Category: zerohedge

Authored by MN Gordon via EconomicPrism.com,

The political differences of today’s leading two parties are not over ultimate questions of principles.  Rather, they’re over opposing answers to the question of how a goal can be achieved with the least sacrifice.  For lawmakers, the goal is to promise the populace something for nothing while pretending to make good on it.

Take the latest tax bill, for instance.  The GOP wants to tax less and spend more.  The Democrat party wants to tax more and spend even more.  We don’t recall seeing any proposals to tax less, spend less, and shrink the size of the state.  And why would we?

Today’s central planners and social engineers are enlightened and progressive.  They know much more about anything and everything than the rest of us.  In particular, they share a general sense that they know how to spend your money better than you.

At best, the central planners call your money to Washington so they can then distribute it back to your friends and neighbors.  In reality, the lawmakers call your money to Washington where they distribute it to their friends and neighbors – not yours.  This is not a matter of opinion.  It’s a matter of fact.

Is it a coincidence that the top three wealthiest counties in the country are in the shadow of the Capitol in the D.C. suburbs?  What it is exactly that the residents of these counties do that’s of tangible value is unclear.  However, what is clear is that bogus government jobs in Loudoun County and Fairfax County, Virginia, pay big bucks.  But that’s not all…

Garbage In Garbage Out

Further up the eastern seaboard, Wall Street has a good thing going too.  The big bankers and brokers make big bucks extracting capital from Main Street America.  That’s a fair characterization, right?

Perhaps the big bankers and brokers really are efficiently allocating capital to its highest and best use.  Who knows?  But as far as we can tell, they’re gambling with other people’s money – and collecting fees regardless of how their coin tosses fall.  It’s always, ‘heads I win, tails you lose.’  Not a bad fugazi gig, if you can get it.

Of course, the cornerstone of it all is the Federal Reserve.  Through what they call “open market operations,” the Fed rigs the game in Washington’s and Wall Street’s favor.  Indeed, the process is really quite elegant.

Under the smokescreen cover of garbage in economic data, the Fed’s economists produce garbage out bar charts and line graphs.  These, in short, are fabricated depictions of the economy’s growth, consumer and producer prices, personal consumption expenditures, unemployment rate, and whatever other aggregate metrics are deemed to be of vital importance.  What’s more, these fabricated depictions serve as the basis for the Fed’s monetary policy decisions.

Do the graphs show price inflation heating up or cooling down?  What about GDP or the unemployment rate?  Is one going up while the other’s going down?  Is one going down while the other’s going up?

The Federal Open Market Committee (FOMC) deliberates over these questions about every six weeks.  Then the Fed goes to work inflating the nation’s money supply, with the occasional rug yank, for the stated purpose of getting the charts and graphs to illustrate the garbage data to their liking.  What to make of it?

The Rug Yank Phase of Fed Policy

From the outside, the Fed’s economists and planners appear to be esteemed professionals, making decisions with the intent of providing for the greater good of the country.  They even attend economic conferences and forums where they present their latest research findings on abstract topics like liquidity traps.  Some of their studies even include footnotes, as if the professional economists are building upon a concrete knowledge base of human intellect.

Yet beneath this cover of bogus science, the real sausage is made.  Capital is borrowed into existence where it is directed to Washington and Wall Street.  There, having first dibs on this phony money, Washington and Wall Street get to spend it as if it has real value.

However, the real value does not coming from the Fed’s phony money.  In fact, as this new phony money appears on the scene, it extracts incremental wealth from the workers and producers across the country that – through their time, talent, and labor – created the wealth to begin with.

At the moment, we’re in the rug yank phase of the Fed’s monetary policy.  This is where they reel back credit ever so slightly after letting it run wild over the last decade.  This tightening of credit markets has the effect of pulling the rug out from under financial markets and the economy.

Monetary policy, without question, is not an exact science.  It’s rudimentary guess work that’s based on committee interpretations of bogus data.  This week, the FOMC raised the federal funds rate by 0.25 percent to between 1.25 and 1.5 percent.  This marks the third increase this year and the fifth increase this cycle.

Incidentally, Janet Yellen also delivered her last press conference as Chair of the Federal Reserve, though she’ll likely still Chair the FOMC meeting scheduled for late January.  Then Jay “Count Dracula” Powell will take over the helm of the nation’s central bank.  The broad expectation is for Powell to continue the rate increase playbook that Yellen has laid out, which includes three quarter percent hikes in 2018.

We wish Powell the best in his endeavors.  But we suspect he’ll unwittingly pull the rug out from under financial markets and the economy before he completes his first year.  After that, the fun really begins.

