Amid the chaos and turmoil caused by Harvey, today's rig count data is likely to change things as much as a fart in a hurricane. US crude production in the Lower 48 actually fell last week, syncing with the stabilization in the lagged oil rig count.
The US Oil Rig count held to two-month lows last week, unchanged at 759…
US Crude production in the Lower 48 dropped last week following a stabilization in rig counts (but rose 2k overall thanks to a pick up in Alaska)…
Notably RBOB prices are down today (and WTI) as John Kilduff, a partner at Again Capital, notes “The government is actually reacting positively trying to address and do what they can,… There are some signs of life in several of the refineries already and the 1 million-barrel tapping of the SPR is also helping to ease anxieties over the storm”
The unprecedented destruction wrought by Hurricane Harvey will impact the US economy in ways may not be immediately apparent. Until recently, coverage of the storm's impact has focused on property damage and the impact on the energy industry. But in a story published Friday, Bloomberg explains the devastating impact the storm has had on Texas’s chemicals industry, which is already causing supply-chain headaches for American manufacturers who're struggling to source the chemicals required to produce plastics and other components used in everything from milk jugs to car parts.
Indeed, if Texas's chemicals plants are closed for an extended period, production at a potentially huge number of American manufacturers to grind to a halt.
More than 60% of the US’s production capacity for ethylene – one of the most important chemical building blocks for American manufacturers – has been taken offline by the storm, a development that could ripple across the US manufacturing industry.
“Texas alone produces nearly three quarters of the country’s supply of one of the most basic chemical building blocks. Ethylene is the foundation for making plastics essential to U.S. consumer and industrial goods, feeding into car parts used by Detroit and diapers sold by Wal-Mart Stores Inc.
With Harvey’s floods shutting down almost all the state’s plants, 61 percent of U.S. ethylene capacity has been closed, according to PetroChemWire.”
Ethylene, the gas given off by fruit as it ripens, occurs naturally, but it’s also a crucial product of the $3.5 trillion global chemical industry, with factories pumping out 146 million tons last year. Processing plants turn the chemical into polyethylene, the world’s most common plastic, which is used in garbage bags and food packaging. When transformed into ethylene glycol, it’s the antifreeze that keeps engines and airplane wings from freezing in winter. It’s used to make polyester for both textiles and water bottles. Ethylene is an ingredient in vinyl products such as PVC pipes, life-saving medical devices and sneaker soles. It helps combat global warming with polystyrene foam insulation and lighter, fuel-saving plastic auto parts. It’s used to make the synthetic rubber found in tires. It’s even an ingredient in house paints and chewing gum.
Ethylene and its derivatives account for about 40 percent of global chemical sales, according to Hassan Ahmed, an analyst at Alembic Global Advisors. And the Gulf Coast is a crucial player in the global market: US production accounts for one of every five tons on the market. International ethylene plants were running nearly full out to meet rising demand before Harvey.
And while Gulf Coast chemical plants are designed to withstand hurricane-force winds and floods, the “1-in-1,000-year flooding” unleashed by Harvey has forced many to shut down. The damage to the region’s chemicals industry is perhaps best embodied by the Arkema plant in Crosby, TX, which experienced two explosions Thursday that the company said it was powerless to prevent.
Another analyst quoted by Bloomberg said he hasn’t seen anything like this in his 18 years of following chemical stocks.
“Ethylene producers hit by the storm along the Texas Gulf Coast include LyondellBasell Industries NV at the southern end in Corpus Christi, Exxon Mobil Corp. in Baytown outside Houston, and Chevron Phillips Chemical Co. in Port Arthur by the Louisiana border.
‘The combination of Harvey’s path, duration and rainfall total is wreaking havoc with the supply side of the U.S. chemicals industry on an unprecedented scale,’ said Kevin McCarthy, an equity analyst at Vertical Research Partners. ‘We certainly haven’t seen anything quite like it in our 18 years of following chemical stocks on Wall Street.’”
