Tag: news

Former Vermont Gov. Peter Shumlin, who led the state as a Democrat from 2011 to 2017 has some harsh words for Bernie Sanders.

During a free-for-all interview with Politico, Shumlin, who recently endorsed Joe Biden, accused Sanders of trying to “Hillarize” Elizabeth Warren.

Specifically, Shumlin criticized Sanders’ attempts to portray Warren as an “elitist”, a perception that helped to deeply undermine the Clinton campaign.

Shumlin warned that Sanders doesn’t feel any “loyalty” to the Democratic Party, and won’t hesitate to put his own interests above the party’s.

The reason? Shumlin said Sanders, a self-described Democratic Socialist, and his supporters feel that they can pass a “purity test” that no Republicans and very few Democrats can pass.

Because of this, Sanders won’t hesitate to “play dirty,” Shumlin said.

“What I’ve seen in Bernie’s politics is he and his team feel they’re holier than the rest. In the end, they will play dirty because they think that they pass a purity test that Republicans and most Democrats don’t pass,” said Shumlin. “What you’re seeing now is, in the end, even if he considers you a friend, like Elizabeth Warren, Bernie will come first. That’s the pattern we’ve seen over the years in Vermont, and that’s what we are seeing now nationally.”

Finally, Shumlin reminded his audience that Sanders first major electoral triumph was defeating the Democratic Mayor of Burlington.

“Don’t forget, the first office he won was beating the Democratic mayor of Burlington. He never endorsed most Democrats until his Senate career,” Shumlin said. “The only way he could win the Senate seat and avoid a Democrat winning the nomination and splitting the vote in the general election has been to run for the Democratic nomination, win it and immediately turn it down.”

After losing to Clinton in the rigged Democratic primary, Sanders was a good sport, and agreed to campaign for Clinton, eventually appearing at more than 80 events as a surrogate.

Does that sound like someone who has no respect or loyalty to the party?

After surging in November (by the most since Oct 2017), Industrial production was expected to contract modestly in December.

November’s big jump was revised lower and the headline production printed a 0.3% MoM contraction (worse than expected), leaving US industrial production down 1.01% YoY – the worst since Oct 2016.

Source: Bloomberg

That makes 7 of the 12 months with contraction in 2019 and ends up being the worst year since 2015.

• Utilities fell 5.6% in Dec. after rising 1% in Nov.

• Mining rose 1.3% in Dec. after falling 0.2% in Nov.

Capacity utilization fell to 77% from 77.4% in Nov., revised up from 77.3%.

Manufacturing actually surprised to the upside in December (rising 0.2% MoM vs -0.1% exp), but year-over-year saw a 1.3% contraction…

Source: Bloomberg

And of course, the Dow Jones INDUSTRIAL Average continues to soar despite INDUSTRIAL Production remaining relatively stagnant…

Source: Bloomberg

And that’s what The Fed is for.

Just hours after we reported that the NTSB would be investigating a fatal Tesla Model X crash in February, we now learn that the U.S. National Highway Traffic Safety Administration has begun an investigation into a petition it has received regarding certain Tesla models.

According to Bloomberg, the petition involves “unintended acceleration in vehicles”.

The NHTSA says its Office of Defects received the defect petition on December 19 and that the request applied to model year 2012 through 2019 Tesla Model S vehicles, model year 2016 through 2019 Tesla Model X vehicles and model year 2018 through 2019 Tesla Model 3 vehicles. This totals about 500,000 Tesla vehicles. 

The petitioner cited 127 consumer complaints to the NHTSA involving 123 separate vehicles. These reports included 110 crashes and 52 injuries.

Yesterday we reported that the NTSB said its going to convene a meeting on February 25 to examine the probable cause of a fatal Tesla accident that took place in California in 2018.

Autopilot was engaged in 38 year old Apple engineer Walter Huang’s Model X prior to the accident, as we have reported. The NTSB and NHTSA are now investigating a “number of crashes” where Autopilot was involved, according to Automotive News.  

Last week, for instance, the NHTSA also said it was investigating a December 29th crash of a Model 3 that a passenger dead after the Model 3 collided with an inanimate fire truck in Indiana. It’s also investigating another crash on the same date where a Model S ran a red light and struck a Honda, killing its two occupants. 

And, of course, it is no surprise to us that the NHTSA has not made a determination as to whether or not an investigation is warranted regarding the new petition yet. Because if it isn’t clear as day to them at this point, we’re not sure what it’s going to take to wake these regulators from the half decade long slumber they’ve been in.

Authored by Nick Cunningham via OilPrice.com,

The risk of oil supply disruptions from around the world has diminished, and rising non-OPEC production provides a “solid base from which to react to any escalation in geopolitical tension.”

In its January Oil Market Report, the International Energy Agency (IEA) said that there is plenty of oil sloshing around, despite the U.S. and Iran nearly going to war.

