Category: zerohedge

Authored by Kevin Muir via The Macro Tourist blog,

I know all the cool kids like to quote Nassim Taleb and give dire warnings about the coming collapse of risk assets, but I must have too many years of playing Dungeons & Dragons because I just can’t seem to join their club. I don’t see the same black swans that everyone else does.

Central Banks have gone giant-golden-crowned-flying-fox batshit crazy, and instead of looking at the possibility that this unprecedented science experiment explodes in a fiery inflationary explosion to the upside, the “in-crowd” are all convinced the collapse has to look exactly like 2008 (only worse).

And yeah, there is no doubt that given the stretched valuations in risk assets, a Central Bank tightening error might have catastrophic consequences. Yet, I believe there is at least an equal chance that Central Bankers have made (or will make) a colossal overshoot error. You are probably getting bored with my posting of the chart of Central Bank balance sheets, but I am amazed at how these Central Bankers can write billions of dollars of blue tickets, and we don’t bat an eye.

The Swiss National Bank owns $85 billion of US equities. F’ me. That’s just absurd.

Central Banks are printing money out of thin air and buying stocks with it. Stop a moment and really take that in. Short term interest rates are negative in many parts of the developed world. Negative! How do you price equities with negative interest rates and Central Banks competing with blue tickets?

But hey! What do I know? Maybe all this extreme monetary stimulus means that when the business cycle finally kicks in, the fall will be all the more violent. That’s certainly the prevalent thinking amongst the “cool kids.”

And while a good portion of this crowd is busy buying VIX and shorting stocks, the more sophisticated are buying protection on corporate bonds. This trade has much less negative carry and presents a much better asymmetrical risk reward profile. Corporate bonds can, at best, only return the interest, but can lose the whole principal.

So when a trader looks at the current high yield spread on the 10 year CSI Barclays index, which is trading at 361 basis points, it seems like betting against corporate bonds is a cheap wager. After all, if they are wrong, it costs less than 4% a year. But if they are correct, then this spread could easily double to 8% like 2015 and 2011, or even spike to 20% like 2008!

This trade made legends of the few hedge fund gurus who were long CDX protection during the Great Financial Crisis. And since this huge win is embedded in all the hedgies’ minds, everyone now envisions themselves putting on the next Big Short.

Carl Icahn even went so far to make a video, fittingly named “Danger Ahead,” outlining the disaster that is coming in high yield bonds.

In the video, Carl highlights how he is buying protection on high yield bonds anticipating rising defaults and spreads blowing out. The problem for all of us without ISDAs, this trade is out of reach. Sure we could short the HYG ETF and buy government bonds in some form on the other side, but this is not a capital efficient way to put on the trade.

What is needed is a listed derivative instrument that tracks the high yield spread index. And I thought we were out luck until I received a call from Corry at ICE Futures. Much to my surprise, ICE has a couple of contracts based on Markit’s CDX Investment Grade (IG) and High Yield (HY) indexes. I could barely contain my excitement. This sort of product is perfectly suited for traders that either don’t have access to OTC products, or want the benefits of trading a listed product.

Corry sent me a PDF with the products’ details. I uploaded it and you can download it here. Or alternatively, you can navigate to the ICE website to the credit index section.

Now I realize that these futures contracts are still in their infancy. There is not a ton of open interest, and the volume is small.

Yet there are market makers continually providing decent two sided markets. And most importantly, the underlying index that the future expires into are OTC benchmarks.

All of a sudden, you can be just as cool as Carl Icahn, and buy protection on the CDX HY CDSI S28 5Y swap.

There is one slight problem for us Interactive Brokers users – IB has not yet listed the product. Corry says it is in the works, but if you are an IB client that wants to trade it, then a request from more clients would probably help speed the process along.

Although I have no desire to join the cool kids and get long CDX protection, I know that many of you have asked for efficient way to put this trade on. Now there is a product that levels the playing field for the little guy. It is in all of our interest that this product succeed. Who knows, someday I might be cool enough to leave the geek table in the cafeteria, and I would love for there to be liquid listed CDX products to trade.

In the meantime, I will agree with Carl that high yield bonds are a disaster in the making. But where I differ is that I believe all fixed income will be a problem. Carl is convinced that credit will be the epic center of pain for the next crisis. I think duration risk is by far more worrisome. I, therefore, have no desire to short high yield credit and go long government bonds (which is what the CDX swap tracks).

