Zen And The Art Of Trading Crude With Dennis Gartman

He’s funny cause he’s… funny.

We are short of Brent while long of WTI, but the political situation over which we’ve no control has taken control of  this spread rendering our position intolerable and forcing us to run for cover upon receipt of this commentary. Not to do so would be trading foolishness of the first order

Because in all other situtations when Gartman “puts” on crude positions (with whose money?) which are always a function of geopolitics, he does so only when he has control over the “political situation”? Gotcha.

Incidentally, here are the “trades” Gartman has on:

  1. Long of Seven Units of Gold/short of Two Units of the Yen and Five of the EUR
  2. Long of Three Units of the Canadian dollar/short of Three Units of the EUR
  3. Long of Two Units of new crop Hard Red Winter wheat/short of two units of Soft Red Winter Wheat
  4. Long of the four units of “dollars” and one Unit of Sterling/short of five units of the Yen
  5. Long of One Unit of August WTI crude/short of One Unit of August Brent crude

No, really.




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Obama: ‘The World Is Less Violent Than It Has Ever Been.’ He’s Right!

At a White House press event yesterday, President Barack Obama
dropped some real wisdom on the youts during
his answer to the last question
 from the crowd of Tumblr
users (starting at around 49 minutes): 

The truth of the matter is that for all the challenges we face,
all the problems that we have,…if you had to choose any moment to
be born in human history, not knowing what your position was going
to be, who you were going to be, you’d choose this time. The world
is less violent than it has ever been. It is healthier than it has
ever been. It is more tolerant than it has ever been. It is better
fed then it’s ever been. It is more educated than it’s ever
been.

Terrible things happen around the world every single day, but
the trend lines of progress are unmistakable. 

Amen. 

Just ask Stephen Pinker, who wrote a whole book about the
decline of violence and the rise of tolerance and learning in human
history, The Better Angels of Our Nature. Pinker
spoke
with Reason‘s own Ronald Bailey a couple of years ago
about the thesis of his book
:

reason: Let’s go through some of the
reasons and processes by which the world became less violent. It
began with what you call the pacification process, which involved
the creation of states.

Pinker: The first states seemed to have in
their wake a massive reduction of death in tribal raiding and
feuding, basically because it’s a nuisance to the overlords. So you
have things like the Pax Romana, the Pax Islamica, the Pax Sinica,
in China, where the emperors would much rather have the peasants
alive to stock their tax rolls and armies, and be slaves or serfs.
So they had a selfish interest in preventing too much internecine
feuding among their subject peoples and basically kept them from
each other’s throats. Not that it was a life that we would consider
particularly pleasant. You’re substituting a lot of violence among
tribes and villages and clans for a lesser amount—but still a
brutal form of violence—from the state against its
citizens. 

The next transition, after you have the government preventing
people from committing violence against each other, you now have
the problem of preventing the government from committing violence
against its own peoples. And that was, basically, the advent of
democracy and the various reforms of the Enlightenment.

reason: The next reduction in violence
occurred as a result of what you call the civilizing process.

Pinker: It’s a term that I borrowed from
the German sociologist Norbert Elias, in his book by that name,
where he figured out—even in the absence of quantitative data —that
Europe had become a less violent place in the transition from the
Middle Ages to modernity. We now know that he was right, now that
historical criminologists have gathered the quantitative data. But
he had noticed it just from narrative accounts of what daily life
was like. Just people cutting off each other’s noses, stabbing each
other over the dinner table in response to an insult—there seems to
be less now than there was then. He had an immediate explanation
and an ultimate explanation. The immediate explanation was a
psychological change. Namely that people exercise more self-control
and more empathy. They counted to 10 and swallowed their pride
rather than lashing out with a dagger when they’d been insulted.
They tried to get inside the heads of other people in general, to
figure out what they wanted. 

Or check in with another Reason
interviewee Lenore Skenazy
 as she advocates giving kids
more freedom and responsibility in her great Free-Range Kids blog
and book. One objection she often hears is that the world is more
dangerous for kids than it used to be. But that’s just not true,
says Skenazy in
this post from 2012
(and over and over on her
blog
):

This is the first time in 45 years that homicide is not among
that top 15 causes of death in America. Put in Free-Range Kids
terms: The murder rate was higher when most of us parents were
growing up than it is now, for our kids. And since I know someone
will say, “So what? That just means kids are safer because we are
keeping them inside, or GPS’ing them, or making sure they are
supervised at all times!” let me quickly note that murder is down
among adults, too, and it’s not because we are
helicoptering them. Moreover, the murder rate is
lower than it has been for almost two generations, which means it
is lower now than even before parents began
hovering….

