Month: November 2017

Both WTI and RBOB prices are tumbling this morning after OPEC member agree to limit oil output through the end of 2018. While this is bullishly longer-than-expected (6-9mo was expected), OPEC members now rely on Russia to agree to these terms, and it appears the market is questioning that. Furthermore, despite US shale output at record highs, Saudi officials are shrugging off any impact.

As The Wall Street Journal reports, OPEC members agreed in principle Thursday to keep limiting their output through the end of 2018, according to people familiar with the matter, providing assurance for an oil industry still struggling through a fragile recovery.

The accord signals that the world’s biggest oil-producing countries believe that a global oversupply of oil is still weighing down oil prices, even a year after they struck their first agreement to cut crude production. Oil in storage—a proxy for the global glut—remains well above historical averages, national oil ministers said.

 

Any agreement OPEC strikes will be contingent on support from a group of producers outside the cartel led by Russia, which pumps more crude than any country in the world. The Russia-led delegations are meeting with OPEC to hash out a final agreement.

It appears the market is questioning Russia's acquiescence…

 

As one wonders ho3w much longer Russia will allow this…

 

But the Saudis do not appear to be woried… (as WSJ notes), overshadowing Thursday’s event are American shale producers, whose techniques allow faster increasing and decreasing of production with the direction of oil prices.

Some big oil producers have expressed concern that OPEC could overstimulate the oil market with production cuts that are too deep for too long, pumping prices high enough for shale to flood the market.

 

U.S. production is expected to reach a record of about 10 million barrels a day this year, according to the U.S. Energy Information Administration.

 

Mr. Falih said he wasn’t worried about shale producers flooding the market again. “Global demand will absorb shale,” he said.

Notably, as Reuters reports, Non-OPEC Russia, which this year reduced production significantly with OPEC for the first time, has been pushing for a clear message on how to exit the cuts so the market doesn’t flip into a deficit too soon, prices don’t rally too fast and rival U.S. shale firms don’t boost output further.

Before the earlier, OPEC-only meeting started at the group’s headquarters in Vienna on Thursday, Saudi Energy Minister Khalid al-Falih said it was premature to talk about exiting the cuts at least for a couple of quarters and added that the group would examine progress at its next meeting in June.

“When we get to an exit, we are going to do it very gradually … to make sure we don’t shock the market,” he said.

via http://ift.tt/2ipHy7s Tyler Durden

Authored by Charles Hugh Smith via OfTwoMinds blog,

Shall we compare the damage that will be done when all these bubbles pop?

Regardless of one's own views about bitcoin/cryptocurrency, what is truly remarkable is the asymmetry that is applied to questioning the status quo and bitcoin. As I noted yesterday, everyone seems just fine with throwing away $20 billion in electricity annually in the U.S. alone to keep hundreds of millions of gadgets in stand-by mode, but the electrical consumption of bitcoin is "shocking," "ridiculous," etc.

Since the U.S. consumes about 20% of the world's energy, we can guesstimate the total amount of electricity wasted on stand-by and similar sources of waste is more on the order of $100 billion annually.

What's shocking and ridiculous is that upwards of $100 billion in electricity is squandered globally annually on stand-by devices and other painfully obvious sources of waste. But this attracts essentially zero concern or commentary. Do you notice any asymmetry in the scrutiny being applied to the status quo and to bitcoin et al.? The status quo– wasteful beyond measure–is just fine: nobody questions the staggering waste built into the status quo, from hundreds of millions of devices consuming electricity but doing no work to hundreds of millions of vehicles idling in traffic for hours each and every day across the globe–nope, the really big issue is bitcoin / blockchain consumption.

Does anyone question how much electricity the vast server farms of Google and Facebook consume in order to serve up adverts and store photos of puppies and kittens? And how about the energy consumed by the NSA and the dozens of National Security agencies that have proliferated over the past 16 years? How much coal gets burned to serve adverts, archive photos of puppies and kittens, and store billions of emails, phone calls to Aunt Sadie, etc. for future analysis? (Dear old Sadie could be a jihadist–ya never know…)

There's also an interesting asymmetry in pronouncements of bubbles. Almost every pundit / commentator agrees that the cryptocurrencies are in crazy bubbles akin to the tulip bulb mania, but how many of these folks publicly ask if fiat currencies might be the greatest bubbles in human history, pyramids of illusion that are supposedly worth tens of trillions of dollars?