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

And just like that, stocks priced in tax reform for the n^th consecutive day, because one day after speculation that Marco Rubio would be a hurdle to the passage of tax reform, which pushed stocks modestly lower, moments ago Fox – or is that Disney – reported that Marcio Rubio is a “yes” on the tax bill, sending risk assets soaring in the latest “buy-everything” euphoria.

Source to FBN: Sen. @marcorubio will be a ‘yes’ on tax bill. http://pic.twitter.com/qd4OXaUawR

— FOX Business (@FoxBusiness) December 15, 2017

Rubio’s turn comes shortly after Speaker Paul Ryan told the media that the Senate and House are both planning to hold votes on the bill by end-of-day Wednsday with the first vote likely coming in the House Tuesday and the Senate following either Tuesday or Wednesday. Separately, Senator Brady announced that the tax measure is now done, and should win every senator’s support.

• BRADY: TAX MEASURE DONE, SHOULD WIN EVERY SENATOR’S SUPPORT

The result in markets was fast and furious, with the S&P, dollar, yields and the USDJPY all surging following the report.

And putting yesterday’s and today’s moves in context:

Yesterday – SPX down 10 on news Rubio wont vote yes on principle…

Today – SPX up 17 on news he will vote yes and has no principles.

— DMW (@dmwlsw) December 15, 2017

via http://ift.tt/2jX9OM7 Tyler Durden

Intro by Vince Lanci

via the Soren K. Group at Marketslant.com

The Next Revolution is already Happening

Over the past few weeks, I’ve had the pleasure of meeting the next revolutionaries in the democratization of money. This was while looking to understand better the guts of the blockchain tech and how it differed from crypto to crypto. I had the  pleasure of meeting with and  speaking to several people involved with Bitshares and those  involved  at the  periphery with Arisebank. During that time, by coincidence, Arisebank was in the process of doing the deal described in the headline. And I was able to look through the glass at this event where people were ,to my eye, looking to facilitate the transition from intellectual ideas to applications in reality. That is what Capitalism is in part about. Providing a service that fills a need and makes it easier which  gets you paid. Not making a dollar and being apathetic if the service actually helped someone. Free market capitalism allows for new ideas to make it (or not) on their own merits. That is what I saw. The potential  for self-clearing markets to  reassert themselves and for money to get to where it is needed most without incumbent toll booth operators throttling ideas fortheri own benefit.

I saw people who will make a bundle of money by adding value to a system in need of overhaul. i spoke wit ha few on a guarantee of anonymity. One key person said to me  in response ot me pointed question that blockchain is the beginning, Bitcoin may be the early pioneer, but like the Palm pilot, it was replaced by better tech. Why wed yourself to Blockchain?:

“Look, the tech is evolving, and we are already looking at how Quantum computing will make different types of tech more palatable than blockchain. I agree with you. In a few years at most, something better will come along. And that is a good thing. Because the goal here is to use these new tools to remove the friction in all things that prevents ideas from getting their chance to make it or not on their own merits. If you ( he was addressing me directly here) have an idea that will make a market more efficient and serve the greater good, I want to hear about it. Because now, I can help you get it into “production” much easier because  of what we can  do.”

My response was: Sure, I feel intermediaries in general that do not add value need to be removed. Frankly, I feel Precious metals producers’  have been victims of their own ignorance for years. As a result they are captive clients to intermediaries who tell them when to hedge in order to maintain their credit line. Meanwhile those same firms that manage the producer’s banking, LOC, ISDAs, and production hedging are making money not just from those services, but on the prop-side of being able to benefit from the natural sell order flow captive producers provide. This is too much friction from production to user. It’s like a poorly connected pipeline slows waterflow”

His response was simple:

“Exactly. And we are already working with someone who is working on solving that problem right now. You should connect with them. “

And in 24 hours I was involved in a pressure cooker with a couple geniuses having conceptual discussions on how to use the available tech to make more precious metals distribution from producer to end user more efficient. The point is, the man quoted above was all about making  it happen. And it likely will if the people I’m now talking with and learning from get their wish. i hope to be sharing more on this topic soon. Moving on to the event at hand today.

Better Money Needs a Better Banking Model

If money is the life blood of capitalism, then banks are the valves that control the flow of that blood. In this way, traditional banks can sometimes make errors in allocation of investment capital, errors in custodial trust, and due to their centralized “gatekeeper” status have a Fed sponsored franchise that can be a deterrent to efficient, free markets. If you had the time to listen to my podcast yesterday on this topic you can see where I was coming from in light of today’s events.

