Class 8 heavy duty truck orders were down for the eighth month in a row, falling a stunning 70% in June to 13,000 units, according to FTR data. The figure was up 20% sequentially, but still follows a 71% decimation in May. Jefferies’ Stephen Volkmann wrote in a note that the figures indicate a SAAR of ~178,000 Class 8 trucks and noted that the sequential growth compares to a sequential drop of 27% in May, when SAAR estimates were 139,000 units.
Kenny Vieth, ACT’s President and Senior Analyst said: “Fraying freight market and rate conditions along with a still-large Class 8 order backlog contributed to the worst NA Class 8 net order performance since July of 2016. May saw NA Class 8 orders fall below the 15,900 units averaged through the year’s first trimester, and year-to-date Class 8 net orders have contracted 64% compared to the first five months of 2018.”
The industry has been dealing with bloated backlogs as a result of aggressive ordering in 2018, coupled with headwinds from the ongoing trade war and the onset of a recession.
The good – and bad – news is that the backlog is starting to decline, and is expected to continue eroding until late summer. However, there is still downside risk for the industry in 2020 as a result of a slowing manufacturing, coupled with recessionary caveats.
On the medium duty market, Vieth commented: “While the US manufacturing/freight economy has been droopy since late 2018, the medium-duty market continues to benefit from the underlying strength in the consumer economy. In May, NA Classes 5-7 net orders were 19,300 units, down 21% year-over-year and 19% from April. One has to look back 22 months to find a weaker medium-duty order month on an actual basis or just 2 months when looking at the data on a seasonally adjusted basis.”
And according to a note by JP Morgan, forward looking indicators are still mixed:
According to our analysis, the New Orders component of the ISM Manufacturing Index tends to be the best leading indicator of future freight trends and truck demand. Specifically, the year-over-year change in New Orders has historically led the year-over-year change in the Cass Freight Index (our preferred broad-based indicator of freight trends) by 6-9 months. The ISM New Orders index was 50.0 in June, down 20.6% YoY. The Cass Freight Index was down 6.0% YoY in May (the latest month available). We note though that the Cass Freight Index includes rail freight and may be less of an indicator of overall freight, so we also look at the ATA Total Loads SA Index, which increased 0.8% YoY to 108.6 in May (vs. up 4.4% YoY in April). Additionally, the Cass Truckload Linehaul Index (which measures the changes in linehaul rates) was up 1.2% YoY in May.
Last month, order data from ACT Research showed that the industry booked just 10,800 units in May, down 27% sequentially, but also lower by a staggering 70% year-over-year. YTD orders are down 64% compared to the first five months of 2018.
via ZeroHedge News https://ift.tt/2JunHgI Tyler Durden
Last week saw Japan’s Mitsui and Japan Oil, Gas and Metals National Corporation agree to buy a 10% stake in Novatek’s Arctic LNG (liquefied natural gas) 2 project for an officially undisclosed price, although Russia’s President Vladimir Putin independently stated that the investment would be around US$3 billion. The fact that Putin himself commented on the deal underlines how important the exploration and development of the Arctic region is for the Russian state as a source of potentially vast new oil and gas resources and the accretion of further geopolitical influence, akin to the game-changing shale industry for the U.S..
Russia’s current development of the Arctic region is centred around the Yamal Peninsula and led principally Novatek but further developments are in the offing from Gazprom and Gazprom Neft, even in the face of current and future U.S. sanctions.
Novatek’s main Arctic project, the Yamal LNG (unofficially referred to as ‘Arctic 1’) last week announced that it produced 9.0 million tons of LNG and 0.6 million tons of stable gas condensate in the first half of this year, with all three LNG trains running above the 5.5 million tons per annum (mtpa) nameplate capacity over that period. This resulted in 126 LNG tanker shipments being dispatched in the six month period via trans-shipment from the ice-class LNG carriers to conventional vessels in Norway and delivered onto the global markets, mostly to Russia’s key target markets in Asia. Overall, the Yamal LNG project consists of a 17.4 mtpa natural gas liquefaction plant comprised of three LNG trains of 5.5 mtpa each and one LNG train of 900 thousand tons per annum, utilising the hydrocarbon resources of the South-Tambeyskoye field in the Russian Arctic.
“Novatek is the exception in terms of global LNG companies in that it has always been very accurate in terms of delivering its projects on time and on budget, as it is a very Western-style operation run by a very capable CEO, Leonid Mikhleson,” Andrey Polischuk, senior oil and gas analyst from Raiffeisenbank, in Moscow, told OilPrice.com last week.
“Additionally supportive of success for further developments is that the Arctic is an absolute priority for the government, aimed at bringing Russia’s LNG standing in the world market into line with its status as a global gas superpower, as its LNG capability has always been way behind what its gas production power would warrant,” he said.
