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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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    farm talk wednesday 24th
    Ag Talk In The Raw



    Published on Jan 24, 2018
    i am here to talk about farming and all that goes with it.
     
  2. searcher

    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    Dollar Tumbles To 3 Year Low As Futures, Oil Rebound
    [​IMG]
    by Tyler Durden
    Thu, 01/25/2018 - 07:07


    Another day, another rout in the USD index, with the Bloomberg dollar index sliding for the 4th consecutive day to the lowest level since December 2014 after Asian participants were able to react to yesterday’s comments from US Treasury Secretary Mnuchin, which he refused to deny in follow up Davos commentary on Thursday.

    [​IMG]

    With the dollar tumbling, the EUR hit a new three year high ahead of the ECB's policy decision this morning (full preview here) before stabilizing around 1.24 as investors wait to see if ECB President Draghi can stem its advance later today when explaining the central bank’s rate decision.

    Concerns about U.S. protectionism kept the dollar weak after its worst day in six months, but it was the ECB’s first meeting of 2018, and when it will end its 2.6 trillion euro stimulus programme, that was attracting attention. Another challenge facing policymakers is how to address the euro’s surge - it hit a three-year high of over $1.24 on Thursday - as this could dampen inflation and endanger the work done by years of unprecedented stimulus.

    The USDJPY treaded water just below 109, where a number of stops are said to be waiting. Kiwi dropped lower on weaker-than-expected 4Q CPI data only to pare losses as dollar selling resumes across the board.

    With offshore currencies surging it was a mixed picture across European stocks, as investors digested the weakening dollar and a protectionist push from the U.S. that helped spur declines in Asian equities. Still, not even the soaring Euro was enough to dent risk optimism, and Europe was trading modestly in the green, while S&P futures were about 0.2% higher at 2,847, just shy of all time melt up high. Germany's DAX underperforms as large trade union threatens walkout over wage negotiations.

    [​IMG]

    In Europe, media and travel companies dragged on the Stoxx Europe 600 Index after the MSCI Asia Pacific posted losses earlier. Tech names the underperforming sector this morning having taken the impetus from their US counterparts. Additionally, in terms of specific stocks, Aryzta is the worst performing stock after the company announced a profit warning, while Smith and Nephew sit at the top of the FTSE 100 following a broker upgrade at JP Morgan Chase. Top Stoxx 600 outperformers include: Elior Group +3.4%, Daily Mail & General Trust +2.9%, Smith & Nephew +2.9%, Elekta +2.8%, STMicro +2.4%

    Some additional developments out of Europe this morning:
    • German Ifo Business Climate (Jan) 117.6 vs. Exp. 117.1 (Prev. 117.2)
    • German Ifo Expectations (Jan) 108.4 vs. Exp. 109.4 (Prev. 109.5, Rev. 109.4)
    • German Ifo Current Conditions (Jan) 127.7 vs. Exp. 125.4 (Prev. 125.4, Rev. 125.5)
    • Norwegian Cenbank Rate Decision (N/A) 0.50% vs. Exp. 0.50% (Prev. 0.50%)
      • The assessment of the outlook and the balance of risks suggested that the key policy rate would remain at 0.5% in the period ahead. The outlook and the balance of risks for the Norwegian economy do not appear to have changed substantially since the December Report.


    Japanese shares fell as the yen traded at the strongest since September; it’s one of a host of major currencies at elevated levels thanks to the dollar slump. The euro edged higher before the European Central Bank’s first policy decision of 2018, and after data showed improving business confidence in Germany.

    In Asian geopolitcs, North Korea is said to be calling for rapid improvement in North-South relations and said it will smash all challenges against reunification of the Korean peninsula.

    As pointed out last night, the onshore yuan strengthens toward the level before its one-off devaluation in August 2015, as the dollar heads for a three-year low. The onshore yuan rose 0.4% to 6.3335 after an overnight gain of 0.8%, the most since February 2016. At this rate the PBOC will need another Yuantervention soon.

    [​IMG]

    Following Lula's failure to get approval to run for president, the Brazilian real strengthened the most in eight months and the MSCI Emerging Markets Index climbed for a tenth day, hitting the strongest on record.

    Dollar weakness continues to boost commodities: Bloomberg's index of raw materials is at the highest since October 2015, and gold traded at about the strongest in more than a year. Indeed, it was onward and upwards for commodity prices which have benefitted from the aforementioned USD weakness. Brent crude futures briefly took out the $71.00 handle. Elsewhere, gold rose to levels not seen since mid-2013 and copper also rallied despite the risk averse tone, as the greenback’s woes solely fuelled gains across the complex.



    [​IMG]

    Looking ahead, highlights include the ECB rate decision and press conference, US weekly jobs, Japanese CPI

    Market Snapshot
    • S&P 500 futures up 0.2% to 2,846.50
    • Euro Stoxx 50 up 0.02% to 3648
    • MSCI Asia Pacific down 0.4% to 186.17
    • MSCI Asia Pacific ex Japan down 0.07% to 608.34
    • Nikkei down 1.1% to 23,669.49
    • Topix down 0.9% to 1,884.56
    • Hang Seng Index down 0.9% to 32,654.45
    • Shanghai Composite down 0.3% to 3,548.31
    • Sensex down 0.3% to 36,044.24
    • Australia S&P/ASX 200 down 0.08% to 6,050.02
    • Kospi up 1% to 2,562.23
    • German 10Y yield unchanged at 0.587%
    • Euro up 0.1% to $1.2422
    • Italian 10Y yield rose 1.9 bps to 1.641%
    • Spanish 10Y yield rose 1.2 bps to 1.37%
    • Brent futures up 0.4% to $70.78/bbl
    • Gold spot up 0.1% to $1,359.70
    • U.S. Dollar Index down 0.2% to 89.06
    Top Overnight News
    • “I thought my comment on the dollar was actually quite clear yesterday, I thought it was balanced and consistent with what I said before” Treasury Secretary Steven Mnuchin told reporters in Davos
    • Special Counsel Robert Mueller is moving at a far faster pace than previously known and appears to be wrapping up at least one key part of his investigation -- whether President Donald Trump obstructed justice, according to current and former U.S. officials
    • The U.K. will be able to negotiate trade deals during the transition period, but those would not be applicable before the end of the transition, according to an EU official
    • German business confidence unexpectedly improved to 117.6 in January, from 117.2 in December, suggesting Europe’s largest economy is off to a strong start
    • IMF’s Lagarde Urges Mnuchin to Clarify Remarks on Weak Dollar
    • Bloomberg Dollar Spot Index recovers after sliding to fresh lows in late Asia session
    • EUR/USD steady after earlier rising as much as 0.4% to 1.2459
    • GBP/USD pares gains after rising to 1.4329 high; U.K. Chancellor Philip Hammond said: “We’re very happy with where the currency is at the moment”
    • EUR/NOK bounces off 100-DMA at 9.58; Norges Bank left its key policy rate unchanged at -0.5% and said the outlook and balance of risks for the Norwegian economy haven’t changed substantially since December
    • NZD/USD climbs, shrugging off an unexpected inflation slowdown which sparked an immediate response of leveraged selling; NZ inflation slowed to 1.6% y/y in 4Q from 1.9% in 3Q; est. 1.9%; on annual basis, consumer prices rise 0.1% q/q; est. 0.4%
    • China’s yuan has rallied so hard against the dollar it’s almost back to levels last seen before the 2015 devaluation

    A subdued tone was seen across Asia stock markets following a lacklustre lead from Wall St, where the Nasdaq underperformed on tech weakness and most major indices finished negative despite hitting fresh intraday all-time highs. ASX 200 (-0.1%) and Nikkei 225 (-1.1%) were lower in which Japanese exporters felt the brunt after USD/JPY briefly slipped to below 109.00, while losses in Australia were stemmed as miners benefited from the recent USD-induced commodity rally. Hang Seng (-0.2%) and Shanghai Comp. (-0.3%) were cautious after the PBoC skipped open market operations and amid trade war concerns due to protectionist messages from US Treasury Secretary Mnuchin and Commerce Secretary Ross at Davos. Finally, 10yr JGBs weakened on spill-over selling from their US counterparts and with demand also dampened by weaker 20yr auction results. PBoC skipped open market operations for today to safeguard bank liquidity stability, while it stated that targeted RRR cut is to offset reverse repo demand.

    Top Asia News
    • Malaysia Raises Key Rate as Analysts Bet No More This Year
    • Vietnam’s World-Beating Stock Market Reopens After Two-Day Halt
    • China’s Yuan Nears Pre-Devaluation Levels as Rally Accelerates
    • A Chinese Car Built in Western Europe? Geely Could Be First

    A majority of European bourses are trading with minor gains, aside from the DAX (-0.1%) which has faltered amid the rising EUR weighing on exporters. Tech names the underperforming sector this morning having taken the impetus from their US counterparts. Additionally, in terms of stock specific, Aryzta is the worst performing stock after the company announced a profit warning, while Smith and Nephew sit at the top of the FTSE 100 following a broker upgrade at JP Morgan Chase.

    Top European News
    • Fingerprint Loses Nearly a Third of Value After Profit Warning
    • German Business Confidence Jumps on Strong Start Into 2018
    • German Parties Weigh Diesel Hardware Fix in Blow to Automakers
    • Polish Refiner Orlen Slumps on Margins Outlook After Record Year

    In FX, the selling of the dollar continued for a 4th day as Asian participants were able to react to yesterday’s comments from US Treasury Secretary Mnuchin who stated that USD weakness is good for the US in the short term. Overnight, the USD printed a fresh 3yr low after dipping through 89.00 and moving towards key support situated at 88.25 (50% Fib retrace of rally from 72.65 to 109.89). Subsequently, GBP continued its stellar gains to move above 1.43, while USD/CHF briefly broke through the 94.25/50 support area which has been in place for 2yrs. However, the USD has found some slight reprieve amid talk of suspected FX intervention in Asian currencies (CNH and JPY) and as such has reclaimed 89.00. As many begin to ask the question of potential currency wars, participants will look to Draghi’s post rate decision press conference on whether he will address recent EUR strength. Elsewhere, NZD had been hit by much weaker than expected Q4 NZ inflation data, which has prompted analysts to push back their rate hike expectations to mid-19. NOK relatively unfazed by the latest Norges Decision which saw the bank stand pat on rates and reiterate the findings of the December analysis

    In commodities, onward and upwards for commodity prices which have benefitted from the aforementioned USD weakness. Brent crude futures briefly took out the USD 71.00 handle, in terms of levels to the upside, 71.66 (50% Fib retrace of decline from USD 116.1 to USD 27.23 may provide near term resistance. Elsewhere, gold rose to levels not seen since mid-2013 and copper also rallied despite the risk averse tone, as the greenback’s woes solely fuelled gains across the complex.

    Looking at the day ahead, the main event is the ECB monetary policy meeting. President Draghi is scheduled to hold a press conference following the meeting outcome. Data releases include February consumer confidence and the January IFO readings in Germany, as well as the December advance goods trade balance, weekly initial jobless claims, December new home sales, December leading index and January Kansas City Fed manufacturing activity index in the US. Before tomorrow morning Japan will print December CPI and publish the latest BoJ meeting minutes. Intel and Caterpillar are scheduled to release earnings with the latter always a good bellwether for the global economy.

    US Event Calendar
    • 8:30am: Initial Jobless Claims, est. 235,000, prior 220,000; Continuing Claims, est. 1.93m, prior 1.95m
    • 9:45am: Bloomberg Consumer Comfort, prior 53.8
    • 10am: New Home Sales, est. 675,000, prior 733,000; MoM, est. -7.91%, prior 17.5%
    • 10am: Leading Index, est. 0.5%, prior 0.4%
    • 11am: Kansas City Fed Manf. Activity, est. 14, prior 14

    DB's Jim Reid concludes the overnight wrap

    It was a big day of headlines yesterday from the highest town in Europe as the news rolled down the mountain as destructively as me on skis and created reverberations around the financial world. Today we will need to switch some of the attention 1448 meters lower and 526km away as the ECB meeting in Frankfurt competes for headlines with the show in the snow in Davos.

    My impression of Davos events in the past is that they’ve generally not had much market moving newsflow associated with them. However as we’ll see below yesterday was an eventful day and we still have yet to see the main event which is Mr Trump addressing the gathering tomorrow after his arrival today. Before that, today we will hear from PM May on the UK’s relationship with Europe and EC President Juncker on a view from the heart of the EU.

    Before we jump into what was said in Davos, in terms of markets the end result was another rough day for the Greenback and a notable sell-off across the bond market that did rally back a bit before the close. On the former, the broad USD index closed last night down -1.03% for the biggest daily decline since June 2017. That is also the 8th down day for the Dollar in the last 10 trading days. On the other side of that, the Euro (+0.89%) closed at the highest level since December 2014 and Sterling (+1.73%) rallied to a new 19 month high after surging through $1.40, $1.41 and $1.42 over the last 24 hours and touching $1.43 this morning in the Asian session which makes the next 5th Avenue Apple store binge ever so slightly more tolerable. In fact every G10 currency rallied at least +0.50% yesterday against the USD while the only EM currency we could find which weakened (out of 23 pairs) was the Argentine Peso. So this was a broad dollar sell-off.

    Meanwhile in bonds, 10y Treasuries closed +3.3bps higher at 2.647% while long-dated 30y bonds were also +3.4bps higher at 2.929%. Yields in Europe were a few basis points higher while Gilts sold-off 5.4bps to hit the highest since February 2017. Gold (+1.29%) seemed to be the big beneficiary of the bond move.