But it’s great to know that you can climb aboard Carl’s train, and get long CDX protection. Just be careful you don’t make Carl mad – you don’t want him yelling at you -it’s not pretty.

via http://ift.tt/2wyVSj7 Tyler Durden

On January 16, 2013, the Bundesbank shocked the world: out of the blue, the German central bank announced that by December 31, 2020, it intends to store half of Germany’s gold reserves in its own vaults in Germany, up from only 31% at the time. The plan would mean repatriating a total of 674 tonnes of gold, 300 from the New York Fed’s gold vault, and another 374 from the Bank of France. The transfer, the Bundesbank explained, was meant to “build trust and confidence domestically, and the ability to exchange gold for foreign currencies at gold trading centers abroad within a short space of time.”

The “politically correct” motives for the transfer, as well as the logistics and the mechanics behind it were explained in a March 2015 video released by the Bundesbank…

… the real reasons, however, is that following several reports on this website which cast doubts on Germany’s gold holdings, in late 2012 the German Court of Auditors demanded that the Bundesbank undertake an audit of its gold reserves. Specifically, the court wanted to ensure that the nearly 3400 tons of gold, of which more than 2,000 tonnes held offshore, is in fact in existence – ‘because stocks have never been checked for authenticity and weight‘.  The move to repatriate was only accelerate following rumors that much of the offshore-held gold might have been “rehypothecated”, and not be there anymore, that it might have been melted down, leased, or sold.

Ironically, at the time, Bundesbank Board member Carl-Ludwig Thiele told the Handelsblatt that these moves were a “trust-building” measure, and he tried vigorously to put the rumors about the missing gold to rest. Of course, repatriating your gold from foreign central banks is precisely the opposite of a “demonstration of confidence.”

Even more ironic is that speaking to Forbes, a Bundesbank spokesman said in Jan 2013 that “we have no intention to sell gold,” adding that “[the relocation] is in case of a currency crisis.”  A mildly paradoxical argument since the officially stated reason for the repatriation the gold was to “build trust and confidence domestically, and to have the ability to sell gold quickly If needed.”

What made matters worse is that at the end of 2013, the Bundesbank announced it had managed to repatriate only 37 tonnes of the total 700 scheduled for redemption, further spooking the local population and suggesting that conspiracy theories that the gold was missing were in fact accurate.

As a result, following blowback from both the media and the public, the Bundesbank accelerated its activity, and repatriated 120 tonnes in 2014, 210 in 2015, and another 216 in 2016, implying that the Bundesbank’s faith in its foreign central bank peers had declined in inverse proportion to the accelerating redemption schedule.

Finally, Germany’s push to redomicile its gold also prompted a similar repatriation by the Netherlands.

* * *

So fast forward to August 23, 2017 when in what appears to have been a very big hurry, and well over three years ahead of schedule, the Bundesbank today announced it had “completed its gold transfer process earlier than originally planned.”

The news should not come as a surprise: back in February the Bundesbank announced that it had already concluded the transfer of all the planned gold from New York, leaving only French gold to be repatriated. And, as of today, that too has been completed. From the press release:

The Bundesbank has completed its gold transfer process earlier than originally planned. After the gold in New York was able to be transferred ahead of schedule in 2016, roughly 91 tonnes of gold still remained in Paris. This was relocated to Frankfurt this year and as a result, there are no longer any German gold reserves in Paris. “This closes out the entire gold storage plan – around three years ahead of the time we were aiming for,” reported Carl-Ludwig Thiele, Member of the Bundesbank’s Executive Board, referring to the gold storage plan unveiled in 2013. This plan saw the Bundesbank storing half of Germany’s gold reserves in its own vaults in Frankfurt am Main from 2020 onwards, requiring the phased transfer of approximately 300 tonnes of gold from New York and about 374 tonnes of gold from Paris.

 

The following table gives an overview of the gold transferred.

 

 

The Bundesbank had verification measures in place throughout the entire transfer process – from when the gold was removed from the storage locations abroad until it was placed back in storage in Frankfurt am Main – to ensure that it was Germany’s gold reserves that were being transferred. Once they arrived in Frankfurt am Main, all the transferred gold bars were thoroughly and exhaustively inspected and verified by the Bundesbank. When the inspections of transfers had been concluded, no irregularities came to light with regard to the authenticity, fineness or weight of the bars.

 

In spring 2018, the Bundesbank will publish an updated version of its gold bar list as at 31 December 2017 on its website.

And so, Germany’s repatriation of 674 tonnes of gold, lifting the amount of gold held domestically to 1,710 tonnes or 50.6% of total, is complete. After today Germany will still have 1,236 tonnes of gold at the NY Fed, and another 432 at the Bank of England.