Adding to the difficulties for American manufacturers, more than 60% of production capacity for polypropylene, another widely used chemical, has been taken offline. Chemical and plastics buyers can’t operate for long without replenishing their inventory, and some producers are already telling customers that they won’t be able to meet their contractual supply obligations because of the storm. According to Bloomberg,Formosa Plastics Corp., which shut its Point Comfort, Texas, ethylene and plastics plants ahead of the storm, said Aug. 30 that it won’t be able to meet commitments for polyethylene, polypropylene and PVC.
These supply-chain disruptions have contributed to the drop in demand for natural gas, which is used by plastics makers during the refining process.
“With so much chemical production in the region out of commission, demand for natural gas has plummeted. Producers such as Dow Chemical Co. use gas as a raw material for ethylene and also to power their massive cracking furnaces and other equipment. Added to the impact from widespread electricity outages, demand for gas fell by more than 5 billion cubic feet a day, according to Citigroup Inc. That’s equal to nearly 8 percent of the country’s normal consumption this time of year.”
Meanwhile, demand for ethane and butane, gases necessary for the production of ethylene and other chemicals, have fallen about 90 percent because of plant closures, according to PetroChemWire.
Because of the complexity of chemical manufacturers’ infrastructure the need to carefully assess damages – or potentially risk an Arkema-style disaster – could forestall plant reopenings for weeks, if not months. What’s worse, companies won’t know for sure whether their plants were damaged until they try to restart them, perhaps only then finding that flood waters have ruined a key piece of equipment.
“No one right now has a very good handle on the full extent of the damage,” Ahmed said.
And even if producers manage to get their plants online sooner than anticipated, other logistical challenges – like damaged train tracks – could prevent them from delivering their products to buyers.
According to IHS, polypropylene producers could face an average delay of two weeks to ship their product via rail because of the storm. Some buyers are seeking supplies outside the US in case of an extended disruption.
Already, the economic damage wrought by Harvey has surpassed even the direst forecasts. If US manufacturers are forced to halt production on such a wide range of products for an extended period, maybe Goldman and Citi’s projections that the storm will negativelly impact GDP during the third and fourth quarter might actually be conservative.
In the September issue of The Atlantic, the cosmopolitan political magazine for globalist elites, the topic of ANTIFA was broached. I wouldn’t call their assessment of the alt-left group a rebuke, but instead a mild chastising.
Antifa believes it is pursuing the opposite of authoritarianism. Many of its activists oppose the very notion of a centralized state. But in the name of protecting the vulnerable, antifascists have granted themselves the authority to decide which Americans may publicly assemble and which may not. That authority rests on no democratic foundation. Unlike the politicians they revile, the men and women of antifa cannot be voted out of office. Generally, they don’t even disclose their names.
Antifa’s perceived legitimacy is inversely correlated with the government’s. Which is why, in the Trump era, the movement is growing like never before. As the president derides and subverts liberal-democratic norms, progressives face a choice. They can recommit to the rules of fair play, and try to limit the president’s corrosive effect, though they will often fail. Or they can, in revulsion or fear or righteous rage, try to deny racists and Trump supporters their political rights. From Middlebury to Berkeley to Portland, the latter approach is on the rise, especially among young people.
Revulsion, fear, and rage are understandable. But one thing is clear. The people preventing Republicans from safely assembling on the streets of Portland may consider themselves fierce opponents of the authoritarianism growing on the American right. In truth, however, they are its unlikeliest allies.
After the events in Berkeley this past weekend, where ANTIFA thugs went haywire, beating Trump supporters up for sport, support for the violent leftist group has plunged.
I am concerned that this video of Antifa beating a 16 year old Trump supporter will cause the public to turn on us. http://pic.twitter.com/e72n3agbDx
Now we’re seeing widespread condemnation from both the media and establishment hacks, deep state troglodytes and politicians alike. Clearly, someone pulled the plug on ANTIFA. Perhaps an important think tank did some proprietary polling and concluded the risk-reward analysis wasn’t worth shilling for them anymore, especially in light of the events in Texas.
Here’s a brief rundown of some of the recent remarks. Bear in mind, about a fortnight ago, the media and a whole slew of politicians, on both the right and the left, condemned President Trump for criticizing ANTIFA. Both Marco Rubio and Mitt Romney praised the group as being ‘anti-fascist.’
