Surgeon General: Next Week Will Be Our 'Pearl Harbor And 9/11 Moments'

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Surgeon General: Next Week Will Be Our 'Pearl Harbor And 9/11 Moments'

Surgeon General Dr. Jerome Adams told NBC's "Meet the Press" that next week's national coronavirus situation would be "our Pearl Harbor moment," adding "It's going to be our 9/11 moment."

Responding to a question on state-specific stay-at-home orders, Adams said "I talked to many of these governors, and here’s what I say to them.

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Here’s what I would say to them right now. The next week is going to be our Pearl Harbor moment. It’s going to be our 9/11 moment. It’s going to be the hardest moment for many Americans in their entire lives, and we really need to understand that if we want to flatten that curve and get through to the other side, everyone needs to do their part."

Adams says that "Ninety percent of Americans are doing their part - even on those states where they haven't had a shelter-in-place." He then asked governors to give the Trump administration at least a week - if they can't give them 30-days, "so we don't overwhelm our health care systems over this next week," adding that they would reassess at that point.

"We want everyone to understand; you have to be Rosie the Riveter. You have to do your part."


Adams has also been backpedaling bigly on his February 29th recommendation to "STOP BUYING MASKS" - as he claimed they "are NOT effective in preventing general public from catching #Coronavirus."


To cover his tracks, Adams told MSNBC "Here's what's changed. We now know that, uh, about 25% and some studies even more, of COVID-19 is transmitted when you are asymptomatic or pre-symptomatic."

Except we've known about asymptomatic transmission since at least January; as we wrote on January 27th: "Incubation is asymptomatic, contagious, and can be as long as 14 days."

Meanwhile, several counties around the country are now mandating face coverings in public - and the CDC has considered recommending that people wear face masks all the time.

More Adams clips:

Meanwhile, the latest as of this writing:

Tyler Durden

Sun, 04/05/2020 - 19:15
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Zoom vows to spend next 90 days thinking hard about its security and privacy after rough week, meeting ID war-dialing tool emerges

logicfish Security zoom vows spend next days thinking hard about security privacy after rough week meeting war-dialing tool emerges All https://go.theregister.co.uk   Discuss    Share
Passwords-by-default feature may be faulty. But hey, who else just went from 10 to 200 million daily users?

Video-conferencing app maker Zoom has promised to do better at security after a bruising week in which it was found to be unpleasantly leaky in several ways.…


Fed Buys $587 Billion In Bonds In Past Week, 2.7% Of GDP, Just As Foreign Central Banks Start To Liquidate

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Fed Buys $587 Billion In Bonds In Past Week, 2.7% Of GDP, Just As Foreign Central Banks Start To Liquidate

Having moved from "Not QE" (or QE4 as it was correctly called), to the $750BN QE5 which came and went with the blink of an eye, to the Fed's open-ended and unlimited QEnfinity in the span of one week, the full "shock and awe" of the Fed's money printer is now on full display, and in just the past week, from March 19 to Marc

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h 25, the Fed has purchased $587BN in securities ($375BN in TSYs, $212BN in MBS), or roughly 2.7% of the $21.4TN in US GDP.

This means that as of Wednesday close, when accounting for last week's repo operations, the Fed's balance sheet has increased by roughly $650BN, bringing it to just over $5.3 trillion, an increase of $1.2 trillion in the past two week, or roughly 5.6% of US GDP.

Some more scary statistics: if the Fed continues QE at the current pace of $625 billion per week, the Fed's balance sheet will hit $10 trillion by June, or just below 50% of US GDP. Even assuming the Fed eases back of the gas pedal, its balance sheet is almost certain to hit $7 trillion by June.

Which is hardly an accident: one look at the Treasury securities held in custody at the Fed shows that the past two weeks have seen a whopping $50BN in foreign central bank sales, a 1.7% drop which was the highest in six years since Russia pulled over $100BN in TSYs from the Fed at the start of the Crimean war in 2014.

As Bloomberg observes, the selling may have contributed to record volatility in the Treasury market and prompted the Fed’s intervention. More importantly, it also means that the biggest buyer of US Treasurys in the past decade, foreign official institutions (i.e., central banks and reserve managers) are now sellers, so now the U.S. government needs private investors to soak up the ever increasing debt issuance.

And since those are busy avoiding a deadly virus, it means that only the Fed now can fund the exploding US budget deficit... which is precisely what it is doing.

Ironically, it was back on Jan 28, just as the world was learning about the coronavirus pandemic that we showed the long-term trajectory of the Fed's balance sheet as calculated by the CBO...

... when we said when we said that "MMT will be launched after the next financial crisis, and which will see the Fed directly monetize US debt issuance from the Treasury until the dollar finally loses its reserve currency status."

We were right about the first part. Now we just have to wait for the second.

Tyler Durden

Wed, 03/25/2020 - 22:10

Watch live online this week: Why you need managed detection and response

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Integrate your disconnected products and management if you want to survive

Webcast  In a recent survey, nine out of 10 organisations that suffered a significant security attack were running up-to-date cybersecurity software. They did what everyone told them to do, and it wasn’t enough.…


China Auto Sales Continue Collapse, Plunging 50% And 44% In First And Second Week Of March, Respectively

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China Auto Sales Continue Collapse, Plunging 50% And 44% In First And Second Week Of March, Respectively

The coronavirus has certainly wreaked havoc on an already dilapidated global auto industry - and it's no more evident than in China, where the virus originated and home to the largest auto market in the world.

Continuing February's trends, auto sales in March have continued to collapse: lower by 50% during the first week of March and

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down 44% the second week of March. 

And that's if you want to believe the numbers that are coming out of China, where the optics of a recovery may mean more to the government than an actual recovery.


China Auto Sales Through March 1, 2020

Cui Dongshu, secretary general of the China Passenger Car Association told Bloomberg that the "market is recovering" but that it is doing so at a "slower than expected pace". He also called for the country to increase car purchase quota, lower purchasing taxes and continue to give subsidies to EV purchases, in an effort to create a tailwind for buyers.

The country is also reportedly considering the idea of relaxing emission curbs to help struggling automakers.

Recall, sales fell 79% in February, marking the biggest ever monthly plunge on record. We reported less than a week ago that automakers were asking the government for relief after the industry's collapse, which occurred in the midst of an already-in-progress global recession for automakers. Specifically, they were asking at the time for cuts on the purchase tax for smaller vehicles and support for sales in rural markets, in addition to the easing of emission requirements. 

It looks as though they may have gotten their wish. 


China Auto Sales Y/Y Change Through March 1, 2020

Sales for February fell to just 310,000 vehicles from a year earlier, marking the 20th straight month of declines. 

A twin shock has plagued the automobile industry in China, one where a supply shock has hit manufacturers, who can't produce automobiles at full capacity because of labor shortages and lockdowns, along with a demand shock that has kept people away from dealerships. While supply woes could be resolved with near term factory restarts, demand woes are expected to linger through the first half of the year.

To illustrate the plunge in business activity, Caixin China Composite Output Index plunged to 27.5 in February from 51.9 in the previous month, one of the quickest drops on record. The virus outbreak has led to company closures and travel restrictions that have ground China's economy to a halt. 


Tyler Durden

Fri, 03/20/2020 - 23:45

Stocks Suffer Worst Week Since Lehman Despite Biggest Fed Bailout Ever

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Stocks Suffer Worst Week Since Lehman Despite Biggest Fed Bailout Ever

This has been the sharpest market selloff in history...

This was the worst week since Lehman (and worst 4 weeks since Nov 1929) for The Dow Jones Industrial Average...(Dow was down 18% during the Lehman week and 17.35% this week)

Source: Bloomberg

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Despite The Fed gushing a stunning $307 billion into the markets - almost double its previous biggest liquidity injection (in March 2009)...


Maybe it was the 'stock' and not the 'flow' after all...

Source: Bloomberg

Stocks still have a long way to go to erase all the delusion (compared to actual profits)...

Source: Bloomberg

And if you think stocks already fell too much, think again... Total market cap to GDP is just now retesting the peak of the housing bubble levels!

Source: Bloomberg

As @TaviCosta notes, "This puts into perspective... We truly were at absurd valuations."

Never Forget!!

Chinese markets are mixed since the Wuhan flu began with tech-heavy super-leveraged ChiNext still green as the the megacaps get pummeled...

Source: Bloomberg

In Europe, "Whatever it takes" wasn't enough...

Source: Bloomberg

Nasdaq remains notably higher since President Trump's inauguration, S&P is barely higher but The Dow, Transports, and Small Caps are all underwater now (the latter two crushed)...

Source: Bloomberg

And US stocks are testing a serious trendline...

Source: Bloomberg

With the Median US Stock down over 50% from its highs...

Source: Bloomberg

The US Stock markets have lost almost $30 trillion in the last few weeks...

Source: Bloomberg

And US stock market volatility has not been this extreme since Black Monday in 1987 and Black Monday in 1929...

Source: Bloomberg

Credit markets are utterly collapsing with nothing The fed did this week helping... HY is the worst since the financial crisis...

Source: Bloomberg

And HY has a long way to go if it catches up with fundamentals...

Source: Bloomberg

And investment grade credit is getting crushed at a record rate...

Source: Bloomberg

Treasury bond vol has exploded - at its sharpest rate ever...

Source: Bloomberg

Bonds and stocks have completely decoupled, trading down together and breaking the 'normal' correlation regime...

Source: Bloomberg

Very volatile week in bond-land but thanks to today's buying pressure, most of the curve ended lower in yield (dominate dby the short-end) as stocks collapsed...

Source: Bloomberg

10Y yields were marginally lower on the week (amid a massive 65bps intra-week range) and back below 1.00%...

Source: Bloomberg

Muni yields ended up 60bps today - refusing to improve despite The Fed's new facility...

Source: Bloomberg

Amid all this carnage, negative-yielding-debt worldwide has evaporates rapidly as bonds have been dumped everywhere (sending yields higher)...

Source: Bloomberg

The dollar is up a stunning 9 days in a row...as the global dollar shortage creates an unstoppable bid every day after Europe opens...

Source: Bloomberg

This is the biggest 9-day surge in the dollar (a shocking 8%-plus) ever - more than when Soros broke the Bank of England...

Source: Bloomberg

Cryptos had a big week, extending gains from last week...

Source: Bloomberg

With Bitcoin up 85% from last week's lows...

Source: Bloomberg

Absolute carnage in commodities this week as a strong dollar and ugly fundamentals slammed copper and crude...

Source: Bloomberg

Precious Metals were pummeled this week as the dollar soared with Platunum worst and gold best...

Source: Bloomberg

But oil was the real headline on the week - utterly devastated and Putin's comments today spoiled the party from yesterday's best day ever... This was WTI's worst week since 1991...

Finally, as a reminder, Santiago Capital explains why The Fed Swap Lines aren't working... (and in fact are making things worse)...

For a month, global stock markets refused to take any notice of the virus that was taking hold in China... not our problem... we'll be fine... Fed will rescue us... v-shaped recovery... and then...

Source: Bloomberg

And the prediction market says that the Wuhan flu has done what Schiff and the Democrats couldn't with three years of bullshit narratives...

Source: Bloomberg

And what happens next?

Source: Bloomberg

And this is not very reassuring - as all the chatter of helicopter money has sent USA sovereign credit risk notably higher...

Source: Bloomberg

Tyler Durden

Fri, 03/20/2020 - 16:01

Stocks Tumble After Trump Claims Pelosi "Won't Be Ready This Week" To Meet On Fiscal Plans

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Stocks Tumble After Trump Claims Pelosi "Won't Be Ready This Week" To Meet On Fiscal Plans



Markets reacted negatively to a tweet from President Trump claiming that "Do Nothing Democrats" will be unable to meet this week to discuss possible fiscal stimulus plans.








After The Market's Week From Hell, Here's A List Of Who Was Puking

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After The Market's Week From Hell, Here's A List Of Who Was Puking

Over the past 7 days, which came just after the stock market hit an all time high, and which turned out to be the worst week for the S&P since the vomit-inducing days of the 2008 financial crisis, and also saw the fastest 10% correction from a market peak on record...

... we tried to put together the pieces of the "liquidation puzzle" to find out i) ju

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st who is selling, whether machines or people or some combination of both, and ii) is there more selling to go?