Why this unexpected scramble to repatraite so much gold 3 years ahead of the 2020 stated schedule, remains a “mystery.”

via http://ift.tt/2wyZNNd Tyler Durden

Following this morning's plunge in new home sales…

 

After household formation collapsed in June…

It appears Institutional Risk Analyst's Chris Whalen is spot on with his mortgage finance update: "Winter Is Here"…

After several weeks on the road talking to mortgage professionals and business owners, below is an update on the world of housing finance.  We hope to see all of the readers of The Institutional Risk Analyst in the mortgage business at the Americatalyst event in Austin, TX, next month.

The big picture on housing reflected in the mainstream media is one of caution, as illustrated in The Wall Street Journal. Borodovsky & Ramkumar ask the obvious question:  Are US homes overvalued? Short answer: Yes.  Send your cards and letters to Janet Yellen c/o the Federal Open Market Committee in Washington.  But the operating environment in the mortgage finance sector continues to be challenging to put it mildly.

As we’ve discussed in several forums over the past few years, home valuations are one of the clearest indicators of inflation in the US economy.  While members of the tenured world of economics somehow rationalize understating or ignoring the fact of double digit increases in home prices along the country’s affluent periphery, sure looks like asset price inflation to us.

In fact, since WWII home prices in the US have gone up four times the official inflation rate.

 “Houses weren't always this expensive,” notes CNBC. “In 1940, the median home value in the U.S. was just $2,938. In 1980, it was $47,200, and by 2000, it had risen to $119,600. Even adjusted for inflation, the median home price in 1940 would only have been $30,600 in 2000 dollars, according to data from the U.S. Census.”

Inflation, just to review, is defined as too many dollars chasing too few goods, in this case bona fide investment opportunities.  A combination of slow household formation and low levels of new home construction are seen as the proximate cause of the housing price squeeze, but higher prices also limit the level of existing home sales.  Many long-time residents of high priced markets like CA and NY cannot move without leaving the community entirely. So they get a home equity line or reverse mortgage, and shelter in place, thereby reducing the stock of available homes.

Two key indicators that especially worry us in the world of credit is the falling cost of defaults and the widening gap between asset pricing and cash flow.  Credit metrics for bank-owned single-family and multifamily loans are showing very low default rates.  More, loss-given default (LGD) remains in negative territory for the latter, suggesting a steady supply of greater fools ready to buy busted multifamily property developments above par value.  We can’t wait for the FDIC quarterly data for Q2 2017 to be released later today as we expect these credit metrics to skew even further.

Single-family exposures are likewise showing very low default rates and LGDs at 30-year lows, again suggesting a significant asset price bubble in 1-4 family homes.  The fact that many of these properties are well under water in terms of what the property could fetch as a rental also seasons our view that we are in the midst of a Fed-induced investment mania.

For every seller in high priced states that finds current prices impossible to resist, there are several ready buyers. But the crowd of buyers is thinning. Charles Kindleberger wrote in his classic book, “Manias, Panics and Crashes,” in 1978:

“Financial crises are associated with the peaks of business cycles. We are not interested in the business cycle as such, the rhythm of economic expansion and contraction, but only in the financial crisis that is the culmination of a period of expansion and leads to downturn.”

One of the interesting facts about the mortgage sector in 2017 is that even though average prices have more than recovered from the 2008 financial crisis, much of the housing stock away from the desirable periphery has not really bounced.  This is yet another reason why existing home sales at a bit over a million properties annually have gone sideways for months.  The 600,000 or so new housing starts is half of the peak levels in 2005, but today’s level may actually be sustainable.

We had the opportunity to hear from our friend Marina Walsh of the Mortgage Bankers Association at the Fay Servicing round table in Chicago last week.  Mortgage applications have been running ahead of last year’s levels, yet overall volumes are declining because of the sharp drop in refinancing volumes.  We disagree with the MBA about the direction of benchmarks such as the 10-year Treasury bond.  They see 3.5% yields by next year, but we’re still liking the bull trade.  But even a yield below 2% will not breath significant life into the refi market.

Though prices in the residential home market remain positively frothy in coastal markets, profitability in the mortgage finance sector continues to drag.  Large banks earned a whole 15 basis points on mortgage origination in the most recent MBA data, while non-banks and smaller depositories fared much better at around 60-70bps.  But few players are really making money.

During our conversations over the past several weeks, we confirmed that the whole residential housing finance industry is suffering through some of the worst economic performance since the peak levels of 2012. The silent crisis in non-bank finance we described last year continues and, indeed, has intensified as origination margins have been squeezed by the market's post-election gyrations.

Looking at the MBA data, if you subtract the effects of mortgage servicing rights (MSR) from pre-tax income, most of the industry is operating at a significant loss.  The big driver of the industry’s woes is regulation, both as a result of the creation of the Consumer Finance Protection Bureau and the actions of the states.