In this context, U.S. sanctions imposed after Russia took over Crimea in 2014 only made Putin more determined that the Arctic LNG program would not fail. Moscow not only initially bankrolled Yamal LNG from the beginning with money directly from the state budget but also later in 2014 supported it again by selling bonds in Yamal LNG (the program began on 24 November 2015, with a RUB75 billion 15-year issue). It further provided RUB150 billion of additional backstop funding from the National Welfare Fund. After that, and months of wrangling, April 2016 saw two Chinese state banks agree to provide US$12 billion to the Yamal LNG project in euros and roubles. The project was helped by a tumble in the rouble in late 2014 that effectively cut the cost of Russia-sourced equipment and labour at a key moment in the construction.
Having insulated itself from U.S. financial sanctions, Novatek is busy doing the same for its technology requirements. Novatek has already indigenised as much of the technology and machinery involved with the Yamal LNG project as it can and last year received a federal patent for its ‘Arctic Cascade’ natural gas liquefaction technology. This is based on a two-stage liquefaction process that capitalises on the colder ambient temperature in the Arctic climate to maximise energy efficiency during the liquefaction process and is the first patented liquefaction technology using equipment produced only by Russian manufacturers. The overall goal of Novatek, as the company itself has stated more than once, is to localise the fabrication and construction of LNG trains and modules to decrease the overall cost of liquefaction and develop a technological base within Russia, so that the Arctic LNG operations are not subject to the whims of other countries and future sanctions.
Given this backdrop, Novatek’s second Yamal LNG project – officially ‘Arctic LNG 2’ – aims for three LNG trains of 6.6 mtpa each, based around the oil and gas resources of the Utrenneye field, which has at least 1,138 billion cubic metres of natural gas and 57 million tons of liquids in reserves. Novatek plans to commission the first train in 2023, the second train in 2024, and the third train in 2025, before reaching full capacity in 2026. To this end, it has already secured three other partners in the venture, aside from the Japanese. Two are from the key target market of China itself– the China National Petroleum Corporation subsidiary China National Oil and Gas Exploration and Development, and China National Offshore Oil Corporation, with a joint 10% stake – and France’s supermajor, Total, also with 10%. Novatek has said that it plans to keep 60% for itself, with the remaining 10% likely to go shortly to Saudi Aramco, OilPrice.com understands form various Russia analysts. Novatek will make the final investment decision on the project in the third quarter of this year.
In the same vein, Russian gas giant, Gazprom, recently announced the full scale development of the giant Kharasavey gas field in the Bovanenkovo production zone on the northern Yamal peninsula. This is part of the company’s continuing shift in its production base northward, in line with Russia’s other major tangential strategy of building out the gas capacity of Yamal to compensate for reserves depletion in West Siberia. Kharasavey is estimated to hold 2 trillion cubic metres of gas and is set to produce first gas in 2023 with plateau output of 32 billion cubic metres per year. Given the outlook for gas demand in the key markets of Europe and Asia, and the geopolitical ramifications of being the major gas supplier to these regions, Gazprom’s oil producing subsidiary, Gazprom Neft, is also looking at producing its own LNG from its Arctic operations.
Monetising its gas resources in the Arctic would be a relatively straightforward task for Gazprom Neft, allowing the company to recoup more of the RUB400 billion (US$6.4 billion) that it plans to spend on developing its Novoportovskoye field (estimated to have recoverable reserves of more than 320 bcm of gas) over the next five years earlier than would otherwise be the case. Part of this development cost is planned to go on the construction of a key gas pipeline to run from Novy Port across the Gulf of Ob to Yamburg, which will carry at least 10 billion cubic metres of gas per year from the Novoportovskoye oil and gas field into Gazprom’s main gas delivery system.
This infrastructure is also likely to be utilised by the third of Novatek’s own Arctic projects – Ob LNG – which commenced development in June. Based on the resources of the Verkhnetiuteyskoye and Zapadno-Seyakhinskoye fields, located in the central part of the Yamal Peninsula, the two fields hold a total of 157 billion cubic metres of natural gas and the projected new plant will produce up to 4.8 mtpa of LNG. The main plant, built exclusively with Russian-made technology in Sabetta, will cost US$5 billion and is set to come into operation in 2023. That a key point in adding such production from this the Arctic region is to dominate the Asian markets, particularly that of China, was tacitly acknowledged by Novatek’s Mikhelson recently when he stated that he expected at least 80% of Novatek’s future LNG production to go to the Asian market. This was further highlighted by the fact that Novatek is moving forward with the trans-shipment LNG facility on the Russian Far East coast in Kamchatka, Anna Belova, senior Russia and FSU oil and gas analyst for GlobalData, in New York, told OilPrice.com.
