helped move the talks toward agreement and avert a U.S. military strike on Syria.


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SNAPSHOT-Syria crisis at 7:15 p.m. ET/2215 GMT

Sept 14 | Sat Sep 14, 2013 7:08pm EDT

Sept 14 (Reuters) - Here is a snapshot of Reuters news about the crisis in Syria:

HEADLINES:

* The United States and Russia agreed on a proposal to eliminate Syria's chemical weapons arsenal, averting the possibility of immediate U.S. military action against President Bashar al-Assad's government. U.S. Secretary of State John Kerry and Russian Foreign Minister Sergei Lavrov announced the agreement after nearly three days of talks in Geneva.

* President Barack Obama welcomed a U.S.-Russian accord on aimed at getting control of Syrian chemical weapons and warned that if diplomacy fails, the United States remains prepared to act.

* The deal over Syria's chemical weapons will afford Assad months to "delay and deceive" while more die in that country's war, senior Republican senators John McCain and Lindsay Graham said.

* A report by U.N. chemical weapons experts will likely confirm that poison gas was used in an Aug. 21 attack on Damascus suburbs that killed hundreds of people, U.N. Secretary-General Ban Ki-moon said on Friday. The report was expected to be presented to Ban over the weekend, diplomats said.

* Syrian warplanes struck rebel-held suburbs of the capital on Saturday and government forces clashed with insurgents on the frontlines, residents and opposition activists said.

* Assad's forces have started moving some of their chemical weapons to Lebanon and Iraq in the last few days to evade a possible U.N. inspection, said Syrian rebel military leader General Selim Idris.

QUOTES:

"There's no diminution of options." - U.S. Secretary of State John Kerry

"There (is) nothing said about the use of force and not about any automatic sanctions." - Russian Foreign Minister Sergei Lavrov.

"Let the Kerry-Lavrov plan go to hell. We reject it and we will not protect the inspectors or let them enter Syria." - Qassim Saadeddine, an official of the opposition Syrian Supreme Military Council.

EVENTS:

U.N. experts studying chemical weapons use in Syria were expected to present their findings this weekend to Secretary-General Ban Ki-moon.


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UPDATE 1-Merkel hopes for re-election boost from Bavarian vote

* Bavaria holds regional vote one week before federal poll

* Merkel's allies seen restoring absolute majority

* Strong conservative result can boost Merkel, FDP a worry

By Christiaan Hetzner

MUNICH, Sept 15 (Reuters) - Bavarians cast their ballots on Sunday in an election that is expected to hand Angela Merkel's allies nearly 50 percent of the vote, giving the German chancellor and her conservatives momentum a week before a federal election.

The Christian Social Union (CSU) - sister party of Merkel's Christian Democrats (CDU) - has governed the rich southern state for 56 years, styling itself the natural ruler of a state that is proud of its "laptop and lederhosen" economy and traditions.

Polls predict the CSU will get at least 47 percent, allowing it an absolute majority in the regional assembly in Munich and cheering conservatives nationwide. First exit polls are due at 6 p.m. (1600 GMT).

"Dear Angela, we'll put the ball on the penalty spot, you just have to kick it in," CSU leader Horst Seehofer said.

Seehofer wants to put behind him the 2008 election, when the CSU scored its worst result in six decades, 43 percent. That forced it into an alliance with the Free Democrats (FDP), who are also Merkel's coalition partners the national government.

The combined CDU/CSU bloc has about 40 percent support nationwide, meaning that if they do win on Sept. 22 they will need a partner to form a government, be it the FDP or the Social Democrats (SPD) with which she ruled in a "grand coalition" from 2005 to 2009.

In Bavaria and in the Bundestag lower house of parliament, the FDP risks falling short of the 5 percent threshold for a seat in parliament, although their poll results have improved in recent months.

A weak FDP showing in Bavaria might even scare conservatives elsewhere into giving their second vote to the FDP, potentially weakening the share of votes that go to Merkel's CDU.