Regulation has pushed the dollar cost of servicing a loan up four fold since 2008.  From less that $100 per loan in 2008, today the full-loaded cost of servicing is now $250, according to the MBA.  The cost of servicing performing loans is $163 vs over $2,000 for non-performing loans.

Source: MBA

As one colleague noted at the California Mortgage Banker’s technology conference in San Diego, “every loan is a different problem.” But nobody in the regulatory community seems to be concerned by the fact that the cost of servicing loans has quadrupled over the past eight years.  The elephant in the room is compliance costs, which accounts for 20% of the budget for most mortgage lending operations.

Technology Driving Down Costs

To some degree, technology can be used to address rising costs.  But when it comes to unique events spanning the range from legitimate consumer complaints to a phone call to follow-up on a past request or spurious inquiries, none of these tasks can be automated.  The obsession with the wants and needs of the consumer has led the mortgage industry to some truly strange behaviors, like Nationstar (NYSE:NSM) deciding to rename itself "Mr. Cooper."

Driven by the atmosphere of terror created by the CFPB, the trend in the mortgage industry is to automate the underwriting and servicing process, and make sure that all information used is documented and easily retrieved. The better-run mortgage companies in the US use common technology platforms to ensure a compliant process, but leave the compassion and empathy to humans.

By using computers to embed the rules into a business process that is compliant, big steps are being made in terms of efficiency. Trouble is, this year many mortgage lenders are seeing income levels that are half of that four and five years ago.  Cost cutting can only go so far to addressing the enormous expense inflation resulting from excessive regulation and revenue compression due to volatility in the bond market.

Avoiding errors and therefore the possibility of a consumer complaint (and a regulatory response) is really the top priority in the mortgage industry today. As one CEO opined: “Sometimes the best customer experience is consistency in terms of answering questions and quickly as possible and communicating in a courteous and effective fashion.”

All of this costs time and money, and then more money.  Our key takeaway from a number of firms The IRA spoke with over the past three weeks is that response time for meeting the needs of consumers and regulators is another paramount concern.

Being able to gather information, solve problems and then document the response to prove that the event was handled correctly is now required in the mortgage industry.  But as one senior executive noted: “Sometimes people are easier to change than systems.”

So in addition to the FOMC, banks and mortgage companies can also thank the CFPB and aspiring governors in the various states for inflating their operating costs for mortgage lending and servicing by an order of magnitude since the financial crisis.  This is all done in the name helping consumers, you understand, but at the end of the day it is consumers who pay for the inflation of living costs like housing.  Investors and consumers pay the cost of regulation.  

Over the past decade since the financial crisis, the chief accomplishment of Congress and regulators has been to raise the cost of buying or renting a home, while decreasing the profitability of firms engaged in any part of housing finance.  We continue to wonder whether certain large legacy servicing platforms — Walter Investment Management (NYSE:WAC) comes to mind — will make it to year-end, but then we said that last year.

Like the army of the dead in the popular HBO series “Game of Thrones,” the legacy portion of the mortgage servicing industry somehow continues to limp along despite hostile regulators and unforgiving markets.  Profits are failing, equity returns are negative and there is no respite in sight.  Even once CFPB chief Richard Cordray picks up his carpet bag and scuttles off to Ohio for a rumored gubernatorial run, business conditions are unlikely to improve in the world of mortgage finance. Winter is here.

via http://ift.tt/2w4oIEU Tyler Durden

Kim Jong Un is once again showing the US exactly how disinterested he is in negotiating any settlement – particularly one that ultimately forces North Korea to surrender its nuclear weapons: To wit, Kim ordered more rockets and warheads during a televised visit to a local munitions factory just hours after Secretary of Defense James Mattis praised Kim’s “restraint” for not having launched any new missile strikes since the latest round of UN sanctions took effect on Aug. 5. Mattis also reiterated that the Trump administration would be open to talks.

Here’s Mattis (via the Wall Street Journal):

“I am pleased to see that the regime in Pyongyang has certainly demonstrated some level of restraint that we have not seen in the past,” Mr. Tillerson said in a news briefing in Washington. “We hope that this is the beginning of this signal that we have been looking for.”

To be sure, if the “Mad Dog” was looking for signs of a détente from North Korea, he’s bound to be disappointed. Though the date of Kim’s visit to the munitions factory wasn’t disclosed, the North Korean leader could clearly be heard ordering the program to press ahead with its quest to develop a nuclear warhead that could reliably target the Continental US. He also showed off two new additions to his arsenal.

