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  3. Week of 6/24/2017 Closing prices & Chg Over Last Wk---- Gold $1256.40 Silver $16.64 Oil $43.01 USD $96.94
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Business News & Views - Metals, Markets, Shipping, Energy, More

Discussion in 'Coffee Shack (Daily News/Economy)' started by searcher, Aug 25, 2017.



  1. searcher

    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    DB - Opening Bell: 10.13.17
    https://dealbreaker.com/2017/10/opening-bell-10-13-17/

    Naked Capitalism Links 10/13
    https://www.nakedcapitalism.com/2017/10/links-101317.html

    SA - Market News Live Feed 10/13
    https://seekingalpha.com/market-news

    CWS - Morning News: October 13, 2017
    http://www.crossingwallstreet.com/archives/2017/10/morning-news-october-13-2017.html

    CWS Market Review – October 13, 2017
    http://www.crossingwallstreet.com/archives/2017/10/cws-market-review-october-13-2017.html

    RR - Saving Twitter, Big Bets and Catching Hackers 10/13
    https://www.bloomberg.com/view/articles/2017-10-13/saving-twitter-big-bets-and-catching-hackers

    MtM - Sterling Extends Yesterday's Recovery; US Data Awaited 10/13
    http://www.marctomarket.com/#!/2017/10/sterling-extends-yesterdays-recovery-us.html

    MtM - Dollar Dropped like Hot Potato After Core CPI Disappointed 10/13
    http://www.marctomarket.com/#!/2017/10/dollar-dropped-like-hot-potato-after.html

    SA - Wall Street Breakfast: The Beat Goes On For Global Stocks As Records Continue To Fall 10/13
    https://seekingalpha.com/article/41...beat-goes-global-stocks-records-continue-fall
     
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    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    Asian Metals Market Update: October-13-2017
    By: Chintan Karnani, Insignia Consultants
    The focus is on Bitcoin as it edged past $5000 and shows no sign of correction. Gold and silver are firm. It is just a technical trade. No one is taking seriously US economic data releases due to hurricane impact. Focus will shift to Japanese elections on 22nd October, Chinese communist party meet and demand. Short term traders are investing into Bitcoin and other forms of crypto currencies. Gold and silver will not attract short term hot money. Most of the investors in gold and silver are medium term to long term. The rally in gold and silver is on solid fundamentals.

    U.S. Mint Gold Coin Sales and VIX Point To Increased Market Volatility and Higher Gold
    By: GoldCore
    – US Mint gold coin sales and VIX at weakest in a decade
    – Very low gold coin sales and VIX signal volatility coming
    – Gold rises 1.7% this week after China’s Golden Week; pattern of higher prices after Golden Week
    – U.S. Mint sales do not provide the full picture of robust global gold demand
    – Perth Mint gold sales double in September reflecting increased gold demand in both Asia and Europe
     
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    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    COT Gold, Silver and US Dollar Index Report - October 13, 2017
    By: GoldSeek.com
    COT Gold, Silver and US Dollar Index Report - October 13, 2017

    Gold Seeker Weekly Wrap-Up: Gold and Silver Gain Over 2% and 3% on the Week
    By: Chris Mullen, Gold Seeker Report
    Gold saw modest gains in Asia before it fell back to $1290.70 in London, but it then jumped up to $1302.50 after the release of economic data in New York and ended with a gain of 0.8%. Silver rose to as high as $17.393 and ended with a gain of 0.99%.
     
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    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    Social Security benefits to rise by 2 percent in 2018...though on average beneficiaries will receive only a $25 increase
    • More than 70million US residents are affected by the cost-of-living adjustment
    • COLA is an inflation index based on a broad measure of consumer prices
    • From COLA, millions of Social Security recipients and other retirees will get a 2 percent increase in benefits next year
    • For the average beneficiary, this increase will comes $25 a month or $300 a year


    Read more: http://www.dailymail.co.uk/news/article-4978756/Social-Security-benefits-rise-2-percent-2018.html#ixzz4vQwHkBWZ
    Follow us: @MailOnline on Twitter | DailyMail on Facebook
     
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    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    Tesla FIRES 400 employees after company-wide performance reviews: Worker slam electric car company for letting them go without any notice
    • Tesla Inc fired about 400 employees this week, including associates, team leaders and supervisors, a former employee told Reuters on Friday
    • The dismissals were a result of a company-wide annual review, Tesla said in an emailed statement, but didn't say how many were let go
    • Though Tesla cited performance as the reason for the firings, the source told Reuters he was fired in spite of never having been given a bad review


    Read more: http://www.dailymail.co.uk/news/article-4979600/Tesla-fired-hundreds-employees-past-week.html#ixzz4vVHZ0Em1
    Follow us: @MailOnline on Twitter | DailyMail on Facebook
     
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    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    REALIST NEWS - Wow China/Russia Pound another Nail into the USD Coffin
    jsnip4



    Published on Oct 14, 2017
     
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    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    Epic Financial Shift is Being Signaled: Prepare NOW | Greg Mannarino
    Reluctant Preppers



    Published on Oct 14, 2017
    There is NO FREE MARKET behind any asset class - except one! Greg Mannarino, former Bear Sterns equity trader and founder of TradersChoice.net, returns to Reluctant Preppers to reveal what specific leading indicator now foretells an epic money flow shift in the largest market in the world.

    Mannarino spells out why Physical Gold & Silver as hard assets are the “Anti-Debt,” and why NOW is a critical juncture as the IMF announces 9-major banks are in trouble.

    If the next crisis will eclipse the 2008 collapse, with no recovery: the system dies. Greg explains how to take trading profits and rebalance to stack hard assets.

    PLUS: Bitcoin broke $5000 as Greg predicted: Find out how high he sees it going next!

    Free ebook available on: Traderschoice.net
    Steemit @MarketReport

    ———————
    Subscribe (it's FREE!) to Reluctant Preppers for more ► http://bit.ly/Subscribe-Free

    Channel graphics by http://JosiahJohnsonStudios.com
    Promotion by http://FinanceAndLiberty.com
     
  13. searcher

    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    Patricia Muth – No Trump Tax Cuts Will Cause Market Meltdown
    Greg Hunter



    Published on Oct 14, 2017
    Author Patricia Muth, who is also a former floor trader for the Chicago Mercantile Exchange, thinks that the establishment is afraid of President Trump being successful. Muth contends, “That’s absolutely right. People are strongly supporting Trump, and the more the establishment bucks him, the stronger the people become. The faith in God is what is moving all of this. . . . If the tax plan doesn’t go through, and major corporations . . . are counting on that happening, if it doesn’t go through, I think we have a different ball game as far as the markets go.”

    So, if we get the Trump tax cuts, Muth says the economy could “take off.” If we don’t get those tax cuts? Muth says, “We should buckle in, and Congress should really buckle in because they are going to be in for a tough ride.”

    Join Greg Hunter as he goes One-on-One with Patricia Muth, author of the new book called “A Title in the Making.”

    Donations: https://usawatchdog.com/donations/

    Stay in contact with USAWatchdog.com: https://usawatchdog.com/join/

    All links are on USAWatchdog.com: https://usawatchdog.com/we-the-people...
     
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    REALIST NEWS - The People are finally becoming aware of the lies
    jsnip4



    Published on Oct 15, 2017
     
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    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    RMR: Special Guest - Syrian Girl (10/15/2017)
    ROGUE MONEY



    Published on Oct 15, 2017
    CJ interviews Syrian Girl for an update on Syria, Turkey and the geopolitical shifts occurring in the middle-east.

    To learn more about Syrian Girl you can follow her:
    https://twitter.com/Partisangirl
    https://www.youtube.com/user/SyrianGi...

    Support her work here:
    https://www.patreon.com/syriangirl

    We are political scientists, editorial engineers, and radio show developers drawn together by a shared vision of bringing Alternative news through digital mediums that evangelize our civil liberties.

    Please subscribe for the latest shows daily!

    http://www.roguemoney.net
    https://www.facebook.com/ROGUEMONEY.NET/
    https://twitter.com/theroguemoney
     
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    IMF Meeting Wrap Up. World Reserve Shakeup? Boring
    SalivateMetal



    Published on Oct 15, 2017
    Warning: This is probably the most boring video you watch today.
     
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  23. searcher

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    Global Stocks Rise Oblivious Of Growing Geopol Risks; Oil, Commodities Jump On Kurdish Clashes

    [​IMG]
    by Tyler Durden
    Oct 16, 2017 6:54 AM


    World stocks and commodities rose on Monday, boosted by upbeat Chinese data, while U.S. oil futures jumped to a near six-month high as escalating tensions between the Iraqi government and Kurdish forces threatened supply. Global markets digested the large amount of weekend newsflow, and clearly liked what they saw as S&P futures were modestly in the green, as both European and Asian stocks are higher.

    The USD is marginally stronger after Yellen’s comments suggest the Fed may look through weak inflation. Still, for those who missed this weekend financial elite extravaganza, Yellen stated that new normal will be lower interest rates than seen historically and that inflation has been largest surprise for the US economy this year. Yellen added that gradual hikes in fed funds rate are likely to be appropriate during next few years and that she will be paying attention to inflation data in the upcoming months, although she guesses that the soft reading will not persist. Meanwhile, Fed's non-voting soft-hawk Rosengren said 3 to 4 rate hikes next year will probably be appropriate and that the Fed may need to overshoot on rates if unemployment is below 4% while inflation reaches target.

    Looking at the big macro picture, via Bloomberg:
    • The dollar advanced against its major G10 peers and Treasury yields rose after Federal Reserve Chair Janet Yellen said on Sunday her “best guess” is consumer prices will soon accelerate after a period of surprising softness, a forecast echoed by European Central Bank President Mario Draghi and Bank of England Governor Mark Carney.
    • The Mexican peso hit a fresh five-month low as NAFTA talks revealed aggressive U.S. proposals;
    • Oil climbed as Iraqi troops moved to take over control of Kurdish fields.
    • The euro trades under pressure via crosses, EUR/JPY accelerates after breaking lower through 132.00,
    • JPY one-week calls also bid as they now capture domestic election date of Oct. 22;
    • EUR/GBP lower as GBP is supported by hawkish comments by Carney on Friday and on news U.K. PM making surprise visit to Brussels today for talks.
    • Gilts underperform from the open, gilt/bund spread wider by 3bps, short sterling strip bear steepens.
    • Bunds steadily grind higher; latest ECB sources report saying some ECB members see $3t QE is within market tapering expectations;
    • Little reaction seen in Spanish bonos to latest Catalonia rhetoric. However, Spanish IBEX underperforms other European equity markets as domestic banks sell off. Eurostoxx and Dax trade flat, miners rally strongly as copper forwards run upside stops through $7000/MT, new YTD high.
    • Crude futures higher after Iraq forces push into Kirkuk region.

    Meanwhile, tension over North Korea continues to simmer. The U.S. and South Korean navies began a joint drill involving around 40 warships, amid signs North Korea is preparing for another provocation such as a missile launch. North Korea’s state-run media agency KCNA on Saturday criticized the exercise, calling it a “reckless act of war maniacs.”

    Stocks in Europe nudged higher after their longest weekly rally since 2015, led by miners, as gains in oil and copper drove Bloomberg’s gauge of commodity prices to a six-month high.

    [​IMG]

    The Spanish IBEX index lags against its counterparts, down -0.7% on Catalan fears with Spanish banks leading the losses. As reported previously, the Catalan Leader suspended independence mandate to pursue dialogue with PM Rajoy, however the letter sent by Puigdemont failed to clarify whether he has declared independence or not, prompting the head of the People’s Party in Catalonia Xavier Garcia Albiol says Puigdemont’s answer shows he is irresponsible. CaixaBank falls 2.4%, BBVA down 1.4%, Bankia down 1.5%; the IBEX is down 2% since independence vote on Oct. 1, vs 1% gain for Stoxx 600 over same period. Elsewhere, Convatec shares fall some 14% after announcing a profit warning, while strength in material names are helping European bourses make slight gains this morning.

    The MSIC Asia index was higher by 0.6%, its highest level since November 2007, led by Australia's ASX 200 (+0.3%) underpinned by strength in commodity related stocks after crude approached $52/bbl and iron ore gained over 4%, while Nikkei 225 (+0.5%) extended on its best levels in over 2 decades. Elsewhere, Hang Seng (+0.8%) outperformed and posted its highest close since December 2007 following stronger than expected Chinese Aggregate Financing, New Yuan Loans and PPI data, although the Shanghai Composite (-0.4%) lagged after the PBoC kept its liquidity operations at a minimal. Meanwhile, China's ChiNext Index of small-cap shares drops as much as 2.3%, the biggest intraday loss since July 17, amid expectations that liquidity could tighten and as investors turn more cautious ahead of the Communist Party congress this week. “Zhou Xiaochuan’s comments signal that China will move further to rein in financial leverage and is unlikely to maintain an easy liquidity environment,” says Shen Zhengyang, Shanghai-based analyst with Northeast Securities Co.

    Overnight, as reported previously, China CPI printed at 1.6% Y/Y, in line with expectations, and down from, 1.8% in August largely due to high year-over-year base effects, but it was PPI to come in smoking hot, jumping from 6.3% last month to 6.9% Y/Y, slamming expectations of a 6.4% print and just shy of the highest forecast, driven by the recent surge in commodity costs and strong PMI surveys.



    [​IMG]

    The stronger than expected PPI has pushed China's 10Y yield to the highest in 30 months, or since April of 2015.



    [​IMG]

    Japan's torried rally continued as technology firms and banks bolstered the Japanese stock market, sending the Topix index to its sixth day of gains, up 0.6%, and its longest winning streak for this year. All but four industry groups in the Topix advanced, while the Nikkei 225 Stock Average rose for the 10th day, the longest stretch since June 2015. Technology shares mirrored gains in U.S. peers as chipmakers and internet giants bolstered the S&P 500 Index at the end of last week. Automakers underperformed after the yen strengthened against the dollar for a second day on Friday as data showed the core U.S. consumer price index rose 0.1 percent in September from a month earlier, below the estimate of 0.2 percent. “Risks of not buying into Japanese equities are rising,” said Masahiko Sato, an analyst at Nomura Holdings Inc. in Tokyo. “In the midst of a global economic expansion, local corporate earnings are improving and equities are looking cheap. Foreign investors are buying into this.”