Bavaria, home to 12.5 million of Germany's 80.5 million people, is the only state with a regional party - the CSU - in the federal parliament.

When other regional conservative parties joined to form the CDU, the CSU remained separate, reflecting Bavaria's strong regional identity. CSU lawmakers make up nearly a quarter of Merkel's conservative bloc.

If Bavaria, home to carmakers BMW and Audi, were a country it would have the euro zone's sixth largest population and economy, which allows it to exert pressure on national policy on issues ranging from energy and the family to the euro zone.

Bavarians consider themselves dedicated Europeans who have benefited from the single currency. Calls within the CSU for Greece to leave the euro zone or to pay its civil servants in drachmas have not prevented it from backing Merkel on bailouts - which one leader likened to "watering flowers in the desert".


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Drummond says restarting Colombia coal operations after strike

BOGOTA, Sept 14 | Sat Sep 14, 2013 7:47pm EDT

BOGOTA, Sept 14 (Reuters) - The Colombian operations of U.S.-based coal miner Drummond will reopen as of Saturday evening, the company said, after the government intervened to end more than seven weeks of strike action that shut its two mines and port.

"We should be returning to normality of work from the night shift of today, September 14th," the company said in a statement, listing the different groups of workers that would cover various shifts in the coming days.

No one at the Sintramienergetica union, which organized the strike, answered calls for comment. On Friday night, a union negotiator, Cesar Flores, said no official notification had been received from the government that it was ending the strike.


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UPDATE 4-Hurricane Ingrid soaking Mexico's Gulf Coast

MEXICO CITY, Sept 14 (Reuters) - Hurricane Ingrid strengthened on Saturday night off Mexico's Gulf coast, dumping heavy rain across central and eastern Mexico and causing thousands to seek emergency shelters as river levels climbed.

Tropical Storm Manuel on Mexico's Pacific coast was also strengthening late on Saturday, drenching coastal towns, including the beach resort of Acapulco.

Rain from the Category 1 Ingrid, which was 185 miles (300 km) east of the port of Tampico, in Veracruz state, at 0300 GMT, has caused landslides and local flooding, but state oil monopoly Pemex said its installations in the Gulf of Mexico were operating normally.

More than 6,000 people in Veracruz state on Mexico's Gulf coast were in temporary shelters or staying with relatives, state Governor Javier Duarte said on Twitter late on Saturday. A hurricane watch was in effect along Veracruz's northern coast, where Ingrid is expected to make landfall on Monday.

Ingrid, with sustained winds of 85 miles per hour (140 kph), could grow even stronger over the next two days as it nears Mexico's coast, the U.S. National Hurricane Center said. A Category 1 storm is the lowest intensity on the five-step Saffir-Simpson scale.

Pemex was operating under security protocols, but none of its installations had been affected, a spokesman said on Saturday.

Ingrid, the second hurricane of the Atlantic season and the ninth storm of the season, was moving north at about 7 mph (11 kph) late on Saturday, the NHC said.

"A turn toward the northwest is expected by Sunday morning, followed by a turn toward the west by early Monday," said the NHC. That would send Ingrid directly toward Mexico, on track to make landfall to the north of Tampico on Monday.

The storm was expected to dump between 10 inches (25 cm) and 25 inches (63 cm) of rain over a large part of eastern Mexico, which could cause rivers to swell, provoking flash floods and mudslides, according to the Miami-based NHC.

Ingrid could also bring a storm surge that would raise waters by 3 to 5 feet (0.9 to 1.5 metres) above normal tide levels near where the storm makes landfall, the NHC said.

A hurricane warning was also in effect on the Pacific coast of Mexico from Manzanillo to Lazaro Cardenas, where Tropical Storm Manuel is churning about 55 miles (90 km) offshore.

The storm had strengthened late on Saturday to sustained wind speeds of 70 mph (110 kph), the NHC said. A tropical storm becomes a hurricane when top sustained winds reach 74 mph (119 kph).

Manuel was lashing parts of Oaxaca and Guerrero states in western Mexico with heavy rain, and the NHC warned the storm could also cause life-threatening flash floods and mudslides.