    It was the comments from US Treasury Secretary Steven Mnuchin which appeared to trigger the latest tumble for the Dollar. Speaking in Davos, Mnuchin said to reporters that “obviously a weaker dollar is good for us as it relates to trade and opportunities”. He also said that the short term value of the Dollar is “not a concern of ours at all”. As a reminder, these comments came a day after President Trump slapped tariffs on imported solar panels and washing machines. Whilst not a material economic impact, it didn’t go unnoticed that Commerce Secretary Wilbur Ross also said in Davos that “trade wars are fought every single day” and that “a trade war has been in place for quite a little while”. Ross did however seemingly attempt to play down Mnuchin’s comments by saying that “he wasn’t advocating anything” and that “he was simply saying it’s not the world’s biggest concern to us right now”. The White House press secretary Sanders also softened the blow a bit later as well by praising a “stable” currency. However it’s certainly been a week of markets fearing a renewed protectionist push. Mr Trump’s speech tomorrow could be a key moment on this theme.

    DB’s Alan Ruskin noted the context in which Mnuchin made his remark matters a great deal and looks at least three ways in which context matters. Overall, Ruskin argues that it is going to be hard for the market not to conclude that the US FX policy extends beyond a simple benign neglect, to something a little more active in its encouragement of currency weakness. As a reminder, one Fed trade model cited by Stanley Fischer suggests a 10% USD TWI decline can support real GDP by 1.5% over 1 years, but add only 0.25% - 0.5% to core inflation over a year.

    Elsewhere, spooking the bond market seemed to be hedge fund mogul Ray Dalio’s echoing of Bill Gates recent comments, with Dalio saying that the bond market is now in a bear phase and that a “1 percent rise in bond yields will produce the largest bear market in bonds that we have ever seen since 1980 to 1981”. Dalio also said that he expects the Fed to tighten monetary policy faster than what they have forecast according to the dots and that he expects the solid growth environment to persist for another two years.

    As discussed at the top, today will see a lot of attention diverted towards the ECB meeting. Post the taper announcement last year it had looked like ECB meetings would be uneventful for much of the start of this year however the December ECB minutes and some of the subsequent news reports have at least added a fair bit of anticipation to today’s meeting. Our European Economists expect Mario Draghi to prepare the ground for changes to forward guidance at today’s press conference by differentiating policy expectations from the policy reaction function within forward guidance. The internal committees may be tasked with studying the options for guidance. Otherwise the team expect the January press conference to contain the same rhetoric as December – rising confidence but no change to the policy stance. EUR appreciation will probably be a talking point, however like in September, our colleagues anticipate tough rhetoric (the currency is “very important” to growth and inflation; volatility needs to be avoided). Given the momentum of the economy, the endogenous appreciation defense remains valid and the policy exit debate will remain live.

    A quick glance at our screens this morning and markets in Asia are broadly lower. The Nikkei (-1.08%), Hang Seng (-0.20%) and China’s CSI300 (-0.36%) are all down while the Kospi is bucking the trend to be up 0.93%. Elsewhere, HK’s H shares index may close lower for the first time in 20 consecutive days as it is down c0.7% as we type. President Trump said his plans to help rebuild the nation’s infrastructure “will probably end up being about $1.7trn” versus the $1trn figure he noted previously. More details of his infrastructure plans are expected in next Wednesday’s State of the Union address.

    Those moves in Asia follow a slightly divergent day for equities yesterday with Europe closing down and the US just about holding onto gains. The currency moves certainly appeared to more than play a part. The Stoxx 600 closed -0.50% to finish lower for the first time in a week while the DAX (-1.07%), CAC (-0.72%) and peripheral bourses also fell (0.5%-1%). The FTSE 100 (-1.14%) also felt the weight of the Sterling rally and had its worst day since October. By contrast the S&P 500 closed marginally lower (-0.06%) while the Dow rose 0.16% and Nasdaq fell 0.61%, weighed down by the softer result from Texas Instruments earlier.

    In commodities, WTI oil jumped 2.19% to $65.88/bbl after EIA data showed US crude stockpiles fell for the tenth week to the lowest level since February 2015. Brent oil also rose to $70.75/bbl – the highest since June 2015. Elsewhere, silver was up 2.95% and other base metals were all higher, partly benefiting from the weaker dollar (Copper +2.03%; Zinc +0.67%; Aluminium +0.65%).

    Away from markets and back to Davos, Germany’s Merkel warned against “right-wing populism” as it is “a poison that appears whenever you have unresolved problems”. She noted Germany has its own difficulties, such as “national polarization that we haven’t witnessed for decades” due to the financial crisis and migration. On globalisation, she said we need to be “patient and look for multilateral solutions rather than slip into the easier solution of pursing national interests, as unilateral solutions …simply promote isolation and protectionism”. Elsewhere, she stood firm on Brexit, noting “….the issue of access to the internal market is linked to freedom of movement…..we can’t make any compromises there”.

    Staying with trade, Canada’s Chief negotiator Verheul told Reuters he had “a constructive conversion” with his US counterpart re the NAFTA deal and will unveil ideas on how to meet a US demand for higher North American auto content soon. In our US economists note, they detail the political state-of-play for the NAFTA talks and provide an assessment of the potential impact on the US, Canadian, and Mexican economies in the unlikely event that a NAFTA breakup occurs.

    In the UK, Brexit Secretary Davis has signalled a desire for some kind of status quo post Brexit which may have helped Sterling yesterday. He noted Britain will stay close to EU’s regulatory regime after it leaves the EU bloc and sees his task as “…maintaining the maximum possible access to the European market..” and creating “the freedom” to allow the government to diverge later on if it choose to do so.

    Before we take a look at today’s calendar, we wrap up with other data releases from yesterday. In the US, the December existing home sales fell 3.6% mom to 5.57m (vs. 5.70m expected), partly affected by lower housing inventory. The November FHFA house price index was also softer than expected at 0.4% mom (vs. 0.5%). Elsewhere, the January composite PMI was lower than last month’s reading at 53.8 (vs. 54.1), with a stronger manufacturing PMI (55.5 vs. 55 expected) offset by a lower than expected services PMI (53.3 vs. 54.3).

    The Eurozone’s January composite PMI was above market at 58.6 (vs. 57.9) and broadly consistent with a quarterly GDP growth of c1% in the Euro area. The manufacturing PMI fell from last month’s 21 year high to 59.6 (vs. 60.3 expected) but the services PMI was stronger than expected at 57.6 (vs. 56.4). Across the countries, there seemed to be a theme of weaker manufacturing PMI offset by stronger services PMI. In Germany, the composite PMI was above expectations and near the highest in c7 years at 58.8 (vs. 58.5 expected), with manufacturing PMI retreating from last month’s record high to 61.2 (vs. 63 expected) while the services PMI beat (57 vs. 55.5). In France, the composite PMI was also above market (59.7 vs. 59.2) with the weakness in manufacturing PMI offset by a stronger services PMI (57 vs. 55 expected).

    In the UK, labour market conditions remain strong with the November unemployment rate remaining at a 43 year low and steady at 4.3%, while the labour force employment change grew 102k (vs. -12k expected). Elsewhere, the average weekly earnings ex-bonus grew slightly more than expected at 2.4% yoy (vs. 2.3%) in the three months through November.

    Looking at the day ahead, the main event is the ECB monetary policy meeting. President Draghi is scheduled to hold a press conference following the meeting outcome. Data releases include February consumer confidence and the January IFO readings in Germany, as well as the December advance goods trade balance, weekly initial jobless claims, December new home sales, December leading index and January Kansas City Fed manufacturing activity index in the US. Before tomorrow morning Japan will print December CPI and publish the latest BoJ meeting minutes. Intel and Caterpillar are scheduled to release earnings with the latter always a good bellwether for the global economy.

    https://www.zerohedge.com/news/2018-01-25/dollar-tumbles-3-year-low-futures-oil-rebound
     
  3. searcher

    searcher Mother Lode Found Site Supporter ++ Mother Lode

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  4. searcher

    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    Asian Metals Market Update: January-25-2018
    By: Chintan Karnani, Insignia Consultants
    Deliberate weakness of the US dollar by the Americans resulted in all metals and energies zooming. The Trump administration wants a weaker US dollar. As a gold bull, I hope that other central banks also jump into the bandwagon of weakening their currencies and we start a central bank currency war. If this happens gold will easily rise to $1961.80 before the end of the year. Manipulating currency price to achieve growth and political agenda is nothing new.
     
  5. searcher

    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    TVR [#450] 01-25-2018 PRE-MARKET PULSESCAN: $$$ BONDS GOLD SILVER OIL STOCKS CRYPTO'S
    ALGO CAPITALIST



    Published on Jan 25, 2018
    Please remember to RATE, SHARE, FAVORITE, COMMENT AND SUBSCRIBE.
     
  6. searcher

    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    Commentary: A Tale of a Tanker, Russian Gas, Sanctions and Energy Politics

    January 24, 2018 by Reuters

    [​IMG]
    Photo: MarineTraffic.com / Manuel Hernandez

    By Agnia Grigas Jan 24 (Reuters) – After months of President Donald Trump’s promises to bring about a new era of American “energy dominance,” largely based on booming oil and natural gas production, it was surprising to learn that the United States will continue importing liquefied natural gas this winter. Even more surprising: that the country could import its first Russian LNG produced by Yamal LNG, a facility subject to U.S. financial sanctions.

    The cargo at the heart of the controversy is carried by Gaselys, a tanker that was approaching Boston Tuesday after various delays and an unusually circuitous course generated intense speculation among energy analysts. While panelists at the World Economic Forum’s Davos meeting were discussing the implications of the new era in energy politics, the Gaselys’ much-watched route was a real-life lesson in the changing face of energy markets, the intensifying U.S.-Russian competition for global gas sales and the question of whether the United States is really on its way to achieving Trump’s goal of becoming a net exporter of energy.

    In recent years, the cards appeared to be stacked in Washington’s favor. Thanks to the shale boom, which unlocked production of “unconventional” gas and oil, the United States emerged in 2011 as the world’s leading producer of natural gas. In 2016, American energy company Cheniere launched LNG exports across the globe, from Asia to Latin America to Europe. The golden age of American gas had finally arrived.

    This was good news for Washington’s allies in Eastern Europe, many of whom had long been dependent on natural gas imports from their regional nemesis, Russia. Last summer saw a historic and symbolic milestone as two energy-vulnerable countries on Europe’s frontier, Poland and Lithuania, received their first American LNG shipments. At the Vilnius Energy Forum in November, the mood was jubilant, and Lithuanian energy minister Žygimantas Vai?i?nas stressed to me the hopes for closer relations with Washington: “We hope that this historic breakthrough will turn into consistent cooperation, which will move the two countries closer through a concrete and practical agenda.”

    Meanwhile, the world’s largest gas exporter, Russia, continued to seek its own wins as competition for European gas markets intensified. Gas giant Gazprom signed a 10-year contract to supply piped gas to Croatia last fall, apparently trying to reduce demand for additional gas imports right as the European Union earmarked 101.40 million euro ($121 million) for the country to build its own LNG terminal, in a bid to reduce the region’s dependence on Russian gas.

    Russia is also trying to boost its own LNG exports and enter the global markets. Despite its status as the world’s leading natural gas exporter, Russia has been behind with its LNG export capacity. But this December, Russia’s second LNG plant, Yamal LNG, launched its first exports. News that Siberian gas from Yamal LNG was to arrive in Boston via the United Kingdom broke in early January, serving as the perfect Orthodox Christmas present for Russian President Vladimir Putin.

    Since then, the LNG cargo and its circuitous route to Boston have generated considerable speculation among industry analysts. In late December, Sovcomflot, the Russian state-owned shipping company, delivered gas from Siberia’s Yamal LNG to a terminal on Britain’s Isle of Grain. The British media worried about the arrival of “sanctioned Russian gas” but, as it happened, the LNG cargo was to remain in Britain only briefly, never leaving its storage tank.

    Two days later, a French tanker, Gaselys, arrived at Grain to pick up a cargo of stored LNG. The North American unit of French energy company Engie SA had purchased the cargo from Malaysia’s Petroliam Nasional Bhd. Eventually, Thomson Reuters shipping data showed the Gaselys vessel making its way to the Everett LNG import terminal near Boston – but only after many twists and unexplained turns. First Gaselys stopped at the tip of Spain then it passed through the Canary Islands. Then, on Jan. 19, after traveling halfway across the Atlantic, the vessel made a U-turn towards Spain in what was explained as a “weather delay” before again resuming its course towards Boston.

    While the Everett terminal on occasion relies on foreign LNG imports, specifically from Trinidad and Tobago, this delivery of Russian LNG is unprecedented. The cargo is even more controversial because the controlling share of Yamal LNG is owned by Russia’s Novatek, which has been under U.S. financial sanctions since 2014 due to Russia’s annexation of Crimea and the war in eastern Ukraine.

    The story of the Gaselys cargo reflects the realities of the globalizing natural gas market. This globalization has been driven by the American boom in gas production and exports, which injected greater volumes and greater liquidity into the market. It also stems from the growth of the LNG trade, which by its very nature is global, as opposed to traditional natural gas exports, which rely on long-term contracts and regional land-based pipelines.

    With this globalization, LNG supplies from one part of the world can increasingly be shipped to another to meet seasonal or longer-term fluctuations in demand. (In this case, the frigid temperatures that hit the U.S. East Coast in recent weeks pushed the domestic natural gas demand to record highs.) Thus it is feasible that Russian LNG could make its way to the United States in the future.

    To mitigate the high natural gas prices faced by New England and to reduce the need to rely on foreign LNG, Washington and the private sector would be wiser to invest in gas pipeline and storage infrastructure, connecting producing and exporting regions such as the Gulf of Mexico and Appalachia with importing regions such as those of the Northeast.