    The Bloomberg Dollar Spot Index rose 0.1 percent as the euro weakened and Spanish shares fell after Spain’s government gave Catalonia a new deadline to back down from its independence claim. The pound extended gains as British Prime Minister Theresa May headed for Brussels to intervene in deadlocked exit negotiations. The Japanese yen increased less than 0.05 percent to 111.81 per dollar.

    The Bloomberg Commodity Index gained 0.4% to the highest in six months. West Texas Intermediate crude rose 1.3% to $52.12 a barrel, the highest in two weeks, due to the conflict in Kurdish Iraq. Gold increased 0.1 percent to $1,304.53 an ounce. Copper climbed 2.3 percent to $3.21 a pound, hitting the highest in more than three years. Palladium traded above $1,000 an ounce for the first time since 2001.

    Economic data include Empire Manufacturing Survey. Netflix, Schwab and CSX are among companies reporting earnings

    Bulletin Headline Summary from RanSquawk
    • Catalonian uncertainty continues to shadow over markets
    • EUR marginally underperforms, as CAD benefits from bullish oil markets
    • Looking ahead, investors will await US NY Fed Manufacturing data
    Top Overnight News
    • Kirkuk: Iraqi forces moved to take over oil fields from Kurdish forces
    • Fed’s Yellen: ongoing economic strength to warrant gradual rate hikes as soft inflation readings will not persist
    • ECB’s Draghi: no convincing signs of underlying inflation; would expect higher wage growth at this stage; sees V-shaped path of inflation due to oil prices
    • ECB QE: GC sees a limit of just over EU2.5t for the QE program based on current rules; enough bonds available to cut monthly purchases to EU30b in Jan. lasting until Sept, according to people familiar
    • Brexit: U.K. PM making surprise visit to Brussels today to meet EU’s Barnier and Juncker for talks; U.K. MPs holding cross-party talks in a bid to stop "No Deal" style Brexit
    • Catalonia: regional president does not give yes/no answer to Spanish govt. on independence declaration; defends claim to independence, asks for negotiations; Spanish Deputy PM says Thursday deadline is now activated
    • Italy: elections could be held March 4 after passage of 2018 budget law: Corriere
    • China Sept. CPI 1.6% vs 1.6% est; PPT 6.9% vs 6.4% est; M2 Money Supply: 9.2% vs 8.9% est; new Yuan Loans 1.27t vs 1.20t est; agg. Financing 1.82t vs 1.57t est.
    Market Snapshot
    • S&P 500 futures little changed at 2,553.50
    • STOXX Europe 600 up 0.2% to 392.30
    • MSCI Asia up 0.6% to 167.66
    • MSCI Asia ex Japan up 0.5% to 552.89
    • Nikkei up 0.5% to 21,255.56
    • Topix up 0.6% to 1,719.18
    • Hang Seng Index up 0.8% to 28,692.80
    • Shanghai Composite down 0.4% to 3,378.47
    • Sensex up 0.5% to 32,603.26
    • Australia S&P/ASX 200 up 0.6% to 5,846.76
    • Kospi up 0.3% to 2,480.05
    • German 10Y yield unchanged at 0.403%
    • Euro down 0.3% to $1.18
    • Italian 10Y yield fell 3.3 bps to 1.815%
    • Spanish 10Y yield fell 1.1 bps to 1.6%
    • Brent futures up 1.4% to $57.98/bbl
    • Gold spot up 0.04% to $1,304.39
    • U.S. Dollar Index up 0.1% to 93.22
    Asia equity markets began the week on the front-foot again after another record setting session last Friday on Wall Street, where softer than expected US CPI figures caused some to rethink the Fed’s hiking trajectory, while the region also digested encouraging Chinese lending and inflation data. ASX 200 (+0.3%) was underpinned by strength in commodity related stocks after crude approached USD 52/bbl and iron ore gained over 4%, while Nikkei 225 (+0.5%) extended on its best levels in over 2 decades. Elsewhere, Hang Seng (+0.8%) outperformed and posted its highest since December 2007 following stronger than expected Chinese Aggregate Financing, New Yuan Loans and PPI data, although the Shanghai Comp. (-0.4%) lagged after the PBoC kept its liquidity operations at a minimal. Finally, 10yr JGBs were initially mildly higher to track recent upside in T-notes and amid the BoJ’s presence in the market for an amount just shy of JPY 1tln in JGBs ranging from 1yr-10yr maturities, but then failed to sustain gains amid the positive risk tone.

    For those who missed the main Chinese economic data over the weekend, here are the highlights:
    • China Sept fiscal revenues CNY 2.27tln +9.2% y/y, spending at CNY 2.02tln, +1.7% y/y.
    • Chinese New Yuan Loans (CNY)(Sep) 1270.0B vs. Exp. 1100.0B (Prev. 1090.0B).
    • Chinese Aggregate Financing (CNY)(Sep) 1820.0B vs. Exp. 1572.7B (Prev. 1480.0B)
    • Chinese Money Supply M2 (Sep) Y/Y 9.2% vs. Exp. 8.9% (Prev. 8.9%)
    • Chinese CPI YY (Sep) 1.6% vs. Exp. 1.6% (Prev. 1.8%).
    • Chinese PPI YY (Sep) 6.9% vs. Exp. 6.4% (Prev. 6.3%)
    • PBoC injected CNY 20bln via 7-day reverse repos; PBoC set CNY mid-point at 6.5839 (Prev. 6.5866)
    PBoC Governor Zhou stated that total debt leverage in China is too high and that there is no clear fiscal discipline to restrict local governments; Zhou also stated that China's economic growth is to hit 7% in H2.

    Top Asian News
    • Japan Shares Rise, Topix Marks Longest Winning Streak This Year
    • Bad-Loan Recast Failures Portend More Pain for India Lenders
    • More Factories Go Dark as China’s Expansion Hangs in the Balance
    • Bitauto Car-Financing Arm Is Said to File for $800 Million IPO
    • H&M Supplier Crystal Sets Price Range for $574 Million IPO
    • Li’s H.K. Tower Sells for Record $5.15 Billion, Report Says
    • Wanda Golf Courses in Chinese Resort Shut Down by Authorities
    In Europe, the IBEX lags against its counterparts on Catalan fears with Spanish banks leading the losses. As reported previously, the Catalan Leader suspended independence mandate to pursue dialogue with PM Rajoy, however the letter sent by Puigdemont failed to clarify whether he has declared independence or not. Convatec shares fall some 14% after announcing a profit warning, while strength in material names are helping European bourses make slight gains this morning. UK debt appears to have weathered an early storm, but like Short Sterling remains on the relative backfoot on near term BoE tightening prospects. This follows more policy guidance from Governor Carney at the World Bank/IMF, and precedes Tuesday’s potentially policy-defining inflation report. Consensus is for headline CPI to climb to 3% y/y, but the bias suggests an above forecast print that would see the mandate breached and by inference strengthen the MPC’s resolve to act sooner rather than later (ie in November). Bunds are steady in comparison, and rangebound amidst contrasting drivers (ECB underscoring tapering intentions, but ongoing Spanish/Catalan uncertainty underpinning the EZ safe-haven). Perhaps surprisingly, Bonos not too adversely affected by the latest regional-national Government impasse, and RAGBs also holding in despite an unexpectedly strong showing by the far right in the weekend Austrian election. US Treasuries have eased off Friday’s post-CPI highs, with Fed chair Yellen still predicting higher inflation ahead and repeating that the wage components in the latest jobs data are encouraging – inference that this is more important than the negative (and obviously hurricane distorted) headline payrolls number.

    Top European News
    • Catalan Leader Defends Claim to Independence, Defying Spain
    • Spain’s OHL Studies Sale of Concessions Unit, EL Mundo Reports
    • Cyprus Rogue Borrowers Pose Threat to Sustained Growth
    • EDP Falls in Lisbon Following Regulator’s Proposal on Tariffs
    • European Miners Rise to 4-Yr High; Citi Still Bullish on Sector
    • U.K.’s Johnson Urges ‘Some Serious Negotiations’ in Brexit Talks
    • Serbia May Present Kosovo ‘Proposal’ in March, President Says
    In currencies, morning reports from the Spanish/Catalonian saga, stating that Catalan leader, Puigdemont has suspended the independence mandate to pursue dialogue with PM Rajoy, led to no reprieve in the EUR, which saw a slow, downward grind through the Asian session, as EUR/USD came back to break through Friday’s pre-US inflation data levels. EUR/GBP has come back to trade in the 0.8900 – 0.8750 range, alongside EUR/USD breaking firmly down through 1.18, with participants showing little optimism towards positive Spanish developments. Focus now slowly moves toward the end of October, as EUR/USD volatility sellers suggest more rangebound trade as we approach the ECB meeting. Options continue to play a part in FX markets as the large expiries theme remains, with hedges evident - EUR/USD sees 2.5bln between 1.1760 and 1.1910, and EUR/GBP has 1.7bln rolling off between 0.8885 and 0.8900. The probability of a Fed move in December has declined (as low as 73.2%, according to some measures) , following Friday’s tame inflation report. Some concerns over the US economy continued over the weekend, with comments from Fed Chair Yellen, stating that the new normal will be lower interest rates, further saying that inflation has been the largest surprise for the US economy this year, yet did add that gradual hikes in the Fed Funds rate are likely to be appropriate during the next few years and will pay close attention to inflation in the coming months. DXY remains rangebound, struggling to break into the range seen prior to Friday’s Inflation report. A marginal inflow into the JPY has been seen in early European trade, however, USD/JPY continues to struggle to trade below 111.70, with rangebound price action clear. The day sees no standout economic data on the docket, with trade potentially likely to remain subdued, as investors focus on global concerns given that various geopolitical and political uncertainties remain.

    In commodities, oil prices notably firmer with WTI and Brent making a breach above USD 52 and USD 58 respectively, largely as a result of the conflict between Iraqi and Iraqi-Kurdish forces, whereby Iraqi forces have moved into Kirkuk, consequently raising concerns over exports (Kirkuk exports account for roughly 600k). OPEC Secretary General Barkindo stated that OPEC and shale companies share responsibility to rebalance market, while there were also comments from Kuwait that producers need another month before deciding on deal extension and decision may be made in November. Iraqi forces capture Kirkuk's K1 airbase from Kurdish forces, according to a military statement. Kurdish leaders have agreed to avoid fighting in Kirkuk's Oil and Gas facilities, according to the Iraqi oil ministry.

    US Event Calendar
    • Oct. 16-Oct. 20: Monthly Budget Statement, est. $6.0b, prior $33.4b
    • 8:30am: Empire Manufacturing, est. 20.5, prior 24.4
    DB's Jim Reid concludes the overnight wrap

    There were few inflationary gusts on Friday after the much anticipated US CPI report. After nudging against 2.40% last Friday after a strong US average hourly earnings number, 7 days later the miss on CPI saw 10yr USTs close the week at 2.274% having traded just below 2.33% most of the session before hand. September core inflation rose only 0.13% mom (vs. 0.2% expected) and 1.7% yoy (vs. 1.8% expected). In the details, core services inflation was inline, but the main miss was on the core goods side, which fell 0.2% mom (-1% over past 12 months - the lowest reading since August 2004). Our US team believes some of this weakness should prove transitory (eg: medical care commodities), but there were also more broad based signs of weakness. The team still expects core CPI inflation to remain near recent levels in yoy terms through 2017, albeit with risks that it now rounds down to 1.6%.

    This now makes it 6 out of 7 months of misses relative to expectations but a) remember that we’ve previously shown US inflation tends to lag growth by around 18 months and growth was weak at the end of ‘15/ early 16, b) that many at the Fed have recently suggested a bias to look through the ‘temporary’ weakness, and c) the Fed have also made it clear they’re looking more and more at (the very loose) financial conditions in their rate discussions.

    So overall, Friday’s number should reduce the risk of a December Fed hike but not perhaps by much. Bloomberg’s calculator has it at 73.3% now, down 3.4ppt versus Thursday’s close. If the usual lag between growth and CPI holds, we still may have weak YoY CPI into Q1 but just as the market gives up on inflation ever rising again, we may get some higher than expected shocks as we move into Q2 2018. Staying with inflation, China’s September CPI was in line at 1.6% yoy, but lower than the prior month, driven by lower food prices. Elsewhere, PPI was notably higher than consensus at 6.9% yoy (vs. 6.4% expected).

    Over the weekend, the main movers and shakers of global central banks spoke on inflation, tapering and risks at the annual IMF meeting. Firstly, Mrs Yellen said “my best guess is that these soft readings (inflation) will not persist” and that “with the ongoing strengthening of labour markets, I expect inflation to move higher next year”. On rates, she noted “we expect the neutral level of the federal fund rates to rise somewhat over time” and that “additional gradual rate hikes are likely to be appropriate over the next few years to sustain the economic expansion”. On fiscal policy changes, she said “it’s a source of uncertainty”, we have taken “a kind of wait and see attitude”.

    ECB’s Draghi also reiterated that he is “confident” inflation will “gradually converge in a self-sustained manner”, but we should be patient, because “it’s going to take time”. On tapering, ECB’s Praet had noted the idea of a bigger reduction in monthly bond buying in exchange for longer duration of the program earlier. When asked by reporters, Draghi said that Praet “had said it very well”. Back on Friday, Bloomberg reported that ECB policy makers are considering reducing the pace of bond buying to €30bn/mth (from €60bn/mth), but for nine more months to September 2018. Elsewhere, Bundesbank President Weidmann noted he does not see the need to further expand monetary stimulus, while the ECB’s Italian governor Visco noted he would prefer not to have specific dates on the unwinding of QE as ECB needs “the flexibility that is in the program”. Given the difference in opinions, we shall find out more at the next ECB meeting next week on 26 October.

    Elsewhere, BOE’s Carney reiterated he may need to raise rates in the “coming months” as the UK’s economy is running out of spare capacity. Japan’s BOJ Kuroda noted “achieving the 2% target is still a long way off and the BOJ will persistently [maintain] aggressive monetary easing” and he does not “see risks mounting in the financial markets in the US, Europe and Japan”. This was also backed up by Draghi who saw little signs that “stocks and bonds are having valuations that are stretched when compared to historical averages”.

    Finally, China’s PBC Governor Zhou noted that “6.9% economic growth may continue in the second half”. He also said “the main problem (in China) is that the corporate debt is too high” and that while debt servicing costs remain low, “we need to pay further efforts to deleveraging and strengthen the policy for financial stability”. Zhou flagged that some of China’s corporate debt includes borrowing from financing vehicles owned by the local governments, so if redefined, corporate debt / GDP is closer to c125% than the official figure of 160%, while government debt would be 70% of GDP (vs. 36%). Elsewhere, he said the asset management business is “a relatively chaotic situation”, partly due to three different regulators with different sets of rules. For those who have missed it, our note “The next financial crisis” takes a closer look at this and other developing risks.

