As the Dollar Index surged post-manufacturing data, WTI Crude began to lose altitude from its overnight ramp. Combined with ongoing concerns over Libya’s production ramp, crude just crashed from over 55.00 to under 53.00 in minutes on heavy volume…

It seems the catalyst was the USD index breaking recent highs…

 

But as Bloomberg notes, Libya, the holder of Africa’s biggest crude reserves, is ramping up output from its biggest oil field again after two years of internal conflict, the latest reminder of just how vulnerable OPEC’s quest to clear a global crude glut might be.

The Sharara deposit in the Libya’s south west will ship almost 1.9 million barrels this month from its Zawiya port near Tripoli, according to a loading program obtained by Bloomberg. That compares with a pumping rate from the field of almost 9 million barrels a month as recently as late 2014, before internal conflict halted flows.

If maintained, the amount Libya is pumping would be about 125,000 barrels a day higher than the North African country was producing in October, thestarting point for when most other OPEC nations are supposed to limit their collective supply.

Mustafa Sanalla, the chairman of Libya’s National Oil Corp., said Dec. 21 that output would reach 900,000 barrels a day early of this year. By hitting that target, Libya would replace about one third of the supplies being cut by other OPEC nations.

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Trump’s recent “strong hints” to US-based automakers to keep production within the US are starting be heard loud and clear, and nowhere more so than at Ford, which just hours after observing the beat down Trump gave to competitor GM on Twitter, announced that it is scrapping plans for a new $1.6 billion plant in San Luis Potosi, Mexico after itself coming under criticism by Donald Trump for shifting small-car production south of the border, and announced it would instead invest $700m in a plant expansion in Flat Rock, Michigan.

Mark Fields, Ford’s chief executive officer, announced the plan today at a press conference at the automaker’s factory in Flat Rock, Michigan, south of Detroit. The second largest U.S. automaker builds the Mustang sports car and Lincoln Continental sedan from its Flat Rock plant, which employs more than 3,700 workers according to Bloomberg. Ford idled the factory for a week in October due to declining Mustang sales, which fell 13 percent in the first 11 months of 2016.

The automaker’s CEO Mark Fields told CNN that the move is a “vote of confidence” in President-elect Donald Trump’s pledge to create a pro-business environment. Fields emphasized, however, that he did not negotiate any special deal with Trump.

“We didn’t cut a deal with Trump,” he said. “We did it for our business.”

Trump had previously slammed Ford on the campaign trail over the automaker’s plan to invest $1.6 billion in Mexico by shifting its North American small-car production south of the border. Ford had emphasized that the move would not affect U.S. jobs because the automaker would be putting new vehicles into the Michigan plants.

But now Ford will instead build the Ford Focus at an existing plant in Mexico and invest $700 million in its plant in Flat Rock, Mich. in an effort to produce more electric and self-driving cars. The automaker has said it plans to build a fully self-driving car by 2021.

“I am thrilled that we have been able to secure additional UAW-Ford jobs for American workers,” said Jimmy Settles, United Auto Workers vice president, according to CNN.

And so, it would appear that Trump was right, and won, again.

Curiously, according to CNBC, a high level Ford source said that “Trump had nothing to do with Ford’s decision to expand its Michigan plant.”

Sure, it was just a bigly coincidence.

We look forward to his victory lap on Twitter in moments.

* * *

From the press release:

FORD ADDING ELECTRIFIED F-150, MUSTANG, TRANSIT BY 2020 IN MAJOR EV PUSH; EXPANDED U.S. PLANT TO ADD 700 JOBS TO MAKE EVS, AUTONOMOUS CARS

Ford today detailed seven of the 13 new global electrified vehicles it plans to introduce in the next five years, including hybrid versions of the iconic F-150 pickup and Mustang in the U.S., a plug-in hybrid Transit Custom van in Europe and a fully electric SUV with an expected range of at least 300 miles for customers globally.

The automaker also announced plans to invest $700 million to expand its Flat Rock Assembly Plant in Michigan into a factory that will build high-tech autonomous and electric vehicles along with the Mustang and Lincoln Continental. The expansion will create 700 direct new jobs.

The moves are part of a $4.5 billion investment in electrified vehicles by 2020, offering customers greater fuel efficiency, capability and power across Ford’s global vehicle lineup. The plans are part of the company’s expansion to be an auto and a mobility company, including leading in electrified and autonomous vehicles and providing new mobility solutions.