Of course, as we now know, the answer to ii) was "oh yes" as an entire generation of traders who had never seen a violent market crash recoiled in terror at the relentless selling, which sent the Dow more than 3% lower on 3 distinct occasions.

"A lot of us hadn’t seen this type of crash in our careers," admitted Justin Wilder, a 31-year-old research analyst at DRW Holdings LLC in Montreal who has never experienced an actual bear market in his career. "There’s definitely some nervousness on the floor, both for the trading and our health" added Justin who was still in high school when Lehman filed for bankruptcy and the S&P lost more than half of its value before the Fed stepped in with QE... and the rest is history.

Other Millennials were just as incredulous: "With coronavirus, the market has found a reason to correct in a way that I’d never seen before," Julian Carvajal, a 30-year-old FX trader at TCX Investment Management told Bloomberg.

"It’s been mental, and that’s probably an understatement," said Rishi Mishra, a 29-year-old research analyst at Futures First, who was definitely in high school when Lehman filed for bankruptcy. "Many of us who weren’t trading during the 2008 crisis see this as one of those days you could tell your grandchildren about." Well, Rishi, you may want to hold off on the grandchildren stories, especially if the Fed does not step in some 24 hours from now to prevent what may be a historic puke on Monday now that "community-spread" cases have emerged in the US, as well as the first coronavirus death.

But while we now know the answer to ii) what about i)? Courtesy of the latest weekly report from Deutsche Bank's flow expert Parag Thatte, we now know the answer to that too.

The answer to "who was selling" is, in short, everybody.

But before we get into the details, a quick reminder: we have been warning for the past two months that positioning and pricing in equities was extremely elevated, with most investors "all-in" in many cases with record leverage, and increasingly disconnected from growth indicators. And just in case any of the abovementioned millennial "traders" claim there were no signs a crash was imminent, well... there were, like the market being the most overbought and complacent ever, with every investor all-in as recently as last month:

  • Institutions, Retail And Algos Are Now All-In, Just As Buybacks Tumble

... only to become even more overbought and even more complacent, with investors even more all-in...

  • Never Before Seen Market Complacency, As Everyone Goes Even More "All In"

... with record leverage and unprecedented "smart money" concentration in the same handful of stocks:

  • Hedge Funds Have Never Been More Levered Or More Invested In The Same Handful Of Stocks

... and since nothing could dent the relentless Nasdaq ascent, even as Apple cut guidance due to the coronavirus...

  • Apple Cuts Guidance Due To Virus Disruptions

... retail investors unleashed a never-before seen buying spree, and not just momentum stocks, but calls of momentum stocks...

  • Frenzied Retail Traders Send Option Volumes To All Time High; Go All-In Tesla, Tech Calls

... to the point where retail investors' record levered beta helped them outperform the entire hedge fund class!

  • Bizarro Market: Retail Investors Are Now Crushing Hedge Funds

... and ushered in the "Profane, Greedy Traders of Reddit" who "Are Shaking Up the Stock Market" even as US consumers just reported the highest median current value of their market investments.

In short, everyone felt invincible, and all thanks to the Fed's QE4 which injected $600BN in the market and made even a modest drop appear impossible.

Only... it was not meant to last, and in a market that took the express elevator up and the Wile-E Coyote anvil down, especially with short interest at all time lows providing almost no natural buffer to a selloff (as there were almost no shorts covering into the plunge)...

... less than a week after markets hit an all time high, stocks crashed, suffering three 3%+ drops in the past week as algos suddenly realized that not even the Fed can print viral antibodies, resulting in the biggest one-day Dow Jones point drop on record (down 1,191 on "Viral Thursday"), but more importantly, the fastest 10% correction from an all-time Dow Jones high since just a few months before the start of the Great Depression.

* * *

Which brings us back to the original question: who was selling?

We already know that retail investors were steamrolled, with the Goldman Sachs Retail Favorite basket tumbling after returning more than 16% YTD just last week, and is now down for the year (curiously, it is still outperforming the GS Hedge Fund VIP basket which as of this morning is down more than 3% in 2020.)

What about non-retail investors?

Oh, where to start with a historic selloff that has sent equities catching down to all other asset classes?

Well, how about at the top: as Thatte writes, equities positioning has flipped from being extremely overweight (95th percentile) to very underweight (12th percentile). DB's consolidated positioning metric, which was at the top of its historical range last week (95th percentile) has now fallen very sharply to underweight levels (12th percentile).

Meanwhile, the bank's cross asset breadth indicator has crashed from a near all time high, to what is basically an all time low.

Worse, the true decline in positioning is likely bigger as some data is available only with a lag: as a result positioning is likely to decline further as momentum signals across all asset classes have now flipped to extreme, and in most cases record risk-off.

A more detailed breakdown of selling classes finds that while discretionary investors were indeed taken to the woodshed, it was systematic investors who were absolutely hammered.

Among them:

Vol control funds equity allocation is down sharply and their selling should start to diminish. Vol control funds have cut exposure to equities from historical maximum last week down to near the bottom of their range (5th percentile), selling $65bn of equities over the last one week.

They can still cut equity exposure further if vol rises but with allocations already low, their sensitivity to incremental selloffs should start to diminish.

CTAs have cut equity exposure to being short but are likely to go further. CTAs were extremely long equities until last week and have now flipped to being slightly short (18th percentile) but their positioning remains above levels seen during prior large selloffs in 2011, 2016 and 2018. Volatility as well as trend signals continue to deteriorate and point to them raising their short positions further.

Risk parity funds’ equity exposure is down from a record high but remains elevated. Risk parity funds are likely to cut exposure further as volatility  continues to remain elevated, but they tend to move more gradually compared to other systematic funds.

How about non-retail, non-systematic investors? Here too the selling was widespread, with huge outflows from equity funds this week but more to come. Equity funds have seen outflows of -$28bn since the selloff began last Friday. However, prior inflows since late October had been extremely strong...

... far more than implied by the modest rebound in global growth and we estimate that equity funds would need to see outflows of about -$130bn just to catch down.

Hedge funds, which were perhaps the least euphoric investors into the February meltup thanks to their curiously low beta...

... suffered the least of all investors...

For quants, the pain was widespread, but nowhere more so than the contrarians with value funds cratering to new all time low.

And here is the worst news for Buy-The-Fucking-Dippers: according to Thatte, "in past large selloffs, outflows typically continued for several weeks"... which means that this thing will go on for a long time.

There was some good news: after last week's rout, stocks are finally realizing that there will be no earnings growth for the second consecutive year, and as a result the S&P is now pricing in negative EPS growth...

... and an ISM plunging to 47.

At the same time the put/call volume has reversed dramatically amid a surge in put buying which - at least from a contrarian standpoint - suggests that the market may finally be at a support level.

Putting this together, it means that unless it is now consensus that a global recession is coming - and as we discussed yesterday, one is certainly likely - the record sell-off may finally be poised to take a break.

Tyler Durden

Sat, 02/29/2020 - 21:05

UBS Hires ING Boss To Replace Ermotti 1 Week After Credit Suisse Ousts Thiam

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UBS Hires ING Boss To Replace Ermotti 1 Week After Credit Suisse Ousts Thiam

Switzerland's cross-town banking rivals are now under new management.

Despite presiding over several epic 'compliance failures' at ING that led the Dutch bank into the morass of a multibillion Russian money laundering scandal that has rocked the European banking system, ING boss Ralph Hamers has been tapped to succeed Sergio Ermotti at the helm of Switzerland's largest

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bank - UBS.

According to the Financial Times, which got the scoop on Hamers' ascension, Hamers will take over for Ermotti as his 8-year tenure at the helm of UBS comes to an end. Like many other European megabanks, UBS has suffered from a stagnant streak in its moneymaking wealth management business, and stalled merger talks with DWS, the actually-profitable offshoot of Deutsche Bank's management business, didn't help. Despite round after round of cutbacks in the name of efficiency, the bank's board decided that Ermotti's time had come.

Ralph Hamers

UBS chairman Axel Weber reportedly approached Hamers months ago and, following an internal and external search, Weber offered him the job after the board determined that Hamers was the most "capable and qualified" candidate.

Hamers joined ING 28 years ago, and has been its CEO since 2013, winning plaudits for leading ING through its post-crisis restructuring and the payback of a Dutch government bailout, while the compliance scandal marred his reputation, per FT.

Mr Hamers, who joined ING more than 28 years ago, has been chief executive of the Dutch lender since 2013. He led the bank through the completion of its post-financial crisis restructuring, repaying the money it received from the Dutch government and returning to dividend payments, while investing heavily in digital services and slashing the size of its traditional branch network.

However, his tenure has more recently been marred by a series of major compliance failings. The bank received a record €775m penalty from Dutch prosecutors in 2018, and has been banned from taking on new customers in Italy for more than a year.

ING was forced to pull an additional tier 1 bond offering on Wednesday because of "new information that has come to the issuer [ING], that needs to be studied".

Notably, the report about Hamers new job comes less than a week since UBS's cross-town rival Credit Suisse fired CEO Tidjane Thiam over the corporate spy scandal that rocked CS last year. Compared to Thiam, who scapegoated a longtime protege just to keep his job for a few more months, Hamers is a banking saint.

Tyler Durden

Thu, 02/20/2020 - 02:45

Platts: 5 Commodity Charts To Watch This Week

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Platts: 5 Commodity Charts To Watch This Week

Via S&P Global Platts Insight blog,

The ongoing outbreak of coronavirus, known officially as COVID-19, continues to dominate commodity and energy market developments, as illustrated by this week’s pick of charts from S&P Global Platts news editors. Plus, key trends in EU and US electricity markets.

1. COVID-19 stalls Chinese workers’ return to manufacturing cen
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What’s happening? China’s coastal provinces are heavily dependent on migrant labour from other provinces. Every year millions of these migrant workers go home for the Lunar New Year, travelling back to the coastal cities when the holiday ends. They go back to jobs on construction sites, in factories and across the service sector. This year the annual migration has stalled due the coronavirus (COVID-19) outbreak, as shown by data from Chinese technology company Baidu. Movement of people into the coastal province of Guangdong after the lunar new year is way down compared to last year. Guangdong is home to more industrial enterprises than another province, many of them privately owned, small and medium sized, manufacturers reliant on migrant labour. The same trend can be seen in Zhejiang and Jiangsu, two other coastal provinces with a large number of private enterprises.

What’s next? State-owned companies are less reliant on migrant labour. The State Council, China’s government, recently announced that 97% of central government-controlled petroleum and petrochemical companies had resumed work. But supply of oil products is not the issue. Demand is the problem. With so few people travelling after the new year and a lack of workers in the coastal provinces, oil demand from the transport, construction and petrochemical sectors is taking a dive. The government has to balance the drive to get people back to work, and the economy moving, with efforts to contain COVID-19 – no easy task. Look for rising levels of internal migration to indicate that China’s economy is spluttering back to life and that oil demand is back on the rise.

2. …and adds to woes for already weak LNG market

What’s happening? China is the world’s second-largest LNG importer behind Japan. Quarantines and travel restrictions imposed to restrict the spread of COVID-19 have caused a demand contraction, hitting an already oversupplied global LNG market.

What’s next? The impact of the outbreak is expected to worsen in coming weeks as economic activity in key manufacturing hubs struggles to rebound, keeping a lid on natural gas demand and triggering more LNG trade flow disruptions. As the previous item shows, travel restrictions were still preventing millions of industry employees in China from returning to work in the week ending February 14 and factories expected only partial production restarts, with some delaying a return to operations until late February or early March.

3. Slump in Chinese construction and autos hits global steel

What’s happening? Steel hot-rolled coil (HRC) prices in Asian, EU and US markets have been falling as inventories swell. The glut has been sparked by lower demand from China’s construction and automotive industries, where activity has plunged due to measures to curb the spread of COVID-19. US domestic prices have shed 5% over the past month, and Chinese domestic prices almost 10%.

What’s next? With the Chinese, the world’s largest steel producers and exporters, experiencing logistics delays and even docking and unloading restrictions on ships carrying  steel into the Philippines and South Korea, exporters elsewhere are eyeing new trade opportunities in China’s usual steel export markets. In flat products, exporters from India, Japan and Russia are seeking new trade, and in long products, Turkish, Middle Eastern and again Russian exporters are keeping a close eye on developments.