    With gas markets experiencing increasing interconnectivity and globalization, the new geopolitics of natural gas have arrived. These changes are upsetting the half-century-long status quo of gas trade driven primarily by piped gas exports from Russia to European states. New routes, new suppliers and re-exporters, and new trade partners are emerging. As the United States is slowly finding its new calling as an energy superpower, the conundrums of this cold winter should only encourage Washington to stick to its energy strategy but also be aware that LNG from sanctioned projects could make it to the United States via the globalizing gas market. (Reporting by Agnia Grigas)

    (c) Copyright Thomson Reuters 2018.

    http://gcaptain.com/commentary-a-tale-of-a-tanker-russian-gas-sanctions-and-energy-politics/
     
  7. searcher

    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    Solar Import Tariff: Pain Without Benefit
    Posted on January 25, 2018 by Yves Smith

    By Roy Morrison, whose latest book is Sustainability Sutra (2017, Select books NY). He is working on dual-cropping installations in New England and NY


    The new 30% import tariff just imposed on imported solar panels and solar cells is a protective tariff without benefit.

    It will not revive the declining U.S. silicon solar cell industry. It will harm U.S. workers in factories manufacturing solar panels using imported solar cells. It will hurt the rapidly expanding U.S.solar industry, slowing down the rapidly growing adoption of solar across the U.S.economy and costing jobs. It will slow the reduction of green house gases and the replacement of coal and natural gas plants with cheaper, zero pollution energy.

    In Jacksonville, Florida the city council has just voted for a $23 million dollar subsidy for Chinese company Jinko Solar to build an 800 worker modular production plant which itself will be subject to the tariff on solar cells. Similarly, the tariff will affect the Tesla giga-factory in Buffalo that uses imported cells.

    The tariff will slow, but not stop, the expansion of U.S. solar. According to Green Tech Media there will be an 11% net reduction of solar installations over the next five years. This means the installation of 61.3 gigawatts instead of a projected 68.9 gigawatts, a 7.6 gigawatt shortfall. That’s the bad news, if the projection is correct.

    7.6 gigawatts of solar if it displaced fossil fuel generation would save, according to the EIA, 1.64 pounds of carbon dioxide per kilowatt hour, or 7.3 million tons of carbon dioxide per year based on New England solar production per megawatt. That’s the projected ecological consequence of the solar tax.

    The good news is that solar is now big and rapidly growing. 61.3 megawatts of new solar in next five years is equal to the capacity of 61 one thousand megawatt nuclear plants. Total U.S.nuclear capacity is 99 gigawatts and declining as nuke plants shut down, unable to compete while solar rises.

    The 30% tariff on cells or modules is scheduled to decline by 5% a year to 15% in 2021, the last year of the tariff. The first 2.5 gigawatts of imports are exempt, as will be a blend of other specialized modules that are applying for exemption from the tariff as are a number of developing nation producers limited to a total of 9% of imports.

    What does this all mean on the ground for solar installations? A 30% module tariff means about a ten cent per watt increase in solar costs. Average residential solar cost, according to NREL (National Resource Energy Laboratory), in 2017 was $2.80 a watt installed, a 3.6 percent increase in 2018 that will decline to 1.8 percent for typical 5-6 kilowatt systems.

    For utility scale solar, huge installations above 10 megawatts or 10,000 kilowatts, the price in 2017 was $1.11/watt. Here, a ten cents a watt increase means a 9 percent increase, declining to 4.5% increase.
    The negative effects of the tariff are likely to be felt most strongly in emerging PV markets in Southern and other States with limited financial support and market rules for solar.

    Mitigating Possibilities

    Solar in recent years has been characterized by plunging costs, improved efficiency, and technological innovation. Globally, wind and solar are now competitive in more than thirty countries with fossil fuels without subsidies and represents “an outright compelling investment opportunity with long-term, stable, inflation-protected returns,” according to Michael Drexler, Head of Long Term Investing, Infrastructure and Development at the World Economic Forum. The judgement of big capital.

    Current responses to utility scale RFPs for solar have been an astounding less than two cents per kilowatt hour. This is stunning for a zero fuel, zero pollution low maintenance cost energy fuel. Fossil fuels and nukes simply won’t be able to compete.

    In addition, there is ongoing technical innovation in all areas of renewable energy and energy efficiency, as well new applications of renewables. It is likely, for example, that new types of solar cells will replace silicon as material of choice such as using perovskite crystals, and further advances in thin film technology.

    Giant offshore wind machines can now float and be anchored to the sea floor in deeper water expanding the available off-shore wind resource. A legion of new innovative renewable projects are moving forward. I am working on a pilot installation for a new Swiss design for a megawatt scale vertical axis wind turbine that is quiet, minimizes or eliminates bat and bird kills, minimizes rotor shade, has a small footprint.

    As a solar developer, I am developing dual-cropping PV systems on working farms that allow PV on poles or tables, at four foot intervals, to be installed in pasture or fields without significantly reducing agricultural productivity. This system was developed by work in test plots by Prof, Stephen Herbert of the Stockbridge Institute with contractor James Marley.

    The market consequences of the tariff may also lead to price reductions by Chinese suppliers, and help accelerate the reduction in cost by racking companies, inverter manufacturers, and in PV installation techniques. For example, Spice Solar, now offers solar panels integrated with racking that can be connected to the roof quickly with a few roof anchors, shipped recently at .60 per watt, a significant price reduction. The tariff may also mean foreign companies, as Jinko did in Jacksonville, building American based factories.

    Tariff or not, now’s the time for us all to embrace the economic, ecological and social benefits of building a secure and prosperous efficient renewable energy future. Our pursuit of ecological economic growth and our democratic action on all levels will shape the emergence of a renewable energy future and our escape from ecological calamity by making economic growth mean ecological improvement and building step by step a prosperous ecological civilization.


    This entry was posted in Energy markets, Environment, Global warming, Globalization, Guest Post, Regulations and regulators on January 25, 2018 by Yves Smith.

    https://www.nakedcapitalism.com/2018/01/solar-import-tariff-pain-without-benefit.html
     
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    Weaker Dollar Good For Gold! Is It Good For US?
    SalivateMetal



    Published on Jan 25, 2018
     
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    Gold Seeker Closing Report: Gold and Silver Fall Roughly 1%
    By: Chris Mullen, Gold Seeker Report
    Gold gained $8.30 to $1366.00 in Asia before it dipped back under unchanged in London and then climbed back towards its earlier high by about 1:30PM EST, but it then dove back lower into the close and ended near its late session low of $134290 with a loss of 0.71%. Silver slipped to as low as $17.148 and ended with a loss of 1.48%.
     
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    Trump welcomes weak dollar?
    RT America



    Published on Jan 25, 2018
    President Donald Trump is due to speak at the World Economic Forum in Davos, Switzerland, the first sitting US president to attend since Bill Clinton. He is expected to articulate an America-first agenda and a more isolationist view, departing from the theme of “creating a shared future in a fragmented world.” RT America’s Bart Chilton reports.
     
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    Second Ship Carrying Russian Gas May Be Headed for U.S.

    January 25, 2018 by Bloomberg

    [​IMG]
    The 285-meter LNG carrier Provalys has capacity to haul 153,000 cbm of liquefied natural gas.

    By Naureen S. Malik and Rob Verdonck (Bloomberg) — A second tanker carrying Russian natural gas may be on the way to the U.S., following in the footsteps of a ship now sitting near Boston Harbor with a similar cargo.

    The Gaselys tanker, which has been sitting for two days in the waters outside of Boston, carries liquefied natural gas originally produced in Siberia, according to vessel tracking data. The ship, poised to dock at Engie SA’s Everett import terminal, would be the first LNG shipment from anywhere other than Trinidad and Tobago in about three years.

    Now Engie is poised to pick up a second Russian cargo from northern France that may land in Massachusetts on Feb. 15, according to Kpler SAS, a cargo-tracking company. The tankers would arrive at a time when New England is paying a hefty premium for supplies as pipeline capacity limits flows of cheap shale gas from other parts of the country in the peak demand season.

    Commentary: A Tale of a Tanker, Russian Gas, Sanctions and Energy Politics

    The tanker named Provalys was sailing to France’s Dunkirk terminal to pick up LNG on Friday and unload a small amount of it nearby in Belgium before heading across the Atlantic, the cargo tracker said. Engie couldn’t be immediately reached for comment about this shipment.

    Gaselys loaded its cargo at the Isle of Grain terminal near London, where another tanker had unloaded the Russian LNG. French energy giant Engie bought the cargo on the spot market “due to the high natural gas demand during the recent record cold snap,” Carol Churchill, a spokeswoman at Engie’s Everett terminal said in an email Wednesday.

    LNG produced from Trinidad was already committed, so Engie looked for uncommitted cargoes with the proper fuel quality that could be delivered by tankers compatible with the Massachusetts terminal, she said.

    “Boston needs it because there are constraints on pipeline capacity from the Gulf Coast to the Northeast and no one has been able to build pipelines from the shale plays in the Northeast to demand centers,” said Jason Feer, head of business intelligence at ship-broker Poten & Partners Inc. in Houston. For the global gas trade, “it signals the continuing evolution of the LNG market from a point-to-point kind of market to a more fully commoditized market.”

    Spot gas for delivery on Enbridge’s Algonquin pipeline into Boston and other New England city gates jumped 28 percent on Wednesday to $15.17 per million British thermal units after tripling the previous day, according to the Bloomberg assessed price. By contrast, the Dominion South Point spot price, a proxy for the country’s most prolific gas producing region in Appalachia, was at $2.79. The price at Henry Hub in Louisiana, the U.S. benchmark, was $3.54.

    It’s hard to know how much Russian gas is in the Gaselys shipment. The actual molecules were a mix of gas of varied provenance, coming as they did from a storage tank in the U.K. that also contained fuel from Algeria, Trinidad and Tobago and Qatar, among others. What we do know is that Engie bought the cargo from Petroliam Nasional Bhd and that the Malaysian company in turn bought it from Yamal LNG operator Novatek PJSC. It was the first cargo from the Siberian plant.

    The Gaselys tanker was sailing toward Boston when it made a u-turn in the Atlantic toward Spain before reversing to resume its original course. Its schedule since leaving the Isle of Grain, a global hub to import and reexport LNG from almost exporting countries, was determined by available storage space at Everett and shipping and safety protocols, Engie’s Churchill said. A typical LNG tanker carries about 3 billion cubic feet.

    “If there is a controversy, it should be that there is no way to move a cargo of LNG from the Gulf Coast to the Northeast because of the Jones Act,” Feer said. There are no U.S. built, flagged and crewed LNG carriers, and the law prohibits fuel chilled on the Gulf Coat being loaded onto a ship for Boston. Feer noted that the U.S. already imports other Russian commodities, including Urals crude.

    Engie hasn’t expressed concerns about the 1920 shipping law. “No, we are not pursuing a Jones Act waiver,” Churchill said previously in a Jan. 8 email.

    © 2018 Bloomberg L.P

    http://gcaptain.com/second-ship-carrying-russian-gas-may-be-headed-for-us/
     
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    Is This The World's Most Critical Pipeline?
    [​IMG]
    by Tyler Durden
    Fri, 01/26/2018 - 03:30


    Authored by Luis Colasante & Sergio Mazodilla via OilPrice.com,

    The Southern Gas Corridor, connecting Azerbaijan to the world’s largest economic block, is one of the most important infrastructure pipeline projects worldwide, bringing Caspian gas into Europe.


    [​IMG]

    Europe wants to become less dependent on Russian gas and use more clean energy, taking advantage of the technological advances made in the renewables sector, along with the use of natural gas.

    After 2016’s 7 percent growth, European gas consumption continued to rise through 2017. Consumption levels showed a year-on-year increase of 6 percent in the first quarter, supported by low temperatures.

    The Southern Gas Corridor is around 80 percent finalized, with the first gas flow for Europe expected around 2020. That’s great news not only for Europe, but also for the Azerbaijan economy, which stands to benefit from improved exported gas volumes, with the oil and gas sector accounting for up to 45 percent of their GDP and around 75 percent of state revenues.

    Europe’s natural gas import needs will continue to increase through the next 10 years, a result of the Netherlands and United Kingdom’s shift from gas exporters to importers, and Norway’s energy policy to freeze new oil and gas offshore projects.

    Azerbaijan will play an essential role in European energy security, not only as a European partner with a stable economy, but also a supplier with growing export potential of the much-needed commodity in a world of rising energy prices. And while the Southern Gas Corridor won’t replace Europe’s need for Russian gas, it will, however, be an outstanding actor for Southern European countries supplied by liquefied natural gas (LNG) carrying higher shipping costs.

    With gas traders exploiting the price arbitrage between the global LNG market and piped gas coming through the Southern Gas Corridor, we forecast that LNG’s market shares will continue to increase in Europe, as new fields were funded in Israel and Egypt.

    [​IMG]

    The Turkish Stream project into Europe will not be a competitor of the Southern Gas Corridor — that is the priority of the European Commission. The Turkish Stream project highlights several political and legal issues, exposing the region’s energy security and strategies aimed at rendering Europe less dependent on Russian gas.

    Assuming that negotiations will need to take place between Russia and Europe in the following months or years, if Russia doesn’t receive an iron-clad guarantee from the European Commission, it’s very likely — in line with Gazprom’s shift to the East — they’ll walk away from the project.

    Speaking of Europe’s Russian dependency, in light of the Southern Gas Corridor project’s potential impact on Europe, Russia’s pivot toward the East — Gazprom exports to China — means any additional or new supply flows into Europe will be of much use, helping the region replenish flows that will be redirected toward the growing and higher paying Asian markets of South Korea and Japan, and newcomers like Pakistan and India.