“As more and more consumers around the world become interested in electrified vehicles, Ford is committed to being a leader in providing consumers with a broad range of electrified vehicles, services and solutions that make people’s lives better,” said Mark Fields, Ford president and CEO. “Our investments and expanding lineup reflect our view that global offerings of electrified vehicles will exceed gasoline-powered vehicles within the next 15 years.”

Ford is focusing its EV plan on its areas of strength – electrifying its most popular, high-volume commercial vehicles, trucks, SUVs and performance vehicles to make them even more capable, productive and fun to drive.

The seven global electrified vehicles announced today include:

• An all-new fully electric small SUV, coming by 2020, engineered to deliver an estimated range of at least 300 miles, to be built at the Flat Rock plant and sold in North America, Europe and Asia
• A high-volume autonomous vehicle designed for commercial ride hailing or ride sharing, starting in North America. The hybrid vehicle will debut in 2021 and will be built at the Flat Rock plant
• A hybrid version of the best-selling F-150 pickup available by 2020 and sold in North America and the Middle East. The F-150 Hybrid, built at Ford’s Dearborn Truck Plant, will offer powerful towing and payload capacity and operate as a mobile generator
• A hybrid version of the iconic Mustang that will deliver V8 power and even more low-end torque. The Mustang Hybrid, built at the Flat Rock Plant, debuts in 2020 and will be available in the North America to start
• A Transit Custom plug-in hybrid available in 2019 in Europe engineered to help reduce operating costs in even the most congested streets
• Two new, pursuit-rated hybrid police vehicles. One of the two new hybrid police vehicles will be built in Chicago, and both will be upfitted with their police gear at Ford’s dedicated police vehicle modification center in Chicago
• In addition, Ford announces that its global utility lineup will be the company’s first hybrids powered by EcoBoost® rather than naturally aspirated engines, furthering improving performance and fuel economy.

The company also plans to be as aggressive in developing global electrified vehicles services and solutions. These include EV fleet management, route planning and telematics solutions.

Building the Future

To support the new era of vehicles, Ford is adding 700 direct new U.S. jobs and investing $700 million during the next four years, creating the new Manufacturing Innovation Center at its Flat Rock Assembly Plant. Employees there will build the all-new small utility vehicle with extended battery range as well as the fully autonomous vehicle for ride-hailing or ride-sharing – along with the iconic Mustang and Lincoln Continental.

“I am thrilled that we have been able to secure additional UAW-Ford jobs for American workers,” said Jimmy Settles, UAW vice president, National Ford Department. “The men and women of Flat Rock Assembly have shown a great commitment to manufacturing quality products, and we look forward to their continued success with a new generation of high-tech vehicles.”

This incremental investment in Flat Rock Assembly Plant comes from $1.6 billion the company previously had planned to invest in a new plant in Mexico.

Ford today announced it is cancelling plans for the new plant in San Luis Potosi, Mexico. It also announced that, to improve company profitability and ensure the financial as well as commercial success of this vehicle, the next-generation Focus will be built at an existing plant in Hermosillo, Mexico. This will make way for two new iconic products at Michigan Assembly Plant in Wayne, Michigan, where Focus is manufactured today – safeguarding approximately 3,500 U.S. jobs.

* * *

The Mexican peso is understandably unhappy following the news:

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Hold your real assets outside of the banking system in one of many private international facilities  –>    http://ift.tt/2cyFwvQ;

 

 

 

 

Silver Prices and the Russian Connection

Posted with permission and written by Gary Christenson (CLICK HERE FOR ORIGINAL)

 

 

 

Silver prices nearly reached $50.00 in April of 2011. They crashed to a low under $14 in December of 2015 and currently (December 2016) sit at about $16.

 

Silver prices, in our increasingly unreal debt based fiat currency world, streak higher and subsequently crash to unbelievable lows.

 

Option One: Silver prices are near the end of their correction and will rally substantially higher. Why? Exponential increases in debt and total currency in circulation lift the prices for nearly everything, including college tuition, cigarettes, the S&P, housing, health care, silver and gold. We have heard this before and we see the consequences of using our “fake money” every day.