4. Successive storms test European wind turbines, power grids

What’s happening? Record wind power generation has its downsides. Storms have swept across Europe the last two weekends, sending UK grid frequency below 49.7 Hertz February 9 and triggering a call for static response from the system operator. When winds are excessive, turbines go into survival mode, automatically reducing or shutting down production. Storm Ciara led to a multi-gigawatt shortfall in UK wind forecasts, even if generation was high at 13 GW – and frequency dropped to 49.6 Hertz. A big slice of this shortfall would have been embedded, distribution-connected capacity, effectively invisible to the transmission system operator. In the event, National Grid dealt with the frequency dive. The lack of inertia on the system, however, is an on-going challenge as dispatchable plants close and more offshore wind farms open.

What’s next? Strong winds are forecast to continue into the current week, with February shaping up to be the third month in a row when European wind generation records are broken. The UK alone is forecast to have close to 15 GW of wind on the system all through Tuesday, equivalent to 50% of demand. There are now over 205 GW of wind capacity installed across Europe, the park averaging 85 GW generation in the most recent week. Average European wind generation this winter stands at around 62 GW, almost 10 GW up on year. Even deficit market Finland has now seen negative hourly prices due to surplus wind spilling from Sweden and Denmark.

5. New England power capacity auction clears at lowest price ever

What’s happening? The New England power market operator’s auction for electricity supplies to be delivered in 2023/24 recently cleared at $2/kW-month, the lowest price since the auction has been conducted. Reductions in expected future power demand and other factors were cited as reasons for the low clearing prices.

What’s next? Next year’s capacity auction will be influenced by a variety of factors on both the supply and demand side, many of which remain uncertain. However, the volume of resources that elect to retire from the market and market design changes being implemented to improve fuel security will impact clearing prices in the next auction. Low capacity prices have been an issue across the US and several proceedings are underway to address problems in these multi-billion dollar markets.

Tyler Durden

Mon, 02/17/2020 - 15:45

Donald Trump Having The 'Best Week Of His Presidency'

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Donald Trump Having The 'Best Week Of His Presidency'

Donald Trump is having a great week.

Just one day after his approval rating hit an all time high, the president emerged victorious from another 'six ways from Sunday' fail with a Wednesday acquittal in his CIA-sparked impeachment trial. Add to that a botched Iowa caucus that made the Democrats look like a joke, and Trump

According to F

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inancial Times' US national editor Edward Luce - who is not a fan of the current POTUS, this week may have been Trump's 'springboard to re-election.'

Three years after taking office, Mr Trump is the least unpopular he has ever been. Moreover, he can do almost what he wants before November without fear of restraint. Impeachment was hardly a blip. Inviting foreign interference cost him nothing. The vote-counting fiasco in Iowa shows how easy it would be to contaminate public trust in the election process. -FT

Luce notes that the most recent Gallup poll found that 63% of voters approve of how Trump is handling the economy, "the largest such rating since George W Bush in the aftermath of the September 11 attacks." The FT editor then trots out 'Trump inherited Obama's recovery' and notes that 'incumbent presidents are almost always rewarded with more dollars in people's pockets,' but says that all of that is immaterial. The win goes to Trump.

Hilariously, Luce chalks Senate Republicans' defense of Trump with cowardice, writing that Utah Senator Mitt Romney (R) "plucked up the courage to declare that the emperor had no clothes." What the FT exec is missing, however, is that Senate Republicans viewed President Trump's request that Ukraine investigate the Bidens as largely justified - regardless of the paused US aid.

Lastly, the botched Iowa caucuses were a disaster - not just because of technical glitches, but because of low voter turnout. According to Luce, "almost a third fewer of Iowans, or 16 per cent, went to the caucuses as in 2008 when Mr Obama’s campaign took off."

This points to a "serious enthusiasm gap" between Democratic voters and Trump supporters. And unless voters 'feel the slowdown in US growth' and the Democrats unite behind a 'good nominee,' it looks like Trump will walk away with another four years in the White House.

Tyler Durden

Thu, 02/06/2020 - 18:55




Hunter Biden Ordered To Appear In Court Next Week For Contempt Hearing

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Hunter Biden Ordered To Appear In Court Next Week For Contempt Hearing

Hunter Biden has been ordered to stand in front of an Arkansas judge next Tuedsay to explain why he shouldn't be held in contempt of court for failing to produce a laundry list of financial and personal information in his ongoing child support dispute with stripper Lunden Alexis Roberts.

Roberts asked the court on Tuesday to hold Bi

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den in contempt for failing to disclose financial information, contact information, and "a list of all companies he currently owns or in which he has an ownership interest," as well as "all companies in which he has had an ownership interest in the past five years."

Also sought are a copy of Biden's 2017 and 2018 tax returns, deeds to properties he owns, and an executed copy of a financial records release Biden has been avoiding filing unless the court allows him to do so under seal.

"The defendant continues to act as though he has no respect for this Court, its orders, the legal process in this state, or the needs of his child for support," reads the filing, which adds "This is but another example of the defendant's unnecessary actions to frustrate prompt adjudication of this matter and increase the plaintiff's litigation costs."

Circuit Court Judge Holly Meyer agreed, ordering Biden to appear in person to explain his failure to produce the requested information which was due in August, 2019.

In November, a DNA test revealed Hunter to be the father of the unnamed child with Roberts. In order to determine what Biden can cough up, Roberts has sought extensive financial records for periods which include his time on the board of a Ukrainian energy company while his father was the Obama administration's point-man on Ukraine.

Hunter served on Burisma's board from 2014 through 2018, while his father openly bragged about getting a prosecutor fired who was investigating the company's founder for a variety of white-collar crimes.

Hunter Biden did not receive any direct compensation from Burisma — rather, the Ukrainian company wired funds to Rosemont Seneca Bohai (RSB), an American firm controlled by Hunter Biden’s longtime business partner Devon Archer. Between June 2014 and October 2015, RSB wired a total of $708,302 to Hunter Biden for undisclosed purposes while RSB was receiving funds from Burisma.

The IRS placed a tax lien on Hunter Biden for $112,805 in unpaid taxes from 2015, the Daily Caller News Foundation previously reported. -Daily Caller

While Congressional Democrats insist the entire affair was above board, and "debunked," it is apparently too radioactive for lawmakers to delve into, despite the fact that it's at the center of impeachment proceedings against President Donald Trump - who withheld almost $400 million in US military aid to Ukraine while he was pushing for an investigation into the Bidens.

Tyler Durden

Wed, 01/22/2020 - 20:45

Blain: This Week Could Be A Shocker

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Blain: This Week Could Be A Shocker

Blain's Morning Porridge - Jan 20th 2020 - Meltup to Meltdown?

“We should skip Mondays. The weekends give clients too much time to worry…”

Last week ended on yet more record highs.  Markets high-fiving all over the place.  Stock market cheerleaders are talking about new higher target levels - 15%+ gains this month already, and they expect

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more. The bulls see nothing to stop the longest and steepest stock market rally in 160 years going higher for longer.  Market’s just can’t get enough!  On the back of half-a-trade deal and pretty dismal Chinese numbers?  Meanwile, bond markets also soared on the back of record European sovereign order and a blowout Italian bond sale (!). Tesla is worth more than the rest of US autos combined, and no one blinked. Nothing seems to phase these markets. Doubts? Damn the torpedoes full steam ahead… 

Are you sure?

Stop Right There. This week could be a shocker. This could be a very big and very negative week. Perhaps it’s time to tighten your seat belt, and check the Brace Position card in the seatbelt.

What’s got me worried? 

I get calls all the time from chartists warning me of “significant” market formations signalling imminent shifts – I usually don’t pay much attention and ignore what I struggle to understand. But, late last week, no less than 3 of the chartists I’ve come to trust all called with the same warning: the charts all point to something significant about to happen

Taken together, three separate chartists hardly make a statistically significant market sample, but they all point the same way: Stocks - Down, Bonds – Up, Oil – Down, Gold – up and the beginning of a great secular shunt down for the Dollar against the Yuan.  

If they are right, then markets could get scary. Or maybe the charts are just playing mind-games with us. If you believe markets can only keep going higher – then Remember Blain’s Mantra No 1: Markets have but one objective: to inflict the maximum amount of pain on the maximum amount of participants. 

I don’t know enough about charting to make much of it myself, but I’ve seen enough to recognise the repetitive nature of market driven behaviour. Market patterns do repeat and are therefore worth paying attention to.  For instance, for a superb overview, that a look at my chum David Murrin’s website. His global forecasts and commentary DavidMurrin.co.uk). is worth a sign up to run through his chart-supported outlook and reading of the underlying forces at play. 

But don’t let charts ruin this beautiful Monday morning. Do a little due diligence yourself on how all monster rallies close. And then look at the economic reality and the factors that move markets. Ask yourself the following questions:

  1. How euphoric or exhausted are markets?

  2. Where are economic factors pushing prices? Growth, central bank policy, consumer confidence, and inflation. 

  3. How do political factors support prices? Geopolitics, domestic politics and uncertainty levels, 

  4. Do technical factors justify prices – price/earnings ratio, corporate earnings, Market cap to GDP (the Buffet factor),

  5. Is there an imminent trigger point on the horizon?

  6. Is the “No-See-Um event” risk elevated – clue: you never know

  7. How is firm is market confidence?

How did you score? 

You can’t deny Markets look to be in a state of dangerous euphoria – do they have the adrenaline left in the tank to move higher? 

Global growth looks back on track, but will remain slow due to ongoing trade uncertainty in Europe and China (better now a phase 1 deal has been done, but who really trusts each other?). Central banks remain accommodative – but what ammunition do they have to solve a new crisis? Consumer confidence remains nervous in the wake of low pay and uncertainty - Housing demand is rising in US and UK, but consumer spending is in flux (look at autos as buyers put off spending plans). There is record employment in the US and UK, but many jobs aren’t paying that much. There is no apparent inflation (outside financial assets) to worry about. 

Geopolitics looks more difficult than ever – the square off between the US and China isn’t over by a long-shot, and will be reflected in the big currency game – US$/Yuan. US protectionism and isolationism is causing fundamental uncertainty around the globe. Domestic populism isn’t really so much about the demonised shift-left, but an even more insidious rightwards lurch as countries become protectionist and anti-immigrant. 

Markets are definitely distorted – P/Es are a record levels, earning are marginal at best, and the stock market to GDP has never been so high. Companies are highly indebted and spent the money on rewarding execs through stock buybacks. It’s difficult to justify further gains when markets are already so highly priced – it looks like FOMO of missing futher upside is overcoming doubts on the rally’s longevity.

We can talk about potential trigger points from the stock market below, but a No-See-Um Black Swan event, or a sudden correction in confidence could shake market far more aggressively than expected, uncovering a host of ancillary problems like debt, leverage and liquidity. 

But no-one is particularly worried. Why should we worry – Global Central Banks are going to bail us out if anything goes wrong. And perhaps that’s the biggest risk of all. Global interest rates are effectively zero. An increasing number of commentators are beginning to state the downright bleeding obvious: Zero-Interest Rate Policies do little to stimulate real growth, but create a host of unintended long-term negative consequences in terms of market, investment, corporate and entrepreneurial behaviours. 

If there was a sudden loss of confidence in global bonds or equity, would easing rates a further 1% or ever 10% make any real difference? The answer is yes – but only if Central Banks further defile themselves and keep buying financial assets. Who could then resist free money at negative interest rates to buy financial assets secure in the belief they will rise in price because Central Banks are defacto guaranteeing it? It happened for most of the 2010s, so why not again? 

You can only fool people so long. Eventually folk see through it.. and see it for the Ponzi-esque distortion it is.. And they will sell. And they will buy bonds secure in the knowledge that even if stocks break from here, there is zero threat of higher rates. And they will buy Gold. And they will sell Oil because a stock market collapse puts the long-awaited recession into fast gear. 

And the big big issue will be the dollar, because for all the bluff and bluster, markets are markets and a collapse will crush confidence at a time when the Yuan and dollar are ever so clearly a competing pair. The last 100 years were all about the US and the dollar. The next 20 could be be very different: China vs US, US vs Yuan. Confidence in the dollar could take a substantial dunt. David Murrin is now calling USD/RMB the Empire Cross to reflect the reality of what’s occurring.

What scares me most? 