    The Southern Gas Corridor will not only offer supply into Europe, but also help dampen future upside price risk as the cost of wholesale energy (in Europe) becomes significantly susceptible to global LNG markets — a change in market dynamics affected by the region’s transition from gas exporting to importing, as seen with the United Kingdom.

    Despite the fact that expected volume flows may not necessarily be threatening to the dominant position of Russia within the region, global natural gas prices have been weak further out on the curve (NBP Sum’20 contracts onward) as ongoing Australian and Qatari LNG projects come into operation, flooding global markets — alongside the goliath that is U.S. shale gas post-2020 — with new LNG exporting capacities.

    https://www.zerohedge.com/news/2018-01-25/worlds-most-critical-pipeline
     
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    DNV GL: Oil and Gas Industry Execs Predict ‘Step Change’ for Market in 2018

    January 25, 2018 by gCaptain

    [​IMG]
    Photo: By Navin Mistry / Shutterstock

    The oil and gas industry is finally shows signs of rebound more than three years since global oil prices crashed, with senior oil and gas executives expecting a ‘step change’ in the industry’s capex, opex and R&D spending levels in 2018, according to new research from DNV GL.

    The positive outlook was released Thursday as part of DNV GL’s eighth annual oil and gas report, which provides a snapshot of industry confidence, priorities and concerns for the year ahead.

    Now, more than three years since the downturn began, confidence in industry has doubled, rising globally from 32% in 2017 to 63% this year, according to executives interviewed. Two thirds (66%) of respondents say their company will maintain or increase capital spending in 2018, compared to 39% last year, the report shows.

    The report reveals an imminent turnaround in spending on R&D and innovation after three years of cuts and freezes. More than a third (36%) of 813 senior sector players surveyed for the report expect to increase spending on R&D and innovation in 2018 – the highest level recorded in four years, according to DNV GL. Meanwhile, digitalization and cyber security will form the principal areas of R&D investment focus this year, representing 37% and 36% of respondents, respectively.

    Nearly one in five respondents (19%) cited lack of investment in innovation as a key barrier to growth in 2018, which is on a par with oversupply of oil and gas (19%), operating costs (18%), reduced exploration activity (19%) and competitive pressure (22%), the report shows.

    “Our research indicates that the oil and gas industry is becoming more confident that its successful focus on cutting costs and building new efficiencies into the value chain will last. A new optimism is now emerging, driven from a common understanding that cost levels are under control and operators can make reasonable margins from an oil price that is expected to stay lower for much longer. The winners in our industry this year are those who can continue to make a clear shift from an expansion mindset to a margin mindset, and recognize the importance of implementing new models and technologies to improve operational efficiency,” said Liv Hovem, CEO, DNV GL – Oil & Gas.

    Strict discipline will remain in the oil and gas industry, however. Half of respondents (50%) are steadfast in their efforts to increase cost control measures in 2018, consistent with 2017 (51%), suggesting permanent new discipline in the industry. Close to two-thirds (62%) believe that these are permanent changes, mirroring the results from last year’s survey (63%). This may suggest that the industry is going through a sustainable period of change.

    “Intentions to increase capital and innovation spending in 2018 come alongside a clear signal that oil and gas industry costs will not return to pre-2014 norms. The need to invest in R&D is urgent for some parts of the sector and our research shows that industry leaders plainly see the need to maintain a tight control over costs to support the leaner, smarter projects and operations that will be necessary to maintain margins in the years ahead,” added Liv Hovem.

    Other key findings from DNV GL’s research include:

    Rising confidence is also evident regionally. Europe has the most improved outlook for the oil and gas sector (up from 25% last year to 64%), with Latin America at 77% (46% in 2017) and Asia Pacific at 57% (30% in 2017), while the trend is less distinct in North America (up from 49% to 57%)

    Nearly three quarters (73%) of senior industry professionals say their organization was somewhat or highly successful in achieving cost efficiency targets in 2017

    Just 37% of senior industry professionals named the oil price as an expected barrier to growth for 2018, compared to 64% one year ago

    Nearly two-thirds (62%) of respondents expect their organization to maintain or increase headcount in 2018, compared to 43% in 2017 – 58% of respondents expect to maintain or increase operating expenditure in 2018, up from 41% last year.

    http://gcaptain.com/dnv-gl-oil-and-gas-industry-execs-predict-step-change-for-market-in-2018/
     
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    Futures A Sea Of Green Amid Relentless Dollar Disintegration
    [​IMG]
    by Tyler Durden
    Fri, 01/26/2018 - 07:05


    It's deja vu all over again as the dollar resumed its decline against all major peers on Friday amid concerns over U.S. trade policy, after a brief rally that followed Trump’s comment on favoring a stronger dollar, setting the Bloomberg Dollar Spot Index heading for its seventh weekly loss. That would be the longest losing streak since 2010.

    [​IMG]

    Meanwhile equity markets from Asia to Europe, and US futures, are a sea of green as the market meltup continues at an unprecedented pace.

    [​IMG]


    Trump’s comments on Thursday that he wants to see a strong greenback barely lifted the currency, which has been dented this week by a rise in U.S. protectionism and Treasury Secretary Steven Mnuchin’s support for a weaker dollar. Incidentally, with Mnuchin receiving rebuke from central bankers to the president himself overnight, he gave some additional clarification in Davos this morning:

    • MNUCHIN: DOLLAR'S SHORT-TERM DIRECTION 'NOT A CONCERN OF MINE ONE WAY OR THE OTHER'
    • DOLLAR COMMENTS WERE 'JUST A STATEMENT OF FACT' -TREASURY SECRETARY STEVEN MNUCHIN
    • DOLLAR COMMENTS NOT INTENDED TO VIOLATE G20 COMMITMENT: TREASURY SECRETARY MNUCHIN

    So far the dollar response to any attempt to talk up the dollar has been brief and feeble at best. "The next couple of weeks could be a watershed moment for world trade and protectionism –- with President Trump’s Davos and, more importantly, State of the Union speeches likely to set the tone for U.S. trade policy over the coming year," said Viraj Patel, currency strategist at ING Bank NV. "Were ‘America First’ policies to quickly lead to a ‘Sell America’ sentiment in global markets, then we could well see EUR/USD moving beyond 1.30 --and USD/JPY down at 100 -- by year-end," Patel wrote in a client note on Friday.

    “The market focus before Mnuchin was on monetary policy, but now it’s shifted to the U.S.’s external policy, its trade stance,” said Naohiro Nomoto, manager of foreign-exchange trading at Bank of Tokyo-Mitsubishi UFJ Ltd. “The U.S. will likely target countries with strong trading relations with America, meaning that the dollar will be top-heavy against the euro and yen this year.”

    Sue Trinh, Hong Kong-based head of Asia FX strategy with Royal Bank of Canada, wrote that President Trump’s comments that the dollar would continue to strengthen won’t probably change the emerging-market dynamic. Regardless of whether the Trump administration wants a strong U.S. currency or not, this week’s plunge is breaching technical barriers that had stood as proverbial last lines of defense against a significant gap lower.

    Elsewhere in macro, sterling was one of the main outperformers versus the dollar, trading at levels last seen on the day after the Brexit referendum in June 2016. Elsewhere, "The last time the euro was this overbought was March 2008,” says Roberto Cobo Garcia, head of G-10 currency strategy at BBVA. “There is not a fundamental justification for a 10-figure spike since mid-November."

    With the dollar tumbling, its polar opposite, China's yuan, was set for its biggest weekly advance since Sept. 1. The onshore yuan gained 0.15% to 6.3219 per dollar, extending its advance for the week to 1.3% and set to climb for seventh week, longest such run since February 2017.

    Meanwhile, equity markets were a sea of green, with european equities headed higher after a mostly bullish session in Asia. Europe's Stoxx 600 Index climbed, with personal and household-goods shares leading gains after LVMH quarterly sales beat estimates. Esewhere, aside from the luxury space, sector specific performance is relatively broad-based with other individual movers including Thales (+3%) following a positive broker upgrade at Exane and Givaudan (-2%) following disappointing earnings.

    Earlier in Asia, Japanese stocks fell while those in South Korea and Hong Kong climbed. Chinese markets were higher in which the Hang Seng (+1.3%) advanced to fresh record levels amid strength in Tencent and China’s largest banks, while the Shanghai Comp. (+0.3%) was choppy after the PBoC refrained from open market operations which resulted to a net weekly drain of CNY 320bln. The Hang Seng Index surged 1.5% to a new record high of 33154, while the Hang Seng China Enterprises index surged 2.5%, led by Chinese banks and real estate developers. Mainland participants also digested Industrial Profits which grew a slower pace, but continued to show double-digit growth for December, while FY Industrial Profits grew at its fastest pace since 2011.

    Naturally, U.S. equity futures inched higher, and were up over 10 points at 2851.50 at last check, which will force Goldman to promptly revise the bank's 2018 S&P price target which was hit in under 4 weeks.

    Elsewhere, West Texas crude oil edged higher after surging to the highest level in more than three years Wednesday, and gold resumed an advance to trade near an 18-month high. Bitcoin dropped below $11,000.

    Today's expected data is wholesale inventories, annualized GDP and durable-goods orders. AbbVie, Colgate-Palmolive, Honeywell and NextEra Energy are among companies reporting earnings.

    Market Snapshot
    • S&P 500 futures up 0.3% to 2,851.50
    • Brent futures little changed at $70.43/bbl
    • Gold spot up 0.5% to $1,355.44
    • U.S. Dollar Index down 0.6% to 88.82
    • STOXX Europe 600 up 0.4% to 400.31
    • MSCI Asia Pacific up 0.04% to 186.68
    • MSCI Asia Pacific ex Japan up 0.5% to 612.18
    • Nikkei down 0.2% to 23,631.88
    • Topix down 0.3% to 1,879.39
    • Hang Seng Index up 1.5% to 33,154.12
    • Shanghai Composite up 0.3% to 3,558.13
    • Sensex down 0.3% to 36,050.44
    • Australia S&P/ASX 200 down 0.08% to 6,050.02
    • Kospi up 0.5% to 2,574.76
    • German 10Y yield fell 0.7 bps to 0.605%
    • Euro up 0.6% to $1.2465
    • Brent Futures up 0.1% to $70.51/bbl
    • Italian 10Y yield rose 5.4 bps to 1.695%
    • Spanish 10Y yield fell 1.4 bps to 1.396%

    Top Overnight News
    • The U.S. Treasury secretary has traditionally been the chief spokesman on currency policy, though President Donald Trump’s White House has demonstrated in the past 48 hours that the practice of one message and one messenger may be a thing of the past.
    • President Donald Trump wanted to fire Special Counsel Robert Mueller in June, three people familiar with the matter said, raising concerns among his top aides and closest supporters that Trump would put himself in legal jeopardy.
    • Chancellor Angela Merkel said a new government for Germany is within reach as she began coalition talks with the Social Democrats and one of her allies set a two-week deadline
    • Countries should abide by the G-7 and G-20 agreements and shouldn’t target currency rates for the sake of international competitiveness, Japanese Finance Minister Taro Aso says on Friday
    • President Trump wanted to fire Special Counsel Robert Mueller in June, three people familiar with the matter said, raising concerns among his top aides and closest supporters that Trump would put himself in legal jeopardy
    • As the EU presents its plan for the U.K.’s Brexit transition, many governments are willing to push the expiration date beyond the December 2020 deadline they’ll set out as their official stance
    • President Donald Trump will support a path to citizenship for as many as 1.8 million undocumented immigrants brought into the U.S. as children, doubling the number of people covered by current protections from deportation, White House officials said Thursday.
    • Prime Minister Theresa May’s office slapped down Philip Hammond after the chancellor of the exchequer said he hoped the U.K. economy would move only “very modestly apart” from the European Union after leaving the bloc.
    • As the European Union presents its plan for the U.K.’s Brexit transition, many governments are willing to push the expiration date beyond the December 2020 deadline they’ll set out as their official stance.
    Asian equities are broadly but modestly higher amid quiet conditions with both Australia and India shut today for national holidays. Nikkei 225 (-0.2%) was negative as the index gradually pared the initial support seen from a recovery in USD/JPY which reclaimed the 109.00 handle on Trump comments. Chinese markets were higher in which the Hang Seng (+1.3%) advanced to fresh record levels amid strength in Tencent and China’s largest banks, while the Shanghai Comp. (+0.3%) was choppy after the PBoC refrained from open market operations which resulted to a net weekly drain of CNY 320bln. Furthermore, participants also digested Industrial Profits which grew a slower pace, but continued to show double-digit growth for December, while FY Industrial Profits grew at its fastest pace since 2011. Finally, 10yr JGBs were slightly higher as prices retained marginal opening gains and with the BoJ also present in the market for JPY 820bln in JGBs under its Rinban operation. PBoC skipped open market operations for a net weekly drain of CNY 320bln vs. last week's CNY 590bln net injection.

    Top Asian News
    • TPG Is Said to Back $1 Billion Tata Fiber Management Buyout Bid
    • Japanese Inflation Continues Rising But No Closer to Target
    • Thailand Central Bank Head Fires Warning at Baht Speculators
    • China Economy Starts 2018 on Solid Trajectory After Profits Dip
    • China Is Said to Consider Banking, Insurance Watchdog Merger

    European equities trade higher across the board (Eurostoxx 50 +0.4%) with outperformance in the CAC (+0.8%) as LVMH tops the index (+4.7%) following their earnings, subsequently dragging the likes of Kering (+3%) and Christian Dior (+4.5%) higher in sympathy. Elsewhere, aside from the luxury space, sector specific performance is relatively broad-based with other individual movers including Thales (+3%) following a positive broker upgrade at Exane and Givaudan (-2%) following disappointing earnings.