This is actually why crypto currencies are vulnerable. They are not regarded as money officially, like Gold is not anymore either . They are also in the process of being regulated via futures listing and “crackdowns” to protect us so we are told; also what happened to precious metals. 

There are many of them, and this fragmentation itself has risk that comes with its promise of economic freedom. Many will not make it. And they exist outside the banking network. 

But what happens if a crypto (or all crypto currencies) gets access to the circulatory system itself? What happens when a cryptocurrency, due to Blockchain’s distributed ledger accounting tech, obviates the need for those custodial trustee valves that  exist like manned toll booths when ez pass exist? They unionize in a panic to protect their jobs. That is what happens. And that has begun. 

To digress a second, we actually pay to get access to our money now. Cash Remember the advent of the ATM? It was heralded as a cost reducer for banks and a convenience for the client. Now, it is a profit center where people frequently are charged to get their money. This is basically cash trading at a discount to digital cash. You are paying the bank money to use your money in private transactions . But Quick-Pay, in which they monitor all cash use and collect data from, is free; for now. 

Supply Side Scalability is No Longer a Viable Business Model in a World Without Scarcity. Demand Side’s Network Effect Model Is

Banking’s centralized method of  “service” which at one time was necessary for orderly and counter-party trustworthiness in markets, has either outlived itself or become easily abused in its use. The trust resided in the person who did the  custodial duties.  Their supply side-market structure based on scalability, key to the industrial revolution, is no longer the most efficient. Scarcity is not the problem anymore. Distribution is. And that means another business model applies more efficiently. It is the demand side market structure model based on the network effect. And  to implement that, we need  a better way of mitigating counterparty trust that removes the  human element and bottleneck that comes along with its centralized systems. 

Traditional brick and mortar centralized Banking, like every industry before it, is jeopardized by the most important concept behind the current disruptive technological movement: decentralization. The problem with decentralization for banking until the advent of Crypto and blockchain tech is: it was not compatible with mitigating counterparty risk.  Therefore a centralized authority was needed. Distributed ledger accounting tech removes the need for a central custodial trustee to protect you from counter-party risk. This is what tech geeks say when they refer to a “trustless” transaction. They mean; there is no need for a human to verify the authenticity of the deal. The trust is verified at its DNA level so to speak.

The Bank Teller’s Revenge

When they fired the tellers it was a good thing for everyone but the tellers. What happens when the credit officers are not needed in a few years? What happens when those technologies that banks use to lower costs actually replace their revenue streams like Letters of Credit, banking fees and other overpriced franchises? White collar people get fired, that’s what happens. Credit lawyers alongside operations managers. The corporation will triage every extremity it has to, to continue to perpetuate its own incumbent authority and existence. It could get very weird. Call it the Teller’s Revenge if it plays out as it could.

The replacement is not crypto per-se; it is Crypto , Gold, Fiat, or anything that people agree is money but in a decentralized system where perfect money (whatever that may be) can exist in a perfect banking system. One that does not need to violate privacy to ensure custodial trust anymore.

Centralized Clearing will be less needed like centralized execution was obviated before it by things like Globex.  Electronic trading platforms removed the need for Central Limit Order Books (CLOBberred Clients) in commodities. CLOBs were comprised of resting orders entrusted by clients and handled by their bankers who traded both principle and agency. This was how the Gold , Silver and LiBor Fixes were run, and we now know how that worked out.

Specifically, a decentralized crypto-exchange that operates network across the borders of nation states on combination with decentralized bank with FDIC approval? Globalism without centralization, organically better for all and a remover of walls for the flow of free capital would be possible. Enter Arisebank in partnership with Bitshares..

– Vince Lanci

contact Vince at vlanci@echobay.com

Cryptocurrency Bank AriseBank To Acquire FDIC-Insured Bank; Partners With BitShares.

Written by Michael Taggart at Huffington post

 

Arise Bank offers a myriad of services to consumers looking for a banking alternative. 

 

Dallas, TX —- AriseBank announced that they have reached an agreement with an FDIC insured bank, that has been operating in the United States for over a century, that they will acquire them before the end of the year. This comes on the heels of their record ICO launch, where AriseBank plans to raise one billion dollars, which would end up being a record in the ICO investment space. 

“We are very excited to be at the forefront of history today. We feel like this was going to happen eventually and wanted to get the process started for the industry as a whole. There are certain people who may disagree with this move but, it has to happen eventually. The bank we are acquiring has hundreds of banking partnerships across the world and many certifications and licenses that make sense when it comes to interacting with our decentralized cryptocurrency platform”, said Jared Rice Sr., a co-founder and current CEO of AriseBank. 

 

Arise Bank is the worlds first decentralized bank.