After a violent weekend of suspected gang-related shootings, Tuesday the Sacramento City Council took action to reduce the bloodshed.
It approved a controversial program called Advance Peace, which offers cash stipends to gang members who remain peaceful.
…
“Let’s get going on doing everything we can to save innocent lives,” Steinberg said.
The program targets key gang agitators, offering them cash stipends to graduate school and remain peaceful. It already claims success in dropping crime rates in Richmond. But the city would still have to pay half the cost of the program, $1.5 million out of the city’s general fund.
…
In the end, the council agreed to the program, voting 9-0 in favor.
Because policies of appeasement have worked so very well throughout history, why not give it another try?
Take money from peaceful tax paying citizens and redistribute that money to the gang bangers who are killing them.
Sounds like a brilliant idea that could only manifest itself on the progressively tolerant left coast.
Maybe we should kick this up to the Federal level and see if we can get taxpayer funds to send to the Islamic State and North Korea… that should work like a charm.
The Juggalos aren’t just ICP fans— they’ve built a cultural identity around the music, the rap duo, and what it represents. In turn, ICP has stood up for its followers as they’ve been harassed and profiled all over the country. Unwittingly, these two white rappers from Detroit have become some of the nation’s most determined advocates for free expression.
“[If] Juggalos are being fucked with, we got to do something about it,” says Violent J’s partner Shaggy 2 Dope (Joseph Utsler). “If that ties us into some First Amendment movement, whatever, we’re First Amendment warriors. I don’t know.”
Watch above or click through for downloadable links.
(Elite E Services) — 9/1/2017 — As we have explained in our book Splitting Pennies – trading FX is nearly impossible; or at least, it may be possible for some time, but in the long run, it’s a near certainty that without the use of professional algorithmic trading systems you will blow up your account. That’s because of the dynamics of how FX works vs. other markets. In traditional markets, there is a bias towards positive movement; all CEOs of public companies want their stock to go higher. Bull traders, 401k investors, pension funds – basically everyone wants the stock market to go up. The short sellers aren’t ‘pessimists’ so much as ‘realists’ that over-inflated P/E ratios are a sign for a crash from unrealistic levels. This is NOT the case in FX. Currency markets have opposing forces like ‘gravity’ and ‘anti-gravity’ – every country wants both a strong currency and a weak currency. This may seem illogical, welcome to the world of Currency! The reason is simple – exporters want a cheap currency and importers want a strong currency. Politicians usually favor a weak currency because it’s good domestically and big business favors a strong currency (at least in the USA) because USA is a net importer. Let’s have a look at today’s USD action most noticed in EUR/USD:
On the surface this looks like a great trading opportunity – but is it? EUR went up on poor US Payroll data; and then fell on dovish jawboning from the ECB. Planned conspiracy to manipulate FX or just random brownian movement? Believe what fits into your mind that helps you sleep at night, either way – would you have been able to buy EUR at 1.1924, sell near the high at 1.1980 and then reverse, covering near 1.19 handle? All within 10 minutes? Maybe someone did it, even if by accident, but the point is that any trading plan or investment strategy shouldn’t rely on the ability of such skills because even if as a trader you were able to achieve this great feat – would it be able to repeat it, day in and day out – for years? Probably not.