    Overnight, South Korean military officials warned North Korea may be preparing for another round of missile launches, while US and SK navies have begun a joint drill involving 40 warships. Elsewhere, US Secretary of State Tillerson said he will continue with diplomacy measures with NK “until the first bomb drops”. This morning in Asia, markets havefollowed the positive lead from the US and are trading higher. The Kospi (+0.12%), Nikkei (+0.68%), ASX 200 (+0.63%) and Hang Seng (+0.81%) are slightly higher as we type.

    In Austria, the centre-right People’s Party (OVP) leader Sebastian Kurz is expected to become the world’s youngest government leader (aged 31). Of the votes counted (c85%), the Interior Minister Sobotka said the OVP received 31.4% (vs. c33% in late polls per The Independent), while the Social Democrats party has 26.7% (vs. 24.4%) and the Freedom Party (FPO) has 27.4% (vs. c26%). A renewed coalition between OVP and SPO is seen as less likely, which makes the far right, anti-immigrant and euro-sceptic FPO party in a strong bargaining position when forming the next coalition government. This would mark the FPO’s first return to government since 2005. So it will be interesting to see what a potential OVP & FPO tie up would mean for Europe on issues such as immigration and deeper EU integration.

    Over in Germany, Merkel’s CDU party has likely suffered the worst election result since 1959 in the northern state of Lower Saxony (home state of Volkswagen with 7.8m people). The Social Democrats Party (SPD) was the big winner, with official preliminary results putting the SPD as winning 36.9% (+4.1ppt from 2013) of the votes, while Merkel’s party came second, wining 33.6% (-2.6ppt). The loss is unlikely to shift the power mix at the state level as the Social democrats and the Green already govern the state, but the softer sentiment for her party could have follow on implications ahead of Merkel’s talks with potential coalition partners (likely the Greens & FDP) this week, in order to form the next federal government.

    Indeed UK PM May is expected to travel to Brussels and meet with EC Commission President Junker and Chief Brexit negotiator Barnier for Brexit talks today. According to her office, the trip has been in her diary for some time, but has only now been publicly announced. We wait and see whether her efforts will improve the chance of some resolution ahead of the EU Summit meeting later this week. Elsewhere tomorrow’s Euro and UK CPI will be a focal point as will the 57 S&P 500 companies reporting. Today, Spain and Catalonia will be back in the spotlight with Catalan President Puigdemont due to face a deadline to clarify to the Spanish Government Catalonia’s position on independence. For the full week ahead we’ve copied the text from “Next week, this week” at the end.

    On the US fiscal front, optimism and pricing of a deal has again faded but the next key step is the adoption of a budget by the Senate (expected to be later this month), which should be followed by a House-Senate conference to agree on a common FY18 budget. As DB’s fixed income weekly explains, the base case is that the House will converge towards a plan consistent with the Senate’s USD1.5 trillion deficit target (relative to the CBO baseline) and assuage deficit hawks with the prospects of higher growth reducing the deficit relative to this target. The final tax reform is more likely to amount to a more modest tax cut with a relatively limited impact on GDP. However, the increase in deficits will still be relevant to bond markets from a flow perspective.

    Quickly recapping the markets performance on Friday. Equities (S&P +0.09%, Stoxx 600 +0.29%) edged higher back towards their record highs. Within the S&P, HP rose 6.42% post results, while bank results were mixed with WFC down 2.75% following an unexpected $1bn legacy legal charge and softer revenue trends, while BofA gained 1.49%, partly due to improved cost discipline.

    Bond markets were broadly firmer following the US CPI miss and stronger than expected retail sales. Core bond yields fell 4-5bp at the 10y part of the curve (UST: -4.5bp; Bunds -4.1bp; OATs -4.6bp), but Gilts underperformed (-1bp). The US dollar index was broadly flat (+0.04%) while Sterling gained 0.17% but the Euro dipped 0.08% versus the Greenback. In commodities, WTI oil rose 1.68% following reports of lower US crude stockpiles, and continues to edge higher this morning as fighting broke out between Iraqi and Kurdish forces near Kirkuk. Iron Ore rallied 4.06% to $62.53/ton following China trade figures that showed a three year high for monthly ore imports.

    Before we take a look at today’s calendar, we wrap up with other data releases from Friday. Excluding the CPI miss, other US macro data were broadly stronger than expected. The September retail sales (ex-auto & gas) beat expectations at 0.5% mom (vs. 0.4% expected), while the University of Michigan’s October consumer confidence also beat at 101.1 (vs. 95 expected). Elsewhere, the August business inventories print was in line at 0.7% mom. In Europe, the final readings of September CPI for Germany and Italy was unrevised, at 1.8% yoy (flat mom) and 1.3% yoy respectively.

    Looking at the day ahead, in Europe the August trade balance reading for the Euro area is the sole release due while in the US the October empire manufacturing print is due. Away from the data Spain and Catalonia will be back in the spotlight with Catalan President Puigdemont due to face a deadline to clarify to the Spanish Government Catalonia’s position on independence. Earnings wise, Netflix results are likely to be the most significant.

    http://www.zerohedge.com/news/2017-...opol-risks-oil-commodities-jump-kurdish-clash
     
  24. searcher

    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    Frontrunning: October 16

    [​IMG]
    by Tyler Durden
    Oct 16, 2017 7:55 AM


    • Iraq forces seize Kirkuk outskirts in advance on Kurdish-held territory (Reuters)
    • Iraq-Kurd Fighting Threatens to Undo Anti-ISIS Coalition (WSJ)
    • Oil rises as fighting escalates in Iraq's oil-rich Kirkuk (Reuters)
    • Madrid moves towards direct rule over Catalonia (Reuters)
    • Spain Signals It Will Suspend Catalan Self-Rule This Week (BBG)
    • Central Bankers Cling to Stimulus Amid Weak Inflation (WSJ)
    • White House pitches corporate tax cut as win for workers (Reuters)
    • White House Says Corporate Tax Cut Would Boost Wages $4,000 (BBG)
    • GOP Tax Plan Would Make Mortgage Break Irrelevant (WSJ)
    • Congress to Tackle Health Care Again (WSJ)
    • Death toll from Somalia bomb attacks tops 300 (Reuters)
    • Yellen Calls Inflation the 'Biggest Surprise' in the Economy (BBG)
    • Wildfire Victims Had Only Seconds to Make Fateful Choices (WSJ)
    • Merkel: Strong result for Austria's FPO 'big challenge' for other parties (Reuters)
    • Nafta Talks Left Reeling After Aggressive U.S. Proposals Land (BBG)
    • The Crash of ’87, From the Wall Street Players Who Lived It (BBG)
    • Kobe Steel Scam Hits Planes, Trains, Automobiles (BBG)
    • A ‘Crazy’ Stock Market Is Punishing Sellers (BBG)
    • Corruption case against U.S. Senator Menendez may fall apart (Reuters)
    • Irish Brace as ‘Life-Threatening’ Ophelia Set to Slam Coast (BBG)
    • Pope implicitly criticizes U.S. for leaving Paris climate accord (Reuters)
    • May Heads to Brussels to Break Brexit Deadlock (BBG)
    • Trump hostility set to deepen Iran power struggles (Reuters)
    • Kushner Plan for Fifth Avenue Tower Is Being Blocked by Partner (BBG)
    • Old Wall Street Is Losing the Battle Beneath the Surface of ETFs (BBG)
    • Croatian police detain six former executives at Agrokor (Reuters)

    Overnight Media Digest

    WSJ

    - The U.S. Senate this week will grapple with President Trump's decision to stop making subsidy payments to health insurers, with lawmakers seeking a deal that would keep the money flowing while Republicans try to fold in conservative-oriented priorities. on.wsj.com/2gdbLBN

    - Iraqi forces clashed with fighters from the Kurdish semi-autonomous region in the oil-rich province of Kirkuk early Monday, Iraqi and Kurdish officials said, in a standoff over Kurdish independence that threatens to unravel a multinational coalition battling Islamic State. on.wsj.com/2gdqfS7

    - The death toll from twin bombings in capital Mogadishu climbed above 200 over the weekend, making it one of the deadliest attacks in the country. on.wsj.com/2gclb0d

    - U.S. officials defended President Donald Trump's refusal to certify the 2015 Iran nuclear agreement, saying the country threatens global stability even while technically complying with the accord itself. on.wsj.com/2gdC5vG

    - Blackstone Group is pushing aggressively into products for retail investors, betting it can raise as much from them over the long term as it does from the institutions that form the main source of its $371 billion of assets. on.wsj.com/2gcC2jA

    - Food-service giant Aramark Corp plans to acquire two closely held companies for a total of $2.35 billion, in its largest deals since going public nearly four years ago. on.wsj.com/2gc5vdo

    - Harvey Weinstein saw fallout from sexual assault allegations increase over the weekend, including fresh investigations in London, as the producer was expelled from the Academy of Motion Picture Arts and Sciences. on.wsj.com/2gb95EO

    FT

    British Prime Minister Theresa May spoke to Angela Merkel on Sunday urging the German Chancellor to bring to an end the stand-off over Brexit during this week’s European Union summit.

    Young conservative star Sebastian Kurz is on track to become Austria’s next leader after an election on Sunday, but his party is far short of a majority and likely to seek a coalition with the resurgent far right.

    National Economic Council director Gary Cohn said on Sunday he sees a “major risk” evolving in clearing houses. Looking at future financial risks, “this is where we should spend some time,” Cohn said

    Uber Technologies Inc’s food delivery service UberEATS accounted for about 10 percent of the ride-services company’s global gross bookings in the second quarter, which implies a gross turnover of $700 million to $870 million, according to sources.

    NYT

    - Germany's largest opposition party, The Social Democrats appeared likely to retain power in an important state election on Sunday that could sway the balance of power in Berlin and stymie efforts to strengthen oversight at Volkswagen , which dominates the region's economy. nyti.ms/2gco2Gr

    - Amazon Inc is sweeping the nation's capitol, Washington D.C. with a branding campaign of jobs creation and support for small businesses, promoting the upsides of its major expansion in media, groceries and transportation. nyti.ms/2gekzY0

    - "Happy Death Day", the latest microbudget movie from Blumhouse Productions, the Universal Pictures-affiliated studio behind runaway original hits such as "Split" and "Get Out", arrived to a strong $26.5 million in ticket sales in North America. nyti.ms/2geht6z

    Britain

    The Times

    - Russia is funding Taliban military operations against NATO in Afghanistan through a covert programme of laundered fuel sales, the Times has learnt from members of the militant group and Afghan officials. bit.ly/2xHw6p7

    - British Prime Minister Theresa May will fly to Brussels on Monday for emergency talks with European leaders to break the impasse on Brexit. bit.ly/2glxZFt

    The Guardian

    - Hillary Clinton embarked on a speaking tour of Britain with a message that the Brexit referendum was won on the basis of a big lie and warning that Vladimir Putin, the Russian president, has been conducting a "cyber cold war" against the west. bit.ly/2hIqF3n

    - A powerful cross-party group of members of parliament is drawing up plans that would make it impossible for Prime Minister Theresa May to allow Britain to crash out of the European Union without a deal in 2019. bit.ly/2kQl1kz

    The Telegraph

    - A report backed by the National Health Service Confederation suggests that tens of thousands of British pensioners living in Europe could be forced to return home if the government is unable to strike a deal with the European Union to continue existing healthcare arrangements. bit.ly/2xHcdmV

    Sky News

    - Ireland and large parts of UK are on alert as the remnants of Hurricane Ophelia brings gusts of up to 80 miles per hour from the Atlantic. bit.ly/2yqgevi

    - UKIP's new leader Henry Bolton has called for Britain to aim for zero net migration to stop the country being "swamped". bit.ly/2ykgJr1

    http://www.zerohedge.com/news/2017-10-16/frontrunning-october-16
     
  25. searcher

    searcher Mother Lode Found Site Supporter ++ Mother Lode

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  26. searcher

    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    WORLD’S LARGEST OIL COMPANIES: Deep Trouble As Profits Vaporize While Debts Skyrocket


    -- Published: Sunday, 15 October 2017
    By Steve St. Angelo

    The world’s largest oil companies are in serious trouble as their balance sheets deteriorate from higher costs, falling profits and skyrocketing debt. The glory days of the highly profitable global oil companies have come to an end. All that remains now is a mere shadow of the once mighty oil industry that will be forced to continue cannibalizing itself to produce the last bit of valuable oil.

    I realize my extremely unfavorable opinion of the world’s oil industry runs counter to many mainstream energy analysts, however, their belief that business, as usual, will continue for decades, is entirely unfounded. Why? Because, they do not understand the ramifications of the Falling EROI – Energy Returned On Invested, and its impact on the global economy.

    For example, Chevron was able to make considerable profits in 1997 when the oil price was $19 a barrel. However, the company suffered a loss in 2016 when the price was more than double at $44 last year. And, it’s even worse than that if we compare the company’s profit to total revenues. Chevron enjoyed a $3.2 billion net income profit on revenues of $42 billion in 1997 versus a $497 million loss on total sales of $114 billion in 2016. Even though Chevron’s revenues nearly tripled in twenty years, its profit was decimated by the falling EROI.

    Unfortunately, energy analysts, who are clueless to the amount of destruction taking place in the U.S. and global oil industry by the falling EROI, continue to mislead a public that is totally unprepared for what is coming. To provide a more realistic view of the disintegrating energy industry, I will provide data from seven of the largest oil companies in the world.

    The World’s Major Oil Companies Debt Explode Since The 2008 Financial Crisis
    To save the world from falling into total collapse during the 2008 financial crisis, the Fed and Central Banks embarked on the most massive money printing scheme in history. One side-effect of the massive money printing (and the purchasing of assets) by the central banks, was that it pushed the price of oil to a record $100+ a barrel for more than three years. While the large oil companies reported handsome profits due to the high oil price, many of them spent a great deal of capital to produce this oil.