    Top European News
    • SES, Eutelsat Extend Slide After Satellite Woes, Rating Cut
    • ECB Says Forecasters Lift Inflation Outlook for 2018 and 2019
    • U.K. Economy Caps Challenging Year With Surprise Growth Pickup
    • Magnit Plunges as Earnings, Sales Disappoint Investors Again
    • Czechs Vote for President as Ties With EU, Russia in Focus
    • ‘God Is Dead’ and Other Takeaways at Credit Suisse Banker Trial

    In FX markets, there was more fast and furious action as US President Trump countered ‘weak Dollar good for trade’ claims made by Treasury Secretary Mnuchin with a desire to see a strong USD and prediction that it will get stronger and stronger. His rallying call sparked a sharp short squeeze across the board, but the Greenback is already under pressure again, albeit off worst levels vs its peers. Indeed, all G10 rivals have regained the upper hand and the DXY is back below the 89.000 handle, with key Index support levels still close enough to warrant attention (88.423 and 88.282). The AUD is outperforming just below 0.8100, while Sterling the CHF, NZD and EUR are not far behind around 1.4230, 0.9350, 0.7370 and 1.2460 respectively. USD/CAD is pivoting 1.2300 again amidst dovish sounding BoC Poloz’ rhetoric and some less bullish (for the Loonie) NAFTA noises ahead of Canadian CPI data. USD/JPY has retreated to sub-109.00 levels from around 109.75 on the Trump bounce, with solid support/bids remaining at 108.50, but options eyeing further downside by end Q1 (via 105.00 expiries in March). In short, the US President’s intervention appears to have stemmed the tide of broad Greenback selling that was veering towards an avalanche in Davos, but the overall bear trend remains intact. Finally, GBP/USD edged closer to 1.4300 after UK GDP exceeded expectations (Q/Q 0.5% vs. Exp. 0.4%, Y/Y 1.5% vs. Exp. 1.4%).

    In commodities, WTI and Brent crude futures have traded relatively sideways during European trade as energy newsflow remains light and prices pare some of yesterday’s USD-inspired losses; next up for energy traders is the Baker Hughes rig count. In metals markets, gold is also off worst levels and has retraced nearly half of yesterday’s move post-Trump, elsewhere, copper has seen relatively rangebound trade with markets likely to be swayed by fluctuations in the USD.

    Looking at the day ahead, this morning in Europe we’ve got January confidence indicators due in France along with December M3 money supply data for the Euro area. Also due in the UK will be a first look at Q4 GDP for the UK with the consensus expecting a +0.4% qoq and +1.4% yoy print. This afternoon in the US the main highlight will be the aforementioned first estimate of Q4 GDP. We’ll also get the Q4 Core PCE print (+1.9% qoq consensus), December advance goods trade balance, December wholesale inventories and preliminary durable and capital goods orders for December. For what it’s worth, the consensus is for +0.8% mom headline durable goods orders and +0.6% core capex orders. Expect Davos developments to be the other big focus for markets today including President Trump’s speech. BoE and BoJ Governors Carney and Kuroda are also scheduled to speak along with the IMF’s Lagarde at 2pm GMT and the ECB’s Coeure at 10am GMT. Over at the Fed, Bullard is due to speak in Oslo at 1pm GMT

    US Event Calendar
    • 8:30am: Advance Goods Trade Balance, est. $68.9b deficit, prior $69.7b deficit, revised $70.0b deficit
    • 8:30am: Wholesale Inventories MoM, est. 0.39%, prior 0.8%; Retail Inventories MoM, prior 0.1%, revised 0.1%
    • 8:30am: GDP Annualized QoQ, est. 3.0%, prior 3.2%; Personal Consumption, est. 3.7%, prior 2.2%
    • 8:30am: Durable Goods Orders, est. 0.8%, prior 1.3%; Durables Ex Transportation, est. 0.6%, prior -0.1%
    • 8:30am: Cap Goods Orders Nondef Ex Air, est. 0.55%, prior -0.2%; Cap Goods Ship Nondef Ex Air, est. 0.4%, prior -0.1%
    DB's Jim Reid Concludes the overnight wrap

    It may have made an assist but it’s not often that an ECB meeting gets overshadowed by a diplomatic - and somewhat confusing - war of words over currencies. Indeed, there will be plenty of people who will have to double-take their screens this morning after FX markets spun on their heels last night. Before you do though a quick 121- word summary goes as follows. Yesterday morning in Davos US Treasury Secretary Steven Mnuchin reinforced his weaker dollar rhetoric. ECB President Mario Draghi then fired an unsubtle warning shot back to Mnuchin at the ECB press conference. The EUR/USD peaked at an intraday high of just over 1% at this stage. Then, after Europe went home, a Bloomberg story hit the screens suggesting that some ECB Governing Council members were said to favour waiting until June to start tweaking forward guidance. A matter of minutes later, President Trump then announced his presence in Davos by saying that he wants to see a strong USD and that comments from Mnuchin were taken out of context. Six hours after starting the rally and EUR/USD was back to flat.

    Clearly it’s the Trump reaction to Mnuchin’s earlier comments which has left plenty – including us – confused but before we dig into that it’s worth firstly recapping how that FX volatility reverberated around markets. First and foremost, the EUR/USD closed last night at $1.240 and -0.06% on the day. However, the intraday high-to-low range of 1.40% was the second biggest since October last year. This morning the EUR/USD is hovering around $1.242. Meanwhile, after being down as much as -0.86% the USD index rallied back to +0.21% and in the process snapped a three-day losing run (although it’s back in the red this morning). In fact, amazingly, after being down versus all other G10 currencies when Europe went home, only the CHF, NOK and SEK strengthened versus the USD yesterday. It won’t come as a great surprise to hear then that FX vol (based on the CVIX) is now the highest since early October.

    Anyway, those FX moves really dictated the price action elsewhere in markets too. After trading a smidgen higher leading into Draghi’s press conference, the majority of European bourses ended in the red including the Stoxx 600 (-0.56%), DAX (-0.87%) and CAC (-0.25%) with the EUR/USD just off the highs. The DAX actually suffered its worst two-day drop (-1.93%) since August last year. Across the pond the S&P 500 and Dow ended +0.06% and +0.54% respectively. They also pared bigger gains as the USD rallied back. Meanwhile in bond markets, yields continued to edge north in Europe. In fact, by the closing bell 10y Bunds ended at the highest since December 2015 (+2.3bps to 0.607%). The periphery sold off a little more with yields in Spain and Portugal +5.4bps and +5.5bps higher respectively. Treasuries felt the full force of the day’s headlines however and in the end 10y Treasuries closed -3.0bps lower at 2.618% with an intraday range of over 6bps.

    Given that it’s fairly rare to see such high-profile comments about the USD it’s not a huge surprise to see markets react as they have however the apparent contradiction of comments between Mnuchin and Trump make this a real head scratcher. Early yesterday Mnuchin said that a “lower USD is beneficial for the US trade balance” while also reinforcing some of his other rhetoric from the day prior. The President then said last night in an interview with CNBC in Davos that “the USD is going to get stronger and stronger and ultimately I want to see a strong USD”. He also suggested that comments made by Mnuchin were “taken out of context”. Bisecting those comments and wading into the war of words was ECB President Draghi. At the ECB press conference yesterday Draghi said that “the exchange rate has moved in part because of endogenous reasons, namely the improvement in the economy, in part due to exogenous reasons that have to do with communication. But not by the ECB, but by someone else”. He added that “this someone else’s communication doesn’t comply with the agreed terms of references”.

    Trying to make sense of the Mnuchin-Trump confusion, DB’s FX Strategist Alan Ruskin believes that what you have here is two officials who like a weak(er) USD in the short-term that will help the US trade accounts and support growth, albeit to the point where strong growth will eventually support a strong USD longer-term. In Alan’s view this is a way of saying that in the short-term a weak USD is good for US trade, and in the long-term a strong USD is good because it is indicative of strong growth a healthy economy. Alan highlights that this is clearly a very confusing message to convey and it’s unlikely to either be reported or understood correctly, which doesn’t really help the message.

    In any case, he may have done so already, but the last 48 hours or so sets us up quite nicely for President Trump’s turn to take the spotlight at Davos this afternoon. With markets already on edge expect trading floors to be glued to the TV. The President is due to speak at 1pm local time in Davos (2pm GMT). Also on the agenda today is some first tier data with a first look at Q4 GDP for the US. Our US economists expect a +3.3% qoq annualized print which compares to the market consensus of +3.0% and the previous reading of +3.2%. One thing worth noting is that a reading close to our economists’ estimate would mean that it would be the third consecutive quarter of 3%-plus-inflation-adjusted output growth and the economy will have ended the year having expanded +2.7% (Q4/
    Q4). That would be the best performance since 2014.

    Finally, back to the ECB. While there were no real surprises at yesterday’s meeting it felt to us like it was the hawks who probably came away feeling slightly better about life. With the forward guidance can kicked down the road for another meeting it was instead that lack of any pushback on recent EUR appreciation by Draghi which was the biggest talking point. DB’s Mark Wall thought the press conference was a bit more balanced and highlighted that the strongest message was that the sequencing on exit and the insistence that the policy rate will remain unchanged ‘well past’ the end of net asset purchases are not just carved in stone but are triple underlined in stone. He notes that there will be changes to QE forward guidance in the coming months. The end of net asset purchases by yearend feels inevitable – the Council debate is about when to act, not when it should – and the ECB apparently wants to ensure that financial conditions decouple from the QE exit process by insisting that policy rates are not up for debate at all. It is worth adding that market pricing for a first rate hike is now mid-2019 which is when our European economists also expect the first hike. On that it’s worth noting that Draghi was asked at the end of his press conference about Weidmann’s recent comment that a rate hike in mid-2019 was consistent with data and Draghi confirmed that this timing was broadly appropriate given what is known today.

    A quick refresh of our screens this morning now shows that equity markets are generally trading firmer in Asia with the exception of Japan. The Shanghai Comp (+0.28%), Hang Seng (+1.20%) and Kospi (+0.27%) are all up while H-shares have rallied another +1.96% following the first drop of the year on Thursday. The Nikkei is -0.09% with the Yen a bit more volatile after Japan’s December CPI figures missed at the headline (+1.0% yoy vs. +1.1% expected) and core-core (+0.3% yoy vs. +0.4% expected) lines.

    Moving on. It feels like it’s almost been slightly forgotten about but Special Counsel Robert Mueller’s probe is picking up pace according to a Bloomberg story which did the rounds yesterday, with the obstruction part of the probesupposedly nearing its conclusion. It suggested that Mueller has interviewed a number of people close to Trump in recent weeks including James Comey, Jeff Sessions and the Director of National Intelligence Dan Coats and NSA Director Michael Rogers, in addition to CIA Director Mike Pompeo. It’s expected that Mueller will schedule an interview with Trump in the next couple weeks which Trump responded to in front of reporters by suggesting that” we do it under oath”.

    It’s worth highlighting that other parts of the investigation are however expected to last a while longer, including the investigation into Russia potentially interfering in the 2016 presidential election. This morning the NY Times is running a story suggesting that Trump ordered the firing of Mueller last June, but backed down after Mueller threatened to resign.

    In other news, in Davos yesterday we also heard from UK Chancellor Philip Hammond. With Brexit unsurprisingly top of the agenda, Hammond said that “we should be confident of reaching something much more ambitious than any free trade agreement that has ever been achieved”. He also added that “an off the shelf deal, whether like Canada or Norway, is not the right option”. Also in Davos, Italy Finance Minister Pier Carlo Padoan expressed concern about potential US protectionism while the IMF’s Lagarde urged that trade rules have to be fair and clear.

    Jumping to the micro now where US earnings season continues to tick along with over 20% of the S&P 500 now having reported. Yesterday we saw Caterpillar report, for who’s earnings are always worth keeping an eye on as a bit of a barometer for global growth. The numbers appeared upbeat with Caterpillar reporting that sales of retail machines in Q4 rose by the most since 2011 after they had been negative in percentage terms for every month in the two years through 2016, while overall earnings and sales figures came in ahead of analyst expectations. Guidance was also revised up for 2018 with growth gathering pace in Latin America and Europe.

