Tag: finance

When trying to time the next US recession, most economists – as one would expect – look at economic data. The problem with such “data” as last year’s farcical double seasonal GDP adjustments have shown, is that if the government is intent on putting lipstick on the pig that is US GDP, it will do just that over and over, unleashing non-GAAP GDP if it must, to avoid revealing the truth until it is prepared to do so.

To avoid such purposeful obfuscation SocGen’s Albert Edwards looks at places where it is more difficult to fabricate and goalseek data. Conveniently, he has discovered precisely that in what calls a “failsafe recession indicator,” one which has stopped flashing amber and has turned to red. He is referring to whole economy profits data, which in his own words “shows a gut wrenching slump.”

What Edwards is referring to is not that different from what we posted about back in October when we said that on 5 of the past 6 times when corporate profits dropped 60%, the economy entered a recession. This time the drop is far worse, and it’s no longer just energy (the loophole used by many to explain away why in 1985 there was no recession). However, instead of looking at bottom up data, the SocGen strategist instead collapses corporate profits from the top down.

Edwards lays out the reasons why he believes that “a recession now virtually inevitable”, and since this is Albert Edwards after all, he has a jovial follow up: not only will the US economy contract, it “will surely be swept away by a tidal wave of corporate default.”

From his latest Global Strategy Weekly

Despite risk assets enjoying a few weeks in the sun our failsafe recession indicator has stopped flashing amber and turned to red. Newly released US whole economy profits data show a gut wrenching slump. Whole economy profits never normally fall this deeply without a recession unfolding. And with the US corporate sector up to its eyes in debt, the one asset class to be avoided – even more so than the ridiculously overvalued equity market – is US corporate debt. The economy will surely be swept away by a tidal wave of corporate default.

 

The temper tantrum risk assets threw at the start of the year was sufficient for the Fed to backpedal furiously on rate hikes. Like the Grand Old Duke of York, the Fed marched us up to the top of the hill and then down again – at the behest of the markets. And as more and more contorted excuses are wheeled out to justify its inaction we all surely know by now that the Fed?s articulated ?data-dependent? rate hikes are primarily focused solely on the level of the S&P, i.e., when it slumps they will quickly back off rate hikes and use any excuse necessary  including dismissing surging core CPI inflation. How sad that Central Bank policy should have come to this.

 

I suppose now the S&P has recovered we are about to go through another turn on the monetary/market merry-go-round. Ignore this noise. Recent whole economy profits data show that while the Fed plays its games, the economic cycle is withering and writhing from within. For historically, when whole economy profits fall this deeply, recession is virtually inevitable as business spending slumps. And if I had to pick one asset class to avoid it would be US corporate bonds, for which sky high default rates will shock investors.

 

 

 

We have written extensively in the past as to why sell-side economists almost to a man and woman fail to predict recessions. One of the key reasons ? aside from the obvious wish not to make an unpopular call that might prove wrong and likely fatal to their career – is that they do not place enough importance on the role of profits as a driver of the economic cycle.

My own observation has led me to the conclusion that when whole economy profits begin to fall sharply, this is usually followed shortly after by the overall economy tipping over into recession, driven by the volatile business investment cycle. The national accounts, whole economy profits data give a wider and ?cleaner? estimate of the underlying profits environment than the heavily doctored ?pro-forma? quoted company profits data (the former also often leads the latter). As illustrated below, a longer term chart shows how whole economy profits tend to be a leading indicator of the business investment cycle. It also shows the current profits downturn is notably worse than the 1998 downturn – which is often cited as evidence that a profits recession does not necessarily lead to a full blown economic downturn.

 

At this point Edwards observes that some fellow skeptics like Gerry Minack do not see a recession as imminent (he sees a stagflation). However, he remains adamant: “My own view is that Fed tightening may not be a necessary condition to catalyse a recession and that the deep profits downturn is sufficient in itself. Historically all recessions are effectively caused by slumps in business investment driven by a profits downturn: the chart below shows that whenever GDP growth (dotted line) is negative it is almost totally overlaid by the contribution of GDP growth in business investment (red line).“

Will Edwards be right? Of course, but at that point the government – which needs to preserve confidence in growth at all costs – will simply change the definition on GDP first, and when that fails, of “recession” next. And all shall once again be well.

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Submitted by Golem XIV,

“We have broken no laws and cooperated with the government at all times.”

Variations of that statement seem to be the default defence of everyone from bankers to politicians when their names come up in the Panama Papers.