 

Option Two: Silver prices reached a generational high in 2011 and will collapse even further in coming years. Why? Supposedly the crushing deflation will rule the world for several years and prices for stocks, bonds, real estate, gold and silver will crash to unbelievable lows. We have heard this before. Some prices will probably crash, but silver and gold should rise because they are real money and independent of (surging) counter-party risk.

 

The Silver to S&P 500 Ratio: This ratio shows the relative valuation of silver compared to stocks in the U.S. See the chart below for the ratio since 1990.

 

 

Silver is currently too low compared to the S&P 500 Index. We live in an exponential world – exponentially increasing debt, banker profits, silver prices, monetary nonsense and more. Examine the increase in U.S. national debt and the – more or less – parallel increase in silver prices – both on log scales.

 

 

 

Silver prices increase exponentially along with debt, currency in circulation, and consumer prices. However, if the world had cast aside economic delusions and returned to a world without central banks, fiat money, fractional reserve lending, unpayable debts … but I digress.

 

Assume that debt will continue to increase (it will as long as politicians and the Fed are “on the job”) and that the last 17 years of silver prices tell the story…

 

 

This chart uses a log scale and shows exponentially increasing prices. A green line connects highs since 2001 and another green line connects lows since 2001. The purple line is the geometric mean between the high and low boundary lines.

 

Prices are propelled higher above the purple line and then crash lower. Assume the purple line is an equilibrium line which suggests we will see the next multi-year move surge above the purple line.

 

Examine the deviation of the monthly price of silver as a percentage above or below the purple equilibrium line. Silver prices oscillate around the equilibrium line of zero on the following chart.

 

 

Silver is far below the equilibrium line and too low compared to its own exponential price history as well as compared to the S&P. The next major move should be UP!

WHY?

Ted Butler:

“The big theme, as I see it, is JPMorgan becoming more aggressive in acquiring physical silver and gold while at the same time reducing its COMEX short position in each almost as aggressively. It’s hard to imagine a more bullish backdrop for futures prices.”

Bill Holter: 

“I believe deflation will destroy financial assets and not stop until fiat currencies (including and specifically the dollar) themselves are destroyed. The coming credit event will wipe out currencies … and what is the result of grossly lower or worthless currencies? Hyperinflation.”

Currencies are created by increasing debt and are backed by nothing but hope, faith and confidence. Exponentially increasing debt is not sustainable. How long before the dollar, pound, yen and euro begin to resemble the Venezuelan and Argentinian currencies?

 

It is more sensible to own physical silver, knowing it is grossly undervalued compared to the S&P, national debt, total sovereign debt, and more.

THE RUSSIAN CONNECTION:

In accordance with the current blame-game promoted by the “fake news” diversions: We can blame Russia for HRC losing the election, releasing scandalous emails that the Democratic National Committee desperately wishes had remained private, the election of Trump, NSA spying on everyone, global terrorism, excess debt in the western world, the failure of hope and change, Federal Reserve monetary policy, unemployment, weak silver prices, strong stock markets, global bond market correction, the coming recession, derivatives disasters, slowing retail sales, Italian banking, cold weather, one brutally assassinated reindeer no longer able to pull Santa’s sleigh and a tardy delivery of goodies from the Easter Bunny next year…

 

 

Well … maybe Russia should not be blamed for all the above …

 

 

Please email with any questions about this article or precious metals HERE

 

 

 

 

Silver Prices and the Russian Connection

Posted with permission and written by Gary Christenson (CLICK HERE FOR ORIGINAL)

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Over the weekend we noted that the Washington Post was caught spreading “fake news” about an alleged attempt by “Russian hackers” to take over a Vermont Utility (see “Washington Post Caught Spreading More Fake News About ‘Russian Hackers’“).  Within hours of reporting that the “Russian hackers” had gained access to the electrical grid, the Burlington Electric Department in Vermont had to issue a statement confirming that the provocative Wapo story simply wasn’t true and that a laptop found to be infected with malware was never actually connected to the grid.  An embarrassed Wapo was subsequently forced to change it’s sensationalized headline and publish a retraction.