Do the bubbles in bonds, stocks and real estate get the same scrutiny as the bubble in cryptos? Do any of the conventional critics deriding the bubble in bitcoin bother comparing the scale of all these bubbles? So bitcoin is in a bubble at a market cap of $170 billion, but the unprecedented $500 trillion bubble in stocks, bonds, debt instruments and real estate is perfectly fine and no risk at all? (Approximately $300 trillion in global financial assets and $200 trillion in real estate.)

Shall we compare the damage that will be done when all these bubbles pop? owners of bitcoin would suffer a collective loss of $85 billion should bitcoin fall in half from $10,000 to $5,000, while the owners of stocks, bonds, debt instruments and real estate will suffer a collective loss of $250 trillion when these bubbles pop–an event that history tells us is inevitable.

The status quo does an excellent job assuring us that these $500 trillion bubbles will never pop– never, ever, ever; they will continue expanding until the end of time because central banks are the greatest power in the Universe and they will never ever let these markets decline.

Meanwhile, history is conclusive: ultimate financial powers in the Universe are 0 for 100 in terms of staving off collapses of asset bubbles, especially asset bubbles based on the infinite expansion of credit.

So which bubble is more dangerous? Which one should be attracting the most scrutiny and risk assessment? The mainstream will answer "bitcoin," but if we strip away the astounding asymmetry that's being applied to all things bitcoin/blockchain, we might find that worrying about the destruction of $250 trillion is considerably worthier of close examination than the potential for what amounts to signal-noise (in comparison to losses that will be measured in the tens of trillions) losses in bitcoin.

The asymmetry of bubbles will generate an asymmetry of losses.

*  *  *

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Rumors have circulated for months that Rex Tillerson's time at the helm of the State Department might soon be coming to the end. Tensions between the two men – who could forget "morongate"? – have apparently worsened since the spring, when reports first emerged that Tillerson and Trump had different views on important foreign policy issues like the Iran deal and North Korea. Trump was famously accused of "castrating" his secretary of state in the eyes of the global diplomatic community when he chided Tillerson not to bother pursuing diplomatic talks with the North Koreans.

Pompeo has long been rumored (as we pointed out in October) to be Tillerson's obvious replacement, given his foreign policy expertise as head of the CIA and a reportedly close relationship with Trump – the two meet every day for Trump's intelligence briefing. Pompeo's reportedly become "a trusted policy adviser" to the president, according to the Times. Before the CIA, Pompeo was a Congressman from Vice President Mike Pence's home state of Indiana.

And now, the New York Times is reporting that Tillerson could be out "within weeks." For the former ExxonMobile CEO, an end-of-year exit would make his time in office the shortest of any secretary of state whose tenure was not ended by a change in presidents in nearly 120 years. Tillerson has reportedly been holding out until year end to try and end his tenure with a little dignity.

Pompeo would then be replaced at the CIA by Senator Tom Cotton, a Republican from Arkansas who has been a key ally of the president on national security matters, according to the White House plan. Cotton has signaled that he would accept the job if offered, said the officials, who insisted on anonymity to discuss sensitive deliberations before decisions are announced.

However, there's the story comes with one crucial caveat: According to the Times, it was not immediately clear whether Trump has given final approval to the plan, but he has been said to have soured on Tillerson and in general is ready to make a change at the State Department.

White House chief of staff John Kelly developed the transition plan and has discussed it with other officials, who presumably shared it with the Times. Under his plan, the shake-up of the national security team would happen around the end of the year or shortly afterward.

As the Times points out, Tillerson's tenure has been marred by "turbulent" relations with his boss:

The ouster of Mr. Tillerson would end a turbulent reign at the State Department for the former Exxon Mobile chief executive, who has been largely marginalized over the last year. Mr. Trump and Mr. Tillerson have been at odds over a host of major issues, including the Iran nuclear deal, the confrontation with North Korea and a clash between Arab allies. The secretary was reported to have privately called Mr. Trump a “moron” and the president publicly criticized Mr. Tillerson for “wasting his time” with a diplomatic outreach to North Korea.