    For instance, the seven top global oil companies that I focused on made a combined $213 billion in cash from operations in 2013. However, they also forked out $230 billion in capital expenditures. Thus, the net free cash flow from these major oil companies was a negative $17 billion… and that doesn’t include the $44 billion they paid in dividends to their shareholders in 2013. Even though the price of oil was $109 in 2013; these seven oil companies added $45 billion to their long-term debt:

    [​IMG]

    As we can see, the total amount of long-term debt in the group (Petrobras, Shell, BP, Total, Chevron, Exxon & Statoil) increased from $227 billion in 2012 to $272 billion in 2013. Isn’t that ironic that the debt ($45 billion) rose nearly the same amount as the group’s dividend payouts ($44 billion)? Of course, we can’t forget about the negative $17 billion in free cash flow in 2013, but here we see evidence that the top seven global oil companies were borrowing money even in 2013, at $109 a barrel oil, to pay their dividends.

    Since the 2008 global economic and financial crisis, the top seven oil companies have seen their total combined debt explode four times, from $96 billion to $379 billion currently. You would think with these energy companies enjoying a $100+ oil price for more than three years; they would be lowering their debt, not increasing it. Regrettably, the cost for companies to replace reserves, produce oil and share profits with shareholders was more than the $110 oil price.

    There lies the rub….

    One of the disadvantages of skyrocketing debt is the rising amount of interest the company has to pay to service that debt. If we look at the chart above, Brazil’s Petrobras is the clear winner in the group by adding the most debt. Petrobras’s debt surged from $21 billion in 2008 to $109 billion last year. As Petrobras added debt, it also had to pay out more to service that debt. In just eight years, the annual interest amount Petrobras paid to service its debt increased from $793 million in 2008 to $6 billion last year. Sadly, Petrobras’s rising interest payment has caused another nasty side-effect which cut dividend payouts to its shareholders to ZERO for the past two years.

    Petrobras Annual Dividend Payments:

    2008 = $4.7 billion

    2009 = $7.7 billion

    2010 = $5.4 billion

    2011 = $6.4 billion

    2012 = $3.3 billion

    2013 = $2.6 billion

    2014 = $3.9 billion

    2015 = ZERO

    2016 = ZERO

    You see, this is a perfect example of how the Falling EROI guts an oil company from the inside out. The sad irony of the situation at Petrobras is this:

    If you are a shareholder, you’re screwed, and if you invested funds (in company bonds, etc.) to receive a higher interest payment, you’re also screwed because you will never get back your initial investment. So, investors are screwed either way. This is what happens during the final stage of collapsing oil industry.

    Another negative consequence of the Falling EROI on these major oil companies’ financial statements is the decline in profits as the cost to produce oil rises more than the economic price the market can afford.

    Major Oil Companies’ Profits Vaporize… Even At Higher Oil Prices
    To be able to understand just how bad the financial situation has become at the world’s largest oil companies, we need to go back in time and compare the industry’s profitability versus the oil price. To find a year when the oil price was about the same as it was in 2016, we have to return to 2004, when the average oil price was $38.26 versus $43.67 last year. Yes, the oil price was lower in 2004 than in 2016, but I can assure you, these oil companies weren’t complaining.

    In 2004, the combined net income of these seven oil companies was almost $100 billion….. $99.2 billion to be exact. Every oil company in the group made a nice profit in 2004 on a $38 oil price. However, last year, the net profits in the group plunged to only $10.5 billion, even at a higher $43 oil price:

    [​IMG]

    Even with a $5 increase in the price of oil last year compared to 2004, these oil companies combined net income profit fell nearly 90%. How about them apples. Of the seven companies listed in the chart above, only four made profits last year, while three lost money. Exxon and Total enjoyed the highest profits in the group, while Petrobras and Statoil suffered the largest losses:

    [​IMG]

    Furthermore, the financial situation is in much worse shape because “net income” accounting does not factor in the companies’ capital expenditures or dividend payouts. Regardless, the world’s top oil companies’ profitability has vaporized even at a higher oil price.

    Now, another metric that provides us with more disturbing evidence of the Falling EROI in the oil industry is the collapse of the “Return On Capital Employed.” Basically, the Return On Capital Employed is just dividing the company’s earnings (before taxes and interest) by its total assets minus current liabilities. In 2004, the seven companies listed above posted between 20-40% Return On Capital Employed. However, this fell precipitously over the next decade and are now registering in the low single digits:

    [​IMG]

    In 2004, we can see that BP had the lowest Return On Capital Employed of 19.68% in the group, while Statoil had the highest at 46.20%. If we throw out the highest and lowest figures, the average for the group was 29%. Now, compare that to the average of 2.4% for the group in 2016, and that does not including BP and Chevron’s negative returns (shown in Dark Blue & Orange).

    NOTE: I failed to include the Statoil graph line (Magenta) when I made the chart, but I added the figures afterward. For Statoil to experience a Return On Capital Employed decline from 46.2% in 2004 to less than 1% in 2016, suggests something is seriously wrong.

    We must remember, the high Return On Capital Employed by the group in 2004, was based on a $38 price of oil, while the low single-digit returns by the oil companies in 2016 were derived from a higher price of $43. Unfortunately, the world’s largest oil companies are no longer able to enjoy high returns on a low oil price. This is bad news because the market can’t afford a high oil price unless the Fed and Central Banks come back in with an even larger amount of QE (Quantitative Easing) money printing.

    I have one more chart that shows just how bad the Falling EROI is destroying the world’s top oil companies. In 2004, these seven oil companies enjoyed a combined net Free Cash Flow minus dividends of a positive $34 billion versus a negative $39.1 billion in 2016:

    [​IMG]

    Let me explain these figures. After these oil companies paid their capital expenditures and dividends to shareholders in 2004, they had a net $34 billion left over. However, last year these companies were in the HOLE for $39.1 billion after paying capital expenditures and dividends. Thus, many of them had to borrow money just to pay dividends.

    To understand how big of a change has taken place at the oil companies since 2004, here are the figures below:

    Top 7 Major Oil Companies Free Cash Flow Figures

    2004 Cash From Operations = …………$139.6 billion

    2004 Capital Expenditures = ……………..$67.7 billion

    2004 Free Cash Flow = ………………………$71.9 billion

    2004 Shareholder Dividends = …………..$37.9 billion

    2004 Free Cash Flow – Dividends = $34 billion

    2016 Cash From Operations = ……………..$118.5 billion

    2016 Capital Expenditures = ………………..$117.5 billion

    2016 Free Cash Flow = …………………………..$1.0 billion

    2016 Shareholder Dividends = ……………….$40.1 billion

    2016 Free Cash Flow – Dividends = -$39.1 billion

    Here we can see that the top seven global oil companies made more in cash from operations in 2004 ($139.6 billion) compared to 2016 ($118.5 billion). That extra $21 billion in operating cash in 2004 versus 2016 was realized even at a lower oil price. However, what has really hurt the group’s Free Cash Flow, is the much higher capital expenditures of $117.5 billion in 2016 compared to the $67.7 billion in 2004. You will notice that the net combined dividends didn’t increase that much in the two periods… only by $3 billion.

    So, the lower cash from operations and the higher capital expenditures have taken a BIG HIT on the balance sheets of these oil companies. This is precisely why the long-term debt is skyrocketing, especially over the past three years as the oil price fell below $100 in 2014. To continue making their shareholders happy, many of these companies are borrowing money to pay dividends. Unfortunately, going further into debt to pay shareholders is not a prudent long-term business model.

    The world’s major oil companies will continue to struggle with the oil price in the $50 range. While some analysts forecast that higher oil prices are on the horizon, I disagree. Yes, it’s true that oil prices may spike higher for a while, but the trend will be lower as the U.S. and global economies start to contract. As oil prices fall to $40 and below, oil companies will begin to cut capital expenditures even further. Thus, the cycle of lower prices and the continued gutting of the global oil industry will move into high gear.

    There is one option that might provide these oil companies with a buffer… and that is a new even larger Fed and Central Bank money printing scheme which would result in severe inflation and possibly hyperinflation. But, that won’t be a long-term solution, instead just another lousy band-aid in a series of band-aids that have only postponed the inevitable.

    The coming bankruptcy of the once mighty global oil industry will be the death-knell of the world economy. Without oil, the global economy grinds to a halt. Of course, this will not occur overnight. It will take time. However, the evidence shows that a considerable wound has already taken place in an industry that has provided the world with much-needed oil for more than a century.

    Lastly, without trying to be a broken record, the peak and decline of global oil production will destroy the value of most STOCKS, BONDS and REAL ESTATE. If you have placed most of your bests in one of these assets, you have my sympathies.

    IMPORTANT UPDATE: TO MY FOLLOWERS:

    I want to thank the new and existing supporters of the SRSrocco Report site. In just the past week, I have received 11 new Patrons and several new members on the SRSrocco Report site. Your support allows me to continue posting articles for the entire public. I have noticed over the past few years, more analysts have decided to put their articles and content behind a subscriber paywall. Unfortunately, that shuts off the information to many followers who do not have the funds to support that paid content.

    I believe the economic and financial situation in the U.S. and world will continue to deteriorate over the next two years and will only get increasing worse going forward. Those who understand the root cause of it all, ENERGY, will be better prepared or less shocked (or both) when the collapse picks up speed.

    I want to thank everyone who participates in the comment section of the site… even those I disagree with… LOL. We like to keep the debate open for everyone. So, if you have been a follower of the SRSroccoReport site for a while, but haven’t participated in the comment section, please let us know what you are thinking.

    Check back for new articles and updates at the SRSrocco Report.

    http://news.goldseek.com/GoldSeek/1508074559.php
     
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    Global Stocks Just Shy Of Record Highs As Dollar, Yields Rise On Taylor Tension

    [​IMG]
    by Tyler Durden
    Oct 17, 2017 6:59 AM


    Global markets traded near all-time highs on Tuesday, with S&P futures, Asian shares and European stocks all flat this morning, while oil continued to gain on Kurdish geopolitical concerns while most industrial metals fell. The euro extended its recent slide and stocks drifted as Spain’s escalating hard-line response to the Catalonian secession threat fueled concern the crisis may intensify.

    Markets initially followed the US reaction to reports of a positive John Taylor (Rule) - Donald Trump meeting, which sent 2Y Treasury yields to their highest since 2008 and pushed up the dollar higher amid speculation the next Federal Reserve chairman will be more hawkish, while TSYs briefly traded through Monday’s session lows because as we showed yesterday, the Taylor Rule would suggest a Fed Funds rate that is far higher than the current.

    [​IMG]

    However, the pop in short-yields was not matched at the long end and the 2-to-10 year U.S. yield curve hit its shallowest in more than a year.

    “Fed chairs have often influenced U.S. monetary policy quite considerably in the past. And I would certainly see Taylor as a candidate who would fit in this pattern,” Commerzbank analyst Thu Lan Nguyen said. “That makes one thing clear: should Trump nominate Taylor as Yellen’s successor the U.S. dollar would initially appreciate notably.”

    Cable remained volatile through U.K. inflation data and dovish commentary from BOE’s Ramsden but eventually traded flat. In addition to Spain, the EUR/USD continued its recent trend lower, pricing a nine-month QE extension within ECB taper, while bunds and other EGBs continue to grind higher. The South African rand weakened following a Zuma cabinet reshuffle

    The common currency declined for a fourth day, the longest streak since May. The Stoxx Europe 600 Index was little changed following mixed trading in Asian stocks earlier, after North Korea warned that a nuclear war could “break out any moment.” Core European equity markets dipped from the open before trading back to unchanged with the tech sector supported by Infineon (2.5%) after positive comments from BofA, leisure sector underperforms after Merlin Entertainments (-19.5%) posts poor earnings forecast. Spain’s IBEX Index fell 0.3 percent to the lowest in a week as Spain cut its economic growth forecast for 2018, acknowledging the impact of an escalating political crisis that led the National Court in Madrid to jail two leading Catalan separatists. As reported on Monday, the Spanish state is turning up the pressure on the separatist leaders as Prime Minister Mariano Rajoy tries to persuade Catalan President Carles Puigdemont to drop his push for independence or see Madrid take direct control of the regionl two Catalan independence leaders were ordered jailed without bail during a sedition trial.

    Asia’s regional stock benchmark was little changed, holding near its highest level in 10 years, while a gauge of mining stocks advanced after Rio Tinto Group signaled it’s on track for record annual iron ore shipments. The MSCI Asia Pacific Index added less than 0.1 percent to 167.82 as of 11:40 a.m. in Hong Kong, after extending gains from its highest level since November 2007 on Monday. Materials stocks led gains Tuesday, rising 0.5 percent. Japan’s Topix fluctuated, erasing early gains, after a six-day rally pushed it further into technically overbought levels. It eventually closed 0.2% higher in Tokyo after gaining as much as 0.6%. Australia’s S&P/ASX 200 Index rose 0.7 percent and South Korea’s Kospi index was up 0.2 percent.

    “Investors are pausing just a bit while waiting for more directional data points on the global state of affairs before they assess whether current high valuations have firm footing,” said Attila Vajda, managing director of Project Asia Research & Consulting Pte. China’s GDP report due on October 19 will help determine investment decisions.

    Elsewhere, the pound dropped amid speculation the Bank of England will deliver the U.K.’s first rate increase in more than a decade next month after data showed inflation in U.K. accelerated in September, although testimony by Governor Mark Carney befire lawmakers in London appears to have taken away the fizzle. British Prime Minister Theresa May and European Commission chief Jean-Claude Juncker agreed over dinner in Brussels on Monday that the pace of negotiations over Britain’s departure from the European Union should be stepped up. Some market watchers such as JP Morgan are sceptical on sterling’s outlook, recommending investors to buy euros against the British pound as “the overhang of the Brexit issue itself would constrain how much accommodation the BoE would be able to remove.”

    One of Monday’s big movers, oil, consolidated a near month-high having spiked after Iraqi forces seized the oil-rich city of Kirkuk from fighters loyal to the country’s semi-autonomous Kurdish Regional Government. After months of rangebound trading during which OPEC-led supply cuts supported crude values but rising U.S. output capped markets, prices have moved up significantly this month. Brent crude oil was 5 cents higher at $57.87 a barrel by 0800 GMT, up almost a third from its mid-year levels. U.S. West Texas Intermediate (WTI) crude CLc1 was nudging up again too at $51.99. There were unconfirmed reports that Kurdish forces had shut around 350,000 barrels per day (bpd) of oil production from major fields. “The 500,000 bpd Kirkuk oilfield cluster is at risk,” Goldman Sachs said in a note to clients.