For the past months, I’ve been aggressively trolled for my temerity in questioning why Tesla is so highly priced. I’ve become familiar with a scary genre of free-market US market commentary. The programs are basically evolved boiler houses – touting baseless opinions as unquestionable fact. They are truly remarkable – hosted by highly animated shouty hosts assuring their viewers Wall Street is full of crooks who don’t want you to know the trading secrets they are sharing. They peddle bad conspiracy theories. I’ve never been able to watch one through to the end, but I just know they’ll be touting penny-stocks that are about to make big time money, and telling viewers where to send their money. 

These “trading bootcamps” pray on desperate retail investors desperate to pay off their debts, their homes and fund their futures. 2 years ago they were telling everyone they could be Bitcoin billionaires. Now, among other things, they are touting the same auto stock. 

They peddle very bad advice. When a stock goes stratospheric for no obvious reason except hype, it’s not good advice to ignore analyst recommendations, because “whatever the crooks on Wall Street says, this stock is going higher. You can’t fight that upward trajectory. Buy because the trend is your friend.”

Yeah, right… The above is about the most scary thing I’ve heard. The moment you trust the trend is when you lose.

I can just imagine what might happen if the current Euphoria collapses. Maybe on the event of a stock market disappointment, or a narrative break. Among others I’ve got Boeing, Tesla and GE on my list. Who is on yours? 

Tyler Durden

Mon, 01/20/2020 - 14:00


Business Finance


Phase One And Done: Key Events In The Busy Week Ahead

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Phase One And Done: Key Events In The Busy Week Ahead

With the market's fascination with events in the middle east appears to be fading fast in the absence of any material escalation, the main highlights for the week ahead will be the signing of the Phase One trade deal between the US and China (Wednesday). Even though Steven Mnuchin said over the weekend that an English-language version of the agreement will be released this week, DB's Jim Reid notes that it’s q

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uite remarkable that we still don’t know much in the way of details so eyes will be on this.

We’ll also see the start of US earnings season with a number of banks reporting. On Tuesday we’ll hear from JPMorgan Chase, Wells Fargo and Citigroup. Then on Wednesday we’ll get Bank of America, UnitedHealth Group, Goldman Sachs, US Bancorp and BlackRock. Finally on Thursday, we’ll hear from Morgan Stanley and BNY Mellon.

In terms of data CPI (Tuesday), retail sales (Thursday), and consumer confidence (Friday) are the main highlights in the US. In China we have trade data (Tuesday) and Q4 GDP/retail sales/industrial production (Friday). So we’ll have quite a good idea about momentum in the Chinese economy by the end of the week. In Europe industrial production numbers (Tuesday), and the flash CPI (Friday) are the highlights. The UK also sees CPI (Wednesday) and retail sales (Friday).

In terms of central banks over the coming week, publications to watch for include the Beige Book from the Fed on Wednesday, and then the ECB’s monetary policy account of its December meeting (and Christine Lagarde’s first as ECB President) on Thursday.

Over to politics now, and there’s a number of upcoming events this week. In the US, it’s the last Democratic primary debate on Tuesday before primary voting kicks off in February. Former Vice President Biden is currently ahead in the national polling according to the average on RealClear Politics. However, the polls in the first two states to vote in February, Iowa and New Hampshire, are much tighter, with the RealClear Politics average putting the 3 top candidates in Iowa between 20% and 22%, so it’s a tight race going into the caucuses there on 3rd February.

A Des Moines Register/Mediacom/CNN poll out from Iowa (the first state to vote) put Senator Bernie Sanders in first place on 20%, a 5-point jump for Sanders since their last poll in November. Elizabeth Warren was in 2nd place on 17%, while Pete Buttigieg was on 16%, and Joe Biden on 15%. As discussed above, nationally Biden remains the frontrunner, but the big question will be whether he can maintain his momentum were he not to win either of the first 2 states. Given how quickly Warren’s support has fallen, and also the impressive rally in Sanders’s ratings over a relatively short period of time, its clear that it remains all to play for in this race.

Below is a day by day guide to the week ahead, courtesy of Deutsche Bank:


  • Data: UK November GDP, trade balance, industrial production, manufacturing production, US December monthly budget statement, Japan November current account balance

  • Central Banks: Fed’s Rosengren and Bostic speak

  • Politics: House of Lords begins debate on Brexit Withdrawal Agreement Bill, deadline for UK Labour leadership contenders to receive nominations from at least 10% of MPs and MEPs


  • Data: US December NFIB small business optimism index, December CPI, Japan December M2 money stock, M3 money stock, China December trade balance

  • Central Banks: ECB’s Mersch, Fed’s Williams and George speak

  • Politics: US Democratic primary debate

  • Earnings: JPMorgan Chase, Wells Fargo, Citigroup


  • Data: Japan preliminary December machine tool orders, France final December CPI, UK December CPI, RPI, PPI, Euro Area November industrial production, trade balance, US weekly MBA mortgage applications, US December PPI

  • Central Banks: BoJ’s Kuroda, ECB’s Holzmann, BoE’s Saunders and Fed’s Harker and Kaplan speak, Federal Reserve releases Beige Book

  • Earnings: Bank of America, UnitedHealth Group, Goldman Sachs, US Bancorp, BlackRock

  • Other: Signing of the US-China Phase One trade deal


  • Data: EU27 December new car registrations, Germany final December CPI, US December retail sales, January Philadelphia Fed business outlook, weekly initial jobless claims, November business inventories, January NAHB housing market index, November net long-term TIC flows

  • Central Banks: Policy decisions from the Central Bank of Turkey and the South African Reserve Bank, monetary policy account of the ECB’s December meeting released

  • Earnings: Morgan Stanley, BNY Mellon


  • Data: China Q4 GDP, retail sales, industrial production, Japan November tertiary industry index, Euro Area November current account, Italy November trade balance, UK December retail sales, Euro Area December CPI, Canada November international securities transactions, US December building permits, housing starts, capacity utilisation, industrial production, preliminary January University of Michigan sentiment, November job openings

  • Central Banks: Policy decision from the Bank of Korea, Fed’s Harker speaks

Finally, looking at the key economic data releases in the US, Goldman notes that this week all eyes are on the CPI report on Tuesday and the retail sales report on Thursday. There are several scheduled speaking engagements by Fed officials this week.

Monday, January 13

10:00 AM Boston Fed President Rosengren (FOMC non-voter) speaks: Boston Fed President Eric Rosengren will speak at a Connecticut Business and Industry Association event in Hartford, Connecticut. Prepared text and audience Q&A are expected.

12:40 PM Atlanta Fed President Bostic (FOMC non-voter) speaks: Atlanta Fed President Raphael Bostic will discuss the economic outlook and monetary policy with the Rotary Club of Atlanta. Audience and media Q&A are expected.

Tuesday, January 14

  • 06:00 AM NFIB small business optimism, January (consensus 104.8, last 104.7)

  • 08:30 AM CPI (mom), December (GS +0.33%, consensus +0.3%, last +0.3%); Core CPI (mom), December (GS +0.16%, consensus +0.2%, last +0.2%); CPI (yoy), December (GS +2.41%, consensus +2.4%, last +2.1%); Core CPI (yoy), December (GS +2.30%, consensus +2.3%, last +2.3%): We estimate a 0.16% increase in December core CPI (mom sa), which would leave the year-on-year rate unchanged at +2.3%. Our monthly core inflation forecast reflects a pullback in used car prices and a holiday-season-related decline in household furnishing prices. On the positive side, we expect a rebound in apparel and footwear prices reflecting residual seasonality and Nike price increases. We estimate a 0.33% increase in headline CPI (mom sa), mainly reflecting higher energy prices.

  • 09:00 AM New York Fed President Williams (FOMC voter) speaks: New York Fed President John Williams will discuss behavioral science and organizational culture at an event organized by the Banking Standards Board, the New York Fed, and the London School of Economics. Prepared text and audience Q&A are expected.

  • 1:00 PM Kansas City Fed President Esther George (FOMC non-voter) speaks: Kansas City Fed President Esther George will discuss the economic outlook and monetary policy at an event hosted by the Kansas City Fed. Audience Q&A is expected.

Wednesday, January 15

  • 08:30 AM PPI final demand, December (GS +0.2%, consensus +0.2%, last flat); PPI ex-food and energy, December (GS +0.1%, consensus +0.2%, last -0.2%); PPI ex-food, energy, and trade, December (GS +0.1%, consensus +0.2%, last flat); We estimate that headline PPI increased 0.2% in December, reflecting stronger energy prices but somewhat softer core prices. We expect a 0.1% increase in the core measure excluding food and energy, and also a 0.1% increase in the core measure excluding food, energy, and trade.

  • 08:30 AM Empire State manufacturing index, January (consensus +3.6, last +3.5)

  • 11:00 AM Philadelphia Fed President Harker (FOMC voter) speaks; Philadelphia Fed President Patrick Harker will discuss “Monetary Policy Normalization: Low Interest Rates and the New Normal” at the Harvard Club of New York. Prepared text and audience Q&A are expected.

  • 12:00 PM Dallas Fed President Kaplan (FOMC voter) speaks; Dallas Fed President Robert Kaplan will speak to the Economic Club of New York. Audience and media Q&A are expected.

  • 02:00 PM Beige Book, January FOMC meeting period; The Fed’s Beige Book is a summary of regional economic anecdotes from the 12 Federal Reserve districts. In the January Beige Book, we look for anecdotes related to growth, labor markets, wages, price inflation, and trade policy.

Thursday, January 16

  • 08:30 AM Retail sales, December (GS +0.5%, consensus +0.3%, last +0.2%); Retail sales ex-auto, December (GS +0.6%, consensus +0.5%, last +0.1%); Retail sales ex-auto & gas, December (GS +0.5%, consensus +0.4%, last flat); Core retail sales, December (GS +0.5%, consensus +0.3%, last +0.1%): We estimate that core retail sales (ex-autos, gasoline, and building materials) increased 0.5% in December (mom sa), reflecting the solid monthly sales results of general merchandisers as well as a boost from the late Thanksgiving holiday, which may have shifted some holiday shopping into December. That being said, we believe uncertainty around this report is higher than usual, as the underlying cause of last December’s sharp and short-lived drop in retail spending remains unclear (potential explanations include the government shutdown, a particularly early Thanksgiving, and the secular trend towards earlier holiday shopping). We estimate a 0.5% increase in the headline measure in this week’s report, reflecting a rise in gas prices but a pullback in auto sales.

  • 08:30 AM Philadelphia Fed manufacturing index, January (GS +4.4, consensus +3.1, last +2.4): We estimate that the Philadelphia Fed manufacturing index rebounded by 2.0pt to +4.4 in January after declining by 6.0pt in the prior month.

  • 08:30 AM Initial jobless claims, week ended January 11 (GS 220k, consensus 217k, last 214k): Continuing jobless claims, week ended January 4 (last 1,803k); We estimate jobless claims ticked up 6k to 220k in the week that ended January 11. We expect a persistent winter seasonal bias to continue to exert upward pressure on the continuing claims measure between now and February.

  • 08:30 AM Import price index, December (consensus +0.4%, last +0.2%)

  • 10:00 AM Business inventories, November (consensus -0.1%, last +0.2%)

  • 10:00 AM NAHB housing market index, January (consensus 74, last 76)

Friday, January 17

  • 08:30 AM Housing starts, December (GS +2.5%, consensus +1.1%, last +3.2%); Building permits, December (consensus -1.5%, last +1.4%): We estimate housing starts increased by 2.5% in December. Our forecast incorporates stronger construction job growth but a drag from likely mean reversion in the noisy multifamily category.

  • 09:00 AM Philadelphia Fed President Patrick Harker (FOMC voter) speaks: Philadelphia Fed President Patrick Harker will discuss the economic outlook at the New Jersey Bankers Association Leader Forum in Somerset, New Jersey. Prepared text and audience Q&A are expected.

  • 09:15 AM Industrial production, December (GS -0.2%, consensus -0.1%, last +1.1%); Manufacturing production, December (GS flat, consensus +0.1%, last +1.1%); Capacity utilization, December (GS 77.0%, consensus 77.1%, last 77.3%): We estimate industrial production declined modestly in December, reflecting a pullback in the utilities category and a slight decrease in auto manufacturing. We estimate capacity utilization declined by three tenths in November to 77.0%.