    Before we look at today’s calendar, for completeness yesterday’s macro data in the US didn’t really move the dial. Initial claims jumped 17k to 233k last week while December new home sales slumped a bit more than expected (-9.3% mom vs. -7.9% expected). The conference board’s leading index for December on the other hand rose a bit more than expected (+0.6% mom vs. +0.5% expected). In Europe the only data of significance came from Germany where the January IFO business climate reading for January was reported as jumping 0.4pts to 117.6 (vs. 117.0 expected), matching the record high made back in November. Current conditions jumped over 2pts to 127.7 although the expectations gauge did slide by 1pt to 108.4

    Looking at the day ahead, this morning in Europe we’ve got January confidence indicators due in France along with December M3 money supply data for the Euro area. Also due in the UK will be a first look at Q4 GDP for the UK with the consensus expecting a +0.4% qoq and +1.4% yoy print. This afternoon in the US the main highlight will be the aforementioned first estimate of Q4 GDP. We’ll also get the Q4 Core PCE print (+1.9% qoq consensus), December advance goods trade balance, December wholesale inventories and preliminary durable and capital goods orders for December. For what it’s worth, the consensus is for +0.8% mom headline durable goods orders and +0.6% core capex orders. Expect Davos developments to be the other big focus for markets today including President Trump’s speech. BoE and BoJ Governors Carney and Kuroda are also scheduled to speak along with the IMF’s Lagarde at 2pm GMT and the ECB’s Coeure at 10am GMT. Over at the Fed, Bullard is due to speak in Oslo at 1pm GMT

    https://www.zerohedge.com/news/2018-01-26/futures-sea-green-dollar-disintegration-refuses-stop
     
  16. searcher

    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    Frontrunning: January 26
    [​IMG]
    by Tyler Durden
    Fri, 01/26/2018 - 07:53


    • World stocks set for 10th straight week of gains, euro jumps (Reuters)
    • Trump Denies Reports He Tried to Fire Mueller (WSJ)
    • Trump confronts Davos on trade abuses, talks up dollar (Reuters)
    • Dollar Resumes Slide After Rallying on President’s Comments (WSJ)
    • China to name Harvard-trained Liu He as vice premier overseeing economy (Reuters)
    • Ranking Amazon’s HQ2 Short List (WSJ)
    • North Korea exported coal to South, Japan via Russia (Reuters)
    • Trump poised for clash with DOJ over classified memo (The Hill)
    • Ackman’s Pershing Square Takes Stake in Nike (WSJ)
    • WikiLeaks' Assange to Ask U.K. Court to Lift Arrest Warrant (BBG)
    • Tax Incentive Puts More Robots on Factory Floors (WSJ)
    • Dell Technologies Considering IPO, Other Options, Sources Say (BBG)
    • Spain declares Venezuela's ambassador 'persona non grata' (Reuters)
    • Tech firms let Russia probe software widely used by U.S. government (Reuters)
    • Honeywell results beat, raises 2018 profit forecast (Reuters)
    • Worthless Auto Trade-Ins Signal Riskier Loans (BBG)
    • Spain appeals nomination of Puigdemont as candidate to lead Catalonia (Reuters)


    Overnight Media Digest

    WSJ

    - European Central Bank President Mario Draghi criticized remarks by U.S. Treasury Secretary Steven Mnuchin that a weak dollar benefits U.S. trade, signaling a fresh economic policy rift between European officials and the Trump administration. on.wsj.com/2ncc6sf

    - U.S. President Donald Trump proposed a path to citizenship for 1.8 million undocumented immigrants brought to the U.S. as children, if lawmakers agree to create a $25 billion fund to expand barriers along the Mexico border and make other changes to the immigration system. on.wsj.com/2nbVJMo

    - Dell Inc is considering a range of strategic alternatives that could transform the maker of PCs and data-storage devices, according to people familiar with the matter. on.wsj.com/2nbZf9u

    - The Iranian military has halted the routine harassment by its armed "fast boats" of U.S. naval vessels in the Persian Gulf, the U.S. military said, a turnabout that officials welcomed but were at a loss to explain. on.wsj.com/2nbtnlw

    - William Ackman's Pershing Square Capital Management LP has taken a passive stake in Nike Inc based on a belief in the sneaker giant's long-term growth prospects. on.wsj.com/2nbBH4r

    - Chinese internet giant Tencent Holdings Ltd is buying a piece of Skydance Media, the Hollywood company behind "Terminator." on.wsj.com/2nbpixE

    - Wal-Mart Stores Inc is joining with Japan's largest online retailer Rakuten Inc to bolster its efforts to compete with Amazon.com Inc in both Asia and the U.S. on.wsj.com/2ng2nkX

    FT

    - European Central Bank chief Mario Draghi took a swipe at U.S. Treasury Secretary Steven Mnuchin’s remarks on Wednesday in Davos, saying they threatened a decades-old pact between the world’s leading economies not to target currencies.

    - South Korea has hit back rapidly at U.S. tariffs on washing machines and solar panels, filing challenges and demands for compensation at the World Trade Organization.

    - The London-based business of Interactive Brokers Group , an electronic brokerage firm, has been fined just over one million pounds ($1.4 million) for poor market-abuse controls and failure to report suspicious client transactions.

    NYT

    - Wal-Mart Stores Inc on Thursday struck a deal with Rakuten Inc to start selling digital books on its website for the first time later this year and to expand its online grocery business in Japan. nyti.ms/2FirHgs

    - A federal advisory committee on Thursday recommended that the U.S. Food and Drug Administration reject a bid by Philip Morris International Inc to market a smokeless tobacco stick in the United States as safer than traditional cigarettes.

    nyti.ms/2Fikltp

    - Apple Inc has taken another step toward becoming a power in the entertainment business by scooping up the rights for a TV project from Damien Chazelle, the Oscar-winning writer and director of "La La Land." nyti.ms/2DLxtu9

    - Airbnb announced on Thursday it had named its first independent board member — Kenneth Chenault, the departing chief executive of American Express Co. nyti.ms/2BugUh0

    Canada

    THE GLOBE AND MAIL

    ** Assembly of First Nations National Chief Perry Bellegarde is urging First Nations across Canada to create their own child welfare legislation - something the federal government says it supports - to prevent more Indigenous children from entering foster care. tgam.ca/2Bu30LO

    ** The Canadian division of the troubled British construction giant Carillion Plc has filed for bankruptcy protection in Ontario, putting 7,500 jobs at risk and jeopardizing projects at dozens of hospitals, hotels and airports across the country. tgam.ca/2BvbzWA

    NATIONAL POST

    ** TransCanada Corp will need to add as much as $200 million to the cost of its $8 billion Keystone XL pipeline project after regulators in Nebraska approved an alternative to the company's preferred route through the state, according to the company's chief executive officer. bit.ly/2BwxooW

    ** Iron Bridge Resources Ltd announced it would form a new subsidiary called Iron Bridge Technology in an attempt to join the cryptocurrency and blockchain craze but also to arbitrage the difference between the value of bitcoin, currently valued at $11,188 per coin, and AECO gas, currently valued at $1.98 per thousand cubic feet. bit.ly/2Bw8PZ7


    Britain

    The Times

    - Doubts are being raised about the scale of the shortfall in the pension funds of GKN Plc, a FTSE 100 engineering giant, amid questions whether it could be used as a poison pill in the hostile takeover bid launched by industrial conglomerate Melrose Industries. bit.ly/2ndipff

    - The world's biggest drinks group Diageo Plc has revealed that sales in China have recovered from a slump caused by the government's anti-corruption drive. bit.ly/2ndswQt

    The Guardian

    - MPs have asked police to investigate if crimes were committed at the men-only Presidents Club dinner, attended by billionaires, politicians and businessmen, at which hired hostesses were allegedly groped and sexually harassed. bit.ly/2GhFoxr

    - Fracking companies must undergo financial health checks if they want to win a green light for their operations, the business secretary Greg Clark has said, as the industry faces another barrier to exploration in the UK. bit.ly/2DLBs9Y

    The Telegraph

    - Russia could cause "thousands and thousands and thousands" of deaths in Britain with an attack which would cripple the UK's infrastructure and energy supply, Defence Secretary Gavin Williamson has warned. bit.ly/2DQyQHK

    - Chelsea are losing patience with Antonio Conte's complaints about the club's January transfer activity and will warn the Italian that he cannot continue to imply he has no input into signings when they are working hard to recruit targets specifically requested by their manager. bit.ly/2FkfvM7

    Sky News

    - Pierre Moscovici, the man in charge of Europe's economic policy, has written off the chances of Britain's financial services sector getting its own Brexit deal. bit.ly/2DzpJrO

    - Mortgage approvals by British banks fell to their lowest level for almost five years last month, industry figures show. bit.ly/2BtHYwR

    The Independent

    - Sky Plc's plan to make all its channels and content available online is being sold as a way to access new customers, people who live in flats for example. ind.pn/2ncPpnG

    https://www.zerohedge.com/news/2018-01-26/frontrunning-january-26
     
  17. searcher

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  19. searcher

    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    Davos – My Personal Experience of the $100,000 Event, $60 Burgers, Massive Inequality and the Blockchain Revolution



    -- Published: Friday, 26 January 2018

    – Davos elite hear warnings of complacency akin to 2007 as economic risks grow
    – Toxic mix of infallible belief, arrogance, megalomania and economic ignorance
    – Some express concern economies are vulnerable due to imbalances, trade, geo-political tensions

    Soros: Trump creating ‘mafia state’ & ‘set on a course towards nuclear war’ with N Korea
    – Bond bear market, rising interest rates and massive $233 trillion debt are some of the many threats to global stability
    – Davos theme explores massive inequality across the globe while eating $60 hamburgers
    – Thousand private jets fly as some attendees lecture poor and middle classes about their fossil fuel consumption

    – Blockchain has potential to revolutionise the world of money and foster equality – if not co-opted by elites
    – Better spending $100,000 on physical gold stored in vault in Switzerland then $100k to attend Davos

    By Jan Skoyles. Editor Mark O’Byrne

    [​IMG]

    Two years ago I was fortunate enough to be invited to the World Economic Forum at Davos. The invite and events were paid for but everything else was not. This gave me an interesting insight into how the other half (read: 1%) live whilst not enjoying all the spoils of the forum.

    Davos for 51 weeks of the year is a fairly bog-standard Swiss ski resort, no more special than others in the surrounding areas. But when the World Economic Forum and world’s elites are in town a normal hotel room suddenly costs $500 and you have to hand over $60 for a hamburger.

    Needless to say I found myself a hotel room an hour’s drive away from Davos and stocked up at the hotel breakfast.

    We hired ourselves a little Vauxhall Astra and set-off for Davos each day. On the drive into Davos you are pulled over at various check-points by armed police who are clearly wondering why someone in their ski gear (it’s the only warm thing I own) and a tiny rental is heading in that direction. You have to prove that you have a access to the WEF events whilst passport and your car are checked to ensure you’re not going to disrupt the air of calm and power.

    The cost of securing Davos is reportedly over $9 million. The whole time you are proving that you are not a security threat multiple helicopters are passing over head bringing those that the armed men are protecting, straight into the heart of the mountain village. Here shops have been converted into hubs by big banks and tech companies looking to host the global elite and black town-cars wait in disabled bays for their clients to finish the latest ground-breaking speech or key meeting.

    [​IMG]
    Davos elite jet into Davos while lecturing humanity to cut down on fossil fuel.
    Source: Twitter via Europa Guardian (@EuGu_) January 21, 2018

    The cost of admission to Davos is made up of the membership fee (over $50,000) and the actual annual ticket (around $20,000). Of course the majority of individuals attending are not covering these costs (or any other costs during the week), they are politicians, wealthy business men and other poweful people hosted by large corporates looking to curry favour.

    The 48th Forum of Davos is running under the theme of “Creating a Shared Future in a Fractured World”.

    The people who regularly attend Davos are certainly good at talking about those who will never even hear about Davos, let alone attend themselves. But it is tricky to imagine how a group of people who don’t blink at a free ticket worth nearly $100,000 (taking sundries into account) are able to relate to the mass of humanity who have so little.

    This is a common criticism of Davos. This year, particular heed should be taken. At the start of the week bank CEOs, Nobel prize wining economists and top investors expressed concern that markets were too complacent about the current state of play. Whilst many market signals suggest we are well-past the financial crisis, cracks are beginning to show. Indeed there are growing signs of “irrational exuberance” and bubbles in stock markets as explored in our podcast released yesterday.

    These levels of complacency have not been seen since 2007, about the time that Roubini, Shiller, GoldCore (trading as Gold and Silver Investments Limited) and a few others were shouting for everyone to wake up. Indeed, we at GoldCore began warning about surging debt levels and the risk of a financial crisis in 2005.

    The global elite should pay attention to this given the theme of the year. Since the financial crisis we have seen the number of billionaires more than double. We are also in the worst period of inequality since 1820, according to the OECD. This is disturbing, particularly for those at Davos flying the flag for globalisation, reduced protectionism and increased trade.

    “We are seeing a paradox of high returns and high anxiety,” BlackRock chief exec Larry Fink wrote in his annual letter to the heads of the world’s biggest companies. “Since the financial crisis, those with capital have reaped enormous benefits. At the same time, many individuals across the world are facing a combination of low rates, low wage growth, and inadequate retirement systems.”

    As Bank of England Chief economist Anthony Haldane reminds us, this is bad news for the Davos Few, there is rising evidence that extreme inequality harms, durably and significantly, the stability of the financial system and growth in the economy.”

    Yet, where is the incentive to pay attention? Stock and bond markets are at record highs (as are property markets where most billionaires reside), corporate taxes in the United States and Britain are falling, and every major economy is performing well – superficially at least. Billionaires and leaders of the West have very little to complain about.

    [​IMG]
    Click to listen to podcast

    But they must. The financial system can no longer afford to be celebrated whilst simultaneously ignoring the many imbalances and risks. Many are now warning against complacency and urging us to learn the lessons of the past and from financial history – distant and more recent. Of particular concern this year is the rise in populism and how this may hinder attempts to avoid another financial disaster and may create a geo-political disaster in the form of a World War.

    Bond bear market is underway

    As we discussed earlier this week, the bond bear market has been signalled by Bill Gross. He has now been joined by Bridgewater’s Ray Dalio who has warned that a rise in yields could spark the biggest crisis for fixed-income investors in almost 40 years. He confirmed that we are now in a bond bear market, that could get worse.

    “A 1 percent rise in bond yields will produce the largest bear market in bonds that we have seen since 1980 to 1981,”
    This isn’t the first time Dalio has expressed such a concern about the bond market, Zerohedge were quick to remind us:

    Readers may recall that when addressing the NY Fed in October 2016, Dalio made virtually the same prediction when he commented on the bond market’s DV01:

    … it would only take a 100 basis point rise in Treasury bond yields to trigger the worst price decline in bonds since the 1981 bond market crash. And since those interest rates are embedded in the pricing of all investment assets, that would send them all much lower.

    Dalio is referring to the record DV01 in the bond market, which according to the latest OFR report released in December, has risen to $1.2 trillion: that’s the P&L loss from a 100bps rise in rates.