    Tension between the United States and Iran is also rising, after U.S. President Donald Trump on Friday refused to certify Iran’s compliance over a nuclear deal which removed long-running sanctions. “If there (were new sanctions), we expect that several hundred thousand barrels of Iranian exports would be immediately at risk,” Goldman said. During the previous round of sanctions around 1 million bpd of oil was cut from global markets.

    In currencies, the Bloomberg Dollar Spot Index gained 0.1 percent to the highest in more than a week. The euro dipped 0.3 percent to $1.1764. The British pound dropped to session lows near $1.3226. The Japanese yen climbed less than 0.05 percent to 112.15 per dollar.

    Yields were little changed, with the US 10-year up one basis point to 2.31%; Germany’s 10-year yield decreased less than one basis point to 0.37 percent; Britain’s 10-year yield climbed two basis points to 1.336 percent, the biggest increase in almost two weeks.

    Gold declined and most emerging-market currencies weakened alongside developing-nation stocks. WTI crude resumed its push above $52 a barrel as tensions in Iraq lingered. Treasuries edged higher as odds rose that John Taylor will replace Janet Yellen at the Fed.

    Johnson & Johnson, Goldman Sachs, Harley-Davidson, Morgan Stanley, Omnicom are among companies reporting earnings

    Market Snapshot
    • S&P 500 futures little changed at 2,556.10
    • STOXX Europe 600 down 0.07% to 391.13
    • VIX Index down 0.6% at 9.85
    • MSCI Asia down 0.04% to 167.74
    • MSCI Asia ex Japan unchanged at 553.36
    • Nikkei up 0.4% to 21,336.12
    • Topix up 0.2% to 1,723.37
    • Hang Seng Index up 0.02% to 28,697.49
    • Shanghai Composite down 0.2% to 3,372.04
    • Sensex down 0.09% to 32,605.86
    • Australia S&P/ASX 200 up 0.7% to 5,889.61
    • Kospi up 0.2% to 2,484.37
    • German 10Y yield unchanged at 0.372%
    • Euro down 0.2% to $1.1769
    • Brent Futures up 0.5% to $58.10/bbl
    • Italian 10Y yield fell 4.9 bps to 1.766%
    • Spanish 10Y yield fell 1.6 bps to 1.566%
    • Brent Futures up 0.5% to $58.10/bbl
    • WTI crude up +0.5% at $52.15/bbl
    • Gold spot down 0.5% to $1,289.85
    • U.S. Dollar Index up 0.1% to 93.41
    Top Overnight News from Bloomberg
    • John Taylor, a Stanford University economist and a candidate for
      Federal Reserve Chairman, made a favorable impression on President
      Donald Trump after the interview at the White House last week, according
      to several people familiar with the matter
    • North Korea
      warned that a nuclear war may “break out any moment” as the U.S. and
      South Korea launched one of the largest joint naval dri
    • Spanish Interior Ministry is preparing first steps it would take if govt opts to trigger clause in constitution allowing for suspension of Catalonia’s self-government, El Pais reported
    • Spain cut growth forecast for 2018 to 2.3% from 2.6% earlier, acknowledging the impact of an escalating political crisis
    • BOE is seen keeping rates on hold through 2018 after making first hike in over a decade in November, according to a Bloomberg survey; 76% of the economists see a rise next month, up from 22 percent of respondents in September but they don’t see another increase until 1Q 2019
    • BOE’s David Ramsden said he wasn’t in MPC majority pushing for a hike in coming months
    • Last-minute efforts by U.K. PM Theresa May to unblock stalled Brexit talks came up short with EU officials now looking to December to move negotiations on to discussions about the future EU-Britain relationship
    • Some Qatari banks are becoming less willing to sell dollars to foreign lenders amid a lingering regional standoff with a Saudi- led alliance, according to people familiar with the matter
    • European car sales fell in September for only the second monthly drop this year as concerns about Brexit among U.K. consumers more than offset gains in France, Italy and Spain
    • Reserve Bank of Australia said economic conditions at home and abroad “had been more positive since 2016,” according to minutes of this month’s policy meeting where interest rates were left unchanged
    • U.K. Prime Minister Theresa May and European Commission President Jean-Claude Juncker’s dinner attempt to smooth out Brexit differences yielded little, revealing entrenched previous stances before the summit on Thursday
    • Industrial production in September and Home Builders Market Index for October will be announced today in the U.S.
    • Goldman Sachs, Morgan Stanley, IBM, Johnson & Johnson, Harley Davidson
    Asia equity markets eventually traded mostly higher following the momentum from their US peers, where all major indices edged to fresh record levels once again. The positive lead provided an early bid tone in ASX 200 (+0.8%) which was also led by materials names as Rio Tinto rose to its highest in around 6 years on strong Q3 iron ore shipments, while Nikkei 225 (+0.4%) was also higher but saw some intraday pressure in which participants took heed of a strengthening JPY and booked profits. Elsewhere, Hang Seng (+0.1%) and Shanghai Comp. (+0.1%) were choppy despite a substantial liquidity operation by the PBoC, with participants tentative in the midst of earnings season and ahead of China’s 19th National Congress. Finally, 10yr JGBs were subdued amid a somewhat positive risk tone in Japan and after softer 20yr bond auction results in which the amount sold, b/c and accepted prices all declined from prior. PBoC injected CNY 100bln via 7-day reverse repos and CNY 90bln via 14-day reverse repos. PBoC set CNY mid-point at 6.5883 (Prev. 6.5839) China researcher states that China should tighten its monetary policy and toughen property curbs.

    Top Asian news
    • The Money-Losing Volatility Trade That Hedge Funds Can’t Resist
    • China Bonds Slump as Zhou’s Optimism on Economy Seen Taking Toll
    • HNA to Spend $7.6 Billion on Technology in Tourism Industry
    • Hedge Fund Oasis Joins Asatsu Shareholders Opposing Bain Bid
    • China’s Stocks, Bonds, Currency Drop in Unison Before Congress
    • Gym of Choice for Hong Kong Financial Elite Is Said to Seek Sale
    • Don’t Panic: China’s Deleveraging May Actually Be Good for Bonds
    European equity markets trade marginally in the red, the FTSE found a marginal bid following the UK CPI data, recovering from best levels, however, still
    behaving as one of the noticeable underperformers across Europe. The CAC continues to trade near session lows,
    despite strong earrings from the likes of Danone. An opening markdown for the 10-year German debt future, largely due to reports that the more hawkish-leaning John Taylor put in
    an impressive performance when interviewed by President Trump for the role as next Fed chair. The news unsettled US
    Treasuries, and especially the short end of the curve where 2 year yields rallied to multi-year peaks alongside a jump in implied
    rates per Eurodollar contracts from the turn of next year through to 2019. A strong German ZEW report could add more
    pressure, while supply is also due via a Eur4 bn Schatz offering (though dovish ECB forward guidance on rates should
    underpin sentiment here, and reiterated by speakers to come). Back to Eurex, the range so far for Bunds has been 162.59-
    37.
    With a 3% headline print all priced in to the UK CPI data, (and in fact a bit more for many), Gilts have rebounded to a fresh intraday
    high of 124.34 (from 124.23 at best pre-data), while Short Stg futures have pared losses to just a tick. Note, comments from BoE’s
    Ramsden may also be lending some support to the 10 year bond and 3 month strip as he highlights slack in the economy, no
    second round inflation in wages and investment risks from Brexit. Note, however, y/y CPI has hit a 5 year-plus peak and November
    tightening remains a better than 50% prospect so any further bounce in debt/STIRs may be contained.
    Germany sells EUR 3.22bln vs. Exp. EUR 4bln 0% 2y Schatz Auction b/c 1.3 prev. 1.8 and average yield -0.75 prev. -0.72%,
    retention 19.5%.

    Top European news
    • Bunds Unruffled by ECB Taper Prospects Paint a Picture of Calm
    • Italy Exercises Power Over Strategic Telecom Italia Assets
    • Lloyds Can’t Shake Troubled Past in Suit Over HBOS Takeover
    • U.K. Inflation Climbs to 5 1/2-Year High on Food, Transport
    • Brexit Timeline Pushed Back as May’s Late Push Comes Up Short
    • Credit Suisse Investor Herro Opposes Push to Break Up Bank
    In currencies, Sterling saw choppy trade following the 9.30 data, as the bid coming into the figures saw a marginal retracement. GBP/USD still trades near session highs, likely to look toward 1.33. USD: The greenback firmer by 0.2% following the move higher in US rates amid source reports stating that John Taylor (very hawkish) made a favourable impression on President Trump in regards to the Fed Chair position. The break above 93.32 (38.2% Fib retrace of the October fall) and the subsequent push through 93.40 indicates a bullish trend forming, however 93.50 is capping further gains for now. Meanwhile, the downward trend continues for EUR which ended yesterday’s session on the back foot amid the stronger greenback. Although with little key risk events until the Oct 26th ECB monetary policy decision it is possible that the pair will stay within close proximity to 1.18.

    In commodities, US Total shale regions oil production for November is seen upwards of 82,000 bpd at 6.12mln bpd WTI and Brent Crude futures have ground higher through early European trade as WTI trades through 52.00/bbl, with latest news from an IEA head stating that OPEC compliance is currently at 86%.

    Looking at the day ahead, the September industrial production print is the most notable release, while September manufacturing production and the import price index readings are also due, along with the October NAHB housing market index print. Onto other events, keep an eye on BoE Governor Carney testifying before the UK Parliament. Away from this, the ECB’s Constancio and Costa is also slated to make comments. Meanwhile EU foreign ministers hold preparatory talks ahead of the summit at the end of the week. Morgan Stanley, Goldman Sachs and IBM results are also due.

    US Event Calendar
    • 8:30am: Import Price Index YoY, est. 2.6%, prior 2.1%; Export Price Index MoM, est. 0.45%, prior 0.6%
    • 9:15am: Industrial Production MoM, est. 0.3%, prior -0.9%; Capacity Utilization, est. 76.2%, prior 76.1%; Manufacturing (SIC) Production, est. 0.2%, prior -0.3%
    • 10am: NAHB Housing Market Index, est. 64, prior 64
    • 1pm: Fed’s Harker Speaks on Equitable Transit
    • 4pm: Total Net TIC Flows, prior $7.3b deficit; Net Long-term TIC Flows, prior $1.3b
    DB's Jim Reid concludes the overnight wrap

    Last week I mentioned that the previous weekend's papers were discussing how a supposed soothsayer was predicting that the start of the end of the world would happen this past weekend. This guy predicted that from October 15th the world will be hit with a tempest of tsunamis, earthquakes, hurricanes and then nuclear war. I dismissed this cheery forecast but if anyone took a walk around London yesterday afternoon then you'd be forgiven for thinking that the apocalypse had arrived as the overcast skies had turned an ominous dark orange. The only thing I've seen like it before was an eclipse on a cloudy day! It wasn't until I got home that I read that this was due to the bypass from Hurricane Ophelia bringing Saharan dust with it. Just to be safe I’m off to Frankfurt this morning to escape the day of reckoning.

    Maybe bonds thought the end of the world was nigh as yesterday was most notable for a strong rally in Euro Govt bonds. Core European 10y bond yields fell c3bp (Bunds -3.2bp; Gilts -3.3bp; OATs -3bp) while most peripherals outperformed, down c5bp (Italy: -5.1bp; Spain: -4.7bp; Portugal: -0.6bp). It’s not obvious to me why the dam broke yesterday, especially as US Treasuries actually climbed c1.8bp from intraday low into the European close. Some talked about Yellen being more resolute about low inflation being transitory over the weekend than Draghi who asked for patience with regard to inflation returning to normal. It didn’t feel to me that either deviated too much from recent remarks though. It could have also been a delayed reaction to the recent inflation misses in France and Sweden and then the US last week. So not easy to pinpoint the reason. Notably, the odds of a December rate hike in US has increased back to 80% (+7ppt from Friday, per Bloomberg).

    After Europe went home we saw a flurry of activity over the next Fed Chair as Bloomberg first reported that John Taylor had impressed Trump, but that Warsh had slipped down the pecking order. A short while later it was reported that Mr Trump will meet Mrs Yellen on Thursday. Net net, yields climbed to 2.31% on the Taylor news but quickly dipped back towards 2.29% and closed 2.304% (+3bp from Friday) as the Yellen headlines came through. Mr Taylor is a renowned economist, known for his Taylor rule on rates as well as serving on the Council of Economic advisers under three presidents. Interestingly, last week he noted that “rules should (not) be used as a way to tie central bankers’ hands” as “there are reasons to run policy with a strategy”. It seems that we should have an announcement on the new Fed Chair within a few weeks so this will remain an important topic.

    This morning, bond market will see the latest round of inflation numbers with the UK the more interesting. Headline UK CPI is expected at +0.3% mom and +3.0% yoy, with core unchanged mom and +2.7% yoy. This will be the highest annual rate since April 2012 for headline and joint highest since December 2011 for core if comes in as expected (Aug. 17 was 2.7% too). The final Euro area CPI is also due but this is the final reading. The flash reading was +0.4% mom and +1.5% yoy (headline) and little change is expected. Core is expected to be +1.1% yoy and also same as the flash reading.

    Over in Catalonia, in his letter to Spanish PM Rajoy, Catalan President Puigdemont has called for more negotiations rather than clarifying whether independence was formally declared or not. He has reasserted that he has a mandate from Catalan voters to declare independence, but noted “for the next two months, our main objective is to bring you dialogue…I’m sure we can find the path to a solution”. In response, Spain has ruled out negotiations until Puigdemont withdrew his demands for independence, noting that he has until Thursday (10am local time) to formally respond again. Spain’s deputy PM said “the question we have asked is…not hard to answer…It’s not hard in these three days for common sense to return” and that the decision “it’s in his hands”. Should Thursday’s response be unsatisfactory, PM Rajoy could ask the Senate to hold an emergency session to invoke Article 155 and seek a suspension of the self-rule by Catalans. The Spanish markets were a bit mixed with equities down 0.75% (Caixabank -1.73%, Sabadell -2.80%), but bonds were firmer with 10y yields down 4.7bp.

    In the latest 2018 budget plan to Brussels, Spain’s Economy ministry has revised down its economic growth forecasts to 3.1% for 2017 (-0.1ppt) and 2.3% for 2018 (-0.3ppt). Elsewhere, as per Bloomberg, Spain’s National Court as ordered the Catalan Police Chief to surrender his passport and report to the court in Madrid every two weeks.