 

With this acquisition, AriseBank, the world’s first decentralized cryptocurrency bank, now has the full financial capabilities of traditional banking coupled with the power and platform of real-time crypto-banking including a global network of ATM’s, debit cards and an AI trading platform. 

“The world’s first federally compliant, decentralized bank invites visionary strategic partners from all countries”, said Eddy Taylor a BitShares partner and a current advisor to AriseBank. “Arise features will include quantum computer-safe operating systems, multi-crypto debit cards, cell to satellite global outreach and much more”, he said. 

Also included in the acquisition is a 25-year old investment bank that Arise plans on converting to a crypto-investment house for consumers around the world. “We plan on growing investor confidence outside of our decentralized platform, which will enable many other outside services in areas like real estate, among many others on a global scale. 

 

Bitshares DEX is the worlds first decentralized cryptocurrency exchange.

 

This acquisition is happening concurrently with the announcement of a strategic partnership with BitShares, the world’s busiest financial blockchain as seen on blocktivity.info. AriseBank, the first decentralized bank is teaming with BitShares, the first decentralized exchange to provide a comprehensive platform for real-time delivery of incorruptible financial products and services. 

BitShares (BTS), with a market cap of $680M, is also a smart coin factory with hundreds of innovative financial products and compliant ICO offerings. It currently holds the record for over one million blockchain transactions per day dwarfing the performance of Bitcoin and all other blockchain networks. BitShares has in turn, teamed with the United Precious Metals Association (UPMA) to bring real-time metal-backed digital currencies into the mainstream. 

 

Gold and Silver can be used as legal tender in many states in the US, and other countries around the world.

 

The combined strengths of a conventional bank + decentralized bank + decentralized exchange + smart coin factory + gold depository + enterprise integrator makes the first full service alternative financial system to offer honest money and a level the playing field for all mankind. 

For more information contact:

Eddy Taylor (310) 940-2404 or visit SovereignHero.com.

John 469-71-ARISE or visit AriseBank.com

via http://ift.tt/2yDYmcN Vince Lanci

Well, this should be sufficiently awkward.  Amid an ongoing feud with the “tainted (no, very dishonest?) FBI”…

Tainted (no, very dishonest?) FBI “agent’s role in Clinton probe under review.” Led Clinton Email probe. @foxandfriends Clinton money going to wife of another FBI agent in charge.

— Donald J. Trump (@realDonaldTrump) December 3, 2017

After years of Comey, with the phony and dishonest Clinton investigation (and more), running the FBI, its reputation is in Tatters – worst in History! But fear not, we will bring it back to greatness.

— Donald J. Trump (@realDonaldTrump) December 3, 2017

…President Trump is about to deliver remarks at the FBI National Academy’s graduation ceremony…what are the odds he get booed?

via http://ift.tt/2j7lQS6 Tyler Durden

Once again the stories of the death of Bitcoin appear to greatly exaggerated.

image courtesy of CoinTelegraph

Overnight Asian demand sent the cyrptocurrency to a new record high at $17,934 (Bitstamp).

Ethereum is off from its $750 highs, but rallying again today…

Today's preice action in ETH and BTC show the ususual trade-off…

And while buying every dip and HODLing makes everyone seem like a genius, DataTrek Research's Nicholas Colas has 5 Bitcoin Lessons For Every Investor

Whatever you think of bitcoin and crypto currencies, there is plenty to learn from their ascent, even if it is still a small part of the global financial system. Forget the noise of “Biggest bubble ever” – the market cap of the NASDAQ was $3.7 trillion in 1999 and fell 70% (a total of $2.6 trillion) by 2002. That puts the total of $500 billion in all crypto currencies outstanding into the correct context.

Still, even if you are in the “Bitcoin Bubble” camp, don’t let that blind you to the lessons of what has happened in the past few years. It is tempting – but wrong – to simply dismiss a 5-digit bitcoin price as the illogical mania of crowds.

Here is a list of 5 instructional points where bitcoin has a bigger story to tell.

#1 Decentralized technology – where no one is “in charge” – can both create and hold trust. Recall that bitcoin launched in January 2009, in the depths of the Financial Crisis. US stocks would not bottom until March of that year, and at the time no one knew how – or if – the global financial system would survive. That sounds like hyperbole now; it wasn’t then.

 

Combine that vacuum of faith with the growth of mobile technology and high speed Internet around the world, and bitcoin was at the right place at the right time. Early adopters were a mélange of libertarians and tech nerds, each of whom saw their own reflection in the bitcoin mirror.