  • 10:00 AM University of Michigan consumer sentiment, January preliminary (GS 99.6, consensus 99.3, last 99.3): We expect University of Michigan consumer sentiment edged 0.3pt higher in the preliminary January reading to 99.6, reflecting increases in other confidence measures and higher stock prices.

  • 10:00 AM JOLTS Job Openings, May (consensus 7,267k, last 7,267k)

Source: Deutsche Bank, SocGen, Goldman

Tyler Durden

Mon, 01/13/2020 - 09:02

Tech Stocks Soar, Bonds Snore, As Oil Suffers Worst Week In Six Months

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Tech Stocks Soar, Bonds Snore, As Oil Suffers Worst Week In Six Months

Well that was a week...

China was mixed on the week with larges caps flat to down and small cap tech soaring...

Source: Bloomberg

European stocks were also mixed with Germany dominating and UK lagging...

Source: Bloomberg

DAX teste

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d up to its record high...

Source: Bloomberg

In the US the picture was a little less mixed with Small Caps unable to hold gains while Nasdaq soared (but late-day weakness today spoiled the party)...Nasdaq 100 is up 5 weeks in a row (and 14 of the last 16 weeks)

Source: Bloomberg

Dow crossed above 29,000 for the first time today...

Not a pretty day today...

Futures give a much clearer picture on the week's craziness however...

Breadth has worsened as this market surged higher...

Source: Bloomberg

Defensives handily outperformed cyclicals on the week...

Source: Bloomberg

Value stocks relative to Growth plunged to a new cycle low

Source: Bloomberg

US Defense stocks soared to a new record high...

Source: Bloomberg

And then there's AAPL (up 15 of the last 16 weeks)...

Source: Bloomberg

Credit protection costs collapsed further this week and equity protection also plunged with VIX back to a 12 handle...

Source: Bloomberg

Notably VIX Call volumes are soaring as the fear index plunges...

Source: Bloomberg

HY Bond risk dropped to its lowest since 2019's April lows...

Source: Bloomberg

Treasury yields tumbled the last two days, leaving them unchanged since Monday's close and marginally higher on the week...

Source: Bloomberg

30Y is back below the pre-Iran-missile-strike levels...

Source: Bloomberg

Bund yields also surged as the European corporate bond market saw a record-smashing $100 bn of issuance (and that means lots of rate-locks)...

Source: Bloomberg

The Dollar dipped today but ended the week higher (after two down weeks)...

Source: Bloomberg

Big week for cryptos with Litecoin and Bitcoin Cash leading...

Source: Bloomberg

Bitcoin surged after Soleimani's death, testing up towards $8500 before fading back a little...

Source: Bloomberg

Oil was the week's biggest loser as copper and PMs clung to the green...

Source: Bloomberg

Gold ended the week above the Soleimani-dead levels...

WTI Crude dropped over 6% on the week - its worst week since July 2019...

Finally, we have seen this kind of liquidity-fueled decoupling before...

Source: Bloomberg

And The Fed just let its balance sheet shrink by the most since May...

Source: Bloomberg

Is reality looming?

Tyler Durden

Fri, 01/10/2020 - 16:01


Business Finance


The Fed Just Monetized $6.4 Billion In Debt Sold Earlier This Week

zerohedge News just monetized billion debt sold earlier this week All https://www.zerohedge.com   Discuss    Share
The Fed Just Monetized $6.4 Billion In Debt Sold Earlier This Week

Yesterday, when looking at the details of the Fed's ongoing QE4, we pointed out that the New York Fed was now actively purchasing T-Bills that had been issued just days earlier by the US Treasury, and which settled the day of the permanent open market operation, or POMO.

As a reminder, the Fed is prohibited from directly purchasing Treasurys at auction,

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as that is considered "monetization" and directly funding the US deficit, not to mention is tantamount to "Helicopter Money" and is frowned upon by Congress and established economists. However, insert a brief, 3-days interval between issuance and purchase... and suddenly nobody minds. As we summarized:

"for those saying the US may soon unleash helicopter money, and/or MMT, we have some 'news': helicopter money is already here, and the Fed is now actively monetizing debt the Treasury sold just days earlier using Dealers as a conduit... a "conduit" which is generously rewarded by the Fed's market desk with its marked up purchase price. In other words, the Fed is already conducting Helicopter Money (and MMT) in all but name. As shown above, the Fed monetized T-Bills that were issued just three days earlier - and just because it is circumventing the one hurdle that prevents it from directly purchasing securities sold outright by the Treasury, the Fed is providing the Dealers that made this legal debt circle-jerk possible with millions in profits, even as the outcome is identical if merely offset by a few days"

So fast forward to today, when the Fed conducted its latest T-Bill POMO in which, as has been the case since early October, the NY Fed's market desk purchased the maximum allowed in Bills, some $7.5 billion, out of $21.9 billion in submissions. What was far more notable, were the actual CUSIPs that were accepted by the Fed for purchase. And here, once again, we find two particular issues that stick out: UB3 (due July 2, 2020) which was the most active CUSIP, with $5.245BN purchased by the Fed, and TM1 (due April 2, 2020) of which $1.2BN was accepted.

What's so special about the highlighted CUSIPs? Well, just as we first showed yesterday, the Fed - together with the Primary Dealers - appears to have developed a knack for monetizing, pardon, purchasing in the open market, bonds that were just issued. And sure enough, TM1 was sold just earlier this week, on Monday, Dec 30, with the issue settling yesterday, on Jan 2, just one day before today's POMO, and Dealers taking down $15.9 billion of the total issue...

... and just a few days later turning around and flipping the Bill back to the Fed in exchange for an unknown markup.

What about UB3, which was the most actively purchased CUSIP in today's POMO, representing 70% of the entire $7.5 billion operation? Exactly the same, as this particular 182-Bill was auctioned off on Dec 30, and settled on Jan 2, also one day before today's POMO. Here, too, Dealers were most active, taking down $23.5 billion of the entire auction... and just days later selling 22% of their entire takedown, or $5.245BN back to the Fed.

These are not isolated incidents as a clear pattern has emerged - the Fed is now monetizing debt that was issued just days earlier, only because it was held however briefly by Dealers, who are effectively inert entities mandated to bid for debt for which there is no buyside demand, it is not considered direct monetization of Treasurys. Of course, in reality monetization is precisely what it is, although since the semantic definition of the Fed directly funding the US deficit is violated by a temporal footnote, it's enough for Powell to swear before Congress that he is not monetizing the debt.

Oh, and incidentally the fact that Dealers immediately flip their purchases back to the Fed is also another reason why NOT QE is precisely QE4, because the whole point of either exercise is not to reduce duration as the Fed claims, but to inject liquidity into the system, and whether the Fed does that by flipping coupons or Bills, the result is one and the same.

Tyler Durden

Fri, 01/03/2020 - 12:16


Business Finance


Bonds, Stocks, & Silver Surge Over Xmas Week But Dollar Dives To 5-Month Lows

zerohedge News bonds stocks silver surge over xmas week dollar dives 5-month lows All https://www.zerohedge.com   Discuss    Share
Bonds, Stocks, & Silver Surge Over Xmas Week But Dollar Dives To 5-Month Lows

"They're keeping the rates down so that everything else doesn't go down... The only thing that is strong is the artificial stock market." - Trump, 9/5/16

It's been a year of buying everything:

  • S&P's best year since 1997

  • Read More
    Gold's best year since 2010

  • Bond's best year since 2014

And all it took was $5 trillion in global liquidity!!!

Source: Bloomberg

Remember, correlation is not causation... especially when your salary depends on it...because this rally in stocks is all about the fun-durr-mentals...The S&P 500 is up almost 30% and earnings expectations are down almost 5% on the year...

Source: Bloomberg

Chinese stocks were unchanged on the week...

Source: Bloomberg

US majors started weak today, rebounded, then ended weak... Nasdaq ended its winning streak...

US Small Caps lagged on the week as Nasdaq soared (the S&P is on the verge of its best year since 1997)...

Nasdaq bounced perfectly off 9,000 intraday...

The Dow bounced off unchanged twice...

AAPL had a more volatile day than normal... was the guy in charge of buybacks taking some time off?


Still doesn't really matter eh?

Source: Bloomberg

We also note that AAPL rejected the Fib 161.8% extension of the late 2018 collapse...

Source: Bloomberg

Something has changed in the last couple of days with AAPL...hedging the huge gains into year-end?

Source: Bloomberg

Even TSLA was red today, but has a long way to catch down to un-exuberant bonds...

Source: Bloomberg

VIX has notably decoupled from stocks this week...

Source: Bloomberg

The open was yet another short squeeze but it didn't last and stocks dumped. But were rescued into the European close by another squeeze...

Source: Bloomberg

Treasury yields ended the week 3-5bps lower

Source: Bloomberg

10Y yields broke back below 1.90%...

Source: Bloomberg

The Dollar plunged today (biggest single-day drop since Sept 4th)...

Source: Bloomberg

This is the 3rd weekly drop in the last 4 weeks, to its weakest close since July...

Source: Bloomberg

As the dollar has slipped, Yuan has drifted very quietly sideways, apparently pegged around 7.00...

Source: Bloomberg

The pound inched higher this week after last week's bloodbath, ending back at pre-election-spike levels...

Source: Bloomberg

Bitcoin was unchanged on the week with Bitcoin Cash surging today to lead on the week; Ripple and Ethereum lagged...

Source: Bloomberg

Bitcoin has been relatively stable for two week weeks (despite the pump and dump)...

Source: Bloomberg

Commodities were all higher as the dollar tumbled, but PMs trumped crude and copper...

Source: Bloomberg

Silver topped $18 on the week (though fell back below today)...

And gold topped $1500 and held it...

Silver has outperformed gold for the 3rd week in a row...

Source: Bloomberg

And WTI Crude has accelerated beyond its uptrend channel...

Copper has now risen for 6 straight weeks - the longest streak since Sept 2017...

Source: Bloomberg

Finally, investor greed has reached peak-extreme...

And hedge fund exposure to the US equity market is exploding...

This won't end well

Tyler Durden

Fri, 12/27/2019 - 16:03


Business Finance


Half Of France's National Train System "Grinds To A Halt" As Labor Unions Strike On Christmas Week

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Half Of France's National Train System "Grinds To A Halt" As Labor Unions Strike On Christmas Week

French labor unions won't be giving any presents to citizens who want to travel by train this Christmas. 

That's because strikes by transport workers against the government's pension-reform plan have shut down half of national train services this weekend, with 59% of services expected to be cut on December 23-24, according

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to Bloomberg. 

French railway company, SNCF, has suspended its unaccompanied minor service, canceling about 6,000 tickets for children this week. Four out of five trains were also suspended in the greater Paris area and the capital's metro system also stopped, with the exception of two automated lines. 

French President Emmanuel Macron urged the unions to come to a truce for the holiday week at the same time public support for the strike during the holiday had fallen to 51%. This is down from 63% just five days prior. However, a poll on Thursday showed 55% of respondents thought the labor unions were "wrong" to strike during the holiday period. 

Macron commented: “Strikes are protected by the constitution. But there are times in a nation’s history when it’s also good to know when to call a truce to respect families and family life.” 

Some unions are calling for truces, others aren't. And the strikes seem to be having an impact. Polls show 57% of people reject Macron's pension reform, which is higher than when the protests started on December 5. Some unions have called for a new day of demonstrations on January 9. 

Macron's administration has had better success with tax and labor laws, but the French people are "wedded to their pension system", making reform a difficult task. Macron aims to merge 42 separate regimes into a single, universal points-based system. The plan also seeks to raise the age for full benefits from 62 to 64. Workers have stood in stark opposition to the changes while the French government aims to phase out special retirement plans for sectors ranging from train conductors to dancers at the Paris Opera.

Macron has tried to lead by example, but to no avail:

Le Parisien newspaper reported on Sunday that Macron will also give up his right under a 1955 law to a set pension for life granted to French presidents once they finish their mandate and will instead switch to a points-based calculation. He will also abandon the right to a post for life at France’s Constitutional Council, which brings with it 13,500 euros ($14,957) in compensation, the paper said.

Meanwhile, the strikes are resulting in a surge of bookings for car-sharing services, which has, in turn, led to hundreds of miles of traffic jams around the French capital. 

Car sharing bookings have "doubled" since the start of the protests and have beaten records, ride hailing company BlaBlaCar said. The company says it'll have 2 million seats available between Dec. 20 and Jan. 5, which works out to the equivalent of 5,000 TGV high speed trains - but, you know, moving much slower. 