    Turning to Brexit, there were quite a few headlines ahead of the official EU Summit meeting later this week which could make or break the current talks. Firstly, UK PM May flew into Brussels yesterday and had a “broad and constructive” working dinner with European Commission President Juncker,where they reviewed the progress made so far and “agreed that these efforts should accelerate over the months to come”, but fell short of delivering a tangible break through. Elsewhere, the FT has reported that PM May will not budge on her offer of €20bn divorce bill. Earlier yesterday, the UK Chancellor Hammond noted that a Brexit (transitional) agreement was in the interest of both sides, while PM May’s office (per Bloomberg) feared that talks are heading for a ‘catastrophic breakdown” unless EU signals a willingness to allow talks to move onto trade and transition at this week’s summit.

    On the other side, the messaging has been firmed but somewhat mixed. The latest draft of the EU summit conclusion has apparently tougher language where the UK have to make “sufficient progress” on all three key areas (the divorce bill, the Irish border and the status of EU citizens) before talks progress to trade. Elsewhere, according to EU officials (per Bloomberg), both Germany and France wants to toughen the tone on the summit declaration. This follows phone calls between PM May with Merkel on Sunday and France’s Macron on Monday. However, there is some optimism, as according to a draft paper prepared by Germany’s Foreign Ministry, it is working on proposals that include calls for the “comprehensive free trade accord” with the UK. So with all this bubbling along, we await for the EU summit later and see who blinks first.

    Staying in the UK, there were a couple of interesting headlines on house prices yesterday. Acadata & LSL suggested that London home values are now down 2.7% in the year through to September, which is the most since 2009. Elsewhere, the stockpile of unsold London homes under construction also rose to a post GFC high, with the number of properties being built or completed but yet to find buyer now at 12,952 units (+2.8% from end of last year). Notably, outside of London and Southeast England, house prices are more resilient, with average prices up c3% on the year through to September.

    Turning to Italy, the Corriere della Sera reported that the President may dissolve parliament early and potentially call for an early election on 4th March, which is c2 months earlier than the original schedule for a May election.

    Overnight, North Korea’s deputy ambassador to the UN warned that a nuclear war “may break out any moment” but “as long as one does not take…military actions against NK, we have no intentions to use…..our nuclear weapons against” others. This morning in Asia, markets are trading slightly higher. The Nikkei (+0.27%), Kospi (+0.10%) and Hang Seng (+0.18%) are up slightly while the Chinese bourses are also up marginally as we type.

    Onto yesterday’s market performance, US bourses edged higher onto another fresh record high, with the S&P (+0.18% to 2,557.6), Dow (+0.37%) and Nasdaq (+0.28%) all up slightly. Within the S&P, modest losses were driven by the real estate and health care sectors (-0.38%), with the latter likely impacted by President Trump’s latest comments that prescription drug prices are “out of control” and that healthcare companies are “getting away with murder”.

    Elsewhere, the weakness was more than offset by solid gains from Telcos (+0.77%), financials and tech stocks. Notably, the VIX was slightly higher at 9.91 (+0.3 pts) yesterday, but has seen 15 sessions out of the last 19 below 10 now.

    Elsewhere, European markets were mixed, but little changed with Stoxx 600 flat, while the DAX (+0.09%) and CAC (+0.21%) rose marginally. Elsewhere, FTSE 100 (-0.11%) and Spain’s IBEX (-0.75%) fell modestly.

    Turning to currencies, the US dollar index strengthened 0.24% while Euro and Sterling weakened 0.20% and 0.26% respectively. In commodities, WTI oil rose 0.82% following reports of increased tensions between Iraqi and Kurdish forces which could disrupt oil supplies. Precious metals softened on the risk on bias (Gold -0.62%; Silver -1.1%), while LME copper rose 2.55% to a new 3 year high, but other base metals were slightly softer (Zinc -1.17%; Aluminium -0.88%). Elsewhere, palladium retreated 1.66% after reaching an intraday high of $1,010, which if held would have been the highest close since February 2001. Away from the markets and onto the timing of US tax reforms. Both President Trump and Senate Majority Leader McConnell have reaffirmed their aim of delivering a tax bill by December. However, Trump pointed out the last major tax reform in 1986 was achieved “mid-way” through President Regan’s second term, but “I’ve been here for a little more than nine months”. Elsewhere, Senator McConnell noted that some of the major changes under President Obama were also signed in the second year of his first term (Affordable Care Act and Dodd- Frank Act).

    Yesterday’s data releases were fairly quiet aheadof a more busy day and week ahead. In the US, the empire manufacturing survey was materially higher than consensu s at 30.2 (vs. 20.4 expected) - the strongest since September 2014. Elsewhere, the Eurozone’s August trade surplus was slightly higher than expected at €21.6bn (vs. €20.2bn expected).

    Looking at the day ahead, a bit of a bumper day for data and particularly inflation readings with September CPI/PPI/RPI due in the UK and the final September CPI report also due for the Euro area. The October ZEW survey will also be worth keeping an eye on in Germany. In the US the September industrial production print is the most notable release, while September manufacturing production and the import price index readings are also due, along with the October NAHB housing market index print. Onto other events, keep an eye on BoE Governor Carney testifying before the UK Parliament. Away from this, the ECB’s Constancio and Costa is also slated to make comments. Meanwhile EU foreign ministers hold preparatory talks ahead of the summit at the end of the week. Morgan Stanley, Goldman Sachs and IBM results are also due.

    http://www.zerohedge.com/news/2017-...ecord-highs-dollar-yields-rise-taylor-tension
     
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    Asian Metals Market Update: October-17-2017
    By: Chintan Karnani, Insignia Consultants
    The inability of gold and silver to trade over $1311 and $1750 is not a very positive sign in the short term. If by Friday gold and silver are unable to break and trade over $1311 and $1750 on a daily closing basis, then short sellers could dictate prices. Incoming US economic data releases suggest a firm and sustained US economy at least till the first quarter of next year.
     
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    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    DAT: Freight Index hits all-time high in September

    Tight capacity sends spot rates to their highest point since December 2014, according to DAT.
    Oct 16, 2017

    [​IMG]
    DAT North American Freight Index (Image: DAT)

    Related Media
    [​IMG]
    Optimism grows for significant freight rate increases


    The DAT North American Freight Index achieved record highs in September, with a 9% gain compared to August. Spot freight availability was 74% higher than in September 2016, reported DAT Solutions, which operates North America’s largest digital truckload freight marketplace.

    Demand for truckload capacity, already at a premium due to economic growth and seasonal freight activity, experienced the largest year-over-year increase since 2010, when the economy was emerging from a recession. Hurricanes Harvey and Irma also contributed to demand, as the storms disrupted supply chains and boosted spot truckload rates to levels not seen since December 2014, when extreme winter weather closed highways and caused fuel prices to spike.

    The greatest impact in September was in the van market:

    • Van freight activity increased 15 percent compared to August and 80 percent year over year.
    • The national average spot van rate was $1.97 per mile, 19 cents higher than in August and 35 cents higher than in September 2016.
    • There were 6.6 available van loads per available truck in September, the highest monthly average in at least eight years.
    Demand for refrigerated (reefer) capacity was bolstered by robust harvests in the Upper Midwest and Pacific Northwest, plus late harvests in California. Reefer freight activity increased 4% compared to August and was 70% higher year over year, which led to higher rates. At $2.23 per mile, the national average spot reefer freight rate was 15 cents higher compared to August and 32 cents higher year over year.

    Flatbed freight activity increased 3% compared to August, as recovery and rebuilding efforts picked up in the Southeast and South Central regions. Flatbed freight activity typically declines in September. The national average spot flatbed rate was up 8 cents to $2.26 per mile.

    “Based on patterns from the last three years, we expect higher demand for truckload capacity to continue at least through December, with the movement of holiday-related e-commerce freight and the onset of the federal electronic logging device mandate,” said Mark Montague, DAT industry analyst. “Demand may recede in February, which is normally a slack period, but we expect rates to remain somewhat higher than in previous years.”

    Reference rates are the averages, by equipment type, based on $33 billion of actual transactions between freight brokers and carriers, as recorded in DAT RateView. Reference rates per mile include fuel surcharges, but not accessorials or other fees. Beginning in January 2015, the DAT Freight Index was rebased so that 100 on the Index represents the average monthly volume in the year 2000. Additional trends and analysis are available at DAT Trendlines.

    http://fleetowner.com/finance/dat-f...m=email&elq2=02e43225868243098cbd416e5b08a7ed
     
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    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    Heavy-truck sales grow in U.S., Canada
    Oct 17, 2017 Fleet Owner Staff


    [​IMG]
    According to data from WardsAuto, heavy-truck sales in the U.S. and Canada continue to rise.


    Related Media

    Last month, U.S. heavy-truck sales grew to 36,057 units – up 7.1% – compared with 2016’s 32,357, according to WardsAuto data. In Canada, big truck sales also continued to rise – up 15.9% to 4,014 in September – for the seventh consecutive monthly year-over-year gain, according to Wards.

    In the U.S., Class 8 sales saw a 13.5% jump to 17,667 units. Truck makers continue to try to make up for the losses experienced in the first six months of the year, since it wasn’t until July when sales in Class 8 finally started to grow, Wards noted.

    U.S. medium-duty truck sales grew a modest 1.7% to 18,390 units. Large gains from Classes 4 and 5 kept the year-to-date total 6.2% ahead of last year with 165,201 deliveries.

    Class 7 sales fared the worst among all segments, with a 12.2% dive to 5,226 units. Sales in Class 6 fell 5.4% on mixed results. With domestics up 11.3% and imports, 14.9%, sales in Class 5 grew 11.7% to 7,105 units. Class 4 enjoyed the best performance in September, up 51.8% on sales of 1,585 units.

    In Canada, heavy-duty truck sales were up 9.8% in September. Class 8 sales hit 2,426 units, compared with year-ago’s 2,124, Wards reported. With four straight months of year-over-year increases, Class 8 sales totaled 18,427 deliveries through the third quarter, 6.9% ahead of last year.

    Classes 4-7 sales were up 26.6% with 1,588 deliveries in September. Year-to-date sales are up 21.0%, to 11,838 deliveries. The only sector to see a drop for the month, Class 7 came in 3.7% below 2016 with 674 units, according to Wards.

    See WardsAuto coverage for more detailed information regarding heavy-duty truck sales in Canada.

    http://fleetowner.com/trucks/heavy-...m=email&elq2=333ce14e75e2403e88a087a9e5d927d1
     
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    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    U.S. online sales will top $1 TRILLION by 2027 and more than HALF will be through Amazon, study predicts
    • Purchases made online accounted for 12% of total U.S. retail sales
    • Are 50% of total sales growth in the past year, according to the new study
    • Amazon.com's total share of these sales likely to increase to 53%by 2027
    • Study says grocery shoppping is the only holdout from going online


    Read more: http://www.dailymail.co.uk/sciencetech/article-4988548/U-S-online-retail-sales-likely-surpass-1-trillion-2027-FTI.html#ixzz4vnO9xWrU
    Follow us: @MailOnline on Twitter | DailyMail on Facebook
     
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  36. searcher

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    Car Manufacturers Are Electrifying Copper, “The Metal of the Future”


    -- Published: Tuesday, 17 October 2017

    By Frank Holmes

    [​IMG]

    As many of you know, copper is often seen as an indicator of economic health, historically falling when overall manufacturing and construction is in contraction mode, rising in times of expansion.

    That appears to be the case today. Currently trading above $3 a pound, “Doctor Copper” is up close to 28 percent year-to-date and far outperforming its five-year average from 2012 to 2016.

    [​IMG]
    click to enlarge


    Several factors are driving the price of the red metal right now. Manufacturing activity, as measured by the purchasing manager’s index (PMI), is expanding at a pace we haven’t seen in years in the U.S., eurozone and China. The U.S. expanded for the 100th straight month in September, climbing to a 13-year high of 60.8.

    Speculators are also buying in response to word of copper shortages in China, despite September imports of the metal rising to its highest level since March. The world’s second-largest economy took in 1.47 million metric tons of copper ore and concentrates last month, an amount that’s 6 percent higher than the same month in 2016.

    Why Copper Is the “Metal of the Future”
    Why are we seeing so much copper entering China? One reason could be battery electric vehicles (BEVs), which require three to four times as much copper as traditional fossil fuel-powered vehicles.

    China is already the world’s largest and most profitable market for BEVs, and Beijing is now reportedly working on plans to curb and eventually ban the sale of fossil fuel-powered vehicles, according to the Financial Times. This would place the Asian giant in league with a number of other powerful countries similarly crafting bans on internal combustion engines within the next 25 years, including Germany, France, Norway, the United Kingdom and India.

    Because of the sheer size of the Chinese market, this move is sure to delight copper bulls and investors in any metal that’s set to benefit from higher BEV production. That includes cobalt, lithium and nickel.

    According to Bloomberg New Energy Finance, BEVs will account for 54 percent of all new car sales by 2040. That year, China, Europe and the U.S. are expected to make up 60 percent of the global BEV fleet.

    This could have a huge effect on copper prices over the next 10 years and more. With fewer and fewer large deposits being discovered, demand should accelerate from 185,000 metric tons today to an estimated 1.74 million tonnes in 2027, according to the International Copper Association.

    [​IMG]
    click to enlarge


    These are among the reasons why Arnoud Balhuizen, chief commercial officer of Australian mining giant BHP Billiton, called copper “the metal of the future” in an interview with Reuters last month.

    “2017 is the revolution year [for electric vehicles], and copper is the metal of the future,” Balhuizen said, adding that the market is grossly underestimating the red metal’s potential as BEV adoption surges around the world.

    Cobalt Gets Its Day in the Sun
    And let’s not forget cobalt. The brittle, silver-gray metal, used to extend the life expectancy of rechargeable batteries, is up more than 81 percent so far in 2017 and 109 percent for the 12-month period. Performance is being driven not only by growing BEV demand but also supply disruptions in the Republic of the Congo, where more than 60 percent of the world’s cobalt is mined.

    “It’s a really bright future for cobalt,” Vivienne Lloyd, analyst at Macquarie Research, told the Financial Times. “There doesn’t seem to be enough of it.”

    Before now, there was very little mainstream interest in cobalt as an investment, but that’s changing as rapidly as world governments are joining the chorus to move away from fossil fuels. One sign of that change is the London Metal Exchange’s (LME) upcoming cobalt contracts, one for the physical metal and another for the chemical compound cobalt sulphate. This will allow investors to trade the underlying metal and participate in the electric vehicle “revolution,” as Balhuizen calls it.