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UPDATE 2-Hurricane Ingrid soaking Mexico's Gulf Coast

MEXICO CITY, Sept 14 (Reuters) - Tropical storm Ingrid strengthened to a Category 1 hurricane off Mexico's Gulf Coast on Saturday, becoming the second hurricane of the Atlantic season as it dumped heavy rain across eastern Mexico.

Rain from the storm has caused river levels to rise and emergency services to prepare for evacuations, but state oil monopoly Pemex said its installations in the Gulf of Mexico were operating normally.

Ingrid, with winds of 75 miles per hour (120 kph), could grow even stronger over the next two days as it nears Mexico's coast, the U.S. National Hurricane Center (NHC) said.

The storm was 195 miles (315 km) east of the port of Tuxpan in Veracruz state at 2200 GMT and moving north at about 7 miles per hour (11 kph), the NHC said.

Pemex was operating under security protocols but none of its installations had been affected, a spokesman said earlier on Saturday.

Two of Mexico's three major oil-exporting ports were closed, but most of the country's Gulf Coast ports including Veracruz remained open on Saturday as the storm approached.

Emergency services in Veracruz state were preparing shelters in the event of flooding, but at midday the shelters were empty, a spokesman said.

A hurricane watch was in effect for a stretch of Veracruz's northern coastline, the NHC said.

Landfall was expected on Monday morning for Ingrid, the ninth storm of the Atlantic hurricane season.

The storm was expected to dump between 10 inches (25 cm) and 25 inches (63 cm) of rain over a large part of eastern Mexico, which could cause rivers to swell, provoking flash floods and mudslides, according to the Miami-based NHC.

Ingrid could also bring a storm surge that would raise waters by two to four feet (0.6 to 1.2 meters) above normal tide levels near where the storm makes landfall, the NHC said.

Separately, tropical storm warnings are in effect on the Pacific Coast of Mexico from Acapulco to Manzanillo, where Tropical Storm Manuel is churning about 85 miles (135 km) offshore.

Manuel was dumping heavy rain and causing landslides in parts of Oaxaca and Guerrero states in western Mexico.


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Thursday, September 19, 2013

Japan retakes top spot for overseas bank lending - BIS

LONDON, Sept 15 | Sun Sep 15, 2013 6:00am EDT

LONDON, Sept 15 (Reuters) - Japanese banks have once again become the biggest overseas lenders, returning to a position they last occupied in the late 1990s before a deep banking crisis forced them to pull back from international markets.

The Bank for International Settlements (BIS), which charts cross-border lending around the world, on Sunday said Japanese banks were responsible for 13 percent of cross-border lending at the end of March, up from 8 percent in early 2007, after stepping up lending to emerging markets, Caribbean and U.S. borrowers.

The put Japanese lenders above U.S. and German banks, who accounted for 12 percent and 11 percent of cross-border lending at the end of March, respectively. British and French banks both accounted for just over 10 percent of loans.

The BIS report said Japanese banks funded their expansion mainly through financing from their large domestic deposit base.

They remain a long way below the dominant position they held in the late 1980s, however, when Japanese banks accounted for 39 percent of all cross-border lending at their peak, the BIS report said. Their share fell sharply through the 1990s and only turned higher six years ago.

Higher overseas lending from Japan in the first quarter of this year offset a drop in lending from Britain and the euro zone to leave total cross-border lending little changed, BIS said. Interbank lending continues to fall, but loans to non-financial firms are rising, it said.

Cross-border loans to China, Brazil and Russia expanded at a record pace in the first quarter, mostly to banks in those countries, taking the share of interbank lending to emerging economies to the highest level on record, BIS said.


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Sailing-Hearts in mouths at home as Team NZ boat almost capsizes

By Greg Stutchbury

AUCKLAND, Sept 15 | Sat Sep 14, 2013 6:28pm EDT

AUCKLAND, Sept 15 (Reuters) - A collective intake of breath and cries of anguish resonated around the Royal New Zealand Yacht Squadron (RNZYS) as almost 500 people watched in horror at the sight of the challengers almost capsizing in race eight of the America's Cup.