In the UK the latest to resort to some version of it, was first Downing Street on behalf of the Prime Minister David Cameron, and then HSBC on behalf of it’s notorious Swiss subsidiary.  The former because his father who lived in the UK, set up an off-shore company which has never paid any taxes in the UK, and the latter because it turns out HSBC has once again been handling dirty money, this time holding and moving money for off-shore companies owned by relatives of Syrian President Bashar al-Assad.

Now HSBC is a well known money laundering bank. They have been indicted and convicted of money laundering so many times in so many different countries.  The best known case was in 2012 when HSBC were found guilty of  laundering drug money out of Mexico. HSBC were tried in the US and fined $1.9 billion. They paid and said how sorry they were, and their group Chief Executive Stuart Gulliver accepted responsibility for their past mistakes, but assured everyone they had now put all that behind them and had even,

spent $290m on improving its systems to prevent money laundering,

That was 2012. In 2015 HSBC all that was found to be blather. HSBC were caught laundering  – again. This time it was HSBC’s Swiss subsidiary which had laundered

the proceeds of political corruption and accepted deposits from arms dealers while helping wealthy people evade taxes.

And so I have been thinking about this phrase we keep hearing, about not breaking laws and cooperating with governments.  Now obviously the first part is rubbish for the likes of HSBC, but perhaps not for the origin of the Panama papers themselves the Panamanian Law firm, Mossak Fonseca. I think they probably have been operating within the law. Doing so by having laws with more holes in than a sieve and governments who leave critical areas of compliance in the semi dark of self regulation or even connive with skirting round the rules.  And this connivance is why I am so interested in the second part of the phrase we keep hearing, the cooperating with governments.

You see I think when we hear the whole phrase, in one variation or another, we are meant to think the two halves of the statement are linked. The bank, law firm or individual has never, at least not ‘knowingly’, broken the law and is now cooperating with the government. The cooperating is seen as the antidote and response to the embarrassing lapse in obeying the law.

But let’s tease the two halves apart. The ‘knowingly’ is precisely how HSBC, Wachovia, Citi or Standard Chartered all admit laundering was done at the bank, but are never guilty of having laundered it…not knowingly.  It is always a huge surprise. A discovery which saddens and angers them. Which they then move on from…. with the blessing of their government.

This is how they are fined but never guilty, how dirty money can have engorged their balance sheet but they never lose their banking license.

I think we could be forgiven for getting the sneaking suspicion that governments cover for their banks.

So I look again at the phrase I started with and hear it differently now. Instead of hearing how the  bank, law firm or individual is contrite about an ‘unwitting error’ about which they are now cooperating with the government, I now hear first a lie about not breaking the law, but then a startling truth.  You see, I wonder if we shouldn’t think that the one truth being hidden in plain sight in all this is that the financial world has indeed been cooperating with governments – but doing so all along.

Does it not make more sense to think that what we are seeing is not a few rogue bank employees and lawyers breaking the law and embarrassing their employers and their pathetically useless, regulators, but rather two cooperating parts of a system of finance and government who are suddenly revealed together? It’s not dirty bankers and corrupt lawyers who are – now they have been caught – having to cooperate with government, to clean up. Not at all. I think we should at least consider that the better explanation is that the two, financial/legal world and government have been cooperating all along.

It stretches the limits of credulity to keep imagining that the bankers aren’t well aware who their clients are and how dirty the money is they are accepting. Equally it is ridiculous to think that governments aren’t aware of how oligarchs become wealthy or presidents suddenly become billionaires. And that dirty but hugely wealthy system is there just whispering to our leaders – who let’s face it are mostly drawn from the wealthiest families.

I suggest that what we are seeing with the Panama Papers is two partners in crime who have been caught together – The ‘criminal’ and the inside man/bent cop together. Normally the criminal – or at least the organisation that he works for – look to the bent cop to protect them. Someone will have to do time of course, but the arrangement remains hidden and therefore protected.

But now the arrangement itself might be uncovered. And if the bent cop, the inside man, is revealed, that threatens everything doesn’t it? That is far more serious. And so here they are, both caught in the light, both being questioned in public. The bankers and lawyers must be wondering how far they can trust the politicians.

Normally this sort of thing is covered over by finding some poor low level fall-guy. Who even if he tries to say the corruption goes higher is easy to discredit or shut up. But now big level people on all sides are blinking in the unwelcome lights.