    In the meantime, investors can participate by investing in a producer with exposure to cobalt—among our favorites are Glencore, Freeport-McMoRan and Norilsk Nickel—or a natural resources fund.

    Gold Closes Above $1,300 an Ounce
    Gold also looks constructive as we head into the fourth quarter and beyond, according to a number of new reports and analysis last week.

    UBS strategist Joni Teves finds it “encouraging” that gold has managed to recover this year off its 2016 lows. Although a likely December rate hike could be a headwind, Teves points out that the metal performed well in the months that followed the previous three rate hikes. What’s more, gold has rallied in each January since 2014. We could see a similar bump in price this coming January.

    Not only is gold trading above its 50-day moving average again, but for all of 2017, it’s been following a nice upward trend as the U.S. dollar dips further.

    [​IMG]
    click to enlarge


    A weaker greenback, of course, is bullish for all commodities, including copper. According to Bloomberg strategist Mike McGlone, unless the dollar unexpectedly recovers in the near term, commodities, as measured by the Bloomberg Commodities Index, could gain as much as 20 percent between now and year’s end.

    Meanwhile, BCA writes that major risks in 2018—inflationary expectations stemming from President Donald Trump’s protectionism, tensions between the U.S. and China, and continued strife in the Middle East among them—could keep the shine on gold.

    The research firm reminds investors that gold has historically done well in times of economic and geopolitical crisis, outperforming the S&P 500 Index, U.S. dollar and 10-year Treasury by wide margins. Because the metal is negatively correlated to other assets, it could potentially serve as a good store of value if equities entered a bear market.

    Such a bear market, triggered by tighter U.S. monetary policy, could take place as early as 2019, BCA analysts estimate. Gold would then stand out as a favorable asset to hold, especially if inflationary pressures pushed real Treasury yields into negative territory.

    A Fear Trade Lesson from Germany
    This is the lesson Germany has learned over the past 10 years, as I shared with you last week. Before 2008, Germans’ investment in physical gold barely registered on anyone’s radar, with average annual demand at 17 metrics tons. The country’s first gold-backed exchange-trade commodities (ETCs) didn’t even appear on the market until 2007.

    But then the financial crisis struck, followed by monetary easing and low to negative interest rates. These events ultimately pushed many Germans into seeking a more reliable store of value.

    Now, a new report from the World Gold Council (WGC) shows that German investors became the world’s top gold buyers in 2016, ploughing as much as $8 billion into gold coins, bars and ETCs. Amazingly, they outspent Indian, Chinese and U.S. investors.

    [​IMG]
    click to enlarge


    Analysts with the WGC believe there is room for further growth, citing a recent survey that shows latent demand in Germany holding strong. Impressively, 59 percent of German investors agreed that “gold will never lose its value in the long-term.” That’s a huge number, suggesting the investment case for gold remains attractive.

    Learn more about investing in gold mining by watching my interview on the floor of the New York Stock Exchange!

    All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. By clicking the link(s) above, you will be directed to a third-party website(s). U.S. Global Investors does not endorse all information supplied by this/these website(s) and is not responsible for its/their content.

    The S&P 500 Stock Index is a widely recognized capitalization-weighted index of 500 common stock prices in U.S. companies.

    The Bloomberg Commodity Index is made up of 22 exchange-traded futures on physical commodities. The index represents 20 commodities, which are weighted to account for economic significance and market liquidity.

    The Purchasing Manager’s Index is an indicator of the economic health of the manufacturing sector. The PMI index is based on five major indicators: new orders, inventory levels, production, supplier deliveries and the employment environment.

    The U.S. Dollar Index measures the value of the United States dollar relative to a basket of foreign currencies, often referred to as a basket of U.S. trade partners' currencies.

    Holdings may change daily. Holdings are reported as of the most recent quarter-end. The following securities mentioned in the article were held by one or more accounts managed by U.S. Global Investors as of 6/30/2017: BHP Billiton Ltd., Glencore PLC, Freeport McMoRan Inc., MMC Norilsk Nickel PJSC.

    http://news.goldseek.com/GoldSeek/1508245380.php
     
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    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    Gold Backed Yuan?? Mike Maloney Vs Smaulgld
    SalivateMetal



    Published on Oct 17, 2017
     
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    Dow Futures Over 23,000: Dollar, Global Stocks Jump As China Congress Begins

    [​IMG]
    by Tyler Durden
    Oct 18, 2017 7:00 AM

    World stocks stayed near peaks and currencies moved in tight ranges on Wednesday as China’s 19th Communist Party Congress opened while focus in Europe turned to speeches from top euro zone central bankers before next week’s key policy meeting, as well as Catalonia's ultimatum due on Thursday. S&P futures are solidly in the green as usual, with Dow futures jumping above 23,000, driven higher by IBM as investors looked for new reasons to extend gains after hitting new all-time highs Tuesday. The dollar continues to strengthen, buoyed by speculation that the next Federal Reserve chair will be more hawkish, as volatility in major currencies fell to a three-month low, while Treasury yields rose.

    [​IMG]

    Among the factors contributing to today's burst of risk on buying is the continued bid in USD, which has forced markets into hybrid risk-on mode according to Bloomberg. EUR/USD and GBP/USD push through yesterday’s session lows, which consequently supports domestic equity markets via exporters and multinationals. Rally in USD/JPY pressures USTs, dragging down core fixed-income markets; UST/bund spread wider by 1.6bps. U.S. equity futures also supported, Dow futures test 23,000; crude futures hold small gains after bullish API data.

    European stocks are on fire, with the Stoxx 600 heading for its biggest rise in 2 weeks as the euro weakened for a fifth day on speculation the ECB will remain accommodative even as it tapers asset purchases, while volatility slid; the Stoxx 600 gained 0.4% while euro falls back to $1.1750 and VStoxx hits intraday record low. Technology, food and beverage best performers among industry groups, all 19 sectors in green; DAX hit another record high. The European vol index, the VStoxx dropped as much as 8% to 10.7, the lowest level on record. bond yields fell ahead of a series of speeches from top European Central Bank officials before next key policy meeting on Oct. 26.

    Looking at European stocks, BNP Paribas Wealth Management CIO Florent Brones said that “there are many positive elements supporting the euro-area stock market at this point, and while the market has been rallying, we’re not yet seeing double-digit gains.”

    European Central Bank chief Mario Draghi, Chief Economist Peter Praet and Executive Board Member Benoit Coeure are among those officials scheduled to speak. First remarks from Draghi at a conference in Frankfurt had limited initial market impact. “Today, bond market investors will probably concentrate exclusively on the various ECB speakers, who could influence market expectations for the last time ahead of next week’s meeting,” said ‎BayernLB rate strategist Alexander Aldinger.

    The MSCI’s Asia-Pacific index ex Japan was flat, near its late 2007 peak after China President Xi Jinping kicked off the twice-a-decade party congress with a wide-ranging speech, in which he warned of “severe” challenges while laying out a road map to turn the country into a leading global power by 2050. Investors are watching to see whether Xi will push through tough reforms as the world’s second-largest economy faces structural challenges over the next five years. Jinping said the market would be allowed to play a decisive role in allocating resources but also said the role of the state in the economy had to be strengthened.

    “His speech offered nothing to move the markets in Asia,” ‎Bayern LB’s Aldinger also said. Investors are looking for clear direction on economic and financial market reform over the next five years, but as has been the case in history, the actual speech was light on detail.

    China's CSI300 index added 0.8 percent in reaction, while Shanghai stocks rose 0.3 percent. “Market participants are paying much more attention to the party congress this time, as they are watching if any surprise reforms will emerge amid concerns over economic growth,” said Yan Kaiwen, analyst with China Fortune Securities.

    Still in Asia, Japan's Nikkei rose for a 12th consecutive day, getting a lift from hopes that this weekend's election will produce political stability and continuation of loose monetary policy even as technical indicators suggest the gauge is overheating. An opinion poll by Kyodo showed Japanese Prime Minister Shinzo Abe’s coalition was on track for a roughly two-thirds majority in Sunday’s general election there. The 14-day relative strength index stood above 70 - a level frequently seen as overbought - for an eighth day, while the Toraku Index, a barometer of momentum, climbed to 128, far higher than the 120 level that signals the Topix is poised to fall.

    “The Japanese stock market may be on alert for high prices and stay in a narrow range,” said Mitsushige Akino, an executive officer with Ichiyoshi Asset Management Co. in Tokyo. “Yet business sentiment is on a firm footing not only in the U.S. but also globally.” Pharmaceutical stocks and automakers were among the biggest boosts to the benchmark gauge, while banks and services companies weighed the most. About two stocks fell for every one that rose. The Nikkei 225 Stock Average extended its winning streak, the longest since June 2015, boosted by Fast Retailing Co. and Astellas Pharma Inc. The Topix has gained 2.5 percent in an 8-day rally, boosting its advance this year to almost 14 percent. It trades at 15.3 times estimated profits for the next year, well below the high of 20.5 reached in March 2013 and compared with the S&P 500 Index’s 19.4 times. “Valuations are low, both compared to other global markets and particularly so when taking account of the 0% yield on 10yr government bonds,” said Nicholas Smith, a strategist at CLSA Ltd. in Tokyo. “Sure, over the short-term it might have a pullback, but I think the fundamentals are excellent and the market is pricing in the decreased uncertainties that go with Abe stronger for longer.”

    In currencies, the dollar edged up amid speculation President Trump could chose a more hawkish leader to replace Federal Reserve Chair Janet Yellen, while investors awaited for any news on progress on U.S. tax reforms.The dollar index rose 0.07 percent to 93.54, extending a rebound from Friday’s 2 1/2-week low of 92.749. It rose as high as 93.729 on Tuesday. The onshore yuan predictably strengthened against the dollar as the 19th Party Congress began in Beijing while the U.S. Treasury’s twice-yearly report softens China FX criticism. The PBOC injected a net 270 billion yuan of liquidity helping the Shanghai Composite 0.3% higher. Australian 10-year yield drops to a one-month low of 2.72% as the curve extends bull-flattening; Treasuries steady. Canadian dollar outperforms G-10 peers after Nafta negotiators agree to extend talks into next year; kiwi slips following weaker Fonterra milk price auction. WTI crude holds above $52; Dalian iron ore futures gain 2.2 percent

    In Europe, the euro was holding at $1.17, still some way above the recent low and major chart support at $1.1667, as dealers awaited speeches by several policymakers from the European Central Bank due later on Wednesday, which includes President Mario Draghi. Some risks linger: Catalonia has until Thursday to back down from its secession push. Investors were reminded of the economic cost of the crisis when Spain, the euro-region’s fourth-biggest economy, cut its growth forecasts for next year. The Catalan standoff is one of several political risks facing investors in Europe, including high-stakes coalition talks that began Wednesday in Germany between Angela Merkel’s Christian Democrats and potential partners to lead Europe’s biggest economy.

    Overnight, the biggest mover was the Mexican peso which boasted its biggest rise in over four months after trade ministers from the United States, Canada and Mexico extended the deadline on a contentious round of talks.

    In commodity markets, talk the next U.S. Federal Reserve chief may be a policy hawk kept gold pinned down $1,283.01 an ounce. Oil prices were lifted by a fall in U.S. crude inventories and concerns that tensions in the Middle East could disrupt supplies. Brent crude futures were at $58.31, up 0.4 percent from their last close - and almost a third above mid-year levels.

    Rates markets remain paralyzed with barely any moves across the bond complex: the yield on 10-year TSYs rose 3 bps to 2.33% , the highest in a week; Germany’s 10-year yield gained two basis points to 0.39 percent, while Britain’s 10-year yield advanced two basis points to 1.276 percent.

    The Fed’s Beige Book and earnings from American Express, EBay and Alcoa will be in focus today.

    Bulletin headline summary from RanSquawk
    • European equities higher, with IT outperforming
    • CAD and MXN notably firmer after NAFTA ministers agreed to extend negotiations into 2018.
    • Looking ahead, highlights include US Housing Starts and comments from Praet and Coeure.
    Market Snapshot
    • S&P 500 futures up 0.1% to 2,559.50
    • VIX Index trading 0.3% lower at 10.28
    • STOXX Europe 600 up 0.4% to 391.35
    • MSCI Asia down 0.01% to 167.44
    • MSCI Asia ex Japan up 0.01% to 552.36
    • Nikkei up 0.1% to 21,363.05
    • Topix up 0.07% to 1,724.64
    • Hang Seng Index up 0.05% to 28,711.76
    • Shanghai Composite up 0.3% to 3,381.79
    • Sensex up 0.1% to 32,656.28
    • Australia S&P/ASX 200 up 0.01% to 5,890.48
    • Kospi down 0.06% to 2,482.91
    • WTI Crude up 0.3% to $52.05
    • Brent futures up 0.68 to $58.35/bbl
    • Gold spot down 0.2% to $1,282.88
    • U.S. Dollar Index up 0.1% to 93.60
    • German 10Y yield rose 0.6 bps to 0.371%
    • Euro down 0.06% to $1.1759
    • Italian 10Y yield fell 3.4 bps to 1.732%
    • Spanish 10Y yield rose 2.8 bps to 1.575%

    Top Overnight News
    • Xi Jinping warned of “severe” challenges while laying out a road map to turn China into a leading global power by 2050. The nation will continue opening its doors to foreign businesses and strengthen financial sector regulation
    • The U.S. softened FX criticism for China, lauded it for acting to avoid a “disorderly” depreciation and then allowing the yuan to rise against the dollar this year. The Treasury Department said no major trading partner is manipulating its currency to gain an advantage in trade
    • Senators from both political parties said a bipartisan deal was reached to stabilize Obamacare, just two weeks before Americans start signing up for 2018 coverage
    • Nikki Haley, the U.S. ambassador to the United Nations, will use a Wednesday Security Council meeting to seek world attention on Iran’s actions in the Middle East in an early test of whether President Donald Trump’s toughening position on the Islamic Republic is alienating allies and leaving the U.S. isolated internationally
    • The SEC is preparing to provide formal assurances to Wall Street by telling financial firms they won’t have to overhaul their operations to comply with sweeping new European rules on investment research, three people familiar with the matter said
    • With monetary policy being accommodative, there is a window of opportunity for economic reforms, European Central Bank President Mario Draghi said as he spoke on Wednesday
    • Dollar continued to strengthen helped by speculation that the next Federal Reserve chair will be more hawkish; Trump’s choice will be unveiled before he leaves Nov. 3 for an 11-day trip to Asia and Hawaii, a person familiar with the process said Tuesday
    • Spanish Deputy PM: Spanish government will take control of Catalonia unless the regional leader withdraws his claim to independence by 10 a.m. on Thursday
    • Housing starts and building permits for Sept. will be announced and the U.S. Federal Reserve releases its Beige Book

    Asia equity markets traded marginally positive following a similar picture in the US where all indices extended on record levels, in which the DJIA briefly surmounted the 23,000 milestone for the 1st time ever. The mild momentum from the historical feat in US carried over to Asia which saw ASX 200 (+0.1%) briefly above 5,900 and at its highest in almost 6 months, while Nikkei 225 (+0.1%) also eked minor gains. Hang Seng (Unch) and Shanghai Comp. (+0.3%) were kept afloat after a continued substantial liquidity operation by the PBoC, although upside was capped as focus remained on the 19th CPC National Congress which opened today. Finally, 10yr JGBs were flat amid a lack of drivers and with demand restricted by a mildly positive tone in Japan and a tepid BoJ Rinban announcement for JPY 400bln of JGBs. Chinese President Xi delivered address at the opening of the 19th CPC National Congress in which he said China will continue to reduce overcapacity and that China will deepen interest rate and FX reform. President Xi also commented that China will lower barriers of entry for foreign businesses and that GDP is to increase to CNY 80tln from CNY 54tln over the next half-decade.