Even more tellingly, perhaps, Mikhelson added that future sales to China denominated in renminbi is under consideration. This is in line with his recent comment that U.S. sanctions accelerate the process of Russia trying to switch away from U.S. dollar-centric oil and gas trading and the damage from potential sanctions that go with it. “This has been discussed for a while with Russia’s largest trading partners such as India and China, and even Arab countries are starting to think about it… If they do create difficulties for our Russian banks the all we have to do is replace dollars,” he said. “The trade war between the U.S. and China will only accelerate the process,” he added.
Such a strategy was tested in 2014 when Gazprom Neft tried trading cargoes of crude oil in Chinese yuan and rubles with China and Europe.
“This idea of an alternate principal trading currency for oil and gas, away from the U.S. dollar was also discussed for the BRIC [Brazil, Russia, India, and China] countries, and was work-shopped again recently by Iran, Iraq, Russia, and China, and China’s launch of the yuan-denominated Shanghai International Exchange can be seen as a move in this direction,” Mehrdad Emadi, head of risk analysis and energy derivatives markets consultancy, Betamatrix, in London, told OilPrice.com.
“The more the U.S. uses the US dollar sanction against major suppliers in the oil market, like Iran, Venezuela, and Russia, and major buyers, like China, then the more momentum will build to replace the oil market with a new currency benchmark,” he concluded.
via ZeroHedge News https://ift.tt/2XDRf0e Tyler Durden
Rep. Alexandria Ocasio-Cortez (D-NY) issued a sharp rebuke to White House counselor Kellyanne Conway, who described the ongoing spat between the Democratic Socialist and House Speaker Nancy Pelosi (D-CA) as a “catfight.”
According to the New York Post, Conway called the dispute over border spending between Pelosi and four female freshman Democrats as a “major meow moment” and a “huge catfight.”
AOC was incensed, resorting to semantics in order to ‘womansplain’ the sexist history of the phrase.
“‘Catfight’ is the sexist term Republicans use when two adult women happen to disagree with each other,” tweeted AOC, adding “The reason they find it so novel &exciting is bc the GOP haven’t elected enough women themselves to see that it can, in fact, be a normal occurrence in a functioning democracy.”
“Catfight” is the sexist term Republicans use when two adult women happen to disagree with each other.
The reason they find it so novel &exciting is bc the GOP haven’t elected enough women themselves to see that it can, in fact, be a normal occurrence in a functioning democracy. https://t.co/s6eMMmvzrd
Looks like Sex and the City‘s Sarah Jessica Parker is a sexist Republican. Same with the Washington Times, The Telegraph, everyone involved in the production of the 2017 film Catfight – and anyone who watched it or thought about watching it.
via ZeroHedge News https://ift.tt/30r57wY Tyler Durden
While the topic of Joe Biden’s financial assets is hardly as controversial as that of Donald Trump, on Tuesday it was revealed that the Democratic presidential front-runner and his wife Jill earned more than $15 million during the past two years – when they left the White House, – with the bulk of their income coming from payments for the memoirs they’ve each written since the former vice president left office in January 2017. The couple’s total income in 2017 was $11 million and nearly $4.6 million in 2018, according to filed tax returns.
Biden’s campaign said that the vast majority of that income ($10,048,739 in 2017 and $3,236,764 in 2018) was derived from payments for the writing of two books: Joe’s “Promise Me, Dad” and Jill’s “Where the Light Enters,” as well as paid speaking engagements. Biden’s first book, an account of his son Beau’s death from cancer, topped bestseller lists in 2017.
Additionally, Joe Biden’s income in both years included about $400,000 from the University of Pennsylvania for his role as Benjamin Franklin Presidential Practice Professor, while Jill Biden took in a far lower $90,000 each year for her professorship at Northern Virginia Community College.
Biden’s financial disclosure also lists 47 speaking appearances; 30 were for his 2017 book “Promise Me, Dad.“
The couple’s earnings from the books and speaking engagements were paid through so-called S-Corporations, which the campaign described as “a common method for taxpayers who have outside sources of income to consolidate their earnings and expenses.” The campaign also said Joe and Jill Biden employed staff and engaged contractors to support their work through their S-Corporations, known as “CelticCapri” and “Giacoppa”, according to Fox News.
Biden, who was never one of the wealthier members of Congress during his decades as a senator, has seen his fortunes turn considerably since the end of Obama administration. During a four-decade political career, Biden brought home little more than his government salary.
Yet despite the turn in his fortune and his generous income in the past two years, the couple’s assets are materially smaller, and excluding retirement plans, the Bidens hold between $500,000 and $1.2 million in cash and have S-corpoprations with between $1 million and $5 million, and $500,000 and $1 million.
The leading Democrat in the 2020 presidential race, who has now made public the last 21 years of tax returns, has moved into a $5 million mansion outside Washington since he left the White House.