Nicolas Brusson, chief executive officer of BlaBlaCar, said: “We see a real solidarity of drivers, more people are offering seats than ever.”

SNCF says it'll try to keep the main lines running on December 23 and December 24. Union leaders met with French Prime Minister Edouard Philippe on Wednesday and Thursday, but said that talks failed to advance. 69% of people polled said they expect the government to push through with reforms without caving to protests.

One French union, the CFDT, called for a truce over the holiday. Laurent Berger, the leader of the CFDT, said: “Everyone should be able to travel freely to do what they need to do during the holiday season.”

We'll check back in on Easter. 

Tyler Durden

Tue, 12/24/2019 - 06:04


Social Issues


Judge Sentences Ex-FBI Analyst To Week In Jail For Accessing Anti-Mueller Provocateur's Email

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Judge Sentences Ex-FBI Analyst To Week In Jail For Accessing Anti-Mueller Provocateur's Email

A former FBI analyst on Friday was ordered to serve seven days in jail, 50 hours of community service, and pay a $500 fine after he admitted to illegally accessing the emails of D.C. lobbyist Jack Burkman.

Burkman teamed up with conservative provocateur Jacob Wohl during the 2018 Kavanaugh confirmation trials in a failed stunt to paint

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then-special counsel Robert Mueller as a sex offender. The pair were accused of paying a woman to levy the claim, which they denied.

According to Politico, Mark Tolson, 60, pleaded guilty in September to a single misdemeanor charge of computer fraud and abuse for unlawfully accessing Burkman's emails. Tolson's wife gave him Burkman's email password, which she obtained while previously working for the lobbyist.

Tolson admitted he unlawfully accessed Burkman’s emails in October 2018, after the conspiracy-minded lobbyist announced plans to hold a news conference to air sexual harassment allegations against Mueller.

After snooping through Burkman’s account, Tolson sent screenshots of the messages and offered the password to an unspecified journalist, court filings say.

Tolson’s wife, Sarah Gilbert Fox, facilitated the illicit access by providing Burkman’s email password, which she had obtained for work she’d previously done for him. -Politico

During Tolson's Friday morning sentencing in Alexandria, VA, the longtime FBI employee told US District Court Judge Leonie Brinkema that he was compelled to crack into Burkman's email in order "to protect Director Mueller" from what he believed to be false allegations.

"It was because of the press conference, your honor," said the ex-FBI official.

US Attorney Alexander Berrang, who recommended a short prison term, suggested that Tolson's motives weren't exactly as pure as that - as his wife believed Burkman owed her money, and Tolson was personally annoyed with the D.C. lobbyist. Tolson's decision to take the information to a journalist instead of to the FBI suggests that his actions weren't about preventing harm to Mueller or his probe, according to the report.

Tolson's attorney, Edward MacMahon Jr. hit back, saying "There was no other motivation here other than to protect Mueller."

Judge Brinkema responded, saying "The government makes a good point," adding "Why wouldn’t you go to the FBI instead of the press?" to which MacMahon said Tolson did notify the FBI what he had done within about a day, but he was primarily focused on scuttling the planned press conference which was eventually canceled.

Tolson received a serious finger wag from Brinekma, who said: "This is actually a very serious offense," adding "You’re lucky. Your wife is lucky. The government could have prosecuted her as well."

The effort by Burkman and right-wing activist Jacob Wohl to target Mueller was widely condemned, particularly following reports that mysterious individuals were contacting Mueller’s female former colleagues and offering to pay them for damaging information.

The defense lawyer called Tolson’s actions “foolish,” but also urged the judge not to give Tolson jail time, saying the episode already caused Tolson to lose his job.

He does not need to be punished any further,” MacMahon said.

Brinkema ultimately concluded that some incarceration was appropriate to send a message that illegally accessing others’ emails is wrong, particularly when those doing so work in government or law enforcement. --Politico

"You can’t just rummage through other people’s accounts," said Brinkema, a Clinton appointee. "You had to have known better."

Brinkema also commended the anonymous journalist who Tolson passed Burkman's emails to for not publishing the story, saying "I would commend whoever the media people are who turned it down," suggesting that Tolson may have faced a more severe punishment if the emails had been published.

"You’re actually probably lucky you didn’t get an unethical media person," said the judge.

Tyler Durden

Sat, 12/21/2019 - 14:00


Law Crime


Nunes: "Phase Two" Of The Impeachment Circus Begins This Week

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Nunes: "Phase Two" Of The Impeachment Circus Begins This Week

Via SaraACarter.com,

House Intelligence Committee ranking member Rep. Devin Nunes told Fox News host Judge Jeanine Pirro Saturday, that phase two of the impeachment hearings will start this week with Chairman Jerrold Nadler who will deliberate on the constitutionality of impeachment.

Watch the latest video at foxnews.com

Nunes said he doesn’t expect any

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thing new from the House Judiciary Committee’s Democrat led investigation.

“Well we now know that this coming week Jerry Nadler is gonna start phase two of the circus,” said Rep. Devin Nunes, on Justice with Judge Jeanine.

Jerry Nadler has been in the witness protection program for several months after he botched the (Robert) Mueller probe. We’re going to see how this goes supposedly they’re going to talk about the constitutionality of impeachment,” said Nunes.

So far the Democrats have not been able to show any evidence that President Donald Trump withheld any aid from Ukraine in exchange for an investigation into former Vice President Joe Biden’s son, Hunter Biden. In fact, Office of Management and Budget Mark Sandy told lawmakers during Schiff’s hearing that the only reason the money was held up for a short period of time was Trump’s concern that other “countries were not contributing more to Ukraine.

The controversy surrounds questionable actions around Hunter Biden’s paid position on the board of Ukrainian energy company Burisma Holdings.  His firm Rosemont Seneca Partners LLC, “received regular transfers into one of its accounts — usually more than $166,000 a month — from Burisma from spring 2014 through fall 2015, during a period when Vice President Biden was the main U.S. official dealing with Ukraine and its tense relations with Russia,” according to reports.

No Evidence For Trump Impeachment

Nunes added, “during the (President Richard) Nixon impeachment hearings you had an actual break in – you knew what the crime was. During the (President Bill) Clinton impeachment you knew that he had lied to a grand jury. I think for two weeks one of the  things we were able to expose is that not only did they not have a quid pro quo, they actually had to change quid pro quo to bribery until John Ratcliff had to pointed out that the only person ever accused of bribery in Adam Schiff’s star basement down in the capital is Hunter Biden.

The White House until Dec. 6, to decide whether to participate in the House Judiciary Committee’s impeachment proceedings, Nadler said. The committee will hold it’s first hearing Wednesday, and offered President Donald Trump the option to send someone to represent him.

It is highly unlikely that the White House will send anyone to represent the president at the Wednesday hearing, according to reports.

Four Key Pieces of Evidence Against Democratic Narrative (Republican Memo)

  1. The July 25 call summary – the best evidence of the conversation – shows no conditionality or evidence of pressure;

  2. President Zelensky and President Trump have both said there was no pressure on the call;

  3. The Ukrainian government was not aware of a hold on U.S. Security assistance at the time of the July 25 call; and

  4. President Trump met Ukrainian President and assistance flowed to Ukraine in September 2019. These occurred without Ukraine investigating President Trump’s political rivals.

Tyler Durden

Mon, 12/02/2019 - 05:00




30% Of Americans Think The Dollar Is Backed By Gold (& Other Absurdities This Week)

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30% Of Americans Think The Dollar Is Backed By Gold (& Other Absurdities This Week)

Authored by Simon Black via SovereignMan.com,

Are you ready for this week’s absurdity? Here’s our Friday roll-up of the most ridiculous stories from around the world that are threats to your liberty, your finances, and your prosperity.

*  *  *

Crackdown on homeschooling coming across Great Brit
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A few weeks ago we talked about how the Labour Party in Great Britain wants to eliminate private schools.

Now, in addition to that, regional governments across Great Britain are launching an assault against homeschooling.

Despite the fact that public education is lacking, the government thinks it is the parents who should have to prove themselves if they want to homeschool their own children.

In Wales and the Isle of Man, authorities are attempting to pass measures that will allow them to interview each homeschooled child. The children will have to pass subjective tests, with government officials deciding the criteria.

Parents will be fined or jailed for failing to comply with government orders if their child fails the subjective evaluations.

Scotland recently tried to introduce rules assigning a state “guardian” to each homeschool child, who would be allowed to intervene in home life including what kids watch on TV, eat, and how they decorate their bedrooms.

Luckily that measure was defeated, but it shows how desperate governments are to get into your home and dictate family life.

Click here to read the full story.

*  *  *

Boston police using robot dogs

Back in the 70s, the government said that SWAT teams would only be used in extreme cases, like hostage situations. That slowly morphed into using them today for tiny drug busts which often turn up nothing.

So forgive me for being skeptical when Boston Police claim the new robot police-dog they are testing will not be weaponized.

The Boston Police acquired its creepy robot dog from Boston Dynamics– you can see a video here.

Click here to read the full story.

*  *  *

California wants to punish a company that orders Ubers for the blind and elderly

“GoGo Grandparent” is a service that allows people who don’t have or can’t use smartphones to order ride services by calling a toll free number.

This is really convenient for visually impaired people, and the elderly.

But the People’s Republic of California thinks that GoGo Grandparent is a transportation company. So authorities fined GoGo $10,000 for not having a license.

California also said the company needs $1 million of insurance for their cars (which don’t exist, they call Uber) and to hand over a list of their drivers to the state (again, they don’t have drivers, they call Uber).

A judge sided with GoGo to dismiss the fine, but that decision still has to be ratified by regulators, who are dragging their feet on a vote.

Click here to read the full story.

*  *  *

30% of average Americans think the dollar is backed by gold

A recent survey of 1,000 English-speaking Americans showed that 29.3% of respondents still think the dollar is backed by gold, and another 23.6% have no idea if or what it’s backed by.

Almost a quarter of respondents thought the Federal Reserve’s job was to secure America’s gold reserves.

30% stated the US government backs the US dollar, and 7% responded that “nothing” backs the US dollar. That last one is probably the most accurate response.

It got even worse when respondents were asked about their money in the bank.

27% thought the bank had to hold all their deposits.

And of the people who knew banks are only required to hold a portion of your money in reserve, only 9% realized they hold as little as 2% of your deposits.

Clearly people have no idea how money and banking actually work.

Click here to download the full study.

Tyler Durden

Fri, 11/29/2019 - 15:05


Business Finance


This week, we give thanks to Fortinet for reminding us what awful crypto with hardcoded keys looks like

logicfish Security this week give thanks fortinet reminding what awful crypto with hardcoded keys looks like All https://go.theregister.co.uk   Discuss    Share
Plus more from the world of infosec

Roundup  Here's a summary of recent infosec news beyond what we've already covered – earlier than usual because some of us have Thanksgiving to get through in the US. By the way, watch out for hackers taking advantage of IT teams suffering turkey comas.…


What Blackout Period: BofA Just Had Its 6th Busiest Week Ever For Stock Buybacks

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What Blackout Period: BofA Just Had Its 6th Busiest Week Ever For Stock Buybacks

It's time to finally put the entire "buyback blackout" myth to pasture.

Commenting on its client flows during the past week in which the S&P 500 closed up 0.9%, Bank of America clients were net buyers of US equities after a week of net selling. Both single stocks and ETFs saw inflows, marking the ninth straight week of ETF inflows.

Looking at the b

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reakdown of client activity that crossed its trading desk, BofA writes that hedge funds were net sellers after buying for six weeks, while in a mirror image of activity, institutional clients bought for the first time after selling for six weeks. Meanwhile, retail clients remained net sellers for the sixth consecutive week.

But what may come as a big surprise to those that still believe buybacks are mostly barred during earnings season is BofA's disclosure that corporate buybacks surged last week (last major week of reporting season) to their sixth-highest weekly level in BofA history. YTD, buybacks are +26% from the comparable period last year.

The bulk of buybacks in the past week was focused on large cap companies, with nearly $3 billion in large cap buybacks executed by BofA's desk.

As for the industry that once again led the surge in buybacks, no surprise there: as has been the case for much of 2019, it was almost all tech, which engaged in the fourth-largest ever weekly stock repurchase on record, with a few banks thrown in for good measure.

