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So let’s get this straight. Russia and OPEC ‘agree’ to consider (not actually act upon) “freezing” production levels (at current record high levels) and the market plunges amid disappointment over no cuts. And today WTI spikes and erases all those losses as Iran supports the “freeze” plan but will not cut its own production plans…

As Reuters reports,

Iran said on Wednesday it would resist any plan to restrain its oil output as fellow OPEC ministers tried to persuade the country to join the first global oil pact in 15 years.

 

Talks in Tehran between Iranian oil minister Bijan Zanganeh and his counterparts from Iraq, Qatar and Venezuela lasted for nearly three hours. Visiting ministers left without making comment.

 

“Asking Iran to freeze its oil production level is illogical … when Iran was under sanctions, some countries raised their output and they caused the drop in oil prices.” Iran’s OPEC envoy, Mehdi Asali, was quoted as saying by the Shargh daily newspaper on Wednesday.

“How can they expect Iran to cooperate now and pay the price?” he said. “We have repeatedly said that Iran will increase its crude output until reaching the pre-sanctions production level.”

And so – Crude rallies??!!

 

What is really diving all this craziness is that it is OPEX in Crude futures today and there are major pins around $31, $30, and $28.

via Zero Hedge http://ift.tt/20ZluPD Tyler Durden

Tepper did it again.

Recall that exactly one year ago, we wrote about David Tepper’s latest TV appearance on BBG TV, when we reported that “David Tepper Dumps 40% Of US Equity Exposure Despite Claiming “Stocks Inexpensive” in which we said the following:

At the start of Q4 2014, Appaloosa’s David Tepper made a series of statements – dismissing Bill Gross as irrelevant (nope – turmoil caused by PIMCO unwinds roiled credit markets), calling the end of the bond bull market (nope – yields went on make lower and lower lows), and finally proclaiming that stocks were inexpensive and multiples not high. So, one wonders, if stocks were inexpensive and multiples not high, why did Appaloosa dump 40% of its US equity exposure in that quarter (only to end the quarter with even more exuberance proclaiming that stocks could rise another 10% in 2015)? It appears that when David Tepper says “buy”, he means “buy… from me.”

Fast forward several months when just after the August market crash which sent the S&P to its first date with 1,812, Tepper was again on CNBC and made a series of bearish prognostication:

“I have problems with earnings growth [and] problems with multiples,” he said. “So I can’t really call myself a bull [near-term].”

 

Acknowledging he was not as definitive as usual, he said he’s “not loving it,” but if stocks were to fall 20 percent or so he’d be a buyer. He added that he still believes the market will go higher in the long term.

He added that “it might be a good time to take money off the table.”

That’s what he said. What did he do?

According to his latest 13F as the market was surging in the last quarter of 2015, Tepper was busy buying. So busy in fact, that he took his total long notional exposure as disclosed in Appaloosa’s 13-F from a modest $2.9BN as of September, to $5 billion as of the end of the year, an increase of 75%, in the process adding 40% to his longs.  Needless to say, stocks were not “dropping 20%”, in fact quite the opposite – they were surging into the year end Santa Rally.

 

To be sure, we don’t know what Tepper was doing with the short side of his book, as well as his credit/CDS exposure, but one thing is clear: when it comes to his longs, as Tepper was urging CNBC’s viewers to take money of the table, he was waving much of it in.

As a reminder, this is a man whose one bullish (or bearish) word on financial TV could “dramatically alter market sentiment.”

And that’s why David Tepper is a billionaire.

via Zero Hedge http://ift.tt/1Q1y8qb Tyler Durden

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

Rather than fix what's broken with the real economy, ZIRP/NIRP has added problems that only collapse can solve.

The fundamental premise of global central bank policy is simple: whatever's broken in the economy can be fixed with zero interest rates (ZIRP). And the linear extension of this premise is equally simple: if ZIRP hasn't fixed what's broken, then negative interest rates (NIRP) will.

Unfortunately, this simplistic policy has run aground on the shoals of reality: if zero or negative interest rates actually fixed what's broken in the economy, we'd all be living in Paradise after seven years of zero interest rates.

The truth that cannot be spoken is that zero interest rates (ZIRP) and negative interest rates (NIRP) cannot fix what's broken–rather, they have added monumental quantities of risk that have dragged the global financial system down to crush depth:

Crush depth, officially called collapse depth, is the submerged depth at which a submarine's hull will collapse due to pressure. This is normally calculated; however, it is not always accurate.