“We cannot know how the geopolitical situation will play out over time, but for now the risk of a major threat to oil supplies appears to have receded,” the IEA said.

“As was the case following the attacks on Saudi Arabia in September, once the initial fears of a sustained supply shock subsided, the Brent price rapidly gave up its $4/bbl spike.”

Oil inventories held in OECD countries is 9 million barrels above the five-year average, and there are also plenty of strategic stockpiles to call upon in the event of an outage, the agency said.

Still, while geopolitical risk has “faded,” it has not gone away entirely. The Trump administration may have refrained from all-out war against Iran, but the assassination of General Soleimani took the confrontation to new heights.

While Trump’s speech earlier this month was widely interpreted as one of “de-escalation,” he also prefaced his comments by saying Iran would never have a nuclear weapon. But, sanctions, “maximum pressure,” and the assassination of one of its top leaders will obviously provoke a response. With little left to lose, Tehran is backing out of most of its commitments under the 2015 nuclear agreement, a deal that the U.S. already exited nearly two years ago.

All of which is to say the countries are seemingly locked on a collision course. The world breathed a sigh of relief when the two countries backed away from the brink, but there are decent odds that the conflict flares up again in the not-so-distant future. There are few pathways for actual de-escalation, absent an overhaul of U.S. policy.

At the same time, Iran has already lost much of its oil supply due to sanctions. So, the additional supply risk is concentrated in Iraq, where the U.S. and Iran conflict is actually playing out. “Recent events have shown that Iraq is a potentially vulnerable supplier, just as its strategic importance has grown,” the IEA said. The agency noted that Iraqi oil exports have doubled since 2010, from 2 million barrels per day (mb/d) to 4 mb/d. China and India each import roughly 1 mb/d of supply from Iraq.

“Iraq’s rising capacity has been very welcome as sanctions have reduced Iran’s exports to only 0.3 mb/d and Venezuela’s production has collapsed,” the IEA wrote.

Left unsaid was that those outages were both the result of U.S. sanctions.

Putting aside the geopolitical risk, the agency said that prices will likely remain subdued this year because non-OPEC supply continues to grow faster than demand.

Non-OPEC countries will add 2.1 mb/d this year, while demand will rise by 1.2 mb/d. 

Unlike in previous years, U.S. shale won’t dominate the supply growth picture, at least not entirely. The sector will likely see a “marked slowdown,” accounting for 52 percent of non-OPEC supply growth, down from an 84 percent average between 2017 and 2019. Instead, Norway, Brazil, Canada, Australia and Guyana will add new barrels.

The bottom line is that OPEC+ still faces a predicament.

“Even if they adhere strictly to the cuts, there is still likely to be a strong build in inventories during the first half of 2020,” the IEA said.

“OPEC crude production would fall to 29.3 mb/d in January if there were to be full compliance and steady output from Libya, Iran and Venezuela. That is still 700 kb/d above the 1Q20 call on OPEC crude and 900 kb/d above the 2Q20 call.”

In other words, unless OPEC+ cuts further, the oil market faces persistent oversupply in the first half of this year.

Following October and November’s bounce in starts and permits, and despite solid sales and mortgage application data, analysts expected a mixed picture for housing data today (with growth in starts slowing and permits shrinking).

However, the data was extreme to say the least with Housing Starts soaring 16.9% MoM (highest since Oct 2016) and Building Permits shrank 3.9% MoM (worse than the -1.5% exp).

Source: Bloomberg

This pushed Starts to their highest since Dec 2006, but permits declined to weakest since September.

Source: Bloomberg

All four regions posted a gain in starts, with the Midwest, South and West showing the best pace since 2006. Starts in the Northeast were the highest since August.

Under the hood, Starts were dominated by a 32% surge in multi-family units (though single-family starts rose 11.2% MoM)…

But, the more forward-looking permits disappointed as multi-family permits plunged 11.1% (single-family -0.5% MoM)…

Even so, the strong overall reading on starts corroborates a jump in developers’ confidence. U.S. homebuilder sentiment posted the highest back-to-back readings since 1999 in December and January amid a jump in prospective buyers and a bump in the sales outlook.

 

Global stock trading screens are a sea of green this morning, despite a slew of key data coming in below expectations and doing anything but confirming the market’s narrative that everything’s about to be awesome again.

Overnight saw the big one from China disappoint with economic growth the weakest in 29 years. But, as Bloomberg’s Richard Breslow notes, if you want to feel good about the equity market today, there is no need to look further than today’s U.K. retail sales report. It was a stinker. Following close on the heels of Wednesday’s CPI miss.

The market pricing of the chances of a cut in rates as soon as this month are now showing an expectation that it is just about baked in the cake. And this at a time when surveys show that most economists think it is too early for a move. When have we seen that before? The U.K. economy may not be as influential as it once was on global matters, but it is still of material consequence.