I think we should admit that both the global financial/legal system, and our governments are both systemically corrupt and have been partners in crime – laundering money and evading taxes – as a matter of undeclared policy. It has been and remains just the way the system they profit by, works.  The only people who were not to know is us – The little people of every country, who are told they must pay their taxes, accept cuts because they aren’t paying enough taxes, and obey the laws and respect their betters.

Time to wake up surely?

via Zero Hedge http://ift.tt/1qAu8E8 Tyler Durden

Even with today’s 3% surge – the most in a month – on the heels of Unicredit’s CEO proclaiming that EU banks are “intensely” looking for fundin solutions, European banking stocks have collapsed for a 4th straight week for the worst losses since 2012.

 

 

Following the brief exuberance after Draghi unleashed his latest bazooka – which it seems was all front-run – European banking stocks have collapsed almost 20% – the biggest loss since April 2012.

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

Since The Fed ended QE3, the world's FX markets have become increasingly turmoily as the loss of Janet's foot on the throat of volatility sends chaotic sprres through carry traders' P&L. In fact, after rising 6 days in a row amid Japanese Yen strength, Global FX rates are the most turbulent since January 2012.

 

Chart: Bloomberg

As Bloomberg reports, volatility in currencies of the Group-of-Seven nations climbed for a sixth straight day Friday, the longest streak of increases this year. Price swings accelerated after the yen strengthened past 110 per dollar for the first time in almost 18 months this week, fueling speculation on whether the Bank of Japan will intervene to weaken its currency.

The trouble with turmoiling FX markets is it forces deleveraging in carry trades and tightens the much-needed liquidity that unerlies the fast-money purchasing of risky-assets around the world.  It is no coincidence that as FX volatility has surged in the last year, so equity performance has ebbed.

via Zero Hedge http://ift.tt/1qAu9YK Tyler Durden

Authored by Steve H. Hanke of the Johns Hopkins University. Follow him on Twitter @Steve_Hanke.

Yesterday, the Wall Street Journal published an editorial that merits careful examination: “Jack Lew’s Political Economy”. The Journal correctly points out that the Obama administration’s meddling with regulations and red tape is killing U.S. investment and jobs. The most recent example being the Treasury’s new rules on so-called tax inversions, which burried a merger between Pfizer, Inc. and Allergan PLC.

As the Journal concluded: “This politicization has spread across most of the economy during the Obama years, as regulators rewrite longstanding interpretations of longstanding laws in order to achieve the policy goals they can’t or won’t negotiate with Congress. Telecoms, consumer finance, for-profit education, carbon energy, auto lending, auto-fuel economy, truck emissions, home mortgages, health care and so much more.”

“Capital investment in this recovery has been disappointingly low, and one major reason is political intrusion into every corner of business decision-making. To adapt Mr. Read [Pfizer CEO Ian Read], the only rule is that the rules are whatever the Obama Administration wants them to be. The results have been slow growth, small wage gains, and a growing sense that there is no legal restraint on the political class.”

Washington’s destructive policies have been dubbed “regime uncertainty” in a strand of innovative analyses pioneered by Robert Higgs of the Independent Institute. Regime uncertainty relates to the likelihood that an investor’s private property – namely, the flows of income and services it yields – will be attenuated by government action. As regime uncertainty is elevated, private investment is notched down from where it would have been. This can result in a business-cycle bust and even economic stagnation. I recommend Higgs’ most recent book for evidence on the negative effects of regime uncertainty: Robert Higgs. Taking a Stand: Reflections on Life Liberty, and the Economy. Oakland, CA: The Independent Institute, 2015.

via Zero Hedge http://ift.tt/1VdvK2W Steve H. Hanke

Submitted by Mish of

Goldman Sach’s Dubious Advice “Short Gold!”

Those betting against Goldman Sach’s retail investment advice have generally been on the right side of things.

The same thing is about to happen again.

“Short gold! Sell gold!” said Goldman’s head commodity trader, Jeff Currie, during a CNBC “Power Lunch” interview.

 

Currie’s advice was in response to the question “Is there any commodity you are recommending that can help our viewers make some money?”

Currie’s provided several reasons for shorting gold, blatantly wrong.

MarketWatch explains, and I will rebut, Why Goldman’s Commodity Chief Wants Investors to Bet Against Gold.

“Short gold! Sell gold!” That was Currie’s unabashed advice during a CNBC interview Tuesday after discussing the outlook for crude-oil futures.