    Top Asian News
    • Topix Holds Near 10-Year High as Indicators Signal Overheating
    • Japan Equity Movers: Ichiyoshi Securities, Matsuya, Toho Zinc
    • Espenilla Vows Philippines Won’t Overheat, Peso Is Under Control
    • Xi Imagines China in 2050: Highlights From His Three-Hour Speech
    • Europe Aviation Agency Warns on Kobe Steel as Scandal Deepens
    • China Sells Bonds at Cost Lower Than Forecast as PBOC Adds Cash
    European bourses were relatively directionless early in the session, although they have since picked up some upward momentum, with the Stoxx 600 up 0.4%. Focus this morning has been on the latest batch of earnings releases, particularly from the some of the Dutch large caps, with Akzo Nobel announcing a second profit warning this year, while ASML Holding also announced a weak earnings update. EGBs softer across the board, the belly of the German curve noticeably underperforming with the yield up 2bps. Focus will be on the German auction in the long-end.

    Top European News
    • U.K. Jobless Rate Stays at 42-Year Low Amid Strong Labor Demand
    • ECB Bond Program Survives Another Challenge at German Court
    • ECB’s Draghi Sees ‘Window of Opportunity’ for Economic Reforms
    • ECB Set-Up in Euro Bonds Underway as Market Sees QE for Longer
    • Bond Calls Clash at JPMorgan, Morgan Stanley Before ECB Tapering
    • Saenz Says Spain Will Apply Art. 155 if Catalans Don’t Comply
    In FX, the dollar index caught a bid overnight and throughout the morning session, trading back above 93.50. This comes off the back of yesterday’s reports that the US President could be swaying towards, noticeable hawk, John Taylor as Janet Yellen’s successor, with the announcement expected before Trump’s department for Asia on November 3rd. NAFTA reports were a theme of yesterday’s US session, as early source reports indicated that Canada and Mexico were said to reject US NAFTA proposals. However, as the story developed, later comments took focus, stating that ministers had agreed to extend negotiations into 2018. Following the initial reports, USD/CAD hit 1.2590, however, over the following hours, the move was reversed, as the pair broke through 1.25, hitting lows through 1.2490. USD/MXN saw similar price action, after firstly moving to highs of 19.1500, the pair came back to trade at lows of 18.7300. Sterling trades subdued, following the bearish BoE commentary seen yesterday. GBP/USD took a slight move higher following the release of the UK jobs reports, however this was quickly pared given that wages had slowed from the prior month. GBP/USD has consolidated through 1.32, with EUR/GBP running into a slowdown at 0.8930, now behaving as the weekly high.

    In commodities, West Texas Intermediate crude increased 0.3 percent to $52.04 a barrel, the highest in three weeks. Gold dipped 0.4 percent to $1,280.13 an ounce.

    Looking at the day ahead, data will likely play second fiddle with the most notable releases being August/September employment data in the UK and September housing starts and building permits data in the US. The Fed’s Beige Book is also due out in the evening. Corporate earnings results on Wednesday include eBay and American Express

    US Event Calendar:
    • 7am: MBA Mortgage Applications, prior -2.1%
    • 8am: Fed’s Dudley and Kaplan Discuss Economic Development
    • 8:30am: Housing Starts, est. 1.18m, prior 1.18m; Building Permits, est. 1.25m, prior 1.3m
    • 2pm: U.S. Federal Reserve Releases Beige Book
    DB's Jim Reid concludes the overnight wrap

    China’s 19th Party Congress is front and centre today with headlines developing as we type. In his opening speech, President Xi Jinping started with the opening remark that “the prospects are bright while the challenges are also grave”, before reminding his audience of his achievements over the past five years, which included: poverty reduction, strengthening the one party rule, national security, cutting down pollution and the Belt and Road infrastructure initiatives. Further, his anti-graft drive has achieved an “important and irreversible’ momentum and he insisted that China has ‘zero tolerance” on corruption. On the long term, he wants to set the agenda for the country to be “a modern, socialist power” by 2050. On the economy, he says the liberalisation of both interest rate exchanges will continue as "the door China opened will not close but will open wider and wider". Elsewhere, he wants China to make the "quality and efficiency" of growth a priority and deepen supply side reforms as well as insisting on the need to reduce excessive capacity and debt ratios. On housing, he said "houses are for people to live in, not for speculation" and he promised to provide more homes through a variety of different channels. Before his formal address, Deputy central bank chief Pan also noted that he expects that the Yuan will have a more secure foundation after the congress allowing the central bank to push exchange rate market reforms.

    This morning in Asia, markets are trading marginally higher. The Nikkei (+0.12%), Hang Seng (+0.01%) and Chinese bourses (+0.2% to 0.5%) are up slightly, while the Kospi is down -0.12% as we type. For those who have missed it, our China Chief Economist Zhiwei Zhang published a prior note previewing the 19th National Congress meeting. Zhiwei notes that this week-long event actually kicks off a six-month process that continues with the Central Economic Working Conference (CEWC) in December and the National People’s Congress (NPC) in March next year. He notes that the current event is more about politics than setting economic policies, as the representatives will elect a group of leaders. Based on the age rule, five of seven incumbent members of the Politburo should retire as they are older than 67. Other important things to look out for include the CEWC setting GDP growth targets, while finally, the NPC will see a reshuffle of cabinet ministers and government posts.

    Over to the US, and the search for the next Fed Chair is apparently very close, with an announcement potentially as soon as 3 November according to sources familiar with the selection process (per Bloomberg). Earlier, Trump told reporters that “within those five (candidates) you’ll get the answer” and that “honestly I like them all”. The five candidates he is referring to are Mrs Yellen, Kevin Warsh, John Taylor, Jerome Powell and Gary Cohn. Elsewhere, Trump continued to rally support for his tax reforms, this time speaking at the Heritage Foundation and reiterating the need for lower corporate tax rates and that “let’s give our country the best Christmas present of all – massive tax relief”.

    Turning to the UK, Gilts outperformed yesterday with 10y yields down 6.1bp (Bunds -0.8bp, OATs -1bp; UST -0.3bp) but GBPUSD fell 0.46% following the combination of Brexit headlines and a slightly less hawkish tone from central bankers. Firstly, in BOE Governor Carney’s testimony to UK lawmakers, he has reiterated that the “majority of the committee (believe) some raise in rates over the coming months may be appropriate”, in part as the UK economy is running out of spare capacity. However, other new MPC members seem a bit less hawkish, with Deputy Governor Ramsden saying “I still think there is some slack in the economy” and noted he was not part of the majority of MPC members pushing for a rate increase. Elsewhere, Tenreyro noted that “we’re approaching a tipping point at which it would be necessary to remove some of that stimulus” but her decision on rates in the coming months will depend on how the economy evolves. Finally, Carney noted the “very limited amount of time” between now and March 2019 and that the Bank was preparing for the possibility of a “hard Brexit” without a transition period, although he conceded that an “agreement is in everyone’s interests”. The next BOE meeting is on 2 November and the odds of a rate hike fell 1.5ppt to 80.6% (per Bloomberg).

    Over to Brexit talks, where the stalemate has continued with rhetoric suggesting a reduced chance of a breakthrough at the EU Summit later this week. The EU negotiator Barnier noted Monday’s dinner with UK PM May has yielded little and that “we are ready to accelerate the rhythm, but to accelerate you need two”. On the other side, UK negotiator Davis has signalled his side is unlikely to make more offers until after the EU Summit, noting “let’s wait and see what they are before we make the next move” and that “we’re reaching the limits of what we can achieve without considerations of the future relationship”. That said, there is still hope, with the Council of the EU reportedly working on preparatory work on the future relationship with UK and aim to have a roadmap ready by December, although this is contingent on the EU deciding that UK has made sufficient progress on the divorce bill issue. Elsewhere, perhaps the Irish PM summed it up well, saying “it’s quite a difficult negotiation when people who want to leave EU in the UK don’t really seem to agree among themselves with what that actually means”. So for now, we continue to wait and see which side blinks first.

    Onto yesterday’s market performance, the Dow edged (+0.18% to 22,997) higher and touched an intraday high of 23,002, which was the sixth time the index passed a 1,000 increment in the last 12 months. Elsewhere, Nasdaq was broadly flat while S&P 500 rose +0.07%. Within the S&P, the healthcare sector rebounded (+1.31%) following a bipartisan deal to allow insurance subsidies for Obamacare to resume, while modest losses were led by the consumer staples and financials sector (-0.55%). Both Goldmans and Morgan Stanley’s results beat consensus with weaker trading income mainly offset by stronger revenue from investing and lending units (GS) and wealth management (MS) respectively. However, the share price performance diverged slightly with MS +0.37% and GS -2.61% on the day. Notably, the VIX rose above 10 yesterday (+0.4pts to 10.31).

    European bourses were broadly softer, with the Stoxx 600 (-0.25%), DAX (-0.07%) and FTSE (-0.14%) down slightly, while Spain’s IBEX was the one of the few higher (+0.35%). Turning to currencies, the US dollar index strengthened 0.20% while the Euro and Sterling fell 0.25% and 0.46% respectively. In commodities, WTI oil was broadly flat (+0.02%) yesterday but is trading slightly higher this morning, as tensions between Iraqi and Kurdish forces have reduced. Precious metals softened for the second consecutive day (Gold -0.82%; Silver -1.11%), while Copper retreated (-1.14%) from its 3 year high and other base metals (Zinc -3.07%; Aluminium -0.82%) also fell.

    Turning to other central bankers commentaries. In the US, the Fed’s Harker told the WSJ that he thinks one more rate hike is appropriate this year, but warned “we just have to be prudent and take our time” with his view dependent on the inflation readings. The Fed’s Kaplan reiterated his views, noting that softer inflation readings recently “may well be transitory” and that “it’s likely we’ll see greater evidence of this progress (rising inflation), so “as a consequence, it will be appropriate to continue the process of gradually removing monetary accommodation”. Elsewhere, he pointed out that the change in fiscal policy and structure reforms “could provide upside” for US economic growth.

    In Europe, ECB VP Constancio noted that the euro area is "more resilient" than last year", but that "in the present configuration of risks….(we) will have to take macro prudential policy much more seriously or they will face the risk of other financial crises that monetary policy cannot prevent.” Elsewhere, he noted that monetary policy, even when recalibrated, “will continue to keep a very accommodative stance”.

    Finally, back onto a topic that has gone quiet for a while. As per the Politico, special counsel Mueller’s team has interviewed President Trump’s former press secretary (who left in August) Sean Spicer back on Monday. He has been previously tasked with investigating potential Russian interference in the 2016 US Presidential election. For now, we await what eventually comes out from these investigations.

    Before we take a look at today’s calendar, we wrap up with other data releases from yesterday. In the US, the September IP was in line with market expectations at 0.3% mom (up for the first time since June), but the prior month reading was revised upwards by c0.2ppt. Elsewhere, the capacity utilization was slightly softer at 76% (vs. 76.2% expected). The September import price index came in higher at 0.7% mom (vs. 0.6% expected) but was partly offset with the export price index at 0.8% mom (vs. 0.5% expected). Finally, the NAHB housing market index was stronger than expectations at 68 (vs. 64).

    In the UK, the macro data was broadly in line with consensus. The September CPI was in line at 0.3% mom and 2.7% yoy (for core CPI) – steady on August and the joint highest since December 2011. The PPI was also in line at 0.2% mom and 3.3% yoy. Elsewhere, the RPI was slightly lower than expected at 0.1% mom (vs. 0.3%) and 3.9% yoy (vs. 4.0% expected), along with the house price index at 5% yoy growth (vs. 5.4% expected). Across Europe, the final reading of the Eurozone September CPI was unchanged at 0.4% mom and 1.5% yoy. Germany’s ZEW survey of the current situation was slightly lower than expected at 87 (vs. 88.5) along with expectations at 17.6 (vs. 20 expected). Finally, the October Eurozone ZEW survey on expectations continued to weaken from the recent peak back in June (37.7) to a still reasonable level of 26.7.

    Looking at the day ahead, the ECB’s Draghi, Coeure and Praet are all taking part at a Conference in Frankfurt. The Fed’s Dudley and Kaplan are also due to speak in the afternoon. Data will likely play second fiddle with the most notable releases being August/September employment data in the UK and September housing starts and building permits data in the US. The Fed’s Beige Book is also due out in the evening. Corporate earnings results on Wednesday include eBay and American Express.

    http://www.zerohedge.com/news/2017-...llar-global-stocks-jump-china-congress-begins
     
  39. searcher

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    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    Asian Metals Market Update: October-18-2017
    By: Chintan Karnani, Insignia Consultants
    The next wave of sell off will be when gold and silver fall below yesterday’s low. I am happy with the performance of copper and nickel yesterday. Zinc and lead just had a correction and are not in a short term bearish phase. The pace of rise of zinc and lead was way ahead of fundamentals. Hence the correction. A once-in-five-year Communist Party gathering starts today and will be closely watched. The focus will be on the team president Xi picks.
     

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