Indeed, the risk that has been generated by ZIRP and NIRP cannot be calculated with any accuracy. The sources of risk arising from NIRP are well-known:

1. Zero interest rates force investors and money managers to chase yield, i.e. seek a positive return on their capital. In a world dominated by central bank ZIRP/NIRP, this requires taking on higher risk, as higher yields are a direct consequence of higher risk.

The problem is that the risk and the higher yield are asymmetric: to earn a 4% return, investors could be taking on risks an order of magnitude higher than the yield.

2. To generate fees in a ZIRP/NIRP world, lenders must loan vast sums to marginal borrowers–borrowers who would not qualify for loans in more prudent times.

This forces lenders to either forego income from lending or take on enormous risks in lending to marginal borrowers.

3. The income once earned by conventional savers has been completely destroyed by ZIRP/NIRP, depriving the economy of a key income stream.

Please consider this chart of the Fed Funds Rate and tell me precisely what's been fixed by seven years of zero interest rates:

Bank credit soared. If our only problem was a dearth of new bank lending, we'd be in Paradise now. Alas, we're not:

The reality is that zero interest rates have only brought debt-based consumption forward, expanded lending to marginal/high-risk borrowers and forced capital into dark caverns of risk from which there is no orderly escape.

What's the crush depth of all this impaired debt and risky credit? Nobody knows. Rather than fix what's broken with the real economy, ZIRP/NIRP has added problems that only collapse can solve.

If zero or negative interest rates actually fixed what's broken in the economy, we'd all be in Paradise now. Instead, we're in a sinking submarine awaiting the implosion of predatory excesses. In other words, a financial Hell.

via Zero Hedge http://ift.tt/1R8gvE6 Tyler Durden

Overnight action saw gold jerked lower as Europe opened and Asia closed. Thanks to Nanex, we now see 'how' this occurred as the "gold spoofer" has returned. Once the spoofer disappeared, gold has rallied back up to the overnight highs… rigged?

75 gold futures contracts used to "spoof" prices lower…

Via Nanex

And once the spoofer left the building…

 

It seems $1200 is the line in the sand once again.

via Zero Hedge http://ift.tt/1R8gvnv Tyler Durden

The algos are happy. Headlines proclaim Iran “supports” the Doha proposal to “freeze” oil production levels (at record levels) and oil spikes. However, what they failed to grasp was Iran’s lack of commitment to actual production levels… i.e. Iran fully supports production cuts for everyone else… but will not freeze its own production.

 

via Zero Hedge http://ift.tt/1Q1sO6a Tyler Durden

China may not have troops or planes in Syria but that doesn’t mean it won’t be a part of World War III.

Even as the eyes of the world are now trained squarely on the Mid-East where the Russian and Iranian assault on Aleppo is set to draw the Saudis and the Turks into a ground war, the dispute over a tiny chain of islands in the South China Sea is still simmering.

Beijing has built some 3,000 acres of new sovereign territory atop reefs in the Spratlys, in what is now a long-running effort to expand the country’s maritime capabilities in waters China claims as its own.

The world began to take notice early last year and before you knew it, Washington’s regional allies were exceptionally upset with China’s “sandcastle” construction, which some view as an illegitimate attempt to militarize the island chain at the expense of peace and stability.

For its part, China says it has every right to do as it pleases in the Spratlys and in fact, at least one Chinese official has said that the PLA would be well within its rights to forcibly expel any country who seeks to occupy islands China doesn’t control.

Tensions escalated in May when China threatened a Poseidon spy plane with a CNN crew aboard and the situation was exacerbated further in October when the US finally “went there” and sent a warship to the islands in what the US dubbed a “freedom of navigation” exercise.

Through it all, China has indicated that it may establish what amounts to a no-fly zone over the islands and now, it appears the PLA is ready to make good on that threat because as Fox News first reported (yes, that’s right, Fox News somehow managed to get an exclusive) last night, China has deployed surface-to-air missile system on Woody Island.

“The imagery from ImageSat International (ISI) shows two batteries of eight surface-to-air missile launchers as well as a radar system on Woody Island, part of the Paracel Island chain in the South China Sea,” Fox said, adding that “the missiles arrived over the past week [as] the beach on the island was empty on Feb. 3, but the missiles were visible by Feb. 14.”