 

Currie’s rationale is fairly straightforward: The closely followed Goldman strategist sees the Federal Reserve raising benchmark interest rates at some point in 2016 and believes the result of higher rates will be a drag on the dollar-denominated precious metal.

 

“The Fed has signaled two [rate hikes]. Data is signaling three and what do higher interest rates do to gold? Send it down,” said Currie.

Exploring Currie’s Claim “Higher Interest Rates Send Gold Down”

Recall that gold fell from $850 to $250 from 1980 to 2000 with interest rates generally declining all the way.

In more recent history (shown above), gold sometimes rises with rising yields and sometimes with falling yields.

In short, Currie’s statement is easily disproved nonsense.

With that out of the way, let’s turn our spotlight on his idea that data signals three hikes.

 

“Fed Signaling Two Hikes, Data Signaling Three”

What data is that?

On April 5, I noted GDPNow Forecast Sinks to 0.4% Following More Weak Economic Report.

 

GDPNow History

Back on March 21, Atlanta Fed president Dennis Lockhart made a speech to the Rotary Club of Savannah on March 21.

His speech was called Kaleidoscopic Context for Monetary Policy. In his speech, Lockhart stated there was sufficient momentum for a rate hike as soon as April.

I commented on his speech with my take called Kaleidoscope Eyes.

Here is the data since Lockhart’s speech.

• On March 21, the same day as Lockhart’s speech, I commented Existing Home Sales Plunge “Surprising” 7.1%, Price Concessions the Norm; What Happened? … Data was so bad the National Association of Real Estate cheerleaders showed concern. “Know Before You Owe” kinks have been worked out. The “surprise” downtrend continues.
• On March 23, I commented New Home Sales Near Consensus on Muddle-Through Track … It’s easy to spot the lack of momentum in housing starting a year ago. This is a muddle-through track, and a weak one at that.
• On March 24, Durable Goods Orders Plunge 2.8%; Will a Falling Dollar Soon Help? … The answer to my falling dollar question is “no”. I used a chart to explain why.
• On March 28, we noted Consumer Spending Outlook Buckles with “Surprisingly Weak” Income Report
• On March 29, Fed Chair Janet Yellen reversed course and gave a Lovey-Dovey Speech Citing “Other Tools” and More QE
• On April 4, we noted Factory Orders Dive 1.7%, Core Capital Goods Dip 2.5%, Last Month Revised Lower
• On April 5, the Trade Deficit Unexpectedly Widens

* * *

Kaleidoscope Currie

Somehow Currie got a hold of Lockhart’s kaleidoscope and is using it.

Did Lockhart throw that thing away?

That would make sense because clearly it’s not functioning properly.

* * *

Stagflation Anyone?

Should the Fed actually manage to get in a couple hikes, the most likely reason would be inflation concerns, not an overheating economy from a GDP perspective.

Call that the stagflation scenario. Historically, that is an environment in which gold rates to do extremely well.

However, there is no sign of that just yet, at least from the bond market.

Instead, the bond market looks like it’s begging for more QE.

* * *

Yield Curve 2002 to Present

The above chart shows monthly closing yields for US treasuries from 3-month to 30-years in duration. Current data points are month-to-date.

There is nothing remotely strong about recent action in Treasuries. In contrast to the recession that started in 2007, the Fed does not have runaway housing prices to contend with.

Should consumer prices rise enough for the Fed to hike, there is every indication the yield curve has room to invert. This is at a time when the 30-year long bond yields a mere 2.58%.

The all-time low yield on the long bond is 2.25%.

* * *

Why the Persistent Hike Talk?

Why does the Fed seem desperate to hike (market willing of course)?

I offer three possibilities.

1. The Fed wants room to cut when the next recession hits.
2. The Fed is clueless about the next recession (which may already be here).
3. The Fed is concerned about wage-push inflation from various minimum wage hikes.

Point #1 discussion: The idea of hiking to have room to cut is nonsensical, but that is the way these guys think.

Point #3 discussion: The Fed may very well be concerned about a series of minimum wage hikes due to escalate every year from now until 2022. (See my post Good Ole Days Return: Nixonian Wage and Price Controls for an explanation).

My preferred explanation is #2. The Fed is clueless in general, not just about recession odds.

I am not arguing for low rates. Rather, I propose the Fed has no idea whatsoever where rates should be.

Talk of negative rates as if they are normal is proof enough.

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

After today’s latest atrocious wholesale inventory and sales data, we predicted that this may be the straw that tips Q1 GDP into contraction, or at best keeps it unchanged, per the Atlanta Fed.