The Triffin dilemma or Triffin paradox is the conflict of economic interests that arises between short-term domestic and long-term international objectives for countries whose currencies serve as global reserve currencies. This dilemma was first identified in a 1929 book, Gold and Central Banks, by Polish economist Feliks M?ynarski,[1] who identified a fundamental instability in a gold-based international monetary system, that the reserve currency countries would tend to accumulate foreign reserves, but as the volume of these grew relative to the country’s gold reserves, international investors would begin to fear suspension of convertibility; later in the 1960s, it was rediscovered in the context of the Bretton Woods system by Belgian–American economist Robert Triffin, who pointed out that the country whose currency, being the global reserve currency, foreign nations wish to hold, must be willing to supply the world with an extra supply of its currency to fulfill world demand for these foreign exchange reserves, thus leading to a trade deficit. Due to M?ynarski’s precedence in articulating the problem, Barry Eichengreen has suggested renaming the problem to “the M?ynarski dilemma“.[1]
This is not only true for a reserve currency – any currency has a conflict between short term and long term interests. For example, if a currency is weaker it can help exporters in the short term to boost sales, but hurt the same exporters in the medium term when they need to go out into the world and buy raw materials for higher prices. This push and pull is what defines modern Forex on a systemic level. While average investors certainly don’t need to know this unless you’re planning on getting a job with a central bank, it can help any investor understand how and why Currency markets fluctuate the way they do. It should also be noted that these forces maintain ‘bounds’ naturally, establishing a sort of ‘high’ and ‘low’ limit for any FX pair. For example the EUR/USD now trading around 1.19, it can go in next days to 1.20 or 1.21 but not 1.90, for example. Even in rare cases such as the “Brexit” the GBP/USD went down by less than 10% – which is a lot, for a major Currency. So let it be known to all that these risks in FX are investable (with the help of algorithms) and hedgeable. Looking from a risk management perspective, it is a lot more manageable than securities, commodities, or bonds – which have the finality of the ‘ulimate’ risk (default) – as Currency is ‘money’ the Euro can’t ‘default’.
A final note to all you Bitcoiners – Bitcoin is a Currency it’s only a matter of time before it’s integrated into the Forex system, because BTC/USD is an FX pair. Good time to brush up on your FX and understand the broader market (not just the microcosm of Cryptocurrencies).
Texas resident Joe Roan woke up to a rather unpleasant surprise yesterday morning as he discovered the remnants of a would-be thief attempting to steal gasoline from his Jeep Wrangler tank. Unfortunately, as a local CBS affiliate pointed out last night, with refinery outages resulting in growing gasoline shortages, this is becoming a rather common occurrence for Texas residents.
Joe Roan didn’t witness the crime, but he found the evidence in his driveway.
“I came outside this morning and found this water hose was sticking out,” he said, holding the hose a thief left hanging out of his Jeep’s tank.
On the ground sat a gas tank.
“Instantly I knew someone was trying to steal my gas,” he said. “Maybe a car drove by when they were doing it and they ran? I don’t know.”
Roan said the thief didn’t even manage to get any fuel.
Meanwhile, Google searches for “how to siphon gas” have soared as criminals have been forced to hone their skills before taking to the streets.
Of course, the rampant onset of gasoline thieves is the result of fuel shortages which are often exacerbated by the pure panic of people trying to keep their tanks topped off. As we’ve reported several times in recent days, long lines at gas stations have become a common sight from the Texas shores up to Dallas.
Flooding from Harvey has caused a temporary gas shortage, creating long lines and price hikes at gas stations in Texas. http://pic.twitter.com/azLD5hZOZE
Meanwhile, one seasoned energy trader warned this is “only just beginning” as the hangover from Hurricane Harvey flows downstream to retail gas prices…
As Bloomberg notes, Harvey impact currently includes:
Colonial says it’ll commingle Rbob and conventional gasoline
Explorer Pipeline planning to start lines Saturday, Sunday
Logjam grows to 29 oil tankers as 11 ports remain closed
Total Port Arthur is said facing extended shutdown on power loss
Texas storm bucks N.Y. traders with wild gasoline expiry swings
NHC issues final advisory on Harvey; losing tropical character
Which has left retail gas prices at the pump at their highest in 2 years…
And, judging by their usual lagged response to RBOB, they are set to go dramatically higher in the next few weeks…
All of which has resulted in the predictable onslaught of price gouging, with the Dallas News reporting sightings of gas prices ranging from $2.99 a gallon to $8….
There were multiple reports of gas stations charging anywhere from $2.99 to $8 for a gallon of regular gas.
At the 76 gas station in Garland, the fuel-price display unit outside showed $8 for a gallon. The station was swamped with calls from angry customers after a photo was posted on social media, according to Robert Fernandez, who works there.
There have been numerous complaints about high gas prices, according to Kayleigh Lovvorn, spokeswoman for the office of Texas Attorney General.