Now, as they often do, it appears this Wapo “fake news” rabbit holes gets even deeper.  Not only are “federal officials” now confirming that “Russian hackers” never targeted the Vermont electrical grid, but the whole mishap was derived from an employee’s attempt to check his Yahoo email account which, as Wapo reports, resulted in his computer connecting to a “suspicious IP address” that is “found elsewhere in the country suggesting the company wasn’t being targeted by Russians.“

The Post now reports that the Vermont utility hack was just an employee connecting to a flagged IP address… https://t.co/fapgFHt9aQ http://pic.twitter.com/zIGp0NEXnl

— Eric Geller (@ericgeller) January 3, 2017

 

Moreover, not only was the malware not linked to a specific attempt of “Russian hackers” to penetrate the U.S. electrical grid, the software in question isn’t even linked to the “Grizzly Steppe” group that the Obama administration says is behind the DNC and John Podesta email hacks.  Of course, this is a direct contradiction to the opening paragraph of Wapo’s original story which directly connected the Vermont “hack” back to “Grizzly Steppe”…apparently with no evidence whatsoever.

U.S. officials are continuing to investigate the laptop. In the course of their investigation, though, they have found on the device a package of software tools commonly used by online criminals to deliver malware. The package, known as Neutrino, does not appear to be connected with Grizzly Steppe, which U.S. officials have identified as the Russian hacking operation. The FBI, which declined to comment, is continuing to investigate how the malware got onto the laptop.

Wapo goes on to point out that the “murkiness of the information” makes it difficult to relay meaningful information to the public about alleged “hackings.” 

The murkiness of the information underlines the difficulties faced by officials as they try to root out Grizzly Steppe and share with the public their findings on how the operation works. Experts say the situation was made worse by a recent government report, which they described as a genuine effort to share information with the industry but criticized as rushed and prone to causing confusion. Authorities also were leaking information about the utility without having all the facts and before law enforcement officials were able to investigate further.

Here’s an idea, how about you simply avoid reporting “murky” information until you have all the facts?  But that wouldn’t help advance your “Russian hacking” narrative now would it?

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If this doesn’t deliver us to Dow 20,000 burger, nothing will.

What’s not to like over soaring sovereign bonds yields for some of the most indebted nations the world has ever known? Brace yourselves, inflation is coming.

Did you ever wonder how sharply higher borrowing costs for an economy with $20 trillion in debt might work out for proposed fiscal stimulus projects? We’ll soon find out!

The euro crapping out v the dollar is a daily occurrence.

And here’s Germany, land of the migrant. Bunds are up an astounding 10bps, a 53% move. Bankrupt Italy surging ahead too, all boolish news, apparently.

Lastly, here a small reminder of debt/GDP ratios. Economics. It used to matter.

Dow 20,000 here we come.

Content originally generated at iBankCoin.com

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About 3 months ago, Goldman’s year end S&P500 target for 2016, 2017 and 2018 were 2,100; 2,200 and 2,300 respectively. Then, as readers are well aware, everything changed with the Trump election which unleashed a surge in US equities and the dollar, on expectations of reflation and fiscal stimulus. That prompted Goldman to boost its S&P price target by roughly 200 points across the board, as it merely tried to keep up with the price action.

Understandably, there was some confusion, so to address it, overnight Goldman’s chief equity strategist David Kostin released his first “weekly kickstart” report, which summarized Goldman’s latest goalseeked forecasts for the S&P500 as follows: “S&P 500 rose 9.5% for a total return of 12.0% in 2016; We forecast a 5% total return in 2017“

The details:

[2016] year was a story of two halves: Cyclicals underperformed Defensives by 4 pp in the first half before reversing and outperforming by 18 pp in 2H. Energy was the best performing sector (+27%) while Health Care was the only sector with a negative full year return (-3%). Return dispersion averaged 25 pp ranking in the 43rd percentile vs. the last 30 years.

 

We expect dispersion will increase next year giving rise to better stock picking opportunities.

 

S&P 500 will rally to 2400 in 1Q 2017 alongside enthusiasm over corporate tax cuts but budget constraints will limit the magnitude of tax reform and fiscal spending and the index will fade to 2300 by year-end.

And the charts:

Finally, if anyone is still looking for absolute and risk-adjusted returns by key asset classes for 2016, here they are:

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The better than expected Manufacturing data in the US has promoted further USD buying, sending the USD Index above 2016 highs back to it highest since Dec 2002.

The USD has taken out recent highs…

 

And EURUSD has plunged through 2016 lows to its weakest against the USD since 2003…

(note the spike and weakness since China adjusted its currency basket weightings)

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