"Astonishing. The old heart stopped and I was thinking, was it going to go over or not?" RNZYS vice-commodore Andy Anderson told Reuters of the dramatic footage from San Francisco Bay that showed the Team New Zealand boat almost flipping over.

"That was one lucky team. If that went over that could have been the end of the America's Cup."

The error handed the advantage to the Oracle Team USA defenders, backed by technology billionaire Larry Ellison's Oracle Corp, with skipper Jimmy Spithill sailing to their second victory of the regatta.

"We had one tack, which was a routine tack, and we didn't get the hydraulics. If the wing doesn't tack and the boat does you end up in the drink," New Zealand skipper Dean Barker said in a televised interview shown on three big screens at the club.

"Fortunately the boat came back up and there was no collision with the other guys."

Many in the yacht club nestled at the foot of the Auckland Harbour Bridge in New Zealand's largest city held their breath, aware that a capsize would have ended their chances of reclaiming the America's Cup.

The day had begun with optimism as club members began trickling in just after 0700 local time (1900 GMT), mindful the racing syndicate needed just three wins to take the trophy.

The gear of the Team New Zealand supporters was prominent while several harked back to the successful 1995 challenge and wore the 'lucky red socks' favoured by then-syndicate head Peter Blake.

The only defeat in 1995 came when Blake, and his socks, were off the boat.

MEZZANINE BALCONY

The club housed the trophy for more than eight years from 1995 until 2003 and sitting on a mezzanine balcony overlooking the main room stands an older version of the Louis Vuitton Cup.

It is where the America's Cup will rest should it return to New Zealand, though after the near-capsize in race eight no-one was prepared to start thinking like that just yet.

"At the moment it's one race at a time," Anderson added. "As we saw today it could have been all over in a flash."

A sense of hope circulated around the room again when news filtered through that the ninth race would go ahead with Team New Zealand reporting little discernible damage.

A raucous bellow erupted when Barker outfoxed Spithill in the start box and grabbed a lead at the first mark.

Applause echoed when New Zealand rounded the bottom mark with a lead and a massive cheer went up when it tacked in front of Oracle on the upwind leg with boat speeds in excess of 30 knots.

Seconds later, however, there was a sigh of despair which sucked the atmosphere out of the room as strong winds forced a cancellation of the day's racing.

"We won't get too far ahead," Anderson said. "We have got three more races to get, Oracle have nine and they will take a big boost out of today but from our point of view let's just get through the next three races."


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Gold Explodes Higher After Inside Bar Breakout, 15th August 2013

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High Risk Warning: Forex, Futures, and Options trading has large potential rewards, but also large potential risks. The high degree of leverage can work against you as well as for you. You must be aware of the risks of investing in forex, futures, and options and be willing to accept them in order to trade in these markets. Forex trading involves substantial risk of loss and is not suitable for all investors. Please do not trade with borrowed money or money you cannot afford to lose. Any opinions, news, research, analysis, prices, or other information contained on this website is provided as general market commentary and does not constitute investment advice. We will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from the use of or reliance on such information. Please remember that the past performance of any trading system or methodology is not necessarily indicative of future results.

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GBPUSD Explodes Higher In Volatile Trading Session, 7th August 2013

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High Risk Warning: Forex, Futures, and Options trading has large potential rewards, but also large potential risks. The high degree of leverage can work against you as well as for you. You must be aware of the risks of investing in forex, futures, and options and be willing to accept them in order to trade in these markets. Forex trading involves substantial risk of loss and is not suitable for all investors. Please do not trade with borrowed money or money you cannot afford to lose. Any opinions, news, research, analysis, prices, or other information contained on this website is provided as general market commentary and does not constitute investment advice. We will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from the use of or reliance on such information. Please remember that the past performance of any trading system or methodology is not necessarily indicative of future results.

