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Following the bump in Eurozone PMIs this morning, Markit reports November US manufacturing at 53.9 (better than 53.5 expected) and its highest since Oct 2015, showing "further signs of factories and their customers moving away from destocking to inventory-building amid a more optimistic outlook."

However, hope in the PMI survey seems to be decoupling from reality in actual production.

 

Under the covers, everything looks awesome with new orders rising (highest since Oct 2015), employment spiked to one of the largest of the year, and output jumped to its highest since March 2015.

Commenting on the flash PMI data, Chris Williamson, Chief Business Economist at IHS Markit said:

“US manufacturers enjoyed a strong post-election bounce in November, further tilting the scales toward the Fed hiking rates in December. Many factories reported that demand from customers had picked up as uncertainty about the election result cleared. Domestic demand rose especially sharply, helping to make up for subdued export growth, linked in turn to the strong dollar.

 

“The survey also found further signs of factories and their customers moving away from destocking to inventory-building amid a more optimistic outlook, accompanied by an upturn in hiring. The increase in employment was one of the largest seen so far this year.

 

“Inflationary pressures remained muted, with average prices charged barely rising, despite some further upward movement in many commodity prices.

 

“The buoyant post-election picture of the manufacturing economy and signs of increased optimism about the future will further fuel the conviction that the Fed will raise interest rates at its December 14th meeting, and may also raise the possibility that policymakers might be inclined to tighten somewhat more aggressively in 2017 than previously thought, although much of course also depends on the new government’s policy framework.”

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Submitted by Nick Cunningham via OilPrice.com,

Oil prices moved back up closer to $50 per barrel on the sudden surge in optimism surrounding an OPEC deal. With the meeting just days away, everybody is playing ball and sticking to the script, and the odds of an agreement have improved markedly compared to a few weeks ago.

Iraq offered three proposals to OPEC members, showing a renewed willingness to negotiate after weeks of disputing production data and demanding an exemption from the proposed cuts. Details of the proposal were kept quiet, but Iraqi officials sounded cooperative in an emailed statement. “Iraq’s legitimate demands should not be perceived as an obstacle to reaching a new agreement to freeze production,” Iraqi oil minister Jabbar al-Luaibi said, according to Bloomberg. Iraq is optimistic about “reaching a fair agreement that would take into consideration everyone’s interests and that puts an end to the glut.” Officials from Iran, Nigeria and even Russia also offered positive words about the prospects of an accord.

Oil prices shot up by more than 4 percent on Monday on the news. Oil has rallied once again in recent days after dropping into the low-$40s per barrel. Now back up close to the $50 per barrel threshold, OPEC has once again succeeded in jaw-boning the oil market.

Goldman Sachs hiked its oil price forecast this week by a substantial amount. The investment bank expects oil prices to average $55 per barrel in the first half of 2017, up sharply from the previous estimate of $45 to $50. The bank is now “tactically bullish” on oil. “With greater confidence that the global oil market can finally shift into deficit later next year, we now believe that there is a strong rationale for low-cost producers to deliver a swift production cut to normalize inventories,” Goldman analysts wrote in a research note this week. In fact, Goldman Sachs sees prices rising across a range of commodities next year.

The optimism has not trickled over into the oil futures market, at least not yet. Hedge funds and other money managers have stepped up their short bets on crude oil ahead of the OPEC meeting, covering against a steep downfall in prices should OPEC fail to come to terms. While the short positions on oil were notable, trading volume in general is way up. Bloomberg notes that as of mid-November, oil price volatility was at a seven month high. Bets on oil futures reached 1.47 million contracts for the week ending on November 15, the largest trading volume in nearly a decade.

But since mid-November, oil prices have increased, suggesting that some oil traders are closing out short positions, which could be because sentiment around the chances of an OPEC deal have improved. Further gains are possible as shorts are closed out.

At the same time, John Kemp of Reuters notes that the oil futures curve still does not look very good. The market is still in a state of contango, in which front month contracts are cheaper than oil futures further out. That is a sign that the markets still expect the glut of supply to continue. In fact, the difference between front month oil contracts and delivery six month out are actually wider than they were back in September when OPEC reached the Algiers agreement, which suggests an even gloomier outlook than two months ago.

 

In short, an OPEC agreement might spark a short-term rally, but unless they agree to real and sustained cuts, the poor fundamentals could ensure the price increases are temporary.