“When evaluating whether a business is engaging in price gouging in the sale of fuel, we look to see if they are charging excessive or exorbitant prices,” Lovvorn said in an emailed statement. “We recognize that certain market conditions, such as decreased production and closed refineries, might cause market fluctuations.”
The attorney general’s office is looking into 984 complaints filed between August 25 and Thursday afternoon. On Thursday alone, its Consumer Protection Division received more than 500 complaints, “many of which involve allegations of high fuel prices in Dallas, including amounts ranging from $6 to $8 dollars per gallon.”
…which is still pretty cheap compared to what Best Buy is charging for water.
It is only logical to assume that after 8.2 years of unimpeded GDP expansion in the US, we are near to the other side of the business cycle, a recession. The average expansion since 1900 is 3.8 years, and this one is already the 3rd longest, only bested by an expansion in the 60’s at 8.8 years and the expansion in the ‘Roaring 90’s’ at 10 years.
Logically and empirically, recessions see much lower interest rates. Cycles associated with the 14 recessions since and including the Great Depression average a drop of 186 basis points in yield (-1.86% in yield) in the 10yr US Treasury. In the last five recessions that we have Fed Funds target data for, the Fed has cut rates an average of 625 basis points (-6.25%) and a minimum of 500 basis points (-5%).
With the Fed at 1.125% now, it is easy to imagine a negative Fed Funds Rate and negative Treasury yields in the next recession. A recent Bloomberg article points to new research from Harvard professor Kenneth Rogoff suggesting that negative interest rates have been proven to work and are a viable choice for the Federal Reserve.
In the next recession we expect rates to fall nearer to Japan and Germany type levels; below 1% and possibly below 0.50% or 0%. Using short-hand, estimates of performance can be calculated using assumptions for where the 10yr UST falls to.
click image for large legible version
*This is a short-hand estimate of what returns may look like before any fees or commissions. This simple model does not take into account carry, rolldown, or active management. Returns could easily be higher or lower than these estimates at these terminal yields. Higher yields would most likely result in lossses.
“Is this patient under arrest?” Alex Wubbles asks the officer, being instructed by legal counsel on the phone.
“Nope,” the officer says.
“Do you have an electronic warrant?” She asks, searching for a way to legally comply with the officers.
“No,” The officer admits bluntly, getting annoyed.
The police did not have a warrant. The police did not have probable cause. The man was not under arrest. The unconscious patient could not consent.
The nurse, Alex, printed out the hospital’s policy which the Salt Lake City Police Department agreed to. She showed it to the officers. She clearly and calmly listed the three things which would allow her to give the police the blood sample: a warrant, patient consent, or a patient under arrest.
The police had none of these things.
“Okay, so I take it, without those in place, I am not going to get blood?” The Officer Jeff Payne is heard saying behind his body cam.
The legal counsel on the phone tries to tell the officer not to blame the messenger, and that he is making a big mistake.
Then, the officer attacks the nurse, Alex Wubbles. He drags her outside, and handcuffs her, while she cries.
“What is going on?!” She says exasperated, wondering why they are doing this to her.
She couldn’t just break the hospital policy and put her job in jeopardy because some police officers illegally told her to. She couldn’t simply collude with the lawbreakers–the police–and illegally hand over a blood sample on behalf of an unconscious patient.
That would have opened her up to lawsuits and job loss.
The officers were, in fact, breaking the law. They had no legal right to demand blood from an unconscious patient who could not consent.
The man they wanted blood from was a truck driver who had struck a vehicle being pursued by the police. It is unclear why they would even need a blood sample from the victim.
But none of these legal facts stopped the police from placing the nurse under arrest.
Wubbles was handcuffed and placed in a police vehicle. She was never actually charged.
You could chalk this up to one crazy officer, Detective Jeff Payne with the Salt Lake City Police.
But then his supervisor showed up to the scene. While the nurse was handcuffed in the cruiser, the supervisor started to lecture her.
“There are civil remedies,” he said, telling her she should have broken the law when the officer told her to. Of course, this ignored the fact that she would have been caught up in the civil action against the officers!