 

Bitcoin’s rise from there is similar to any FANG-y stock story. Global adoption of new technologies led to Facebook’s dominance in social, Google’s in search, and Apple’s in hardware/software. What is different with bitcoin is that it has no CEO, no board, and no proprietary physical assets. But that has proven to be a feature, not a bug. No one “needs” to be in charge… And that’s new and notable.

 

#2 Get out of your head. One thing I have noticed about Bitcoin’s most vocal naysayers: they are almost all wealthy westerners. They cannot imagine why the world needs a crypto currency backed by nothing but computer code and the faith of the masses. For them, steeped in the status quo, it simply makes no sense.

 

Personal story here: my parents fled the Cuban Revolution in 1960 with $200 and a suitcase. They weren’t allowed to take anything else, or transfer funds overseas. They arrived in New York with no place to live and no work. My mom didn’t speak English.

 

Step outside the safe confines of western democracies, and my parents’ history is a relevant and cautionary tale. Similar stories happen every day, across multiple continents. Of course there is intrinsic value in a decentralized store of value that governments cannot control or confiscate. To think otherwise is myopic.

 

#3 Have a Little Faith. Bitcoin and other crypto currencies are notoriously volatile, but few investors/traders seem to care. There is even an self-identifying moniker in crypto circles – HODLers (Hold On For Dear Life) – that captures this sentiment. Don’t sell on any dip, and add to your position if you can.

 

This confidence comes from a deep-seated faith, and it is something that equity investors in particular can learn from. A wise reader once told me, “The lows for US stocks in 2009 weren’t caused by people giving up on stocks – they were caused by people giving up on America”.

 

You’d think that after +70 years of consistent long-term value creation, US equities wouldn’t have to prove time and again that they are money-making investments, and America is a safe country in which to invest. Bitcoin’s rise shows such faith is possible; equities – and the US – have the track record to merit the same level of confidence.

 

#4 You never know where you will find the next Big Idea. We started looking at bitcoin in 2013 after reading about it on Zerohedge. Learning more meant studying the structure and uses of the Dark Web, boning up on computer-driven cryptography, and plowing through fringy tech websites.

 

In contrast, no large investment bank bothered with bitcoin. Financial news sites gave it a passing look when drug dealing website Silk Road was a thing, and when Japanese exchange Mt. Gox imploded.

 

Basically, the entire world missed the story. Too weird, too sketchy, too geeky, too.. strange. And in that is an important lesson: you need to go off the standard intellectual grid to make outsized returns. Some will pan out, and others won’t. But without any exposure, your returns are guaranteed to be zero.

 

#5 Imagination. There is an old Hindu saying that goes something like this: “From a drop a water, you should be able to imagine ice, steam, glaciers, rain, oceans, and waterfalls”.

 

Think back to when Amazon just sold books – their “Drop of water”. A few farsighted individuals could imagine everything that would come next. But not many. And certainly none of their competition had an inkling until it was too late.

 

Regardless of where crypto currency prices go, remember the water drop. The use cases so far have varied, from the illegal to the sketchy to the current popular trading craze.

 

All this is as powerful a cautionary tale as I can imagine. It echoes through the expansive challenge of equity investing even more than the narrow confines of crypto currencies. Technology writ large is a largely ungoverned force for societal change. It can engender high levels of trust very quickly, in the right framework.

 

What comes next for crypto currencies, we have no idea. But we know a drop of water when we see it.

We’ll close out with a quote from Bruce Lee, who in an alternative universe would have made a great investor: “You must be shapeless, formless, like water. When you pour water in a cup, it becomes the cup. When you pour water in a bottle, it becomes the bottle… Water can drip, and it can crash. Become like water, my friend.”

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

Earlier this week, Seoul asked the US to delay joint military exercises with Japan until after the Winter Olympics, ostensibly to avoid provoking North Korea ahead of the 2018 Winter Games. The timing of the request is suspicious – having coincided with Secretary of State Rex Tillerson’s announcement that the US has offered to begin talks with the North “without preconditions." While State Department spokesperson Heather Nauert walked back Tillerson’s statement the next day, insisting the North cease its weapons tests before talks can proceed, it is possible such a delay – if undertaken – could be construed as an opening gambit.

US drills in the region have stopped, though it’s unclear whether the US will abide by South Korea’s request. However, the brief lull in the area was interrupted Thursday when local media reported that China has decided to hold military drills of its own.

According to the South China Morning Post, China is now conducting a live-fire exercise off the North Korean peninsula, and is expected to last for four days. In addition to citing security concerns, Beijing also criticized the US for pushing the region toward nuclear war.

The drill in the Bohai Sea started on Thursday afternoon and will last until 4 pm local time next Monday, according to a notice issued by the Liaoning Maritime Safety Administration.