    The watchdog found that “valuations are also elevated” in bond markets. Of particular interest is the OFR’s discussion on duration. Picking up where we left off in June 2016, and calculates that “at current duration levels, a 1 percentage point increase in interest rates would lead to a decline of almost $1.2 trillion in the securities underlying the index.”

    [​IMG]

    The following includes excerpts from a Bloomberg article highlighting the key concerns from some of the Davos attendees this year.

    One of the most interesting was Jes Staley, CEO of Barclays expressing concern that we are returning to 2006:

    “I do feel it’s a little bit like 2006, when we were all talking whether we’ve solved the riddle of economic crises.”

    CHINA
    The world’s second-largest economy surprised on the upside through 2017, but is beginning to show renewed signs of cooling. A plan to reduce risk in the financial system has slowed credit growth, but the country’s debt pile, equivalent to about 264 percent of gross domestic product in 2017, remains a concern.

    How the Chinese authorities rein in borrowing without tipping the economy over will be one of the year’s biggest challenges.

    “I think of China as probably being the epicenter if we got hit by a global recession,” said Rogoff.

    [​IMG]

    GLOBAL DEBT
    It’s not just China. Global debt rose to a record $233 trillion in the third quarter of 2017, more than $16 trillion higher from the end of 2016, according to the Institute of International Finance. Private non-financial sector debt hit all-time highs in Canada, France, Hong Kong, South Korea, Switzerland and Turkey.

    As interest rates begin to increase, borrowers might start to feel pain even though the ratio of debt-to-GDP has fallen as growth accelerated.

    “We’ve seen the world leverage up,” said Tim Adams, the institute’s president who will be in Davos. “It’s been an incredibly low rate environment which I suspect is going to change.”

    INTEREST RATES
    The trigger for the end to that environment could be an inflationary surge that forces central banks to dump their piecemeal approach to reversing the emergency stimulus of the past decade.

    Staley believes we’re currently in a depression-era style system:

    We’ve got a monetary policy that’s still in the remnants of the depression era. We’ve got very little capacity in the capital markets to deal with a real move in interest rates.”

    The Bloomberg article goes onto say:

    With economies expanding so quickly, commodities prices are picking up and manufacturing gauges are pointing to supply constraints. The U.S. also just slashed taxes, and some big employers, like Walmart Inc., are beginning to lift wages.

    “We could start to see inflation rising more than most people think in financial markets which means the Fed and other central banks will have to raise rates sooner and faster,” said Nariman Behravesh, chief economist at IHS Markit. “That could rattle things up.”

    Anne Richards, chief executive of M&G Investments, also told Bloomberg separately about her concerns for potential for higher interest rates. “If interest rates go up meaningfully over the next 12 months, there will be a bunch of people who have borrowed money who will not be able to pay it back,” she said. “Those people are out there, and the markets are not, in aggregate, pricing that.”

    Rogoff said the “biggest vulnerability” in markets would be a sudden reversal in the trend toward lower inflation-adjusted borrowing costs.

    Rogoff also stated:

    “If interest rates go up even modestly, halfway to their normal level, you will see a collapse in the stock market…I don’t know how everything from art and bitcoin to stock prices will react as interest rates go up.”

    The Doom-sayers of Davos

    Bloomberg also highlights the dangerous collision course that economics and politics are currently on. Sadly, many politicians believe they can manage one without considering the other. Economists are also guilty of this.

    But with North Korea affecting sanctions, Brexit as uncertain as ever and Trump’s populist approach driving down the US dollar, there is little that can be ignored.

    For all of the geopolitical risks considered below, leaders saw the risks rising:

    [​IMG]

    Blockchain is forcing a wake-up call

    Now this year they are being forced to consider how these geopolitical risks are affecting the many who have so little.

    One of the main areas being discussed is the role of blockchain, the very technology that first grabbed the world’s attention because of bitcoin’s desire to operate beyond the world of the bankers and monetary and political elites.

    Blockchain is the reason I was at Davos. The theme that year was ‘The Fourth Industrial Revolution’, possibly one of the more forward thinking and interesting topics we’ve seen.

    There was a lot of chat about blockchain but a lot more about the dangers of bitcoin. Now both are being seen as a threat, and blockchain also as an opportunity.

    Most of the world’s elites, from bank CEOs to central bankers refuse to touch bitcoin. The recent price activity has (they believe) vindicated their concerns about the asset. However, they are all putting in time and money into blockchain. Safe in the knowledge that it could end up disrupting their whole world.

    Blockchain really is the leader of the next tech revolution. It has a huge amount of potential. However, the wheel wasn’t much use until you redesigned how you travelled. The same can be said for blockchain.

    Blockchain’s potential will come to nothing if the systems, approach and mindset of the Davos elite does not change. Complacency around financial markets is dangerous. The system is clearly broken but until the elites realise that the current status quo is broken then their is little blockchain can do for them.

    Blockchain demands accountability, transparency and validation. Can the Davos few cope with this?

    No expensive burger will solve the next financial crisis

    My memories of Davos are nothing like those of the elite.

    No $60 burger passed my lips and I was forced to park in the supermarket rather than have a chauffeur pull-up and rescue me from the bitter cold. I was only given access to satellite events, not the main forum yet even there there was an air of arrogance that we could all fix the world’s problems.

    My main takeaway is I’m unsure of the efficiencies achieved in a mountain resort that (at some points) was minus 18 degrees centigrade, takes a real effort to get to and is (financially, geographically and culturally) a world away from the main issues of the day.

    This is where my concerns lie. We have not solved the financial crisis that was ultimately borne out of total hedonism, greed, infallibile belief, arrogance and economic ignorance. Yet here we see 2,500 global elite (including 70 heads of state and government) at an event, the cost to attend is well in excess of the average global citizen’s annual wage.

    Whilst our leaders and great minds sit pretty in the snowy mountains of Switzerland we can be working to protect ourselves. Let’s be honest 48 years of Davos has not brought a huge amount of benefits to our day-to-day lives. Instead we have been forced to take charge of our finances and protect ourselves from the system.

    Physical gold, that is allocated and segregated may well be stored in Switzerland but it cannot be debased or confiscated by the monetary elites. As they work to make the world more connected, more digital and at risk then our cash in the bank and digital assets in our online world are becoming increasingly vulnerable.

    Ignore the noise coming out of Davos and focus on what we can control – earn more than we spend, diversify our assets, save with safe counter parties and protect our wealth with the insurance gold.

    $100,000 worth of physical gold coins and bars stored in a vault a few miles from Davos is important financial insurance and it only costs the same amount as attending Davos!

    Related reading

    Government Shutdown Ends – Markets Ignore Looming Debt and Bond Market Threat

    Is New Fed Chief A “Swamp Critter Extraordinaire”?

    Protect Your Savings With Gold: ECB Propose End To Deposit Protection

    News and Commentary

    Gold Is Heading Towards a Four-Year High (Bloomberg.com)

    Gold inches up after dropping from 1-1/2 year highs (Reuters.com)

    Trump says dollar to get ‘stronger and stronger’ (CNBC.com)

    ECB keeps policy unchanged, faces questions over euro surge (Reuters.com)

    Trump Rallies Dollar as Stocks Wobble, Crude Falls: Markets Wrap (Bloomberg.com)

    Davos team propels gold price to 18-month high, Trump shoots it down (Mining.com)

    [​IMG]
    Source: Bloomberg

    Is This The Greatest Stock Market Bubble In History? Goldnomics Podcast (GoldCore.com)

    It Is Frankly Scary – Bill White Warns Global Financial System Faces “Perfect Storm” (BrisbaneTimes.com)

    DataTrek: The 5 Scenarios That Could Crash The Market, And How To Hedge Them (ZeroHedge.com)

    Why We’re Underestimating American Collapse (ZeroHedge.com)

    The Dark Side of America’s Rise to Oil Superpower (Bloomberg.com)

    Markets Are About to Get Ugly According to These Charts (Bloomberg.com)

    Gold Prices (LBMA AM)

    26 Jan: USD 1,354.35, GBP 950.21 & EUR 1,087.41 per ounce
    25 Jan: USD 1,360.25, GBP 954.35 & EUR 1,095.27 per ounce
    24 Jan: USD 1,350.50, GBP 957.50 & EUR 1,093.77 per ounce
    23 Jan: USD 1,337.10, GBP 959.10 & EUR 1,091.74 per ounce
    22 Jan: USD 1,334.15, GBP 959.12 & EUR 1,087.87 per ounce
    19 Jan: USD 1,335.80, GBP 960.17 & EUR 1,087.74 per ounce

    Silver Prices (LBMA)

    26 Jan: USD 17.40, GBP 12.21 & EUR 13.99 per ounce
    25 Jan: USD 17.52, GBP 12.29 & EUR 14.12 per ounce
    24 Jan: USD 17.19, GBP 12.16 & EUR 13.93 per ounce
    23 Jan: USD 16.98, GBP 12.19 & EUR 13.87 per ounce
    22 Jan: USD 17.04, GBP 12.25 & EUR 13.90 per ounce
    19 Jan: USD 17.04, GBP 12.27 & EUR 13.89 per ounce

    https://news.goldcore.com/

    http://news.goldseek.com/GoldSeek/1516951860.php
     
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    American Greed The Real Wolf of Wall Street
    tassen777



    Published on Dec 3, 2017
     
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    Oil’s Heavy Hitters Line Up to Dive Into Mexico’s Deep Waters

    January 26, 2018 by Bloomberg

    [​IMG]
    File Photo: By Mike Mareen / Shutterstock

    By Adam Williams and Sabrina Valle (Bloomberg) — If you’re a super-major oil explorer, Mexico says it’s got a bargain for you.

    The once-giant crude nation whose output plunged in the past decade is enticing the world’s richest explorers with cut-rate prices for drilling rights to its most coveted offshore fields. The Jan. 31 auction for access to 29 deep-water tracts comes as $70-a-barrel crude lifts foreign drillers from the worst market slump in decades.

    Exxon Mobil Corp., Royal Dutch Shell Plc and Chevron Corp. are among the 21 entrants registered to bid next week, the National Hydrocarbons Commission, known as CNH, announced Thursday in a webcast. The sale will be Mexico’s biggest, in terms of fields and expected investment, since government-controlled Petroleos Mexicanos’s monopoly ended in 2013.

    Mexico’s demand for low upfront bonus payments probably accelerated interest in the auction, Horacio Cuenca, an analyst at Wood Mackenzie Ltd., said in an interview in Rio de Janeiro. The blocks also don’t require large initial investment commitments.

    “Mexico has done all it could to attract companies,” he said. “It’s going to drive interest. The blocks are very cheap.”

    Pemex, as the state-owned oil producer is known, is set to bid individually and as a partner in six groups with companies such as Chevron and Shell. Malaysia’s Petroliam Nasional Bhd also qualified as a lone bidder and as a part of five consortium groups with partners such as Cnooc Ltd. and Repsol SA.

    “This is good news,” Hector Acosta, CNH commissioner, said during Thursday’s webcast. “The fact that we have so much variety in the integration of the consortium groups — 17 bid groups and nine individual bidders — seems like good news and that we will have a good presentation of offers for the different blocks.”

    © 2018 Bloomberg L.P

    http://gcaptain.com/oils-heavy-hitters-line-dive-mexicos-deep-waters/
     
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    Blockchain Gold? News: LIVE
    Junius Maltby



    Streamed live 4 hours ago
    Looking at efforts to link METALS TO CRYPTO, as there are multiple attempts being organized and for a variety of purported reasons. Join the Junius Maltby Channel for this broadcast where we take a look at the issue and news as well as current metal prices, the dollar, deal with a scam call and even look at the Bitconnect lawsuit.
     
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    SD Weekly Metals & Markets Wrap...........

    Fund Manager: Dollar to Fall Further in 2018
    SilverDoctors



    Published on Jan 26, 2018
    https://sdbullion.com
    http://www.silverdoctors.com/precious...

    In this week’s SD Metals & Markets, fund manager David Kranzler tells us he is bearish on the U.S. dollar.

    Kranzler says in the short term the U.S. dollar is oversold and gold is extended. But long term, he sees the U.S. dollar going a lot lower, and he says gold could hit $1,400 this year. And he is also bullish on junior mining stocks.

    Contrary to what the Fed is saying, Kranzler presents evidence that the Fed is not reducing it’s balance sheet, rather, the Fed is expanding it.
     
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    Ira Epstein's End of the Day Agriculture Video 1 26 2018
    Ira Epstein



    Published on Jan 26, 2018
     
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    Ira Epstein's Metals Video 1 26 2018
    Ira Epstein



    Published on Jan 26, 2018
     
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    Ira Epstein's End of the Day Financial Video 1 26 2018
    Ira Epstein



    Published on Jan 26, 2018
     
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    Euphoria in Stocks - What Possibly Could Go Wrong?
    Silver Fortune



    Published on Jan 26, 2018
    It was a crazy week in the markets across the board.
    Would you feel confident betting against a market crash right now?
     
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    TOTE’s Plan for New Hawaii Shipping Service Put on Indefinite Hold; Construction Suspended on Four Newbuilds at Philly Shipyard

    January 26, 2018 by Mike Schuler

    [​IMG]
    File Photo. Credit: TOTE Maritime

    U.S. shipping company TOTE is putting plans for a new Jones Act service between the U.S. mainland and Hawaii on hold due to complications in securing terminal space Honolulu.

    As a result, TOTE says it will not move forward with its Letter of Intent with Philly Shipyard, which called for the construction of up to four containerships custom-built for the Hawaii trade.

    In an emailed statement on Friday, TOTE said that its plans to enter the Hawaii service are on hold as a result of its Phase 1 technical review of Piers 1 and 2 in Honolulu Harbor.