“Middle-Class Joe” more recently has resided in a 12,000-square-foot home in McLean, Va., that came complete with “five bedrooms and 10 bathrooms, marble fireplaces, a gym and a sauna,” The Washington Post reported last month. The home was rented from multi-millionaire Mark Ein.
via ZeroHedge News https://ift.tt/30sqVrI Tyler Durden
The pullback suggests that the UAE is preparing for the possibility of a US military confrontation with Iran in which the UAE and Saudi Arabia could emerge as prime battlegrounds.
Image: Christopher Pike for the Crown Prince Court-Abu Dhabi
It also reflects long-standing subtle differences in the approaches of Saudi Arabia and the UAE towards Yemen. It further highlights the UAE’s long-standing concern for its international standing amid mounting criticism of the civilian toll of the war as well as a recognition that the Trump administration’s unquestioning support may not be enough to shield its allies from significant reputational damage.
The withdrawal constitutes a fine-tuning rather than a reversal of the UAE’s determination to contain Iran and thwart political Islam witness the Emirates’ involvement in the Libyan civil war and support for renegade field marshal Khalifa Belqasim Haftar as well as its support for the embattled Sudanese military and autocrats like Egyptian general-turned-president Abdel Fattah al-Sisi.
While the UAE may have withdrawn the bulk of its troops from key regions of Yemen, it leaves behind Emirati-trained local forces that will continue to do its bidding. The withdrawal, moreover, is not 100 percent with the UAE maintaining its Al-Mukalla base for counterterrorism operations.
As part of its regional and international projection, the UAE is keen to maintain its status as a model for Arab youth and preferred country of residence. The UAE’s image contrasts starkly with that of Saudi Arabia, the custodian of Mecca and Medina, Islam’s two holiest cities.
Wittingly or unwittingly, the withdrawal leaves Saudi Arabia and Prince Mohammed, the instigator of the more than four-year long war that has sparked one of the world’s worst humanitarian crises, exposed.
Nonetheless, despite differing objectives in Yemen, the UAE too suffered from the reputational fallout of bombings of civilian targets that were largely carried out by the Saudi rather than the Emirati air force.
Operating primarily in the north, Saudi Arabia focused on countering Iranian-backed Houthi rebels whose stronghold borders on the kingdom while the UAE backed South Yemeni separatists and targeted Muslim-Brotherhood related groups.
With the withdrawal, the UAE may allow differences with Saudi Arabia to become more visible but will not put its alliance with the kingdom at risk.
Similarly, differences in the two countries’ concept of Islam failed to rock their alliance despite the effective excommunication in 2016 of Saudi-backed ultra-conservatism at a UAE-sponsored conference in the Chechen capital of Grozny.
The alliance is key to the two countries’ counterrevolution aimed at maintaining the region’s autocratic status quo in the face of almost a decade of popular revolts, public protests and civil wars.
The UAE-Saudi-led counterrevolution is driven by Prince Mohammed and his UAE counterpart, crown prince Mohammed bin Zayed’s desire to shape the Middle East in their mold.
Four years later Saudi Arabia, is unlikely to radically shift gears but could prove less intransigent towards the group than the UAE.
While preparing for possible conflict with Iran may be the main driver for the withdrawal, it is unlikely to protect the UAE from damage to its reputation as a result of its involvement in Libya and Sudan as well as its draconian clampdown on dissent at home.
The UAE’s withdrawal from Yemen will likely help it evade calls for Yemen-related arms embargoes. Libya, however, could prove to be the UAE’s Achilles heel.
Said Robert Menendez, the top Democrat on the Senate Foreign Relations Committee, in a letter to US Secretary of State Mike Pompeo: “You are surely aware that if these allegations prove true you may be obligated by law to terminate all arms sales to the UAE.”
via ZeroHedge News https://ift.tt/2NH52na Tyler Durden
A popular southern country-rock banned named Confederate Railroad has been kicked off the roster at the Du Quoin State Fair in Illinois due to “racial sensitivity concerns” over their name, according to The Mental Recession‘s Rusty Weiss.
“The Illinois Department of Agriculture has removed Confederate Railroad from our 2019 Du Quoin State Fair Grandstand lineup,” said State Fair Manager Josh Gross, adding “While every artist has a right to expression, we believe this decision is in the best interest of serving all the people in our state.”
Oak Ridge Boys singer Joe Bonsall tweeted “I have played the @DuQuoinFair many times over the decades … however, I must say that canceling @ConfederateRR JUST because their name is CONFEDERATE RAILROAD is a crock of crap!!!
I have played the @DuQuoinFair many times over the decades … however, I must say that canceling @ConfederateRR JUST because their name is CONFEDERATE RAILROAD is a crock of crap!!! These are good men singing good songs… God please help us all … pic.twitter.com/EG32tCPbMC
Confederate Railroad has seen over 20 of their singles enter the Billboard Hot Country Songscharts since becoming active in 1987.