“Mr. Kim’s visit, the date of which wasn’t disclosed by Pyongyang in its report Wednesday, underscores North Korea’s continued investment in its ability to threaten the continental U.S. with a nuclear-tipped long-range missile.”

As WSJ notes, while Kim’s temporary discontinuation of the missile tests has been perceived as an encouraging sign by some, the real issue is the North’s nuclear program, and any progress their engineers might be making. US intelligence agencies believe the Kim regime possess the capability to reach the US with an ICBM.

From Mattis, any statement connoting positivity regarding the relationship between the US and North is indeed rare. The general has typically backed his boss’s aggressive tone when speaking about the isolated nation publicly, like he did during an appearance on Fox & Friends earlier this month…  

“Defense Secretary James Mattis warned North Korea in stark terms on Wednesday that it faces devastation if it does not end its pursuit of nuclear weapons: "The DPRK must choose to stop isolating itself and stand down its pursuit of nuclear weapons," Mattis said in a statement adding "The DPRK should cease any consideration of actions that would lead to the end of its regime and the destruction of its people."

Photos published by the KCNA along with Wednesday’s report showed Kim inspecting what looked to be two new missiles.

“Photos published alongside Wednesday’s report by the official Korean Central News Agency showed Mr. Kim and other officials standing in front of diagrams. Missile experts said the diagrams appeared to show at least two never-before-seen missiles, including one that looked to be a variant of a solid-fueled missile that North Korea launched from a submarine last year.

 

Pyongyang in February launched a land-based version of the solid-fueled missile, known as the Polaris-2. Solid-fuel missiles, unlike traditional liquid-fueled ones, don’t need to be fueled on the launchpad—a laborious process that makes the weapon vulnerable to a pre-emptive strike.”

The photos represent a clear message to the US: North Korea has no intention of halting its nuclear weapons program.

“’Pyongyang’s release of photos indicating yet two more new missiles in development shows it has no intention of halting its continuing quest to threaten the U.S. and its allies with nuclear weapons,’ said Bruce Klingner, senior research fellow for Northeast Asia at the Heritage Foundation.

 

“A two-week adherence of North Korea to U.N. prohibitions against missile tests hardly counts as a significant indicator of benign intent by the regime,” he added, referring to the United Nations Security Council’s newest round of sanctions earlier this month.”

Another of the WSJ’s “expert” sources said the missile program is probably “untouchable” for now, but that diplomacy could still be worth pursuing.

“’The missile-building program is unstinting,’ said Patrick Cronin, senior director of the Asia-Pacific Security Program at the Center for a New American Security.

 

“Diplomacy cannot touch that for now.”

 

But Mr. Cronin argued that the U.S. should continue to pursue diplomacy with Pyongyang, and encourage any signs of progress — including the recent dearth of missile tests.

 

North Korea hasn’t launched a missile in 26 days, though the launch of its first ICBM on July 4 came after a 35-day pause.

 

“North Korea has shown glimmers of restraint for now and the U.S. seeks to encourage more, but is ready to move in the opposite direction as well,” Mr. Cronin said.”

In summary, the Pyongyang report was of a kind with what North Korea has said from the beginning: It will not give up its weapons. End of story.
 

via http://ift.tt/2xdbo1u Tyler Durden

Authored by Mohamed El-Erian via Bloomberg.com,

Persistently low inflation, or "lowflation," is vexing lots of people. According to the recent minutes of policy meetings of the Federal Reserve and the European Central Bank, central banks on both sides of the Atlantic have been trying to identify the causes — but with limited success so far. This complicates monetary policy decisions and undermines the range of institutional solutions that have been proposed by academics. Until this changes, central banks may need to think more holistically about the objectives of monetary policy, including the unintended consequences for future financial stability and growth of being too loose for too long.

Four facts stand out in reviewing recent inflation data:

• Inflation rates have been unusually and persistently low.
• This is primarily an advanced-country phenomenon.
• Inflation has not responded to the prolonged pursuit of ultra-low interest rates and huge injections of liquidity by central banks through quantitative easing. 
• This has coincided with a period of notable job creation, especially in the U.S., thereby flattening the "Phillips curve" that plots unemployment and inflation rates.

Many economists worry that such lowflation frustrates the relative price adjustments that are critical to a well-functioning market economy. And if the inflation rate, and related inflationary expectations, flirt with the zero line for too long (as had occurred in Europe), there is an increased risk of actual price declines that encourages consumers to postpone their purchases, weakens economic growth, and undermines policy effectiveness (as had been the case in Japan).