 

Beijing cordoned off an area of some 276 square kilometers near Lushun in Liaoning province, an important naval base for the People’s Liberation Army’s North Sea Fleet, which is responsible for defending the Bohai and Yellow Seas off the Korean peninsula.

The scale of the drills as well as the exact number of ships participating remained unclear. China’s drills capped off two weeks of heavy military activity in the area. Last week, more than 40 warships from the Chinese Navy took part in a major exercise in the East China Sea, just days after the country’s Air Force had carried out similar high-level drills. Then the US and its allies held their drills earlier this week.

Meanwhile, Pyongyang said Thursday that a Trump administration plan to impose a naval blockade on North Korea, if implemented, would be “extremely dangerous” and “big step” toward nuclear war.

Moscow and Beijing have repeatedly advocated a “double freeze”solution to the current verbal standoff between the US and North Korea. As part of the Russia-China plan, the North would halt missile and nuclear programs in exchange for Washington dialing down its military drills in the region. Earlier this month, Moscow said it was ready to help facilitate talks between Washington and Pyongyang, with Foreign Minister Sergey Lavrov stating that “North Korea wants to talk to the US about its own security assurances."

The PLA Navy’s guided-missile destroyers have carried out a series of live-fire drills in the Yellow Sea while the Air Force has stepped up its patrol and surveillance over the region.

Separately, on Monday, China and Russia started a simulated anti-missile exercise in Beijing. China’s defense ministry on Monday said the drills helped foster cooperation against threats from ballistic and cruise missiles in the region – ironically, the US and South Korea use similar excuses to justify their drills.

via http://ift.tt/2AOctC6 Tyler Durden

“Recovery” is a funny word that seems to mean very different things to different people…

Industrial Production rose just 0.2% in November (below the 0.3% rise expected) but October was revised higher from 0.9% to 1.2% amid storm reconstruction.

 

And so while The Dow Jones Industrial Average has ‘recovered’ its way to new record highs way beyond Dec 2014 levels, actual Industrial Production continues to lag…

via http://ift.tt/2Bsb8jW Tyler Durden

Authored by Nick Cunningham via OilPrice.com,

For the second month in a row, the IEA has poured cold water onto the oil market, publishing an analysis that suggests 2018 could hold some bearish surprises for crude.

The IEA’s December Oil Market Report dramatically revises up the expected growth of U.S. shale, which goes a long way to torpedoing the excitement around the OPEC extension.

Late last month, when OPEC agreed to extend its production cuts through the end of 2018, the U.S. EIA came out with data – on the same day as the OPEC announcement – that showed an explosive increase in shale output for the month of September, up 290,000 bpd from the month before.

Although there is a time lag on publishing production data, the huge jump in output in September, plus the spike in rig count activity over the past few weeks, points to strength in the U.S. shale sector. Against that backdrop, the IEA predicted that non-OPEC supply would grow by 1.6 million barrels per day (mb/d) in 2018, a rather significant upward revision of 0.2 mb/d compared to last month’s report.

Adding insult to injury for OPEC, the IEA sees oil demand growing by just 1.3 mb/d. In other words, supply will grow at a faster pace than demand next year, opening up a global surplus once again. “So, on our current outlook 2018 may not necessarily be a happy New Year for those who would like to see a tighter market,” the IEA said. The surplus will be front-loaded – the first half of the year will see a glut of about 200,000 bpd.

(Click to enlarge)

“A lot could change in the next few months but it looks as if the producers’ hopes for a happy New Year with de-stocking continuing into 2018 at the same 500 kb/d pace we have seen in 2017 may not be fulfilled,” the agency wrote. In the past few months, a sense of bullishness and optimism returned to the oil market for the first time in years, but the IEA warned that it won’t last.

The news wasn’t all bad for oil bulls. OPEC production fell by 130,000 bpd in November, due to lower output in Saudi Arabia, a rather large decline in Angola, and the continued erosion of output from Venezuela. It is the fourth consecutive month of falling output from OPEC, and the compliance rate for the cartel jumped to 115 percent in November, the highest rate so far this year. That bodes well for the extension of the deal – OPEC and its partners seem resolved to keep compliance high heading into 2018.

Inventories also continue to decline. The IEA said that OECD commercial stocks fell by 40.3 million barrels in October to 2,940 mb, the lowest level since July 2015. That decline was almost twice as large as usual for this time of year. And for crude inventories specifically, they fell counter-seasonally by 19.7 mb, including the first decline in China this year.