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AUDUSD Continues to Push Higher, 11th September 2013

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High Risk Warning: Forex, Futures, and Options trading has large potential rewards, but also large potential risks. The high degree of leverage can work against you as well as for you. You must be aware of the risks of investing in forex, futures, and options and be willing to accept them in order to trade in these markets. Forex trading involves substantial risk of loss and is not suitable for all investors. Please do not trade with borrowed money or money you cannot afford to lose. Any opinions, news, research, analysis, prices, or other information contained on this website is provided as general market commentary and does not constitute investment advice. We will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from the use of or reliance on such information. Please remember that the past performance of any trading system or methodology is not necessarily indicative of future results.

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GBPUSD Tests Support, EURUSD Weakens, 28th August 2013

Disclaimer: Any Advice or information on this website is General Advice Only - It does not take into account your personal circumstances, please do not trade or invest based solely on this information. By Viewing any material or using the information within this site you agree that this is general education material and you will not hold any person or entity responsible for loss or damages resulting from the content or general advice provided here by Learn To Trade The Market Pty Ltd, it's employees, directors or fellow members. Futures, options, and spot currency trading have large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don't trade with money you can't afford to lose. This website is neither a solicitation nor an offer to Buy/Sell futures, spot forex, cfd's, options or other financial products. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed in any material on this website. The past performance of any trading system or methodology is not necessarily indicative of future results.

High Risk Warning: Forex, Futures, and Options trading has large potential rewards, but also large potential risks. The high degree of leverage can work against you as well as for you. You must be aware of the risks of investing in forex, futures, and options and be willing to accept them in order to trade in these markets. Forex trading involves substantial risk of loss and is not suitable for all investors. Please do not trade with borrowed money or money you cannot afford to lose. Any opinions, news, research, analysis, prices, or other information contained on this website is provided as general market commentary and does not constitute investment advice. We will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from the use of or reliance on such information. Please remember that the past performance of any trading system or methodology is not necessarily indicative of future results.

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Wednesday, September 18, 2013

Gold Moves Higher From Pin Bar Buy Signal, 3rd September 2013

Disclaimer: Any Advice or information on this website is General Advice Only - It does not take into account your personal circumstances, please do not trade or invest based solely on this information. By Viewing any material or using the information within this site you agree that this is general education material and you will not hold any person or entity responsible for loss or damages resulting from the content or general advice provided here by Learn To Trade The Market Pty Ltd, it's employees, directors or fellow members. Futures, options, and spot currency trading have large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don't trade with money you can't afford to lose. This website is neither a solicitation nor an offer to Buy/Sell futures, spot forex, cfd's, options or other financial products. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed in any material on this website. The past performance of any trading system or methodology is not necessarily indicative of future results.

High Risk Warning: Forex, Futures, and Options trading has large potential rewards, but also large potential risks. The high degree of leverage can work against you as well as for you. You must be aware of the risks of investing in forex, futures, and options and be willing to accept them in order to trade in these markets. Forex trading involves substantial risk of loss and is not suitable for all investors. Please do not trade with borrowed money or money you cannot afford to lose. Any opinions, news, research, analysis, prices, or other information contained on this website is provided as general market commentary and does not constitute investment advice. We will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from the use of or reliance on such information. Please remember that the past performance of any trading system or methodology is not necessarily indicative of future results.

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Snowball Your Trading Success and Stop Losing Money

snowball your trading successThe market has been somewhat difficult to trade in recent months; many of the major currency pairs have been rather erratic and “choppy”, and until recently, very quiet. There is ONLY ONE SINGLE THING that kept the profitable trader from losing money during market conditions like these: PATIENCE. The most IMPORTANT thing that I have learned over my 10+ years trading the markets, is that patience really does pay, and what’s more, a lack of patience will make YOU pay.

The “Snowball effect” is a very good metaphor to explain the importance of patience to a trader and also the how a lack of patience can quickly destroy trading accounts…

Wikipedia defines the phenomenon known as the “Snowball effect” as “…a figurative term for a process that starts from an initial state of small significance and builds upon itself, becoming larger (graver, more serious), and also perhaps potentially dangerous or disastrous (a vicious circle, a “spiral of decline”), though it might be beneficial instead (a virtuous circle).”