The many reasons that have been put forward for the lowflation phenomenon range from benign measurement errors to worrisome structural drivers, with a host of "idiosyncratic factors" in the middle. Indeed, the Fed minutes released last week contain a list of possible drivers. These also note that a few central bankers are questioning the usefulness of traditional models and approaches in explaining and predicting inflation behavior. The recent ECB minutes also refer to "a number of explanatory factors" for lowflation and the importance of monitoring "the extent to which such factors could be transient or more permanent." (And that is not the only issue vexing central bankers and economists more generally — productivity and wage formation have also been puzzles to an unusual extent.)

Turning to solutions, some economists have suggested that central banks increase their inflation targets, typically set at 2 percent currently. Others have proposed that the monetary authorities should pursue a price level target so that shortfalls in meeting the desired inflation rate in one year would require aiming for a higher rate in the subsequent year.

As attractive as they may sound to some, these solutions are operationally challenged, particularly if structural factors are depressing inflation. 

Having failed to meet the 2 percent target despite aggressive monetary policy, it is far from obvious that central banks would be able to meet a higher objective. And no one is quite sure how the political system would respond to a central bank that pursues much higher inflation as it tries to offset the shortfalls of prior years. Indeed, until we have a better understanding of how the transmission mechanism has evolved, there is no guarantee that a change in policy approach would do anything more than threaten even greater collateral damage and unintended consequences.

Already, economies on both side of the Atlantic must contend with the risk that a loose monetary policy approach may have overly repressed financial volatility, excessively boosted a range of asset prices beyond what is warranted by economic fundamentals, and encouraged too much risk-taking by non-banks. Indeed, in the Fed minutes, the central bank staff noted that "since the April assessment, vulnerabilities associated with asset valuation pressures had edged up from notable to elevated." Robust job creation, financial conditions, and the overall health of the economy should guide monetary policy formation rather than the excessive pursuit of a still-misunderstood lowflation.

The lowflation demon is real and, in the case of the U.S., the market now believes that it will likely dissuade the Fed from delivering on the next signaled step in the gradual normalization of monetary policy, including an interest rate hike in the remainder of 2017. Yet a lot more work is needed to understand the causes and consequences of persistently low inflation. Until that happens, central bankers may be well advised to stick with the demon they know rather than end up with one of future financial instability that undermines prospects for growth and prosperity.

via http://ift.tt/2xcH8DD Tyler Durden

“Everybody has a plan…until they get punched in the face.”

-Mike Tyson

Paul Alster has an interesting story this month in The Jerusalem Post.  It begins by informing us that…

“A fierce battle is being waged in the north of Israel.”

Then goes on to say…

It’s a battle pitching the might and financial muscle of the Netanyahu government, allied with powerful international energy companies and lobbyists, against local residents of the Mediterranean strip, which will soon become the site of the natural gas energy boom on which Israel’s economy may become increasingly reliant in years to come.

 

…

“Why,” ask objectors to new plans for developing the Leviathan gas field off the Carmel coast, “have proposals for up to 16 130-meter high, massive gas platforms been changed from siting them 120 km from shore for safety, efficiency and security reasons to as little as seven to 10 km from shore?” There is no doubt they will be an ugly blot on the landscape. When you look out from the hillside town of Zichron Ya’akov and gaze from the seashore to the horizon, it is a distance of approximately 32 km. The platforms will stand around a quarter of the distance out to sea, far too close by almost all calculations and international norms.

The fumes, say those opposing the plan, will drift with the sea breezes onto the population of the region, posing a significant health risk.

They note the already shockingly high numbers of breathing-related illnesses and cancers in the nearby Haifa region that are attributed to noxious fumes belching from the petrochemical plants of the Haifa Bay.

The development of the gas field close to land is set to eventually span a distance from south of Haifa Bay to Netanya where another 16 gas platforms in addition to the original 16 of the first phase are proposed, something that appears to have not yet been fully communicated to those who will eventually be affected.

But of even more concern in the new plan is the decision to process highly toxic and potentially carcinogenic condensate, a valuable natural gas byproduct, on land at the Hagit power station between Zichron Ya’akov and Yokneam. It will be piped to the shore under extreme pressure, emerging at the stunning Dor beach before being piped on to Hagit. Objectors, including residents of Dor and the adjacent beach at Nahsholim, say most gas-producing countries are not prepared to run the risk of processing condensate close to population centers and prefer to do so out at sea, limiting the potential danger to their citizens. Not so, Israel, it appears.

 

 

Setting these fears of the Israeli people aside, let us take note of these words from the article attributed to US drilling company, Noble Energy (NE)…

“The development plan approved by the Ministry of Energy on 02.06.2016, [June 2, 2016] will deliver natural gas to the Israeli market and to neighboring countries before the end of 2019. The Leviathan Production Platform is located 10 km offshore on the edge of the continental shelf and within the area approved by the National Planning Committee’s National Outline Plan 37H.