Reports suggest the move was made due to an inquiry made by a local political blogger named Rich Miller who asked a ‘Question of the Day‘ for Capitol Fax on June 17th.
“A band named Confederate Railroad. In Illinois. The Land of Lincoln. Playing at a state-owned facility,” Miller said aghast. “I’ve never heard anyone claim that the group has Confederacy-loving song lyrics or anything … It’s just… well… Allow me to turn this one over to you…”
Miller also notes the band has a song called “I Hate Rap” (which clearly means they’re racist) and that the group’s latest album features Confederate flags on the cover. –The Mental Recession
According to Saving Country Music, however, “Confederate Railroad has no songs that could be considered or construed as racist.”
“Being disallowed to play a government-organized event and venue simply because of their name and after being approved opens up a slippery slope of concerns for the future of free speech in musical performance and beyond.”
Country music legend Charlie Daniels criticized the ban, tweeting “When a fair cancels the Confederate Railroad band because of their name its giving in to facism, plain and simple and our freedom disappears piece by piece.”
This political correctness thing is totally out of control
When a fair cancels the Confederate Railroad band because of their name its giving in to facism, plain and simple and our freedom disappears piece by piece.
Sick of it.
As the world edges closer to the next crisis, today the man who has become legendary for his predictions on QE and historic moves in currencies spoke with King World News about $18,160 gold and the wisdom of Jesse Livermore.
The Wisdom Of Jesse Livermore
Authored by Egon von Greyerz,
Lemmings have a herd mentality. But following the crowd, can have grave consequences like falling off a cliff and drowning in the ocean. Many investors have the same instinct. They follow the crowd and buy or sell when other people do. This probably won’t end in the same disaster as for the lemmings, but following the crowd virtually never leads to a successful long term investment performance.
The biggest investment profits are normally made by investing long term. But the key is to buy when an investment is undervalued and unloved. That reduces the risk substantially and thus the potential return.
Extremely important when investing is to be patient and wait for the right opportunity. As Jesse Livermore said:
“It was never my thinking that made the big money for me, it was my sitting.”
I have probably been following the gold market for longer than most people still being active today. When gold went from $35 in 1971, to $850 in 1980, I owned only a little physical gold. I also owned some Australian mining stocks since the bank where I worked in Geneva was advised at the time by Adolf Lundin. Adolf was a legendary Swedish resource investor who lived in Geneva. Sadly, he died too early in 2006, but his sons have continued to expand the Lundin Group to one of the most successful businesses in the resource sector in the world.
So back in 1969 I made my first investment in mining stocks based on Adolf Lundin’s recommendations. I remember Adolf phoning in the middle of the night in Europe from Australia with the latest hot tip. At the time there was a boom in mining stocks. The most infamous company was nickel miner called Poseidon which rose dramatically and later collapsed. Then, when Nixon closed the gold window in August 1971, a spectacular bull market in precious metals started and a bear market in paper money which lasted until January 1980…
I Believed The World Economy Would Have Very Serious Problems
After the 1980 peak, as gold and the gold mining stocks started falling, I was involved in corporate life and stopped following the resource sector. But then in the 1990s, I started analyzing global financial and economic risk and came to the conclusion that the world economy at some point would have very serious problems. At the time I considered that the two most likely areas that would cause this were derivatives and debt.
We Then Aggressively Moved Into Gold
I was looking at how best to protect against these risks and gold was the obvious solution. But gold at the time was totally out of fashion and central banks around the world had been reducing their holdings. From the January 1980 high of $850, gold crashed to just over $300 in 1982. Thereafter gold traded between $300 and $500. Central bank selling pushed gold down to a bottom in 1999 at $250. Finally, at the end of 2001 gold seemed to have stabilized around the $300 pivot point. We then decided that risk seemed right with gold totally unloved and undervalued. So we decided to make physical gold our primary investment in early 2002 when the price was around $300, or in pounds, £200 per ounce. At the time we were based in the UK.
So when we entered our physical gold investment in 2002, I had certainly been “sitting” for a very long time. Gold started the current bull market in 1971 at $35, made a temporary top in 1980 at $850 and then spent 20 years correcting. But the gold bull certainly hadn’t finished, central banks saw to that. They continued their irresponsible monetary policy, leading to a chronic credit expansion, debasement of currencies and thereby permanently underwriting the gold price.
Inflation-Adjusted Gold Price
Looking at gold on an inflation adjusted basis, 2000 was the lowest point since 1971 when the price was $35 per ounce (based on Shadow Government Statistics inflation calculation).