That last point is also key. OPEC may agree to something, but the details matter. OPEC is now producing at least 236,000 barrels per day (as of October) more than they were in September. That means that instead of needing to cut between 200,000 and 700,000 barrels per day in order to reach the stated goal of bringing output down into the range of 32.5-33.0 mb/d, OPEC will now need to make even sharper cuts – somewhere on the order of 600,000 to 1.1 mb/d. On top of that, the latest reports suggest that OPEC is discussing a six month agreement rather than one that would last a year. The idea is that it would require less of a sacrifice for OPEC members, particularly for Iraq and Iran who are still holding out. Of course, if OPEC cuts for six months and then the agreement expires, the effort will produce very little in the way of balancing the market.

Finally, assuming OPEC does the unthinkable and actually agrees to substantive and sustained cuts in output, they will likely succeed in pushing up oil prices. But that then merely throws a lifeline to U.S. shale, which could come back to life if oil prices move closer to, say, $60 per barrel. Even today, with prices below $50 per barrel, the rig count has been climbing for half a year, and now stands at 588 rigs as of last week, up almost 200 rigs from May. Gains in the rig count will only pick up pace of OPEC agrees to cut its output.

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Picking up the torch on the most hotly debated topic by the humiliated US mainstream media, namely the spread of so-called “fake news” (not to be confused with Brian Williams lying for years on prime time TV, and which until recently was branded far simply as “conspiracy theory”), German Chancellor Angela Merkel warned on Wednesday against the power of fake news on social media to roil the establishment and to spur the rise of populists, after launching her campaign for a fourth term.

Speaking in parliament for the first time since her announcement Sunday that she would seek re-election next year, Merkel cautioned that public opinion was being “manipulated” on the internet.

“Something has changed — as globalisation has marched on, (political) debate is taking place in a completely new media environment. Opinions aren’t formed the way they were 25 years ago,” she said.

Quoted by France 24, she said that “Today we have fake sites, bots, trolls — things that regenerate themselves, reinforcing opinions with certain algorithms and we have to learn to deal with them.” The chancellor said the challenge for democrats was to “reach and inspire people. However, should that fail, Merkel essentially suggested the time for censorship has come: “we must confront this phenomenon and if necessary, regulate it.“

She said she supported initiatives by her right-left coalition government to crack down on “hate speech” on social media in the face of what she said were “concerns about the stability of our familiar order”.

She warned that “Populism and political extremes are growing in Western democracies.”

Merkel’s warning comes a week after Google and Facebook (which overnight was revealed to have a “tool” ready to implement regional censorship) moved to cut off ad revenue to bogus news sites after a US election campaign in which the global misinformation industry may have influenced the outcome of the vote.

Perhaps a reason for Merkel’s concern is that while her conservative Christian Democrats are largely favourites to win the German national election, expected in September or October 2017, she is facing a strong challenge from a resurgent rightwing populist party, Alternative for Germany (AfD), which has her liberal refugee and migration policy in its crosshairs.

* * *

Meanwhile, just as Merkel was launching Europe’s war on “fake news”, Europe’s bureaucrats were one step ahead, and in a shocking move, on Wednesday the EU Parliament voted on a non-legislative resolution which calls for the EU to “respond to information warfare by Russia.” Russian news websites RT and Sputnik news agency were alleged to be among the most dangerous “tools of Russian propaganda.”

A total of 691 lawmakers participated in the vote: 304 voted in favor of the resolution dubbed ‘EU strategic communication to counteract propaganda against it by third parties’, 179 voted against and 208 abstained from voting. Authors of the document equate counteracting Russia with the resistance to Daesh terrorist group and call on EU member states to boost financing counter-propaganda projects.

Written by a Polish member of the European Conservatives and Reformists (ECR) group, Anna Fotyga, the report alleged that Moscow aims to “incite fear and divide Europe,” and called for the establishment of measures to tackle the perceived Russian propaganda threat. The report suggests that Moscow provides financial support to opposition parties and organizations in EU member states, causing disintegration within the bloc.

In other words: to counter alleged Russian propaganda, Europe is unleashing it own, very much formal counter-propaganda. 

As a result of the vote, Russia is now accused of “information warfare,” with such entities as RT TV channel, Sputnik news agency, Rossotrudnichestvo federal agency and the Russkiy Mir (Russian World) fund alleged to be among its most threatening propaganda “tools.”

The document also places Russian media organizations alongside terrorist groups such as Islamic State (IS, formerly ISIS/ISIL).