But even there, the IEA was quick to point out reasons to be bearish, noting that the inventory drawdowns will soon end. “Going into 1Q18, our balances imply that global oil stocks will increase by 300 kb/d, assuming stable OPEC crude production of 32.5 mb/d,” the IEA said in its report.

Those increases in inventories in 2018 largely come down to U.S. shale, which continues to grow at an impressive rate. Rystad Energy says that almost 1,000 horizontal wells were completed in October, the highest total since March 2015. That should ensure a rush of fresh supply will be added onto the market by the end of this year and into 2018.

Overall, the downbeat conclusions from the IEA report were largely backed up by OPEC itself a day earlier. The cartel published data that also anticipated large increases in U.S. shale output, including an upward revision for 2017 output by 150,000 bpd – an acknowledgement that shale drillers are adding supply at a faster rate than expected. More ominously, OPEC predicts that the U.S. will add more than 1 mb/d of new supply in 2018 – a truly staggering figure.

Putting it all together, OPEC is essentially keeping 1.2 mb/d off of the market in 2018 so that the U.S. can add 1 mb/d. It’s a quite a gamble; a bet that by doing so, the group can prevent oil prices from falling. But the payoff is debatable. OPEC is selling less oil and allowing the U.S. to sell more.

The bet is that next year inventories will fall and oil prices will gradually rise, but the IEA’s report predicts that such a scenario may not play out.

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

The Senate Homeland Security and Governmental Affairs Committee has discovered that edits made to former FBI Director James Comey’s statement exonerating Hillary Clinton for transmitting classified info over an unsecured, private email server went far beyond what was previously known, as detailed in a Thursday letter from committee chairman Sen. Ron Johnson (R-WI) to FBI Director Christopher Wray. 

James Comey, Andrew McCabe, Peter Strzok

The letter reveals specific edits made by senior FBI agents when Deputy Director Andrew McCabe exchanged drafts of Comey’s statement with senior FBI officials, including Peter Strzok, Strzok’s direct supervisor, E.W. “Bill” Priestap, Jonathan Moffa, and an unnamed employee from the Office of General Counsel (identified by Newsweek as DOJ Deputy General Counsel Trisha Anderson) – in what was a coordinated conspiracy among top FBI brass to decriminalize Clinton’s conduct by changing legal terms and phrases, omitting key information, and minimizing the role of the Intelligence Community in the email investigation. Doing so virtually assured that then-candidate Hillary Clinton would not be prosecuted.

Heather Samuelson and Heather Mills

Also mentioned in the letter are the immunity agreements granted by the FBI in June 2016 to top Obama advisor Cheryl Mills and aide Heather Samuelson – who helped decide which Clinton emails were destroyed before turning over the remaining 30,000 records to the State Department. Of note, the FBI agreed to destroy evidence on devices owned by Mills and Samuelson which were turned over in the investigation. 

Sen. Johnson’s letter reads: 

According to documents produced by the FBI, FBI employees exchanged proposed edits to the draft statement. On May 6, Deputy Director McCabe forwarded the draft statement to other senior FBI employees, including Peter Strzok, E.W. Priestap, Jonathan Moffa, and an employee on the Office of General Counsel whose name has been redacted. While the precise dates of the edits and identities of the editors are not apparent from the documents, the edits appear to change the tone and substance of Director Comey’s statement in at least three respects. 

It was already known that Strzok – who was demoted to the FBI’s HR department after anti-Trump text messages to his mistress were uncovered by an internal FBI watchdog – was responsible for downgrading the language regarding Clinton’s conduct from the criminal charge of “gross negligence” to “extremely careless.”

“Gross negligence” is a legal term of art in criminal law often associated with recklessness. According to Black’s Law Dictionary, gross negligence is “A severe degree of negligence taken as reckless disregard,” and “Blatant indifference to one’s legal duty, other’s safety, or their rights.” “Extremely careless,” on the other hand, is not a legal term of art.

According to an Attorney briefed on the matter, “extremely careless” is in fact a defense to “gross negligence”: “What my client did was ‘careless’, maybe even ‘extremely careless,’ but it was not ‘gross negligence’ your honor.” The FBI would have no option but to recommend prosecution if the phrase “gross negligence” had been left in.

18 U.S. Code § 793 “Gathering, transmitting or losing defense information” specifically uses the phrase “gross negligence.” Had Comey used the phrase, he would have essentially declared that Hillary had broken the law. 

Also removed from Comey’s statement were all references to the Intelligence Community’s involvement in investigating Clinton’s private email server.

Director Comey’s original statement acknowledged the FBI had worked with its partners in the Intelligence Community to assess potential damage from Secretary Clinton’s use of a private email server. The original statement read: 

[W]e have done extensive work with the assistance of our colleagues elsewhere in the Intelligence Community to understand what indications there might be of compromise by hostile actors in connection with the private email operation. 