The gold chart below, adjusted for real inflation, shows this amazing insurance can be bought today at an all-time historical low. Gold priced currently at $1,400 is cheaper than in 2000 at $280, cheaper than in 1970 when gold was $35 or in 1780 when gold was traded in London at £4 per ounce.
Gold’s 1980 High Today Equals A Staggering $18,160 Inflation-Adjusted
What the above chart also shows is that the peak price for gold in 1980 at $850, today would be $18,160 adjusted for inflation. There is no reason why gold wouldn’t reach that level in the next few years, especially as the gold paper market implodes.
Since we bought gold in 2002 we have been “sitting.” We didn’t buy gold for speculation and we didn’t buy gold for participating in a price move. Instead, we bought gold for long term capital appreciation in real terms and most importantly for wealth preservation purposes against an extremely precarious world economy and financial system.
As Ralph Waldo Emerson said:
“the desire of gold is not for gold…
…it is for the means of freedom and benefit”
Once we owned the best insurance you can buy, our intention was to keep this cover indefinitely.
It is the best kept secret in the world that you can buy an investment with the following attributes:
The best insurance against financial and economic risk
The ultimate wealth preservation asset
Holds its value in real terms through the ages
Has a stable intrinsic value
Is totally liquid
Is a medium of exchange and the only money that has survived in history,
Has no liability or debt attached to it,
Has a high potential of substantial capital appreciation
It is the opportunity of a lifetime to acquire insurance that is also a superb investment, or an investment which is also the ultimate insurance, and all this at the lowest price ever in real terms.
We have been sitting with our gold position since 2002, and virtually all the investors we advise have also kept their gold since they acquired it. So when would we dispose of all or part of our gold and advise our investors to do the same? First, I doubt we would ever dispose of all our gold. Because gold is generational wealth and an asset that should always form the foundation of your wealth pyramid.
Today, most of the clients we advise hold at least 25% of their financial assets in gold. Some hold a much bigger percentage. It must of course be pointed out that our clients believe strongly that wealth preservation is extremely important at a time when risk is greater than ever in the global financial system. But even if we will always hold some gold, there will be a time when gold becomes over-loved and overvalued. I don’t expect this to happen for quite a few years, whether it is in 5 or 10 years or even longer. At that time we will analyze the state of the world economy and financial system and decide if we should reduce our gold holdings and what we should do with the proceeds.
If the financial system still has major unresolved problems like massive debts and derivatives, then it will still not be the place to put your money. Only when debt and derivatives have imploded and the system is restructured will it be safe to put your money or assets there. Until then, if you can swap your gold for real assets like land, income producing property or sound businesses at bargain prices, this would be a serious opportunity. History is full of examples of people who used their gold to pick up absolute bargains in periods of economic distress and hyperinflation.
When the time is right, investors with bigger gold holdings will be able to buy valuable assets with their gold for a fraction of what they cost before the crisis. Price reductions of 90-95% are not uncommon in these periods, especially if measured in gold grams or kilos. For people with smaller gold holdings, this will guarantee them the ability to continue to lead a decent life, as opposed to, for example, the Venezuelans who are now living in total misery.
But we must also remember that if you hold gold, it is extremely important to keep a low profile from a social and personal safety point of view. It will be essential not to flaunt your wealth like many people are doing today. You will also be able to help family and close friends. Remember that with bankrupt governments, there will be virtually no social security or pensions, so there will be many people who will need your assistance.
The inflation adjusted gold chart above is one method of illustrating the real value of gold. Another way is to adjust the gold price for the increase in US money supply. As the chart below shows, on that basis gold is as cheap today as it was in 2000 at $280 or in 1970 at $35. So whatever method we apply, it comes back to the fact that gold today is an absolute bargain.
We Devised The Best And Safest Way To Acquire And Store Gold
As I explained at the beginning of the article, we bought gold in 2002 for ourselves and the people we advised at the time. For that purpose, we devised the best and safest way to acquire and hold physical gold. A few years later, in 2005, we opened it up for outside investors.
Some of these investors bought early and some bought at higher prices as gold was rising quickly to the $1,920 top in 2011. The good thing is that it doesn’t matter at what level you bought your gold in the last 17 years since gold will go to multiples of the current price. As I have already stated, it will be the ultimate form of wealth preservation and a superb investment over the next 5-10 years.
So some of us took our positions in gold 17 years ago and many others later. But since we are all holding gold for wealth protection reasons, we will be “sitting” for many years to come without any concern about the value of our gold holding. We know with absolute certainty that governments will continue to oblige by destroying the economy, spending money their countries can’t afford to spend, increasing deficits and debts, and totally debasing currencies until they are worthless. For those reasons we are holding gold and sleeping well at night
For those who would like to read more of Egon von Greyerz’s fantastic articles CLICK HERE.