Sputnik has already appealed to the UN, the Organization for Security and Co-operation in Europe (OSCE) and a number of international journalists’ organizations and NGOs, including Reporters Without Borders, to take measures to stop what it considers to be interference into freedom of speech in the EU. “The resolution hits straight at a number of respected media, including Sputnik agency, and has an aim to stop their activity in the EU. Moreover, the resolution bluntly contradicts the  EU’s own human rights and freedom of press norms,” reads the letter signed by Sputnik Editor-in-Chief Margarita Simonyan.

* * *

Shortly after the vote Vladimir Putin slammed the EU parliament resolution against Russian media. He said that Europe is trying to “teach” Russia democracy. Putin added that the EU Parliament’s resolution demonstrates “political degradation” in regard to the “idea of democracy” in the West. He also pointed out that while “everyone tries to lecture” Russia on democracy, European lawmakers themselves resort to a policy of restrictions, “which is not the best way” to deal with any issues.

“More recently — and these attempts are still ongoing — they [European officials] tried to ‘teach us’ democracy, and we have always heard from these ‘teachers’ that the most vicious way to do business with opponents is to ban something and that it is not consistent with the principles and norms of democracy. Open discussion is always the best way,” Putin said.

Adding that he hopes the Western move to “counter Russian propaganda” won’t lead to serious restrictions, the president congratulated RT and Sputnik journalists on their work.

He concluded that the EU parliament resolution is an “evident sign of degradation of the Western society’s vision of democracy,” Putin said. It is curious how many “western society” citizens agree with him.

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As Chinese Yuan collapses to fresh lows (USD Index spikes), and bond yields surge, this morning's durable goods data sparked an extended collapse in gold, crashing them below $1200 as over $6 billion of pressure flowed through futures.

EUR down, Stocks down, Bonds down, Gold down…

Yuan just keeps crashing…

 

Bonds are dumped as USD soars…

 

Sending gold reeling… as 50,000 contracts are dumped

 

The gold liquidity moment started it (around 0825ET) but the US macro data sparked the break below $1200…

 

Pushing Gold to its lowest since Feb…

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Durable Goods Orders jumped 4.8% MoM in October, the highest since the October 2015 (start of government fiscal year) bounce last year, thanks to a yuuge in transportation orders (up 12.0%) which included a surge in orders for civilian aircraft (up 138.5%) and military aircraft new orders (up 33.1%). However, Core Capital Goods Shipments, i.e. true CapEx, has now declined 15 straight months year-over-year (the longest non-recesionary streak in history).

Lots of excitement that Durable Goods (ex transport) turned green year-over-year for the first time since Dec 2014.

 

But away from the unsustainable Boeing and Military orders…

 

And, Core Capital goods shipments continue to decline…

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As was speculated yesterday in various media outlets, moments ago Bloomberg confirmed that Ben Carson, the man who ran for president then said he wouldn’t feel comfortable having a role in the Trump administration because he has no government experience, has been formally offered the position of secretary of the Department of Housing and Urban Development.

As AP adds, a person close to Carson, who was not authorized to discuss the offer publicly, told The Associated Press Carson would spend his Thanksgiving mulling over whether to accept the position. Earlier in the day, Donald Trump tweeted that he was “seriously considering” Carson as the head of HUD because he’s a “greatly talented person who loves people!” Carson was also being floated as potential secretary of education or health and human services, AP reports.

Carson’s business manager, Armstrong Williams, previously said the “last thing” Carson would want to do was “take a position that could cripple the presidency,” but he would be open to considering a role if Trump made it clear there was no one else for the job — this must mean the only option is having a retired neurosurgeon lead the government agency that strengthens the housing market to bolster the economy and protect consumers and utilizes housing as a platform for improving quality of life.

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Following news that its Alzheimer’s drug has failed final stage trials, Eli Lilly stock is crashing this morning to 2 year lows. The ‘safe haven’, ‘paid-to-wait’ stock has tumbled almost 15% – erasing over 6 years of dividends, and sparking contagious selling across Biotech stocks.

As The FT reports, many analysts and investors had been expecting the medicine, Solanezumab, to show efficacy in patients suffering from mild dementia due to the disease, after previous trials showed it slowed the disease by roughly a third in early-stage patients, reports David Crow in New York.

However, the company said that while many of the results “directionally favoured the drug, the magnitudes of differences were small” and, as such, it has no plans to seek regulatory approval.