Exporting significant amounts of natural gas to neighboring countries…via pipeline…before the end of 2019? 

http://ift.tt/2xd8yJA…

To better understand the war in Syria, remember the surge in natural gas discoveries in the Eastern Mediterranean starting in 2009. Israel, Cyprus, and Egypt have found large gas deposits, and offshore Lebanon has the potential for significant gas resources. Israel has the potential to export gas to Egypt, Jordan, the Palestinian Authority, and Turkey [Read Europe] (Israel and Turkey have discussed a pipeline  to Turkey, but Cyprus has objected as it does not have diplomatic relations with Turkey.) 

So, looking at the following map, it is easy to see why the Israeli government and AIPAC’s whores in Washington, D.C., have been so keen on regime change in Syria. 

 

From the EIA…

There are proposals, at varying stages of development, to export gas via pipeline and as liquefied natural gas (LNG) from both Cyprus and Israel (for a more detailed discussion of the proposed export routes, see EIA’s regional brief Oil and Natural Gas in the Eastern Mediterranean). An LNG terminal in Cyprus already began pre-front-end engineering design work and could begin construction in 2015. Cyprus hopes to incorporate volumes from fields in offshore Israel into its plans, but Israel appears to prefer its own facility at this point.

 

Other natural gas export options include

  

• A new pipeline from the eastern Mediterranean to Crete (where the volumes could flow into the European grid)
   
• A new pipeline from the eastern Mediterranean to Turkey
• Use of existing infrastructure to send volumes to Egypt for export via its LNG facilities

 

Several factors may influence how and when exports may came online: regional insecurity, such as the ongoing conflict in Syria and the recent unrest in Egypt; territorial disputes, such as that between Israel and Lebanon; and the status of economies in both potential exporting countries and destination markets like Europe and Asia.

 

Indeed, Syria and her long-standing ally and gas-exporting friend, Russia, have refused to tap-out of the fight, and it seems to have paid off.

So, with the recent defeat of the Israeli-American backed terrorists in Syria, and the Israeli people protesting the industrialization of their beautiful but limited seashore, the Israeli Ministry of Energy and Noble Energy may need to revise their plan of exporting gas to neighboring countries…via pipeline…through Syria…before the end of 2019.  

Peace, prosperity, and liberty,

h_h

via http://ift.tt/2w4w3EG hedgeless_horseman

Unveiling a novel, if oddly circuitous attempt to shut up President Donald Trump on his favorite social network, former undercover CIA agent Valerie Plame Wilson has launched a crowdfunding campaign in hopes of raising enough money to buy Twitter so she can then ban Trump from using it.

The blonde ex-spook launched the fundraiser last week, tweeting: “If @Twitter executives won’t shut down Trump’s violence and hate, then it’s up to us. #BuyTwitter #BanTrump.”

If @Twitter executives won’t shut down Trump’s violence and hate, then it’s up to us. #BuyTwitter #BanTrump https://t.co/HhbaHSluTx

— Valerie Plame Wilson (@ValeriePlame) August 18, 2017

The GoFundMe page for the fundraiser says Trump’s tweets “damage the country and put people in harm’s way.”

From the campaign:

Donald Trump has done a lot of horrible things on Twitter. From emboldening white supremacists to promoting violence against journalists, his tweets damage the country and put people in harm’s way. But threatening actual nuclear war with North Korea takes it to a dangerous new level. 

 

It’s time to shut him down. The bad news is Twitter has ignored growing calls to enforce their own community standards and delete Trump’s account. The good news is we can make that decision for them.

 

Twitter is a publicly traded company. Shares = power. This GoFundMe will fund the purchase of a controlling interest in Twitter. At the current market rate that would require over a billion dollars — but that’s a small price to pay to take away Trump’s most powerful megaphone and prevent a horrific nuclear war.

And the punchline: “Let’s #BuyTwitter and delete Trump’s account before he starts a nuclear war with it. The whole world will thank us when we do!”

Plame’s pitch is simple: raise enough cash to buy a controlling interest of Twitter stock. If, on the “odd chance” Plame is unable to raise enough to purchase a majority of shares, she said she will explore options to buy “a significant stake” and champion the proposal at Twitter’s annual shareholder meeting.

Considering that her campaign’s stated goal is only $1 billion, a (very) minority stake is the best the former CIA agent can hope for. As of Wednesday, a majority stake would cost just over $6 billion (TWTR’s market cap is $12.33 billion). Still, a billion dollars of TWTR shares would make her Twitter’s largest shareholder (or rather bagholder) and give her a dominant “activist” position to exert influence on the company. Of course, whether kicking Trump off Twitter is worth the hassle is a different question, especially since anyone who wishes not to follow Trump can do so for free.