“A U.S. official confirmed the accuracy of the photos,” Fox goes on to claim. “The official said the imagery viewed appears to show the HQ-9 air defense system, which closely resembles Russia’s S-300 missile system [and] has a range of 125 miles.”

Here are the images:

“Asked about the missiles at a briefing in Beijing, Foreign Minister Wang Yi said that limited self-defense facilities on Woody Island are consistent with China’s self-protection policies and international law,” Bloomberg reports. “He described the report as Western media hype.” He also said the West should focus more on the lighthouses China has built on the islands which should help to protect the $5 trillion in shipping that moves through the region each year.

Right. It’s all “Western media hype.” This is just the PLA putting air defense systems in place on islands that China is definitely not militarizing. Nothing to see here, move along…

“This calls into direct question the seriousness of President Xi’s statement [that China doesn’t seek to militarize The South China Sea],” U.S. Pacific Command chief Harry Harris said. 

Yes, it most certainly does and now that the HQ-9s are in place, you can expect to see more incidents like the one recorded below. 

via Zero Hedge http://ift.tt/1QlPLNh Tyler Durden

The last 3 days have been a face-ripper as US equities have soared most since August amid (oil) rumors, (banking system) hope, and (bad news is good news) dismal data. The Dow is up 900 points from Thursday’s lows…

 

but Trannies 8% surge off the lows is the most stunning…

 

This is all happening as “Most Shorted” stocks spike 11% off Thursday lows – the biggest squeeze since Black Monday.

 

And we know what happened after that dip was bought.

via Zero Hedge http://ift.tt/1op9jty Tyler Durden

Earlier we reported that in a sign of “defiance”, Tim Cook said he would oppose the “chilling” government demand to help the FBI hack its own phones, and that it vehemently opposes the government’s intention to implement a back door in iPhones. Just hours later Donald Trump has decided to join the fray in the biggest topic of the day, by insisting that Apple should unlock the iPhone of one of the San Bernardino shooters.

“To think that Apple won’t allow us to get into her cell phone,” Trump said on Fox and Friends Wednesday morning. “Who do they think they are? No, we have to open it up.“

As the Hill reports, Trump argued vehemently that Apple should help investigators crack the phone’s encryption system.

“Apple, this is one case, this is a case that certainly we should be able to get into the phone,” he said. “And we should find out what happened, why it happened, and maybe there’s other people involved and we have to do that.”

To be sure, this is not Apple’s first time standing up for encryption and personal security: Cook has repeatedly argued that building any guaranteed access for law enforcement into devices — what has been short-handed as a “back door” — would undermine the overall security of the device.

“There have been people that suggest that we should have a backdoor. But the reality is if you put a backdoor in, that backdoor’s for everybody, for good guys and bad guys,” Cook said in a December interview with “60 Minutes.”

Trump disagreed stridently on Wednesday, calling it a matter of “common sense.”

“I agree 100% with the courts,” the business mogul said. “In that case, we should open it up. I think security over all — we have to open it up, and we have to use our heads. We have to use common sense.”

However, as we further showed earlier, it would appear that both sides of the argument are merely padding on theatrics to an issue that has long ago been resolved in favor of the government. Once again, this is what we reported back in September 2013 in, when the revelations from Edward Snowden’s whistleblowing campaign emerged:

NSA Mocks Apple’s “Zombie” Customers; Asks “Your Target Is Using A BlackBerry? Now What?”

The following slide comes from a secret presentation called “Your target isusing a BlackBerry? Now what?” It shows an email from a Mexican government agency which was sent using BlackBerry encryption technology — and intercepted by the NSA nonetheless.

 

 

 

But the kicker is when, in another secret presentation, the NSA itself mocks Orwell, using a reference from the iconic Apple “1984” advertisement…

 

… As it says the man who has become “Big Brother” is none other than AAPL’s deceased visionary leader Steve Jobs…

 

… And is so very grateful for Apple’s paying client “Zombies” who make its job so much easier

 

In other words, not only does the government already have easy access to any iPhone it seeks to “enter”, but today’s dramatic and vocal defense by Cook, and the likewise just as dramatic theatrics by Donald Trump are just that.

via Zero Hedge http://ift.tt/20E0qsl Tyler Durden