Our parents didn’t feel guilty or terrified when they let us
play outside and the murder rate was higher. Today’s kids deserve
the even-less-risky chance to enjoy a Free-Range
childhood. 

As for being better fed, here’s Bailey again, reviewing
Ramez Naam’s The Infinite Resource

Take agriculture. 10,000 years ago it took an average of 3,000
acres to feed one hunter-gatherer; farmers today can feed one
person using less than one-third of an acre. “Our innovation in
farming technology has multiplied the value of a plot of land by
nearly 10,000,” Naam notes. If crop yields per acre had remained
stuck at their 1960 level, half of the world’s remaining forests
would have been plowed down
by now
.

Obama frames this good news as a plea against cynicism.
Reason prefers a spin that makes the broader case for
individual freedom and human ingenuity. But good news no matter
which way you slice it. 

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Al Qaeda Insurgents Surround Iraq’s Largest Refinery

While there had been sporadic reports over the past few days that Al Qaeda’s ISIS spinoff had surrounded or even taken control of Iraq’s largest refinery in Baiji, the government was quick to deny such rumors. As was reported earlier, the Baiji refinery remained under government control on Thursday after Sunni rebels’ offensive through northern Iraq, Iraqi Oil Minister Abdul Kareem Luaibi said. Luaibi said Iraq was not importing any additional fuel and that stored supplies of gasoline and diesel were good.

Militants from an al Qaeda splinter group, who seized Iraq’s second biggest city of Mosul this week, advanced into the oil refinery town of Baiji on Wednesday, setting the court house and police station on fire.

 

“Baiji refinery is totally secured by the special forces and operating normally now,” an official at the refinery said on Thursday.

It may be time to hit F5, because as Reuters reported moments ago, the Baiji refinery appears set to fall in Al Qaeda’s hands.

Insurgents surrounded Iraq’s largest refinery in the northern town of Baiji on Thursday, police and an engineer inside said.

 

Sunni militants first moved into Baiji late on Tuesday, closing in on the refinery, but later withdrew to the surrounding villages after reaching a deal with local tribal chiefs.

 

A witness who lives in a house near the refinery said the militants arrived in more than 50 vehicles.

Here is a quick snapshot of the refinery’s capacity:

North Refineries Co. of Iraq named Honeywell the main engineering, procurement, and construction contractor for an upgrade of automation systems at its 310,000-b/d hydroskimming and hydrocracking refinery in Baiji. Honeywell will fully automate the refinery, replacing a 30-year-old single-loop instrument control system. The contractor said the project, in addition to improving productivity, will offer “full scalability to support future technology upgrades.”

 

Built in 1982, the Baiji refinery has these processing capacities: catalytic reforming 46,000 b/d, catalytic hydrocracking 38,000 b/d, and catalytic hydrotreating 182,000 b/d. It has design capacity to produce 64 MMcfd of hydrogen, 5,000 b/d of lube oils, and 26,000 b/d of asphalt.

A snapshot.

And an aerial view.

So with the Al Qaeda spin off, now armed with the latest US weapons and with nearly half a billion in petty cash courtesy of yesterday’s Mosul raid, the insurgents are about to have direct control over several hundred thousands b/d of energy output.

All they need is a central bank. We are confident Goldman can spare a partner to run it.




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Trannies Tumble To Red Post Draghi, Exuberance Fading Fast

Volume is well above average pro rata as US equity markets are stumbling notably this morning. Was retail sales’ miss the final straw that broke the hope back? Or was it China’s CNY vol, failed auction, warehouse probe, or Japan’s dismal data and misery, or Iraq’s reignition, or Ukraine, or Q1 GDP downgrades, or earnings outlook downward revisions, or flows? Since Mario Draghi promised the world and made everyone believe that’s what he gave them, US equity markets have rolled over hard today and Dow Transports are now notably in the red as the former high-flier unbreakable trend looks set to follow Biotechs in the momo meltdown club…

The cash indices are rolling over…

 

As Futures have broken initial resistance and are testing to pre-Draghi levels…




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Steven Greenhut on Kids Triumphing Over Teachers Unions

TeacherEducation reformers
and their teachers union foes seemed equally stunned on
Tuesday by Los
Angeles County Superior Court Judge Rolf Treu’s
ruling
 that found California’s teacher tenure system—which
makes it nearly impossible for public schools to fire teachers—to
be an affront to the equal protection clause in the state
constitution.

This may be just the first step in a long legal process that
pits a group of poor kids and reformers against the state, the
powerful California Teachers Association, and its allies in the
legislature, but this was big national news—and the latest volley
in an ongoing debate about education reform, writes Steven
Greenhut.