Pompeo's move is, of course, a setback for Nikki Haley, Trump's ambassador to the UN, a position that's typically seen as a stepping stone to leading the state department.

Cotton's promotion wouldbe a reward for one of Trump's most loyal supporters in the Senate on national security and immigration issues. However, Cotton's ascension is not yet completely assured: There's still some debate about whether he'd be more use to Trump in Langley, or in the senate.

If Cotton leaves, his seat will be up for grabs in 2018.

Tillerson would mark the latest in a string of more than a dozen high-profile departures from the Trump administration during its first year. He's also probably the most high-profile figure to depart since Health and Human Services Secretary Tom Price resigned after being exposed for taking expensive chartered flights at taxpayer expense.

Sally Yates
Michael Flynn
Katie Walsh
Preet Bharara
James Comey
Michael Dubke
Walter Shaub
Mark Corralo
Sean Spicer
Micheal Short
Reince Priebus
Anthony Scaramucci
Steve Bannon
Sebastian Gorka
Tom Price

…and (maybe) Rex Tillerson?

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After reaching its highest since March 2011 in October, Chicago Business Barometer dropped in November (but beat expectations) amid slowing New orders.

Chicago PMI dropped from 66.2 to 63.9, better than the 63.0 expectations…

Under the covers:

• Prices paid rose at a faster pace, signaling expansion
• New orders rose at a slower pace, signaling expansion
• Employment rose and the direction reversed, signaling expansion
• Inventories rose at a faster pace, signaling expansion
• Supplier deliveries rose at a faster pace, signaling expansion
• Production rose at a faster pace, signaling expansion
• Order backlogs rose at a slower pace, signaling expansion
• Business activity has been positive for 12 months over the past year.

As good as it gets?

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Rocky took some many punches and kept coming back. Fighting the trends highlighted below might be a little painful to the pocketbook.

Below looks at three broad-based indices on a monthly basis over the past few decades-

CLICK ON CHART TO ENLARGE

Breakouts continue to take place in each of these broad-based indices at each (1).

Until these indices reflect weakness and break key support lines, might not be worth fighting these price trends!

 

Why you see chart pattern analysis with brief commentary:   

There is a ton of news and opinions about markets and stocks that make the decision-making process more difficult than it needs to be.    

I believe the Power of the chart Pattern provides all you need to see what is taking place in an asset and determine the action to take.  

This approach has worked well for me and our clients and I encourage you to test it for yourself. 

 

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A day after reports emerged that Michigan Rep. John Conyers wouldn't seek re-election in 2018, ending a more than 50-year career in the House, local media reported that he had been hospitalized after returning to the Detroit area.

Conyers' office confirmed the congressman is hospitalized but did not say why or at which hospital. Political consultant Sam Riddle spoke to reporters Thursday morning and said Conyers was hospitalized due to stress. Riddle said he spoke to Conyers' wife, Monica Conyers, Thursday morning.

"I just spoke with Monica Conyers on the phone and we want you to know that the congressman is resting comfortably in an area hospital. He's doing OK, as well as he can be expected for a gentleman that's approaching 90 years of age," Riddle said. "The congressman's health is not what it should be and lot of that is directly attributable to this media assault."

The 88-year-old congressman returned to Detroit this week amid sexual harassment claims from his former staffers.

One of the women accusing Conyers of sexual harassment spoke early Thursday.

Marion Brown described what she claims Conyers did to her while she worked for him.

"Some of the things that he did, it was sexual harassment," she said. "Violating my body, propositioning me, inviting me to hotels with the guise of discussing business, and then propositioning for sex. He just violated my body. He has touched me in different ways, and it was very uncomfortable and very unprofessional."

Conyers settled a sexual harassment claim with Brown back in 2015.

Buzzfeed reported last week that Conyers had used taxpayer money to pay settlements to several former staffers who accused him of sexual harassment.

 

via http://ift.tt/2AKP8B3 Tyler Durden