Imagine me ‘banging on your trading desk’ trying to get this point through to you: THE SINGLE BIGGEST REASON YOU’RE EITHER GOING TO MAKE IT OR BREAK IT AS A TRADER IS BEING ABLE TO WAIT, WAIT, WAIT…and then wait some more….and THEN you POUNCE and go hard when you see a setup that is so obvious you literally don’t have to think about whether or not to take it.

In choppy trading conditions, when the market is behaving erratically or simply ‘backing and filling’ on itself, the primary thing that separates successful traders from struggling traders, is the ability to muster and maintain extreme patience, following a trading plan with obsessive discipline and executing trades without hesitation.

Poker, chess and other strategy games are won when the opponent ‘walks’ into your trap. The great mind games like poker, chess and trading, are all won through strategy, discipline and execution without hesitation. The strategy part is where patience comes in, having an effective trading strategy means nothing if you do not have the patience to wait for your strategy to provide you with high-probability entry signals.

Having this patience as you trade, will work to “snowball” your trading success by reinforcing the fact that trading with low frequency is not only easier, far less stressful and time consuming than high-frequency trading, but is also the “key” to trading success for most traders. Conversely, traders who have little or no patience end up creating a “snowball” of increasingly worse trading, because they grow increasingly desperate and emotional the more they over-trade and lose money in the market. Thus, your job is to make the snowball effect work for you rather than against you, and the way you do that is by simply sitting on your hands until a “damn” obvious trade setup comes along…

key to trading successThese days, I am so relaxed in regards to how often I trade, that I may only trade one or two times a month. Part of this is because I’ve been very busy recently with redesigning my website as you may have noticed and with planning a seminar in Singapore for my members. However, a funny thing hit me as I was so busy recently, I noticed that whilst I was still staying in-touch with the markets each day, I was not analyzing the charts as often as I usually do and I also was not really seeing any obvious trade setups.

Then, on Monday of this week, a very very obvious pin bar reversal / false-break signal formed on the Kiwi/Dollar daily chart at a key level of resistance up near 0.8105 which we had been discussing and watching in the members’ community over the previous weeks.

I had not traded for about a week before this signal formed, I had simply been busy doing other things while casually scanning the markets for setups each day; nothing intense or over-analytical. Then, when I saw this setup in the NZDUSD which we talked about in our August 19th commentary, I knew that it was a valid trade and something I wanted to risk some money on, so I acted quickly to setup my entry order, stop loss and profit target and then went to bed. The trade actually hit my target as I was boarding a plane to Singapore the next day.

Now, just a little “inside info” here, personally, I approach trading from the mindset of trying to do everything to not be in a trade. A good trader will try to find things wrong with a trade setup before entering it…if you have a difficult market with a lot of chop, staying flat on the sidelines is a no-brainer for the successful trader. Conversely, these are usually the exact same times when the amateur / struggling trader cannot keep his or hands in their pockets and continues to try and “force” trades out of the market, eventually giving back any recent profits they may have made. I discussed a “case study” of this common trading error in my article on how to find your trading ‘mojo’. Just remember; in a quiet market, patience is the only thing that will save you, that is the most important thing to take away from today’s lesson.

I wasn’t worried about this NZDUSD trade after I put it on, as I said earlier, my profit target actually get hit while I was on an airplane to Singapore. I don’t worry about all the little intra-day movements against my positions, I just let the trades come to me and then execute my orders, if the trade results in a loss, then I can live with that because at least I know I waited for a good setup that qualifies under my trading plan and I didn’t over-trade. The only time you should feel regret about a loss is if you traded when you knew you shouldn’t have or you risked more than you were comfortable with losing.