Another problem is that almost a week into the campaign, it has raised just under $8,000, meaning it is about $999,992,000 shy of its lofty goal.

The White House responded to the campaign, and in a statement to the AP, press secretary Sarah Huckabee Sanders said the low total shows that the American people like the president’s use of Twitter. “Her ridiculous attempt to shut down his first amendment is the only clear violation and expression of hate and intolerance in this equation,” the White House read.

As a reminder, Plame’s identity as a CIA operative was leaked by an official in former President George W. Bush’s administration in 2003 in an effort to discredit her husband, Joe Wilson, a former diplomat who criticized Bush’s decision to invade Iraq. She left the agency in 2005.

Some cynics have dared to speculate that Plame’s campaign is just a (not so) veiled attempt to regain social and media prominence. It is unclear if their Twitter accounts will also be banned by the up and coming CEO. It’s also unclear what happens to the raised cash once the campaign fails to reach its target, although we are confident Jill Stein has some ideas…

via http://ift.tt/2g5F9gC Tyler Durden

Below looks at the Dow Jones Transports ETF (IYT) that remains in a long-term bull market.

 

CLICK ON CHART TO ENLARGE

IYT broke to new all-time highs seven weeks ago at (1). It stayed at new highs for one week, before selling pressure started taking place. The weakness has it breaking below 18-month rising support last week, which does send a caution signal to bulls.

The next critical support level for IYT comes into play at the $159 zone. With an “unfilled weekly gap” still in place at the $142 level, what it does at (2), could become very important for the uptrend.

 

from Kimble Charting Solutions.  We strive to produce concise, timely and actionable chart pattern analysis to save people time, improve your decision-making and results

Send us an email if you would like to see sample reports or a trial period to test drive our Premium or Weekly Research

 

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CNN’s Don Lemon and former Director of National Intelligence James Clapper linked up for an epic tag-team attack on President Trump last night in which Lemon masterfully teed up one leading question after another and Clapper knocked them all out of the park with provocative sound bites that will undoubtedly be played throughout the day. 

Bravo, team!  Beautiful performance and seamless transition from the fake ‘Russian collusion’ narrative to the new, yet equally fake, “Trump is a racist and unfit for office’ narrative.

Here is a small sample of last night’s master class on journalism:

Lemon:  “What did you think of tonight’s performance by President Trump?”

 

Clapper:“I don’t know when I’ve listened and watched something like this from a President that I found more disturbing.”

 

“Having some understanding of the levers of power that are available to a President, if he chooses to exercise them, I found this downright scary and disturbing.”

 

Lemon:  “Are you questioning his fitness?”

 

Clapper:  “Yes, I do.”

 

“I really question his ability, his fitness to be in this office and I also am beginning to wonder about his motivation for it.  Maybe he is looking for a way out.”

 

“I do wonder, as well about the people that attracted to this — to this rally as others. You know, what are they thinking? Or why am I so far off base? Because I don’t understand the adulation. Of course, that’s why I think he gravitated to having this rally as ill-timed as it is.”

 

Lemon:  “You said you questioned his fitness. Is he a threat to national security? The president?”

 

Clapper:  “Well, he certainly could be. Again, having some understanding of the levers that a president can exercise, I worry about, frankly, you know, the access to the nuclear codes.”

And here is the full interview should you have the stomach for it:

 

Of course, one exchange that you likely won’t see replayed throughout the day on CNN is the one in which Clapper again said he has no evidence of any collusion between Russia and Trump. 

Lemon:  “The New York Times is reporting tonight about the falling out between the President and Mitch McConnell over Russia’s interference in the 2016 election. The report is that the President is furious that McConnell failed to protect him.  You called the accusation of collusion between the Trump campaign and Russia ‘worse than watergate.’  What do you think is going on with the President?”

 

Clapper:  “First, to be clear Don, when I left certainly on the 20th of January I had not seen any evidence of direct collusion between the Trump campaign and the Russians.” 

WATCH: During Don Lemon & James Clapper’s ranting on #PhoenixRally, they AGAIN admit that there’s no evidence of Trump/Russian Collusion… http://pic.twitter.com/OySpNHbMHB

— Tim Young (@TimRunsHisMouth) August 23, 2017

 

Come on, Clapper…facts have no place in a narrative-building segment…

via http://ift.tt/2v63ABe Tyler Durden

Authored by Tho Bishop via The Mises Institute,

 

via http://ift.tt/2vYQJ2F Tyler Durden