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In a report that is intended either as a warning to President Trump or as gloating over the state of the Iranian regime, Israeli TV station i24 reports that over the past week, a delegation from the US has been holding talks with a group of senior Iranian officials in Erbil, the de facto capital of Iraqi Kurdistan.
Iranian officials
The meetings are a sign of “nascent upheaval” in the Iranian government, the report said, as the country’s economic crisis worsens. Another sign is the arrest of 125 Iraqi government officials, many of which have been charged with espionage. Others have been removed from their posts, while some have simply disappeared.
As the Israelis tell it, Iran made the first overtures about holding talks with the US – though President Trump has repeatedly insisted that he’d be open to talking. Tehran reportedly contacted the Kurdish opposition parties based in Iraq, hence the location of the meeting. Unfortunately, an Iranian source said the talks proved ‘useless’. One State Department official effectively denied the report, saying rumors about a US-Iran meeting were “highly doubtful.”
However, the Israelis’ Iranian sources warned that the leadership is worried about a possible soft coup brewing in the IRGC.
Sources suggest that Iran’s Revolutionary Guards, especially its Basij forces – one of the five forces of the IRGC – have experienced division, suggesting Iran’s leadership is working to counter a budding soft coup.
The Iranian delegation was led by the grandson of Iran’s Ayatollah Khomeini, Hassan Khomeini. Two officials from the Islamic Revolutionary Guard Corps were also involved, as was Iraj Masjedi, Iran’s special envoy to Iraq. Publicly, Tehran has refused Trump’s overtures and insisted that it wouldn’t negotiate with the Trump administration.
Gen. Ali Nasiri, who has likely been detained, according to sources, while others were killed in assassination plots that include fatal medical injections and car “accidents”.
Over the past week, two tankers carrying Iranian crude have been seized, and – more ominously – Tehan breached limits on the enrichment threshold for its uranium, which it has also been stockpiling again. Now, Iran is threatening to enrich its uranium past 20%. The level as of early this week was 4.5%.
The US and Iran also haven’t quite resolved tensions that flared following a series of tanker attacks in the Persian Gulf and Strait of Hormuz, and the downing of an American spy drone.
Though, notably, Washington seems to have toned down its anti-Iranian rhetoric this week.
via ZeroHedge News https://ift.tt/2LcfGQM Tyler Durden
Economists who say that there is no such thing as a free lunch are forgetting the Supplemental Nutrition Assistance Program (SNAP) and the National School Lunch Program (NSLP).
SNAP, formerly called the food stamp program, is administered by the Food and Nutrition Service (FNS) of the U.S. Department of Agriculture (USDA), but is operated by the 50 states. Although it began as a temporary program in 1939, it was made a permanent one as part of Lyndon Johnson’s vision of a “Great Society.”
SNAP “offers nutrition assistance to millions of eligible, low-income individuals and families and provides economic benefits to communities” and is “the largest program in the domestic hunger safety net.” Benefits differ by state. There is no limit as to how long one can receive benefits as long as there are children in the household, subject to renewal every six months. According to the FNS, in fiscal year 2018, the average monthly benefit was $126.32 per person and $252.55 per household. In fiscal year 2018, the program cost American taxpayers $65.055 billion.
[ZH: Food Stamp participation is at 10 year lows]
Recipients of SNAP benefits receive a deposit on an electronic benefit transfer (EBT) card each month that can be used only for prepackaged food items. To receive benefits, a family’s gross monthly income must be at or below 130 percent of the federal poverty line. Net monthly income must generally be less than or equal to the poverty line. Government payments from other welfare programs are not counted when determining income. Able-bodied adults have minimal work requirements.
The NSLP is a federally assisted meal program that operates in more than 100,000 public and nonprofit private schools and residential child-care institutions. Although it began in 1946, it was expanded in 1966, also as part of Johnson’s Great Society. In fiscal year 2018, the program cost American taxpayers $13.8 billion.
The NSLP provides free or low-cost lunches to more than 31 million children each school day. It is administered on the federal level by the FNS of the USDA. On the state level, the NSLP is administered by state education agencies, which operate the program through agreements with school food authorities. Participating school districts receive cash subsidies and USDA Foods for each reimbursable meal they serve.
Children may be determined “categorically eligible” for free meals through participation in certain federal assistance programs, such as SNAP or Head Start. Children can also qualify for certain programs on the basis of household income and family size. The children in a family having an income at or below 130 percent of the poverty level are also eligible for free meals. An income between 130 percent and 185 percent of the poverty level means that schools may not charge students more than 40 cents for a reduced price lunch.
SNAP and the NSLP were recently reauthorized, with overwhelming Republican support, as part of the Agriculture Improvement Act of 2018 (H.R.2).