Last week's repurchase activity is merely a continuation of the buybacks announced over the past three months, which were also led by infotech and financial companies.

Yet as executed buybacks soared, buybacks announcements (which can take place at any time in the near future) dipped, although there was still a plethora of companies announcing they will buy back their shares.

More importantly, while it is now clear that companies deploy buybacks even more aggressively during "blackout" period, the recent surge in stock repurchases probably explains why buyback-linked ETFs have been trouncing dividend ETFs.

In fact the surge in stock repurchases may explain not just the impressive outperformance of buyback-linked ETFs, but why the market has continued to levitate despite the latest bout of violent momentum/value reversal, which any other time would have been sufficient to know the S&P500 several percent lower, but not this time.


Tyler Durden

Tue, 11/12/2019 - 18:05


Business Finance


Amid Crises, China Sets 2020 Tone With Secret Plenum Meeting Next Week

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Amid Crises, China Sets 2020 Tone With Secret Plenum Meeting Next Week

The Chinese Communist Party (CCP) is expected to hold a long-delayed meeting next week, according to several state media sources, as the country experiences a wide range of issues, such as social and economic chaos in Hong Kong, a trade war between the US, and the possibility of sub 6% GDP in mainland China in 2020. 

Global Times reported Friday that the closed-door, secret m

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eeting would be held from Oct. 28-31 in Beijing.

Xinhua News Agency reports that President Xi Jinping will speak at the event on Thursday.

Members of the CPC, the Communist Party's elites, are expected to discuss several important topics, including "issues concerning how to uphold and improve the system of socialism with Chinese characteristics and modernize China's system and capacity for governance," the Global Times said. 

Plenum, what the meeting is technically called, is the convening of the CCP's Central Committee to discuss policy and country direction. 

Last year's plenum was delayed, so next week's meeting will be important as communist elites discuss policy and country heading to navigate the trade war with the US and address policy that will further create a soft landing for the economy. 

"The fourth plenum will implement reform plans, and they will talk about how to improve governance, which is pressing," one Chinese policy insider told Reuters on condition of anonymity. 

"They need to transform the overall state governance capacity and adapt to changes in global rules and withstand stress tests from external risks," the insider said, adding that the trade war is exacerbating such pressures.

Wang Jiangsu, director of the Asian Law Institute at the National University of Singapore, told Reuters that President Xi would likely say that the Chinese political system is superior to the Western world. 

Analysts at the Washington-based Center for Strategic and International Studies (CSIS) said a trade war with the US and decelerating economy had left President Xi with an internal power struggle. 

Sinocism blog's Bill Bishop wrote on Monday that some CPC members would be pushing for immediate trade war solutions as the economy slows. Some are expected to push for the removal of all tariffs to improve the business environment. 

So far, China shows no slowdown in the restructuring of its domestic economy. When it comes to the trade war, Washington and Beijing have made recent efforts to talk and allow China to obtain new US agriculture purchases, but it seems a complete trade deal is far away. 

The trade war is really about a power struggle between China and the US, and mainly, who will control the world after 2025. So China has been laying out roadmaps with meetings of how it will be the next global superpower, something that has infuriated Washington. 

Tyler Durden

Fri, 10/25/2019 - 21:40




D.C. Considers 1.5C-Per-Ounce Soda Excise Tax One Week After Implementing 2% Soft Drink Sales Tax

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D.C. Considers 1.5C-Per-Ounce Soda Excise Tax One Week After Implementing 2% Soft Drink Sales Tax

Today in "we must find new things to tax, even if we've already taxed them" news, Washington DC’s City Council is considering a plan to place a 1.5 cent per ounce excise tax on soda and other sweetened beverages, according to Fooddive.

The proposal comes just a week after the DC Council put an additional 2% sales tax on sof

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t drinks and it already has support from 8 of the 13 DC council members. It will affect soda and any other sugary drinks, such as Gatorade, iced coffee and orange juice.

Drinks like diet soda or other beverages containing artificial sweeteners would be exempt from the tax, as would alcohol and beverages with milk as the main ingredient. The estimated $21 million in annual revenues the tax would bring in will go to educational and food programs.

Naturally, the beverage industry stands in stark opposition to the tax. Ellen Valentino, a spokeswoman for the DC Beverage Association, called the tax a "big mistake" and said "people will flee in order to purchase beverages and other grocery items outside the city’s borders."

And yet again, it’s the consumers that wind up getting screwed: the tax would add about a dollar to the price of a 2 liter bottle of soda. This will cause manufacturers and retailers to likely hike prices to consumers. Some have speculated that since Washington DC is close to the Maryland border, people could travel across state lines for their soft drink needs.

These types of taxes have also been enacted in several cities in California, Boulder, Philadelphia and in the state of West Virginia. Cook County Illinois implemented a similar tax in 2017 but repealed it just months later after pressure from the American Beverage Association. California’s proposed tax didn’t make it through the state assembly this year, although it may be brought up again soon.

States like Arizona and Michigan have already passed legislation prohibiting local governments from adopting food and beverage taxes.

The effect of the tax has been noticeable where it has been implemented.

A study published earlier this year took five years of data from Berkeley, California, and found a 52% decrease in soda consumption in the first three years after the tax was adopted. After two months of Philadelphia's soda tax, which is the same rate as the proposed D.C. excised tax, a study found residents were about 40% less likely to drink sugary drinks daily than those in other cities. Philadelphia's tax projections, however, were lowered 15% in March 2018 and didn't make major changes in the population's consumption of healthier fare, so its tax could face a repeal.

Beverage makers are likely to posture up for a significant fight of the DC excise tax. The beverage industry has already spent $48.9 million since 2009 to work to oppose these taxes.

But two other groups of concerned individuals, the American Academy of Pediatrics and the American Heart Association, are both urging legislation to reduce consumption of sugary beverages, not only through taxes, but also through marketing campaigns. They argue that milk and water should be the default drinks for children in vending machines and that soda should not be allowed to be purchased with government benefits.

Tyler Durden

Thu, 10/10/2019 - 23:25


Business Finance


Platts: 4 Commodity Charts To Watch This Week

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Platts: 4 Commodity Charts To Watch This Week

Via S&P Global Platt's 'The Barrel' blog,

Asian demand for light crude oil grades and record US gas exports to Mexico are in the sights of S&P Global Platts editors this week. Plus, European gas price trends and the prospects for German power plant fuel switching.

1. Asian crude buying helps widen spread between light and heavy grades

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What’s happening? Asia was quick to respond to the growing uncertainty over Arab Light and Arab Extra Light crude supplies following the September 14 attacks on core Saudi oil facilities, with Southeast Asian refiners among the first group of buyers to secure alternative light oil cargoes from the spot market. The apparent shortage in supply of light Saudi crude to Asian refiners has boosted demand for distillate-rich grades in the global spot market. As a result, the outright price spread between Murban crude and Iraq’s heavy sour Basrah Heavy staged a sharp rebound this week, settling at $4.60/b Friday, Platts data showed, having touched a record low of $2.35/b on August 19.

What’s next? The rise in Asian buying activity potentially sets the tone for light/heavy sour crude price spreads to widen in the short run – how long exactly depends on how fast Aramco can fully restore production from the damage. In addition, the spread between the official selling price of Arab Extra Light and Arab Heavy could widen in the coming months if Chinese end-users continue to face a shortage of lighter-end Saudi term crude supply, according to multiple refinery and trade sources surveyed by Platts.

2. US exports record gas volumes to Mexico as pipeline availability rises

What’s happening? US natural gas pipeline exports to Mexico climbed to a record high last week propelled by the recent addition of new transmission capacity on the 2.6 Bcf/d Sur de Texas-Tuxpan marine pipeline. However, the record 6 Bcf/d export figure came not from an increase in exports on Sur de Texas, but rather from a recovery in transmission volumes on other southbound pipelines. The recent growth in US export volumes to Mexico has bolstered South Texas gas prices and could be a contributing factor behind the recent rise in cash prices at the US benchmark Henry Hub. In the week since the start of commercial service on the pipeline, spot market prices were up as much as 20 cents/MMBtu compared to prior 30-day averages.

What’s next? With recent maintenance- and commissioning-related declines on the NET Mexico and Nueva Era pipelines coming to an end, US exports to Mexico could remain around 5.8 Bcf/d to 6 Bcf/d or potentially move even higher in the days and weeks ahead. As export volumes continue to grow, gas prices in South Texas and at the Henry Hub could be expected to remain around current levels or possibly gain additional momentum.

3. Full stocks, LNG outlook weigh on European gas curve

What’s happening? European prompt gas prices remain at historically low levels of around just Eur10/MWh given a well-supplied market, with storage facilities filled to almost 100% capacity and LNG expected to come to Europe in ever bigger quantities through the fourth quarter.

What’s next? Winter 19 prices are also trending downward – though they are still trading at a healthy premium to prompt prices – and are now at parity with prices for Summer 20. A mild start to winter in Europe, forecast last week by The Weather Company, could see the contract move closer to the prompt and bring down Summer 20 with it if storages remain well stocked.

4. German lignite, coal plant profitability poised to recover this winter

What’s happening? Cheap gas and rising CO2 prices have pushed German coal- and lignite-fired power generation down the merit order this summer. Year to date coal/lignite generation is down 26%, while that for gas-fired generation is up 67%. Combined conventional generation, meanwhile, is down 13% on year as wind and solar continue to grow.

What’s next? The thermal merit order is due to switch into the fourth quarter of 2019 and Q1 2020, with German lignite plant firmly back in the money, and hard coal plant increasingly so as the quarter matures. Gas is not as cheap on the curve as the market prices in a breakdown in Russia-Ukraine gas contract talks, as well as winter heating demand.

Tyler Durden

Mon, 09/30/2019 - 10:15


Business Finance


Brexit Chaos Forces Jaguar Land Rover To Halt Production At UK Factories For A Week 

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Brexit Chaos Forces Jaguar Land Rover To Halt Production At UK Factories For A Week 

The UK's manufacturing sector is quickly scaling back investments and output at a time when the economy is nosediving. Jaguar Land Rover reported Thursday that it would halt car production at its factories in November for a week amid slumping economic conditions and ahead of a Brexit crisis.

Jaguar Land Rover joins BMW and Toyota in emergency

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preparations to help mitigate any supply chain disruptions from a no-deal Brexit.

Carmakers are also dealing with declining domestic and export orders despite a weakening pound.

The British manufacturing sector is a critical component of the UK economy, employing over 2.7 million people and accounting for 50% of UK exports.

While manufacturing has seen nearly a decade of growth, it could be all coming to an end as Brexit anxieties have pushed UK manufacturing's output to a 15-month low earlier this year.

Manufacturing remains on a cliff-edge, which uncertainty around Brexit has pushed carmakers into becoming extremely defensive in the next several months.

Prime Minister Boris Johnson has said Britain would exit the EU, with or without a deal, on October 31.

Jaguar Land Rover Chief Executive Ralf Speth said emergency plans have already been enacted, production halts at four British factories will occur during the first week of November.

"I need 20 million parts a day and that means I have to make commitments to my suppliers, I have to have every and each part available and I have to have it just in time," Speth said.

Toyota in August said it would not make cars at its British factory in the first week of November. BMW said the same as well.

Brexit developments have unquestionably exacerbated the economic slowdown in the UK. This means that the world's fifth-biggest economy is in danger of entering a recession if the Brexit turmoil intensifies in the coming months.

Tyler Durden

Fri, 09/27/2019 - 04:15

Repo Market Guru: "Whatever Changed Last Week Is Clearly Still A Problem"

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Repo Market Guru: "Whatever Changed Last Week Is Clearly Still A Problem"

Last week around this time, most of the self-described repo experts on twitter and elsewhere were pounding the table, screaming to anyone who would listen that the unprecedented spike in overnight general collateral repo from 2.25% to 10% was a non-event, and reflects one-time items such as the mid-September tax remittance, the rapid build up of cash in the Treasury's general account and a

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flurry of Treasury settlements. 

Alas, as we warned, and as the NY Fed today confirmed, the sudden heart attack in the critical, overnight funding market has turned out to be anything but a one-time event. First, as we saw first thing this morning, the latest repo overnight repo operation was the most oversubscribed yet, with $91.95BN in securities tendered for $75BN in reserves, the most yet since the Fed resumed these "unclogging" operations after a decade plus hiatus.