If the ruling is upheld, the legislature will need to defy the
CTA and revisit teacher dismissal laws. But real change needs to
come from the grassroots, argues Greenhut with the public demanding
that the state start putting the education of kids above the job
security demanded by the unions representing those kids’
teachers.

View this article.

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America’s Record Political And Ideological Divide In Charts

One hardly needs more charts to understand that over the past 6 years America has never become more ideologically and politically divided, but here, just to hammer that point, is the latest survey of 10,000 adults from Pew confirming just this.

In a nutshell, after some modest convergence to the center in the last decade of the 20th century and the early years of the 21st, Americans have radically polarized their views and have grown further apart politically and culturally to never before seen degrees. The “median democrat” has become more ideologically consistent with other liberals, while the “median republican”, with other conservatives. Furthermore, both sides are more disapproving of those they disagree with.

Finally those at the extremes are most vocal, as the dwindling center has grown frustrated by both wings. And not helping matters is a Congress, which courtesy of the Fed’s monetary policy which is now extensively used in lieu of a functioning fiscal process (“Get to work Mr. Chairman”), means that dissatisfaction with the broken legislative branch has never been higher, even if the stock market is at all time highs.

An animation of America’s record polarization

NEW: How political polarization in America is affecting politics, compromise & everyday life http://pewrsr.ch/2014polarization

 

And in charts:

 

Democrats and Republicans More Ideologically Divided than in the Past

Republicans Shift to the Right, Democrats to the Left

More Democrats Take Liberal Positions, More Republicans Take Conservative Positions

Growing Minority Holds Consistent Ideological Views

Polarization Surges Among the Politically Engaged

Growth in Ideological Polarization Sharper among Politically Engaged

Growing Gaps between Republicans and Democrats

Ideological Self-Placement Mostly Corresponds to Political Values, With Some Exceptions

Compromise in the Eye of the Beholder

Liberals, Conservatives Want Their Side to Get More of What It Wants




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Bond Traders Are Taking Iraq’s Turmoil Seriously

While the turmoil in Iraq continues to rise, US equity markets have brushed off most of the geopolitical concerns (more worried about dismal retail sales than the surge in oil prices that is now happening) but bond traders did not wait to sell. Iraq’s bond prices have plunged in the last 2 days as concerns that fighting will reach the oil-rich regions of the nation (and thus the money). As Aberdeen Asset Management’s Anthony Simond told Bloomberg, “if violence can stay away from the oil region, you’ll probably see a rebound in prices; the ability to pay is there… and the willingness to pay for the moment.”

 

 

Time to buy the dip for all  that yield…




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Firefight Underway As Russian “Rebels” Cross Border Into Ukraine

While all eyes are affixed on Iraq (and record highs for stocks), the situation in Ukraine continues to re-escalate. Ukraine’s interior minister Arseniy Avakov, speaking at a news conference, exclaimed:

  • *UKRAINE SAYS RUSSIA FAILED TO STOP REBEL CONVOY AT BORDER
  • *UKRAINE SAYS ARMORED REBEL VEHICLES CROSSED BORDER FROM RUSSIA
  • *UKRAINE SAYS REBEL CONVOY INCLUDES 3 TANKS, NUMBER OF APCS
  • *UKRAINE MILITARY IN FIREFIGHT WITH REBEL VEHICLES NEAR BORDER

Unconfirmed reports note 3 T-72 tanks in the Snezhnoye region. Time for some more sanctions.

 

What Avakov said (via InterpreterMag)

Last night, three T-72 tanks crossed the Ukrainian state border from the Russian side.

 

One tank is in the village of Snezhnoye. Two other tanks have moved out of the town.

 

These tanks were intercepted by Ukrainian troops in the vicinity of Snezhnoye.

 

A battle is under way.

 

 

 

The tanks on the move this morning…

And another more detailed clip…




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Legal Weed: Where Are We Now?

It’s a weird weed world out there these days. While the federal
War on Drugs—including medical marijuana—persists, we’re starting
to see cracks. Congress is well on its way to forbidding
the Drug Enforcement Agency
 from interfering with medical
marijuana operations in states where it’s legal. And FBI
Director James
Comey says
 the agency needs to be able to hire pot smokers
for some positions. Meanwhile, culturally, we’re seeing all sorts
of interesting experiments in legal marijuana: Cannabis
cafes
; weed-friendly symphony
concerts
; organizations that grow free
marijuana for vets
; food trucks for cannabis
edibles

In February, Reason published a
state-by-state guide to marijuana legalization
 and
decriminalization. Since then, some states have seen pro-pot
successes, some have seen failures, and some new bills and
initiatives have cropped up. Elizabeth Nolan Brown looks at the
state of state marijuana laws circa summer 2014.  

View this article.