Conservatives have recently criticized both programs. But their critiques ring hollow. They are worth looking at, however, because they show that conservatives are utterly devoid of any firm philosophical base on which to ground their criticisms of these or any other government programs. Only libertarians are able to properly analyze these programs.
Conservatives want to eliminate the “broad-based categorical eligibility” that allows food stamp applicants to bypass asset tests. Bypassing asset tests means that a food stamp recipient may have millions of dollars in assets, but still receive benefits if his income is low enough. The USDA is considering a regulation that would eliminate the broad-based policy. At a recent hearing of the House Agriculture Committee’s nutrition, oversight, and department operations panel, the subcommittee’s ranking member, Rep. Dusty Johnson (R-S.D.) termed the loophole “egregious and unnecessary.” Johnson referenced a USDA report that estimated that “most food stamp income-eligible homes have financial resources that exceed the federal limit of $20,000 in assets,” “one in five had more than $100,000 in assets,” and “tens of thousands had more than $1 million in assets.” Conservatives also regularly talk about the need to expand the food stamp work requirements.
Conservatives are pointing out the waste and fraud in the NSLP. According to the Office of Management and Budget, the NSLP “lost nearly $800 million owing to improper payments in fiscal year 2018.” Conservatives want to eliminate the “Community Eligibility Provision” that “allows schools, districts, and even groups of schools located in the same area where 40% of student enrollment is eligible for federal assistance (such as food stamps) to offer free meals to all students.” It turns out that middle- and upper-income students are receiving free meals that they normally are not entitled to. “Congress and the White House should eliminate this provision and focus resources on helping children in need, as recommended in Heritage’s ‘Blueprint for Balance,’” says Jonathan Butcher, a senior policy analyst in The Heritage Foundation’s Center for Education Policy. (The Heritage Foundation is a conservative think tank.)
Conservatives generally focus on the waste, fraud, loopholes, and inefficiencies in these and other federal programs and rarely, if ever, make the case that it is not the proper role of government to feed anyone. They have no philosophical objection to any government program as long as it is run efficiently, doesn’t waste taxpayer dollars, or furthers some agenda of theirs.
But conservatism is actually worse than it seems. Even if a conservative personally supports the federal government’s efforts to provide a hunger safety net, make sure that low-income families have enough food to eat for dinner every night, and feed children lunch at school, he should still oppose the federal government’s food stamp and school lunch programs.
Conservatives claim to revere and follow the Constitution. Yet, SNAP and the NSLP are blatantly unconstitutional.
The Constitution nowhere authorizes the federal government to have anything to do with food, nutrition, breakfast, lunch, dinner, supper, hunger, or food safety nets.
The Constitution nowhere authorizes the federal government to have SNAP, the NSLP, the Agriculture Improvement Act, the FNS, or the USDA.
At the very least, conservatives should be calling for the total and complete elimination of those actions, programs, and agencies on the federal level and their continuance on the state level. But, apparently, federalism means no more to conservatives than the Constitution does.
When it comes to SNAP, the NSLP, or any other food program of the U.S. government, libertarianism says three things:
It is not the proper role of government to feed the hungry or subsidize the purchase of food by low-income families.
Transferring wealth from one American to another — whether it takes the form of a deposit on an EBT card or a hot lunch at school, and even if the recipient is hungry — is immoral.
Charity should be private and voluntary, not public and forced.
There is such a thing as a free lunch. And you can count on conservatives to make sure of it.
via ZeroHedge News https://ift.tt/2XwnWl8 Tyler Durden
Oil prices gained modestly on the day, with WTI rallying up to $58 ahead of tonight’s API inventory data, despite another tanker being seized (by Egypt this time).
“Given the continued presence of sanctions and tensions between the U.S. and Iran, the ongoing trade war between the U.S. and China, and the potential for an economic slowdown, oil prices are likely to remain volatile in the short term,” said Michael Laitkep, an analyst at Alerian, which tracks energy infrastructure companies.
But for tonight, and tomorrow morning, all eyes are on the fundamental side…
API
Crude -8.129mm (-2.5mm exp)
Cushing -754k
Gasoline -257k
Distillates +3.690mm
Crude inventories were expected to drop in the last week (after 3 previous weeks of draws) but the huge 8.1mm crude draw was a big surprise (everyone is ignoring the distillates build for now)…
WTI hovered around $58.00 ahead of the print, and exploded higher (above $59) on the huge draw…
The initial spike has faded a little after running the $59 stops…
“There is a strong case to paint a bullish as well as a bearish picture depending on one’s view on the general state of the world economy and politics,” said Tamas Varga, an analyst at PVM Oil Associates Ltd. in London.
Powell’s testimony will be watched closely for an indication of whether the Fed is likely to cut U.S. interest rates at its next meeting on July 31, with energy market hope for growth gains.
via ZeroHedge News https://ift.tt/2Jy0rhP Tyler Durden