And every stock index loves it when a major central bank moves to the left.

Progress on trade matters between the U.S. and China is a positive development. It doesn’t matter if it isn’t as good as it gets.

Increasing talk of election year fiscal stimulus in the U.S. has stock investors rubbing their hands together. But nothing gets them more stoked than rate cuts and the possibility of more QE.

Yesterday, two of Germany’s leading industry groups, the BDI and BGA, urged the government to do more to stimulate the economy. Yes there have been green shoots trying to poke their heads out of the ground. But, as the BDI’s managing director said, “Better-than-expected still doesn’t mean good.”

As one of ECB President Christine Lagarde’s biggest fans, I continue to maintain confidence that, ultimately, she will be able to wring some action out of the German government. But all of the European and euro bulls need to accept the reality that it doesn’t count until they show us the money. And it remains true that the global economy won’t ever be able to “run hot,” as we understand the concept, without Europe contributing its fair share.

All of the trade recommendations calling for the much-anticipated move in bund yields back to the lofty zero level may have to wait for some confirmation from the foreign exchange market, where implied volatility in the options market continues to suggest that we are going nowhere fast. Little episodes of short-term, event-driven optimism continue to have little influence on the pricing for the longer-dated outlook. That can always change, but it is devilishly difficult to anticipate.

Europe aside, the economic results out of China were quite good (except for GDP).

Who wouldn’t want numbers like these? With a dovish PBOC to boot. At least we know there is one country where there is demand for automobiles. Chinese equities had a so-so session but with reportedly so much new money having been piling into that market it wasn’t a bad performance ahead of the weekend. Of greater note, and importance for the moment, Asian equities as a group had a solid showing, in sympathy, and have their sights again set on the spike high from earlier this week.

The very crowded emerging market currency trade continues to hang in there. This is something to keep an eye on. Trending assets can, by definition, stay over-bought for a long time, but the risk also increases. This market can correct a fair way without doing anything wrong in the grand scheme of things. Nevertheless, it is a sign that carry and risk remain in vogue.

The dollar continues to go nowhere, but remains resilient, despite its naysayers. I’m not sure why I keep being told that if the euro goes up and breaks resistance, it will be a bullish sign.

Also watching the 10-year Treasury versus bund spread. That spread narrowing is a popular trade that is showing signs of being called into question.

Perhaps the most interesting question in the short-run is how the Treasury yield curve behaves. It’s a little steeper on the 20-year announcement. But things won’t really get interesting, and perhaps more volatile, until we see it do so in a bear market.

The U.N.’s annual report, the World Economic Situation and Prospects 2020, has said the global economy recorded its lowest growth in a decade in 2019, falling to 2.3% as a result of the U.S. and China trade war and sharp pullbacks in investment. 

The report warns of slowbalisation will define the global economy in the early 2020s. Growth is expected to pick up slightly across the world from 2.3% last year to 2.5% in 2020, but that depends on the effectiveness of monetary policy and if all trade disputes can be resolved. 

The U.N. warned that if trade disputes aren’t resolved this year, geopolitical tensions spiral out of control, and for whatever reason, central banking monetary policies are ineffective in stimulating growth, then the global economy could register a depressing 1.8%.

It said that slowbalisation “threatens to undermine progress towards eradicating poverty, raising living standards, and creating a sufficient number of decent jobs.”

To give readers a sense of the below-trend growth seen across the world, actually starting before the trade war. The U.N. had global growth forecasts of 3.2% in 2017, 3% in 2018, and 3% in both 2019 and 2020. Obviously, that’s not the case today, and the global economy is rapidly slowing as central banks are freaking out with over $1 trillion in money printing in the last four months and 80 rate cuts over the previous 12 months. 

The report noted that 2019 was the slowest year in global growth since the financial crisis a little over a decade ago, with all major economies sharply slowing except Africa. 

“This slowdown is occurring alongside growing discontent with the social and environmental quality of economic growth, amid pervasive inequalities and the deepening climate crisis,” it said.

The U.N. said the epicenter of the slowdown is the “global manufacturing” recession that spread across most G20 countries. 

It said the shift in trade policies between the U.S. and China also led to declining investment in major economies and will lead to slower economic growth in the years ahead. Trade disputes also weighed heavily on commodity prices, especially crude and petroleum products, and industrial metals.

“A significant number of countries are still suffering from the effects of the 2014-2016 commodity price downturn, which has resulted in persistent output losses and setbacks in poverty reduction,” the U.N. said.

U.N. Secretary-General António Guterres warned: “These risks could inflict severe and long-lasting damage on development prospects. They also threaten to encourage a further rise in inward-looking policies, at a point when global cooperation is paramount.”

Global central banks have had no other choice but to print like crazy and hyperinflate asset prices as their ammunition to combat the next global crisis is running low.