 

“The results of the Solanezumab trial were not what we had hoped for and we are disappointed for the millions of people waiting for a potential disease-modifying treatment for Alzheimer’s disease,” said John Lechleiter, chief executive officer, Lilly.

 

He added: “We will evaluate the impact of these results on the development plans for Solanezumab and our other Alzheimer’s pipeline assets.”

And thus the disappointment.

 

So much for that 2.68% dividend yield.

And other Biotech stocks are taking it on the chin, such as Biogen, which is also running trials on its own Alzheimer drug…

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Submitted by Carey Wedler via TheAntiMedia.org,

As protesters continue to stand against the proposed Dakota Access Pipeline in North Dakota, facing off against heavily militarized police and their water cannons, rubber bullets, tear gas, and tasers, they have gained broad support. Celebrities and millions of social media users have raised awareness about the situation in North Dakota, and now, the “water protectors” have earned support from another group: veterans.

According to an article published by Business Insider that first appeared in Task and Purpose, a military-oriented news and culture site, two veterans are leading the charge in a show of dissent against the increasingly aggressive police. In the last several months, tensions have escalated as Natives and their allies have blocked the pipeline’s construction, citing fears surrounding water will be endangered and sacred burial sites will be destroyed (not to mention the fact their lands were forcibly stolen by the U.S. government over a century ago).

“This country is repressing our people,” says Michael A. Wood Jr., a Marine Corps veteran who recently retired from the Baltimore police force to work toward reforming law enforcement. “If we’re going to be heroes, if we’re really going to be those veterans that this country praises, well, then we need to do the things that we actually said we’re going to do when we took the oath to defend the Constitution from enemies foreign and domestic,” he asserted about his plans to go to Standing Rock.

Woods Jr. is joined by Wes Clark Jr. Clark Jr. is the son of General Wesley Clark, the famous military leader who once warned that shortly after 9/11, the government had its eyes on Iraq, Syria, Lebanon, Libya, Somalia, Sudan, and Iran. Clark would later attempt to distance himself from those statements but still managed to convince his son, a member of the Army at the time, to stay away from Iraq.

“I was like, ‘I’m going back in. I’m going to go in there and fuck people up,’” Clark Jr. recalls of his desire to fight for the military after 9/11. He later changed his mind after his father warned him, as Task and Purpose summarized, “that as a soldier he would be fighting a war that had nothing to do with defeating al Qaeda.”

Now, Wood Jr. and Clark Jr. are attempting to organize a mass, nonviolent protest against police action in North Dakota. Just this past weekend, a female protester was hit with a concussion grenade, causing severe damage to her arm and requiring surgery.

Other have been tear gassed, tased, beaten, and shot with rubber bullets. Anti-Media journalist Derrick Broze was tased by law enforcement immediately after he declared he was a member of the media. Another journalist was shot with a rubber bullet while standing away from a gathering of protesters as she interviewed an attendee.

Police have made over 470 arrests since August, and the Indigenous Environmental Network claims 167 people were injured just this past Sunday when police deployed water cannons in freezing weather.

Clark, a contributor to the Young Turks, explained that aside from the flagrant violations protesters are subject to in North Dakota, Natives are especially deserving of veteran support:

“First Americans have served in the Unites States Military, defending the soil of our homelands, at a greater percentage than any other group of Americans. There is no other people more deserving of veteran support,” he said.

According to a Facebook event the two men created called “Veterans Stand for Standing Rock,” those who join the effort will arrive at the protest site on December 4, where they will stay until December 7.

The event description reads:

“Come to Standing Rock Indian Reservation and hold the line with Wes Clark jr, Michael Wood Jr, Tulsi Gabbard and hundreds of other veterans in support of the Sioux nation against the DAPL pipeline. Bring Body armor, gas masks, earplugs AND shooting mufflers (we may be facing a sound cannon) but no drugs, alcohol or weapons.”

Clark Jr. was clear he was not looking for violence and that the protest would be unarmed.

“We’re not going out there to get in a fight with anyone,” he said. “They can feel free to beat us up, but we’re 100% nonviolence.”

As Task and Purpose explained:

“With an eye toward the media, old military uniforms will be donned so that if the veterans are brutalized by the police, they are brutalized not as ordinary citizens, but as people who once served the government they are protesting against.”

The event page makes it clear that the group will not tolerate “hate, violence or divisive behavior of any kind.”

“We’re doing this to support our country,” they advise, “so let’s do it with honor, working together. We can stop this savage injustice being committed right here at home. If not us, who? If not now, when?”