Atlanta Fed should be at 0.0% for Q1 GDP after this

— zerohedge (@zerohedge) April 8, 2016

We were wrong. Moments ago the Fed with the highly-tracked GDP estimator, slashed its Q1 GDP estimate… to 0.1%. As a reminder, this number was as high as 2.7% precisely two months ago.

The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2016 is 0.1 percent on April 8, down from 0.4 percent on April 5. After this morning’s wholesale trade report from the U.S. Bureau of the Census, the forecast for the contribution of inventory investment to first-quarter real GDP growth fell from –0.4 percentage points to –0.7 percentage points.

 

So should you panic? No, says BofA economist Ethan Harris. It’s all due to, drumroll, “faulty seasonals” the same fault seasonals that prompted the BEA to introduce a second seasonal adjustment last quarter to account for precisely that!

For the third year in a row, forecasters came into the first quarter looking for 2%-plus GDP growth, only to steadily revise estimates lower. Chart 1 shows the Atlanta Fed’s GDPNow tracking for 1Q in each year. They are far from alone: both we and the consensus have been doing the same thing. This weakness adds to market skepticism about a June Fed hike.

 

In both 2014 and 2015 we faded the weak 1Q data and argued that the recovery remained on track. Today, we see four reasons to reiterate that call. First, outside of the GDP adding up, the data look fine. Second, some of the weakness is likely due to lingering seasonal adjustment problems. Third, the fundamental backdrop points to moderate growth, not a big slowdown. Fourth, and perhaps most important, with potential growth slipping below 2%, and given the normal variation in the data, we should not be surprised to see near-zero quarters on an annual basis.

 

* * *

At this time in both 2014 and 2015 a tremendous amount of ink was spilled trying to explain the 1Q collapse. On its third release, the official estimate of 1Q 2014 GDP fell to negative 2.9%. That is the weakest nonrecession quarter in modern history. History almost repeated itself in 2015, with the 1Q number bottom at -0.7%, this time on its second release. After benchmark and other revisions, the 1Q numbers now stand at -0.9% and 0.6% respectively. Those are still very weak numbers.

 

Two seasonal adjustment stories were in play in both years. First, these were unusually harsh winters, although in 2015 February was the only truly nasty month. Our own work and reading of the literature suggested that bad weather had a big impact on certain sectors (such as housing) and on the hard hit regions, but it is hard to show a compelling impact on overall GDP. Bad weather seems to cause delays and shifts in spending—for example, utility spending rises while other activity dips—with limited sustained impact overall. Note, that 2Q GDP rebounded by 4.6% in 2014 and 3.9% in 2015.

 

A bigger issue appears to be “residual seasonality” in the first quarter. Recall that on a nonseasonally adjusted basis, the economy has a one-quarter “recession” at the start of every year. Consumption plunges after the holiday season and housing and other activities freeze up. While up-to-date data are not available, seasonal effects push down GDP at about a 15% annual rate for the quarter. This makes measuring the quarter extremely difficult. Adding to the challenge, many of the more obscure indicators that go into GDP are not seasonally adjusted either because there is not adequate history or the data are erratic and don’t meet the “statistical significance” required for seasonal adjustment.

 

* * *

Perhaps the biggest story here is simply that with low trend growth, near-zero quarters are more frequent. By our estimate, potential GDP growth has fallen in half—from 3.5% in the 1990s to 1.7% currently. The volatility around that trend remains  roughly the same (Chart 6). The standard deviation of GDP growth was 2.0% in the 1990s expansion and is 1.6% in the current expansion (Table 1). Nonetheless, sub-1% quarters now happen almost every year. Get used to it.

Oddly enough, while “residual seasonals” may justify why Ethan Harris has been so wrong on numerous occasions with this forecast, it does not explain why in a separate report, the very same BofA found that retail sales in March continue to struggle as the rebound for the US consumer, responsible for 70% of the US economy, is nowhere to be found!

No comment on that Ethan? Or maybe on this: if it is “faulty seasonals” to blame… for the third year in a row… were you unaware of them when you made your initial 2.5% Q1 GDP estimate?

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

While attending the ultra-exclusive Ambrosetti Workshop, University of Chicago finance professor Luigi Zingales took a few minutes to discuss income inequality in an interview with Bloomberg.