The edited version removed the references to the intelligence community: 

[W]e have done extensive work [removed] to understand what indications there might be of compromise by hostile actors in connection with the personal e-mail operation.

Furthermore, the FBI edited Comey’s statement to downgrade the probability that Clinton’s server was hacked by hostile actors, changing their language from “reasonably likely” to “possible” – an edit which eliminated yet another justification for the phrase “Gross negligence.” To put it another way, “reasonably likely” means the probability of a hack due to Clinton’s negligence is above 50 percent, whereas the hack simply being “possible” is any probability above zero. 

It’s also possible that the FBI, which was not allowed to inspect the DNC servers, was uncomfortable standing behind the conclusion of Russian hacking reached by cybersecurity firm CrowdStrike. 

The original draft read: 

Given the combination of factors, we assess it is reasonably likely that hostile actors gained access to Secretary Clinton’s private email account.” 

The edited version from Director Comey’s July 5 statement read: 

Given that combination of factors, we assess it is possible that hostile actors gained access to Secretary Clinton’s personal e-mail account.

Johnson’s letter also questions an “insurance policy” referenced in a text message sent by demoted FBI investigator Peter Strzok to his mistress, FBI attorney Lisa Page, which read “I want to believe the path you threw out to consideration in Andy’s office — that there’s no way he gets elected — but I’m afraid we can’t take that risk.” It’s like an insurance policy in the unlikely event you die before you’re 40….”

One wonders if the “insurance policy” Strzok sent to Page on August 15, 2016 was in reference to the original counterintelligence operation launched against Trump of which Strzok became the lead investigator in “late July” 2016? Of note, Strzok reported directly to Bill Priestap – the director of Counterintelligence, who told James Comey not to inform congress that the FBI had launched a counterintelligence operation against then-candidate Trump, per Comey’s March 20th testimony to the House Intelligence Committee. (h/t @TheLastRefuge2) 

Transcript, James Comey Testimony to House Intel Committee, March 20, 2016

The letter from the Senate Committee concludes; “the edits to Director Comey’s public statement, made months prior to the conclusion of the FBI’s investigation of Secretary Clinton’s conduct, had a significant impact on the FBI’s public evaluation of the implications of her actions. This effort, seen in the light of the personal animus toward then-candidate Trump by senior FBI agents leading the Clinton investigation and their apparent desire to create an “insurance policy” against Mr. Trump’s election, raise profound questions about the FBI’s role and possible interference in the 2016y presidential election and the role of the same agents in Special Counsel Mueller’s investigation of President Trump.” 

Johnson then asks the FBI to answer six questions: 

1. Please provide the names of the Department of Justice (DOJ) employees who comprised the “mid-year review team” during the FBI’s investigation of Secretary Clinton’s use of a private email server.
2. Please identify all FBI, DOJ, or other federal employees who edited or reviewed Director Comey’s July 5, 2016 statement. Please identify which individual made the marked changes in the documents produced to the Committee.
3. Please identify which FBI employee repeatedly changed the language in the final draft statement that described Secretary Clinton’s behavior as “grossly negligent” to “extremely careless.” What evidence supported these changes?
4. Please identify which FBI employee edited the draft statement to remove the reference to the Intelligence Community. On what basis was this change made?
5. Please identify which FBI employee edited the draft statement to downgrade the FBI’s assessment that it was “reasonably likely” that hostile actors had gained access to Secretary Clinton’s private email account to merely that than [sic] intrusion was “possible.” What evidence supported these changes?
6. Please provide unredacted copies of the drafts of Director Comey’s statement, including comment bubbles, and explain the basis for the redactions produced to date. 

We are increasingly faced with the fact that the FBI’s top ranks have been filled with political ideologues who helped Hillary Clinton while pursuing the Russian influence narrative against Trump (perhaps as the “insurance” Strzok spoke of). Meanwhile, “hands off” recused Attorney General Jeff Sessions and assistant Attorney General Rod Rosenstein don’t seem very excited to explore the issues with a second Special Counsel. As such, we are now almost entirely reliant on the various Committees of congress to pursue justice in this matter. Perhaps when their investigations have concluded, President Trump will feel he has the political and legal ammunition to truly clean house at the nation’s swampiest agencies.

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For the second straight month, Empire Fed Manufacturing survey disappointed expectations in December, tumbling to its lowest since July.

 

Under the hood are glimpses of stagflation as new orders slide but prices paid rise…

and employment and workweek number stagnate (if not contract)…

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