Here’s the NZDUSD daily chart showing the pin bar / false-break sell signal that many of my members and I traded this week. I will sometimes wait two or three weeks for an obvious price action signal like this to form:

high probability trade signal

Several things are worth noting about this trade:

1) This was not a hindsight call. My members and I were discussing the key resistance near 0.8105 in the members’ daily commentary and in the forum for about one or two weeks before the signal formed there. This is called anticipating trade signals and is a key part of my trading approach and relates back to that whole “strategy in mind games” concept I discussed earlier in this lesson.

2) I could not fault this signal. If I cannot find anything wrong with a particular signal than I will trade it. Normally, I do indeed find things wrong with signals, and that approach has saved me countless amounts of money over the years whilst other traders who are less-picky were losing money on the same signals most likely.

3) I had not traded for a while before this NZDUSD signal formed, I was waiting in the “darkness” like a sniper waiting for his target, and then when it formed, I had been anticipating its arrival and so I acted with total confidence in the setup, win or lose.

4) As I was doing during the two weeks leading up to this signal; everyday, casually scan your watch list of markets that you prefer to trade, but do not sit there all day staring at them. Checking in at the end of the trading day will give you a clear picture of what happened that day, and the closing price on the daily chart is very important as it will help you see false-break type signals like the NZDUSD pin bar false-break in the chart above.

If you find yourself posting on forums asking other people if you should take a particular setup or not, you probably shouldn’t take it. I don’t risk my money in the market unless there’s a setup so damn obvious that I will feel stupid for not taking it, but when I do go in, as I said before, I will go in with a position size that is big, but that I’m comfortable with losing because I believe in the setups I trade.

lifestyle of a traderProper trading habits (trading with patience) breeds trading success which breeds a “trader lifestyle” which in and of itself works to further support trading success…it really is a “snowball effect”. Let me explain this more clearly…

The successful trader might choose to go play a round of 18 holes after putting a trade on, or maybe go fishing with his buddies, etc. Meanwhile, the struggling or failing trader is sitting in front of his computer screen biting his finger nails at every little pip that moves against his position. Which of these two traders do you think is trading in harmony with the market and trading with a stress-free trading mindset? Clearly, it’s the trader out enjoying his life and letting the market do the ‘hard work’.

He is doing this because he has long since figured out that what the amateur traders are doing; sitting in front of their charts, over-analyzing everything and over-trading, is both a waste of time and a lot less likely to make him money in the long-run.

The difference between an “obsessed” trader who needs to be in the market all the time and the successful trader, is simply that the successful trader has learned to ENJOY THE DISCIPLINE AND MODERATION and has realized that THAT is what is making him (or her) profitable. Meanwhile, the unsuccessful trader is still addicted to the “hope” of trading and cannot seem to believe that doing “less” will ultimately result in him making more money in the end. Thus, the struggling trader will trade away as if they have some type of addiction to the market. A very similar analogy can be drawn between alcoholics and those who drink socially and in moderation; the alcoholic allows alcohol to destroy their life whilst the responsible drinker has self-control and gets to enjoy a few drinks here and there and go about their lives successfully. In other words, just as you need to control yourself when drinking alcohol, you need to control yourself when trading the market, by having patience and not becoming addicted to being in a trade.

Good traders who get to enjoy the “trader lifestyle” also benefit from it, because living their life fills in the time and keeps them busy and makes them less likely to interfere with their trades or over-trade. Obviously, I cannot speak for “every” successful trader in the world, but this lesson has given you some very clear insight into what has worked for me over the years and I hope you use it to your advantage. If you want to learn more about my patient price action trading approach, checkout my trading course for more information.

September Special Promotion: This month I’m offering a Special Discount on Lifetime Membership to my Forex Course, Live Trading Forum, Daily Trade Setups Newsletter & Email Support – For More Info Click Here.

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Nial Fuller is a professional forex trader, author and trading coach who is considered ‘The Authority’ on Price Action Trading. He is one of the most widely followed forex trading coaches in the world with monthly readership of more than 200,000 traders. If you want to learn more about harnessing the simplicity of Price Action Trading Strategies visit Nial’s Forex Trading Course Page Here.

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