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Hey Republicans: If You Reduce Cantor’s Loss to Immigration Reform, You Will Keep Losing

As Peter Suderman
pointed
out yesterday
, one of the major fauxplanations for House
Majority Leader Eric Cantor’s stunning primary loss to David Brat
is that Cantor was “soft”
on immigration
. Exactly what that means is anybody’s guess,
given that Cantor wanted a militarized, wall-defended border with
Mexico and got a 100 percent rating from the anti-immigration group
FAIR.

As I argue in
this Daily Beast column
, Cantor’s sins against the
ideals of limited government are long and numerous. Fact is, since
taking office in 2001, he never missed an opportunity to vote for
every major expansion of government power he was given, as long as
a Republican was in the White House. No Child Left Behind, Medicare
Part D, extension of the Patriot Act, TARP, auto bailouts, endless
war: It’s all there in his record. As a self-styled (read: sad and
pathetic) “Young Gun,” he also pushed the GOP’s Path to Prosperity
budget, which would grow annual spending over the next decade from
about $3.7 trillion to $5 trillion. On top of that, of course, he
hit all the sour notes possible on social issues: He was dismissive
of marriage equality, loved the drug war, and anti-abortion all the
way. 

In other words, Cantor represents big government conservativism
in its most fulsome manifestation. And it’s this package of B.S.,
not anything related to immigration, that has driven voter
identification with the GOP down to 25 percent according to Gallup.
Until Republicans understand that they cannot mix libertarianish
rhetoric about reducing the size, scope, and spending of government
with a massive buildup of spending and regulation and a buttinsky,
intolerant attitude toward social issues, they will keep losing
elections.

Either own the fact that you are in favor of slightly less
spending than Democrats and want to marginalize social outgroups or
start living up to your rhetoric. Voters, it seems, are neither
stupid nor receptive to lies.

When it comes to immigration specificially, Sen. Rand Paul
(R-Ky.) is right that Republicans have become “trapped” by their
rhetoric on the topic, especially regarding the concept of
“amnesty.”

“We’ve been somewhat trapped by rhetoric and words, and
amnesty’s a word that has kind of trapped us,” he said, adding that
some people think it means giving undocumented immigrants a right
to vote, while others say it means allowing them to obtain legal
status without a penalty….

Paul is no champion of open borders or even last year’s Senate
immigration-reform bill (he explains his vote against
the plan here
). But he is already being attacked by “real”
Republicans for even talking about immigration in
less-than-apocalyptic terms, especially by people who are quick to
say Eric Cantor got crushed because he was “soft” on
immigration.

As it happens,
64 percent
of Republicans nationwide favor immigration reform.
They are joined by 71 percent of independents and 78 percent of
Democrats. Within Cantor’s own district,
a large majority of voters
(as many as 72 percent) favored
immigration reform.

If the Republicans decide that
being virulently anti-immigrant and immigration reform is a way to
succeed, they will be on the losing side of not just that issue but
history.

Even though polls routinely show that immigration is actually
not a particularly important issue for voters, hostility to
immigrants confirms in many people’s mind a vision of the
Republicans as mean, intolerant, and white. That simply doesn’t
play well in an increasingly diverse and globalized America.

More to the point, large numbers of voters—including 65 percent
of the independents who decide all national elections—think that
government “has too much power.”
A majority of voters
(55 percent) think the “government is
doing too much.” These are not new findings or recent turnarounds.
Voters have been saying the government does too much and spends too
much
for a long time
.

The Republican Party, especially its doltish leadership, keeps
saying, “Yeah, yeah, we hear you, we’re on your side, shrink the
state, stop spending, we get it.” And yet when it is power it
cranks up spending and regulation like LBJ’s bastard child. And
when it is in opposition, it still proposes to spend more money in
the future and refuses to abide by its attractive libertarian
rhetoric by going on and on about abortion, drugs are bad mmkay,
gays need fixing, immigrants scare me, and all the rest. Think
about it, Republicans: Large majorities of Americans keep saying
they want a government that spends less and does less. Large
majorities are also favorably disposed to immigrants and
immigration. And you’re seriously fixating on keeping immigrants
out of country as a successful electoral ploy while laying out
budgets that increase spending by at least 35 percent over the
coming decade? Run the numbers again, pal.

As much as a single person could personify everything that sucks
about the contemporary GOP—a patently fake commitment to small,
limited government, a lack of social tolerance, and uncritical
support for a military-industrial complex that has lost the last
two wars it foisted on Americans—that person was Eric Cantor. Good
riddance.

Republicans who sound like him and legislate like him won’t be
any more successful come this November or in any other future
elections either.

News flash: Voters dislike Republicans (and Democrats, too) not
despite their policies and the way they wield power but
because of their policies and the way they wield
power.

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