It’s like an episode of the Twilight Zone as the Supervisor lies and says the nurse was obstructing justice. All the nurse wanted was a warrant signed by a judge, the legal requirement to execute a search! And yet not just Officer Payne, but his Supervisor insist that she should have given them what they wanted, without a warrant.
Listening to the Supervisor’s justification is a real trip. He repeatedly says, things like, “If you already have a sample, we can just go get a warrant, but all I’m hearing is no, no, no.”
What? Yes, go get a warrant! That is what you have been repeatedly told by the nurse and hospital staff!
You can tell from the video she is not some anti-cop crusader. She was legitimately trying to do her job and follow the law to the best of her ability. Before she is arrested, you can tell she is worried and uncomfortable, trying her best to keep the situation calm and professional.
And then the police handcuffed and dragged a crying nurse out of the building to intimidate and harass her further.
She is a strong woman. She stood up to their bullying and lies and did not give in. Despite the best efforts of the police, she would not help them violate the Fourth Amendment rights of her patient.
Police should not be able to just handcuff people and drag them to a car as an intimidation method. Payne should be fired and charged with assault.
The supervisor should also be fired, for continuing to harass that poor woman after learning quite clearly that his officer was attempting to break the law. These people are a threat to the public.
But all too often Police Cheif’s and other officers line up behind their disreputable colleagues.
And that is why people have such a problem with the police. Fire the bad officers, and maybe the good ones can take the public spotlight.
But if the police treat nurses like this, surrounded by hospital staff, how can we expect them to treat the rest of us?
The ongoing ETF insanity, which as of the end of August saw Vanguard fund inflows of $1.6 billion every day (or $100 million every single hour) has now boldly crossed over into the political arena, with the upcoming launch of the “MAGA” ETF, which hopes to “make America great again” by investing exclusively in companies that support the Republican Party, and Trump of course.
To keep it simple, the Point Bridge GOP Stock Tracker ETF will – as one would expect – list under the ticker “MAGA,” in reference to Trump’s campaign slogan. In addition to MAGA, Hal Lambert, founder of Point Bridge, is planning a set of what it calls Politically Responsible Investing products. MAGA is expected to begin trading on September 7.
Unlike other ETFs which invest in specific industries, products, or factors, the ETF strategy will instead analyze the political contributions of the employees and the PACs of S&P companies. It will then pick the top 150 Republican stocks based on their contribution data for ETF inclusion. Lambert, a major Texas Republican fundraiser, refers to the approach as “politically responsible investing.”
Speaking to the Daily Caller, Lambert said that “corporations have been very active in political contributions and those effect the outcome of elections. Many are now becoming outwardly vocal in their attacks on President Trump and Republican policies to the detriment of their shareholders and the country. Investors need to support the companies that are supportive of President Trump and the Republican Party because that drives policy across the country.”
“How can a company that has a fiduciary duty to shareholders support candidates that want higher taxes on their company which ultimately harms their shareholders? Investors should have a way to say no thank you to companies that are actively against their interests.”
Lambert said that the top five Republican contributors in the past two election cycles were: AT&T, Marathon Petroleum, Home Depot, Exxon Mobil, and Altria. “All of those stocks will be in the ETF,” Lambert said. The launch of the fund comes as major corporations are increasingly getting involved in politics (just google GOOGLE).
Before rushing in, keep this in mind: one sector fund investors will miss is the one that has been the best performing YTD: tech. As of the most recent election cycle, the MAGA ETF will not have any large technology companies that are typically Democratic in their contributions, but Lambert maintains that with 150 stocks, it still contains plenty of industry diversity.
The fund, which is expected to list on the BATS exchange, has a rather generous annual expense ratio of 0.72%. Which is why investors may want to look to cheaper, knock-offs alternatives: according to Reuters, a rival group, Active Weighting Advisors LLC in Cape Girardeau, Missouri, plans a Republican Policies Fund and a Democratic Policies Fund listed under the tickers GOP and DEMS.
Is it unclear if there will be any correlation between the performance of the GOP or DEMS and the actual approval polling of either the Republican or Democrat party, although it is very clear that