We were delighted that the irony of being at a luxurious villa on the shores of Lake Como discussing income inequality wasn’t lost on the Booth PhD: “First of all it’s a bit funny to discuss about income inequality here at this luxurious villa in Como next to George Clooney’s villa”

As Jeb Bush might say, “Please laugh.”

Moving on: when asked if central bank policy is making people feel that they’ve really lost out, Zingales reiterates what we’ve known all along, namely that the real consequences of central bank actions don’t matter, what matters is simply how people perceive the central bank and its actions. If people are told enough by smart people on television that the economy has been fixed, and the market is a reflection of the fundamentals, then they’ll blindly support anything the fed does. After all, as long as whatever voodoo is going on over at the Eccles building is pushing 401k balances higher, then it must be right.

He then goes on as far as stating that capitalism in the U.S. has failed and been converted into a perverted, mutant, crony version and that “the game is rigged.”

“I think that people are willing to support capitalism if capitalism is providing growth, providing better income for everybody, and also if it has some at least appearance of being fair. Unfortunately, none of these conditions are in place today in the United States. I think that growth is limited, and disproportionately goes to a small fraction of the population. And there is a sense that the game is rigged.”

We’ll jump in here to say, first, at least he’s telling the truth about the central planners’ strategy of perception. And also to point out that there isn’t a “sense” that the game is rigged, there is undeniable proof that the game is rigged.

As we have showed (repeatedly)  the S&P 500 (that is to say, the “1%”) has completely dislocated from the average American’s reality.

 

And here is another chart showing that all of the income gains over the past 30 years have gone to the 1% as compared to the bottom 90% of earners.  QE only made this dislocation more acute.

He wraps up the interview by answering whether or not the monetary policies of central banks are adding to income inequality and actually making the rich richer.
   
“I think QE adds to income inequality though to be fair with Mario Draghi that’s the only thing he can do.”

Well, that, and the soon to be unleashed Helicopter money of course. Meanwhile, for politicians who are supposedly so focused on fixing the unprecedented US and global wealth divide, may we suggest starting with those ruinous policies which – as we warned back in 2009 – even tenured professors now admit are not helping the everyday individual, but merely making the rich richer… as they were designed from the beginning. 

Probably not.

 

Full interview below

 

via Zero Hedge http://ift.tt/1VdvH76 Tyler Durden

Only in the new normal of manic algos and goal-seeked short-squeezes could actual news that Iran is undercutting OPEC by slashing prices to maintain market share be out-followed by hopefulness driven by upbeat comment from Janet Yellen (because she has nailed everyting so far) and more chatter about a production freeze (which makes no sense whatsoever given the Iran news). For now, WTI is trading above $39.50 ahead of today’s rig count data, back at 2-week highs.

After yesterday’s rollover collapse, everything is epically awesome once again…

So the bad news… As Gulf News reports, Iran ratcheted up its offence in the oil market after breaking a pricing tradition, signalling it’s seeking to win market share at a time when rival producers are trying to forge a deal on freezing output.

State-run National Iranian Oil Co. will sell the Forozan Blend crude for May to Asia below the level offered by rival Saudi Aramco for Arab Medium, the third month the Arabian Gulf state is giving the discount after setting it at a premium for almost seven years through February 2016, data compiled by Bloomberg show. NIOC will also sell the Iranian Light grade to Asian customers at 60 cents below Middle East benchmark prices, a company official said on Friday, asking not to be identified because of internal policy.

 

While producers including Saudi Arabia, OPEC’s biggest member, and Russia are due to meet in Doha on April 17 to discuss a deal to freeze output in a step toward clearing a global glut, Iran is determined to regain market share lost over the past few years due to sanctions over its nuclear programme. To pry away customers relishing oil that is cheaper than mid-2014 levels by more than 50 per cent, the country is expected to focus on pricing and boosting supply.

 

“Unquestionably, since the lifting of sanctions, the Iranians have become a force to be reckoned with in global oil markets,” said John Driscoll, chief strategist at JTD Energy Services Pte, who has spent more than 30 years trading crude and petroleum in Singapore. “Their mission is to recapture market share, pure and simple.”

But oil is rallying because…

Upbeat Yellen: Bloomberg reports Crude benefits from Yellen’s upbeat comments – all of which is utter nonsense as she has been a total disaster in forecasting anything.

 

Production Freeze Chatter: Bloomberg reports WTI extends gains to above $39 for the highest this month as market considers potential for output freeze – all of which is total nonsense since if Iran is cutting prices to maintain market share then the Saudis will never freeze production.

But since when did any of that matter.

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