However, the big surprise came later on Wednesday morning, when in an "unexpected" move, the Federal Reserve expanded the size of its two dollar funding operations, the overnight and term repo, from $75BN to $100Bn, and from $30Bn to $60BN heading into quarter-end, effectively injecting up to $250 billion in funding ($30BN in already concluded term repo as well as two $60BN term repos yet to come, together with the $100BN overnight repo, assuming full allottment on all operations, for a grand total of $250BN).

Commenting on this dramatic expansion in Fed liquidity injections, BMO's rates expert ian Lyngen, had a simple, if very powerful observation: "the fact that we’re discussing a quarter trillion dollars is telling as to the depth of the constraint in repo." Indeed a far cry from the "all clear" the twitter repo "experts" were screaming from the top of their lungs last week.

As we approach quarter-end, it’s intuitive that funding markets are attracting heightened attention after last week’s repo fiasco. One thing has become clear, however, and that is that the Fed is willing to provide significant  amounts of liquidity to primary dealers to alleviate as much stress as possible. By upsizing injections to $250 bn or  more (assuming overnight remains at $100 bn through October 1 and the terms are $30 bn/$60 bn/$60 bn, respectively) the fact that we’re discussing a quarter trillion dollars is telling as to the depth of the constraint in repo as well as the New York Fed’s desire to make September 30 boring. At the end of the day, only primary dealers are counterparties of this facility. This presents a possibility of some upward pressure on rates were cash not to have permeated throughout the system by the reporting date.

Confirming Lyngen's fears, and in a troubling indication that despite the Fed is now clearly throwing the kitchen sink at the repo problem and failing, was today's increase in the overnight G/C repo rate which has once again started to rise ominously.

Unfortunately, in its attempt to window-dress the issue, and pretend there is no problem at all, the Fed continues to pretend as if the problem isn't there, and following on this morning's comments from Lael Brainard that the repocalpyse was the result of a "simple imbalance" of supply and demand - and not a sign of deeper distress in credit markets - Dallas Fed president Kaplan said late on Wednesday that whereas the repo strain is important, it does not signal broader stress, and merely shows that the system needs more liquidity.

To be sure, as we explained over the weekend, he is right about the latter, but wrong about the former, and to make it crystal clear to everyone that something is clearly broken with the systemic plumbing, here is repo market guru, Scott Skyrm, who works for Curvature Securities, and whose sole business is Repo financing in U.S. government securities, so yes, he knows better what he is talking about than any so-called fintwit expert.

Let's just say that the Repo market is not so simple. Just a week ago I was singing praises to the Fed's overnight and term RP operations. Then, when rates backed-up the past two days, I was worried there was not enough cash in the system and the existing operations had failed. Now, it looks like smooth funding again! The Fed announced they are doubling the term and overnight RP operations tomorrow to $60 billion and $100 billion, respectively. When in doubt, throw more money at the problem!

To be sure, if there is anything the Fed has demonstrated amply over the past decade, is that when in doubt, it will throw "enough money at the problem" that it will inflate the biggest asset bubble in history in the process.

But it was Skyrm's punchline that was especially troubling as it confirms our worst fears:

Now, here's the rub. It's great that the Fed is pumping liquidity into the system, however, why were the existing operations insufficient?

As of today, the Fed had injected $105 billion in liquidity into the Repo market, but rates were still stubbornly high. Whatever changed last week to cause the funding spikes is clearly still an problem.

Indeed it is, and unfortunately neither the Fed nor apparently anyone else, still has a clue what is going on.

Which brings us to something else that Kaplan said late on Wednesday, namely that the Fed will now study what size the balance sheet should be in the future. Sound familiar? It should: that's precisely the exercise we conducted over the weekend, when we analyzed how much bigger the Fed's balance sheet will be in the coming year, and how the Fed will get there. For those who missed it: the Fed needs to boost its reserves by roughly $400 billion to get the total to $1.8 trillion.

The only question is what how it will do it. And here we get to the bottom line, because whereas the Fed and its sycophantic media enablers are desperate to avoid calling the upcoming bond purchases by their real name, instead settling for the far more technical POMO, or permanent open markets operations, which as Goldman estimates will have to by roughly $15BN per month for a total of about $150BN per year...

... it was Bank of America that let it slip, and in a chart from BofAs' Michael Hartnett, the Chief Investment Strategist called what is coming by its real name: QE4.

The problem, as Hartnett also identified, is that this will take the central banks' balance sheet to new all time highs, resulting in the biggest asset bubble in history getting even bigger... and setting up the world for an even greater crash when the fed's pushing on a string fails. And while nobody knows when that will happen, the fact that the financial system nearly collapsed last week even with $1.4 trillion in "excess" liquidity for reasons still unknown, means that like a great white shark, the market now needs constant liquidity injections, or else it will collapse.

Finally, considering that it has now filtered down to even the average American that - courtesy of Bernie Sanders and Elizabeth Warren - that it is the Fed's market distorting operations that have resulted in a record wealth and income gap, we wonder: is it Trump's impeachment, or is it the Fed's upcoming QE4, that sets the stage for the now upcoming US civil war?

Tyler Durden

Wed, 09/25/2019 - 21:10


Business Finance


'Work Less, Make More': Labour Party Introduces Plan For 4-Day Work Week

zerohedge News work less make more labour party introduces plan 4-day week All https://www.zerohedge.com   Discuss    Share
'Work Less, Make More': Labour Party Introduces Plan For 4-Day Work Week

As Labour's 2019 party conference started yesterday, the party's leadership was busy selling their slate of far-left policies.

In addition to support for a 'Green New Deal' (not dissimilar to the one from the US) and the abolition of private schools, the Labour Party is pushing a plan for a four day work week. But don't worry: workers

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will still earn the same amount of money, they'll just need to work less for the money.

By Labour's reasoning, since the link between increasing productivity and expanding free time has been broken, it's time for the government to step in and set the trend right. After all, increasing automation was supposed to allow Britons to work less, not more.

But with the next general election expected in the coming months, Shadow Chancellor John McDonnell pledged during a speech on Monday that Labour would implement the 32-hour-work-week within 10 years if votes deliver a majority.

McDonnell's pledge stopped short of making a 32 hour week compulsory, saying that only "average" hours worked would be cut. But he insisted that lower in the number of hours worked by most Britons is the right course of policy: "millions are exhausted from overwork," McDonnell said to the audience at Labour's Party conference in Brighton. And that must end.

"As society got richer, we could spend fewer hours at work. But in recent decades progress has stalled," McDonnell added. "People in our country today work some of the longest hours in Europe."

That's actually not true, according to official EU data, which found that Greeks put in the longest work weeks (at an average 42.3 hours per week), followed by Bulgaria and Poland. The only western European nation that made the top ten was Portugal.

Before the conference, a report commissioned by crossbench peer Robert Skidelsky found that working fewer hours would be good for Briton’s wellbeing but that "a rigid four-day week was not realistic or desirable."

But Labour clearly can't resist the headline: A 32 hour work week! With no loss in pay!

Unsurprisingly, McDonnell received a standing ovation when he finished his speech. But just wait until this crosses the pond.

Tyler Durden

Tue, 09/24/2019 - 02:45

Platts: 6 Commodity Charts To Watch This Week

zerohedge News platts commodity charts watch this week All https://www.zerohedge.com   Discuss    Share
Platts: 6 Commodity Charts To Watch This Week

Via S&P Global Platt's 'The Barrel' blog,

Oil markets are scrutinizing the export and stock balance of OPEC kingpin Saudi Arabia this week, following attacks on critical oil infrastructure. Brazil’s corn exports and the success of Gazprom’s European auction platform are also among our latest pick of energy and commodity market trends.

1. Saudi Arabia looks to
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plug oil export gap in wake of attacks

What’s happening?  The devastating aerial attacks on Saudi Arabia’s key oil infrastructure last week brought into acute focus the falling crude supply buffer held by the world’s biggest oil exporter to shield against market trauma from upsets to its oil industry. Since OPEC cuts were launched in 2017, Saudi Arabia has been drawing on its crude stocks to help maintain export flows at a time of growing crude domestic demand for its expanding refining capacity. Official figures show Saudi crude stocks have shrunk over 40% since 2015, the majority of which has occurred under OPEC cuts.

What’s next? Oil markets will closely monitor the recovery of damaged Saudi production capacity. Attention will focus on any efforts to fill crude or products supply shortfalls, as Riyadh struggles to meet both its crude exports contracts and meet domestic fuel demand as it diverts some crude away from domestic refining.

2. Gazprom’s European gas sales through online auctions soar

What’s happening? It is now one year since Gazprom Export held the first auction on its Electronic Sales Platform (ESP), and since then more than 12.6 Bcm of gas has been sold to European buyers. That is almost enough to meet the demand of Austria and Hungary combined, and would outpace the expected production next year of the giant Groningen field in the Netherlands.

What’s next? The ESP has evolved from a simple auction platform to a dynamic sales tool, with Gazprom Export likely to continue to use it to sell surplus gas onto the European market regardless of price as it continues its strategy of prioritizing volume over value.

3. Brisk pace of S America corn shipments weigh on US exports

What’s happening?  Following a record harvest this year, Brazil has been exporting corn at a brisk pace. Brazil corn production is expected to reach 99.98 million mt in 2018-2019. Corn exports hit a monthly record of 7.6 million mt in August. The US Department of Agriculture expects Brazil to export 38 million mt in 2018-2019 (March 2019-February 2020). Argentina, another major corn producer, is seeing robust export growth, with a jump of 66% on year during March-August this year.

What’s next? Markets will be keenly watching the progress of corn exports from South America, as the fast pace of shipments from Brazil and Argentina keeps US exports under pressure. Moreover, corn harvesting has also started for major producer Ukraine. As the US harvest nears, the price spread between the US and South American corn has narrowed, but US corn prices are still expected to remain uncompetitive through January 2020, according to the USDA.

4. West Canada gas stocks on track to end injection season at 13-year low

What’s happening? Although US gas storage levels are near the five-year average as the injection season begins to wind down, inventories above the border in West Canada remain on track to close out the season at a 13-year low. Western Canadian production was down 0.7 Bcf/d summer over summer, and there have been injection curtailments on the NOVA Gas Transmission system. This has led to the region only injecting 67% of the five-year average, according to Platts Analytics.

What’s next? If this injection rate continues, Western Canada will end summer at its lowest volume since 2006. AECO futures for the 2019-2020 winter strip suggest the market is not anticipating these risks. The market could be expecting strong production to help offset low storage, but with the gas-focused rig count stalling near all-time lows, this seems unlikely.

5. Nordic power house in grand shape heading into winter

What’s happening? Sweden’s power exports are booming this year due to a surge in wind farm installations and demand from neighboring Finland. While completion of Finland’s 1.6 GW Olkiluoto-3 nuclear plant enters a tenth year of delay, Sweden has added 2.3 GW of wind this year alone, outpacing stalled onshore wind development in Germany and the UK.

What’s next? A Nordic wind boom means Scandinavia’s vast hydro reservoirs can afford to take stock through the summer ahead of a winter payday. As Nordic links to other markets are built, the region’s generators are increasingly well placed to take advantage of bountiful hydro, and now wind, resource.

6. Coking coal prices diverge on China, India buying behaviour

What’s happening? Coking coal prices are widening between grades, as global buyers reduce demand on weaker steel demand. China has prioritized buying low-vol coals over premium mid-vols as remaining import volumes under coal quotas shrunk. “Vol” refers to volatile matter – lower volatile matter increases coke production yield. Premium mid vol coking coals typically see regular spot demand in India, which is suffering an economic downturn. Post-monsoon spot buying in India is yet to fortify and inventory has been left to run down, while Europe and Brazil are needing less spot tons. Premium mid vol coking coals, such as Goonyella, Moranbah North and Illawara, are seeing the weakest pricing relative to benchmark Peak Downs and other premium low-vol HCC brands all year.

What’s next? Forward Chinese met coal import demand is facing uncertainty as coking coal volumes are anticipated to reach 2018 totals during September. This potential reduction in quotas for the fourth quarter may cut into demand for premium low-vol HCC, the grade most sought out by Chinese buyers. An extension to coking coal volumes under China’s import quota may be needed to help balance the market.

Tyler Durden

Mon, 09/23/2019 - 11:05


Business Finance

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