Over 250 veterans have already committed, but organizers hope to have a group of 500 or more by the time they head to Standing Rock.

Once there, the  veterans intend to engage in a traditional native healing ceremony with protesters, with whom they have been coordinating, according to the veterans. Then, protective gear like gas masks and body armor will be issued to anyone who needs it. The soldiers will march to bagpipes and Sioux war songs as they head to the banks of the Missouri River to meet police.

“Then, the veterans and their allies — or at least the ones who are brave enough — will lock arms and cross the river in a ‘massive line’ for their ‘first encounter’ with the ‘opposing forces.’”

Though the veterans have adopted a strict policy of nonviolence, they refuse to back down and apparently hope to use their military status to spotlight the egregious behavior of the police.

“We’ll have those people who will recognize that they’re not willing to take a bullet, and those who recognize that they are,” says Wood Jr. “It’s okay if some of them step back, but Wes and I have no intention of doing so.”

Veterans Stand for Standing Rock is accepting donations to cover food, transportation, and supplies for those who travel to North Dakota. You can donate here. You can also donate directly to the water protectors.

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In the first woman appointment to Trump’s administration, South Carolina Govenor Nikki Haley has accepted the president-elect’s offer to be his ambassador to the United Nations, NBC News reported this morning. The daughter of immigrants from India, Haley served three terms in South Carolina’s State House before winning the governorship in 2010 and again in 2014. A two-term governor, Haley, 44, initially backed Trump rivals Sen. Marco Rubio and then Sen. Ted Cruz during the GOP battle for a White House nominee.

She is the first woman in the state’s history to hold the role and only the nation’s second Asian-American governor.

If confirmed, Haley would succeed Samantha Power, who served as President Barack Obama’s U.N. ambassador since 2013, and who has been the most vocal opponent of the Russian regime’s overtures in the United Nations.

Trump transition team @Scaramucci: Nikki Haley has enormous amount of respect across parties https://t.co/NIkkkdaa1Q https://t.co/rIcEwwDHMz

— New Day (@NewDay) November 23, 2016

Haley has little direct foreign policy experience. She has spent time overseas negotiating trade deals for South Carolina businesses, but she has never served in a roll directly related to American foreign policy, or any other role in the federal government. As such, she is likely to draw scrutiny during Senate confirmation hearings for the Cabinet-level position. Haley would be the first ambassador since Madeleine Albright never to have served in any other role in the federal government before heading to Turtle Bay.

In what has been dubbed a “remarkable” shift in the president-elect’s mindset, Trump’s selection of Haley caps a dramatic year for their political relationship. They started 2016 with a fight and are ending it as allies in a nascent Trump administration, suggesting that far from bearing grudges Trump is willing to reconcile in the name of national interests.

The pair feuded in January after Haley’s Republican response to President Barack Obama’s State of the Union, during which she took a thinly-veiled swipe at Trump, warning against “the siren call of the angriest voices.”  Haley told Matt Lauer the following morning that then-candidate Trump “has definitely contributed to what I think is just irresponsible talk.”

“If we have citizens who are law-abiding, who love our traditions, who do everything to be productive citizens in America, they should feel welcome in this country,” Haley said. “The reason this country is so great is because the fabric of this country was made by immigrants, and its legal immigrants.”

In February, she called Trump “everything a governor doesn’t want in a president.” The following month Haley endorsed Rubio in the South Carolina primary. Following Rubio’s loss and subsequent withdrawal from the race, Haley said it was her “hope and prayer” tha Cruz would win the Republican nomination.

By the Republican National Convention in July, though, Haley had warmed enough to Trump to say she planned to vote for him in a tepid endorsement to MSNBC’s Jacob Soboroff.

“I would not be here if I didn’t want to make sure that Hillary [Clinton] was not going to be the next president,” Haley said in July.

Haley is married to a captain in the Army National Guard who served in Afghanistan, and has two teenage children, according to her biography on the state’s website.

As The Hill adds, back in South Carolina, Haley’s selection will have a significant impact on the race to replace her in 2018. If Haley becomes the next ambassador to the United Nations, she would be succeeded by Lt. Gov. Henry McMaster (R), who has had his own conversations with the incoming Trump administration. cMaster, the first major South Carolina politician to back Trump during the primaries, had considered running to replace Haley when term limits barred her from a third term in 2018. If Haley were to leave the state before her term expires, McMaster would likely get a leg up on a potentially crowded primary in 2018.

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