    “In September 2017, the Hawai’i Department of Transportation earmarked for TOTE access to Honolulu Piers 1 and 2 and exclusive use of the adjacent 45 acres beginning in 2020, to coincide with TOTE’s new service to Hawai’i. TOTE subsequently conducted a preliminary study of the site’s infrastructure which indicated that upgrades and improvements will be required to accommodate the new operations,” the statement said.

    “Due to the scope and timing of the upgrades and improvements, TOTE will not renew the letter of intent (LOI) with Philly Shipyard that expires on January 31, 2018.”

    In August 2017, TOTE revealed that it was behind a previously-disclosed Letter of Intent calling for the construction of up to four containerships at Philly Shipyard being built specifically for a new Jones Act shipping service between the U.S. mainland and Hawaii. For TOTE, the service would have marked its entry into the trade, pitting it against Matson and Pasha Hawaii.

    The LOI called for the initial construction of two 3,700 TEU containerships, with options to build two additional vessels. The ships were given delivery dates of early 2020 (for the first two ships) and 2021 (for the second pair), and Philly Shipyard even began working on the vessels in order to ensure on-time delivery.

    On Friday, TOTE said it is still open to working with the Hawaii Department of Transportation to update plans and a timeline for access to a Honolulu deep water terminal that would allow commencement of the new service, however, no specifics were provided.

    Philly Shipyard said in its own statement that as a result of these new developments, the shipyard has suspended all construction activities on the vessels as it assesses its options.

    “Based on these developments, the project to build Hulls 031-034 as containerships is being put on hold,” the shipbuilder said. “PSI is suspending substantially all construction-related activities on these vessels, including design, planning and procurement work. As previously disclosed, PSI has placed orders for all major long-lead items for the first pair. If these orders were to be cancelled, then the cancellation costs would be substantially lower than the value of the orders placed.”

    “PSI intends to resume this project when there is more clarity regarding the new order situation and related capital requirements. Accordingly, PSI is exploring alternatives in order to secure contracts and financing for these vessels.”

    http://gcaptain.com/totes-plan-for-new-hawaii-shipping-service-put-on-hold/
     
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    Ikea founder dies aged 91 after setting the business up when he was just 17 that is now worth £51bn with 412 stores... but despite his wealth he wore second hand clothes and drove 15-year-old car
    • Ikea founder Ingvar Kamprad has died at his Swedish home, the company says
    • Notoriously frugal 91-year-old billionaire was listed as world's fourth richest man
    • He said he regretted his Nazi past and that it was the biggest mistake of his life


    Read more: http://www.dailymail.co.uk/news/article-5321677/Man-founded-Ikea-died-aged-91.html#ixzz55U82WQFl
    Follow us: @MailOnline on Twitter | DailyMail on Facebook
     
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    World's largest ATM makers reveal hackers are targeting US machines and forcing them to spit out cash in scheme known as 'jackpotting'
    • Hackers can make the machines spit out cash from a remote location
    • It is unknown how much cash has been lost because of the trend
    • ATMs in more than 12 countries in Europe as well as some in Asia have already been attacked
    • The cases now reported by two ATM companies are the first in the US


    Read more: http://www.dailymail.co.uk/news/article-5322029/ATM-makers-reveal-hackers-targeting-machines.html#ixzz55VGA4duo
    Follow us: @MailOnline on Twitter | DailyMail on Facebook
     
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    Gross Domestic Problems



    -- Published: Sunday, 28 January 2018

    By John Mauldin

    The Plow Horse Speeds Up
    Libraries and Typewriters
    Better Mousetraps
    Sonoma and San Diego

    Fictitious Wall Street villain Gordon Gekko famously declared, “Greed is good.” I think actual Wall Street titans would mostly disagree. They would change one word. Instead of “greed,” they would say, “Growth is good.” That is Wall Street’s real mantra. Growth is the magic elixir we all need.

    [​IMG]
    Getty Images

    The question, if we define growth as good, is how do we measure it? Presently we use gross domestic product, or GDP. But GDP is showing its age in the 21st century. The measure was actually invented in the late 1930s when President Roosevelt needed some way to prove that his policies were working. And at 85 years old, the old formula may be nearing time for retirement.

    The only way for Roosevelt to show that his policies were working was to put government spending inside the GDP number. There was vicious fighting among economists over whether he should be allowed to do so. Many economists even argued that military spending should not be included in GDP because it didn’t produce anything. And it’s true that overreliance on GDP has often sent policymakers and business owners in wrong directions. We need a better yardstick.

    First, we must next decide what, specifically, a newly formulated GDP should measure and how – and that’s a thornier question than you might think. Today we’ll wrestle with that question and with some of the implications of changing how we measure growth.

    These are exactly the types of pressing questions we will be attempting to answer at my upcoming Strategic Investment Conference. By “we,” I mean the hand-selected, A-list cast of economic, investment, and geopolitical powerhouses who will speak, and the audience that will respond to them. And for SIC 2018 we really do have an all-star group, including “bond king” Jeffrey Gundlach, hedge fund titan John Burbank, renowned historian Niall Ferguson, and some 20 more brilliant minds. At SIC you will get their latest and best thinking. Better yet, SIC is small enough that you can usually find the speakers in the hallway or after hours and interact with them.

    In addition, there are a couple of hundred “core” SIC attendees who come every year. They represent a remarkable range of talent, experience, and wisdom. Some of them really ought to be on the stage. Instead, they’ll be sitting with you, and you’ll find them friendly and ready to swap ideas. We’ve seen countless business relationships form at SIC, and many more will happen this year. I hope you’ll join us, March 6–9, in San Diego.

    Now, let’s see how we can fix the GDP problem, starting with where we are right now.

    read his outlook anyway, because he breaks his estimate down to the components of GDP to show how he arrived at 3.3%.

    The GDP formula is C + G + I + NX, where

    C = Consumer spending
    G = Government spending
    I = Private investment
    NX = Net exports.

    Net exports is exports minus imports, so it’s a negative number for a country like the US that runs a trade deficit.

    To get GDP, you just estimate the change in each component, weight it by the appropriate amount, and add the components together.

    That’s easy enough, but the calculation ignores whether those are the right components and how to define them. The result is a lot of potential distortion. For example, very little happens to GDP if you do your own housekeeping. You consume some cleaning products, but your labor doesn’t count, no matter how long you scrub. But the labor does count toward GDP if you hire someone and pay that person to do the exact same work while you take a nap. The hired labor “produced” something of value, and you did not.

    To an economist, a barrel of oil selling for $100 has the exact same effect on GDP as two barrels of oil selling at $50. Silly, but that’s the way the accounting works.

    reduction in labor needed to operate a power plant as we move from nuclear or coal to natural gas or wind or solar. One company that is shutting down its coal plant and laying off 430 workers will be opening a solar plant in West Texas that will be one of the largest solar facilities in the country, operated by two workers, who may actually be part-time. Put that in your future-of-work pipe and smoke it.

    [​IMG]

    Coal power accounted for 39% of US electricity production in 2014, 33% in 2015, and 30.4% in 2016. There are 1308 coal-powered plants in the US. Assume 125 workers per plant. That’s 163,500 workers. Now cut that number by at least 80% if the plants all shift to natural gas, which they will over time. That’s a loss of 130,800 workers. And that’s assuming that they all go to natural gas and don’t go to wind or solar. This is going to happen in the next 10 to 15 years. My math could be off here or there, but not by an order of magnitude.

    We are now producing vastly more energy with far fewer workers than we did in GDP’s heyday. That’s a labor problem for sure, but it’s also a growth measurement problem. We desperately need a better method.

    [​IMG]
    Getty Images

    GDP: A Brief But Affectionate History” and “Weapons of Economic Misdirection” for the gory details.

    A key question: Is GDP completely outmoded, or does it just miss some things? If the latter, then maybe it just needs some tweaking instead of total replacement. The wickedly brilliant Diane Coyle, a University of Manchester economist, has been working on this issue for years. She proposed in a recent paper with Benjamin Mitra-Kahn a series of incremental changes that should help: better measurement of intangible goods, an adjustment based on income distribution, and some other relatively simple changes.

    Distribution effects are a problem whenever we look at GDP per capita, as we commonly do when we compare nations. Almost everywhere, income is far more concentrated at the top than it used to be, but the effect varies a lot depending on where you are. It is entirely possible, indeed it is likely in some places, for per capita GDP to rise sharply while most of the population sees no change in its living standards or economic health. An adjustment to compensate for this inequity is an excellent idea.

    That point brings up a thornier problem, though. In whatever way we measure it, is “growth” the right thing to watch? Does it really tell us what we think it does? We look at GDP growth and assume a country that has it is prospering. We think everyone who lives there must be thrilled. Often, they have little reason to be.

    The assumption works in the other direction, too. If GDP is flat or falling, we see a recession and react accordingly. That is particularly the case with political leaders and central bankers, who then introduce policies to solve the perceived problem. These policies can be damaging if the problem is less serious than central bankers think it is. This may be happening in the US right now.

    We’re asking GDP to do something it can’t. What we want is a benchmark of economic progress. Are a country and its people generally better off economically than they were last year or five years ago? If so, by how much? Then we can start to know which policies might help and which might hinder progress. Business owners would be able to make better decisions, and ultimately everyone should feel the benefits.

    The problem is, measuring concepts like income inequality may differently skew the witches’ brew that is GDP. The only part of the economy that is really subject to serious increases in productivity is manufacturing; and, as noted above, manufacturing involves less than 9% of the workforce. It is hard to get increased productivity out of service workers. Now, you can use technology to replace them, but that hardly improves their situation, even if it does increase the production of gross domestic stuff per dollar spent.

    People have proposed such measures. In 2013 the Skoll World Forum launched the Social Progress Index, defined as “the capacity of a society to meet the basic human needs of its citizens, establish the building blocks that allow citizens and communities to enhance and sustain the quality of their lives, and create the conditions for all individuals to reach their full potential.”

    [​IMG]
    socialprogressindex.com

    Some of those indicators could be hard to pin down. I don’t see how you put a number on “religious tolerance,” or “tolerance for homosexuals,” for instance. But the creators of the index are on the right track in that they are attempting to measure well-being. I am not certain how widely accepted such a measure would be, but it’s a start.

    Another effort appeared in a 2010 book by economists Joseph Stiglitz, Amartya Sen, and Jean-Paul Fitoussi, called Mismeasuring Our Lives: Why GDP Doesn’t Add Up. Their suggestion is to continue using GDP but add other data points to clarify it. They would use things like life expectancy, debt levels, educational achievement, and other social progress metrics.

    The World Economic Forum, which had its annual shindig in Davos last week, took another stab at this problem with its “Inclusive Development Index.” It too supplements GDP with other progress indicators.

    [​IMG]
    The WEF paper says GDP is fine as a top-level measure, but growth is a means to an end, namely better living standards. Only by looking at those living standards can we know if GDP growth is accomplishing what it should.

    By WEF standards, the “most inclusive” advanced economies are mostly European. The US and Canada are not in the top 10. The most inclusive emerging economies list is more interesting. Azerbaijan? Really?

    [​IMG]
    Lithuania leads the list, and from what I’ve heard, it probably deserves to do so. (We have employees in Lithuania, and they are excellent and productive workers, as are our Eastern European staff. We are truly a worldwide virtual company.) The other countries on the list look like a strange mix at first but make more sense after some thought. Several live in the shadow of much larger neighbors, so maybe they are more willing to innovate. This list would be a good starting point if you have money to deploy in emerging markets.

    That’s a good thought: Countries that are growing in a fair, sustainable way should attract investment. Often they don’t, because investors want quick profits. Look at the move by corporations to increase the number of temporary workers and contract workers so that they are not so much paying for employees as paying money for actual production, without having to cover a lot of the extra benefits that normally go along with traditional employment.

    This is a particular complaint that I hear from the friends of my kids, especially the Millennials. They need to hold two part-time jobs in order to make ends meet, and generally those are not jobs that pay a great deal. The gig economy is not all that it’s cracked up to be. The drive by senior management to create short-term profits and to see employees as liabilities rather than as partners in the business process will create a great backlash in coming years.

    I’m going to stop here because the next section of the letter would be at least as long as this letter is so far. But let me tease you for next week. I think I’m getting ready to start talking about the probability of a recession before the 2020 election cycle. I see structural problems, monetary policy errors, and a tax cut that is not going to produce the results that the Reagan tax cuts did. M2 money is not even growing at 2%. The savings rate is the lowest it has been for 70 years except for one quarter in 2005; and even though consumer spending was strong last quarter, it came from much-reduced savings and borrowing, much of it on credit cards as a result of the two hurricanes and other disasters and longer-term challenges.

    So while on the surface 4.4% nominal GDP growth and 2.6% real growth look pretty good, when you really begin to inspect the engine of growth, you find less under the hood. The velocity of money keeps falling. Our demographics mean that we are not adding workers, and the latest immigration proposal would reduce the number of immigrants and potential workers. And while I am all for allowing the so-called Dreamers to be allowed to stay in this country – the only home country they have known – we do need to be a lot more strategic about allowing potential workers into this country.

    After all, GDP is simply the number of workers times productivity. With the number of workers tailing off and with productivity as weak as it has been, the sugar high that the economy has been on is going to wear off. Let me hasten to say, I don’t think nearly enough credit has been given to Trump for changes in the regulatory environment. It’s not merely the reduced number of regulations, it’s the attitude of the regulators that I keep hearing businessmen talk about. Given that I am in highly regulated businesses, I hope to enjoy that new environment sooner rather than later.

    Sonoma and San Diego

    I will be in Sonoma with my friends at Peak Capital in late February, and then of course I’ll head to San Diego for my conference. I’ll arrive a few days early and maybe stay an extra day just to relax from the adrenaline rush.

    My travel seems to have slowed down somewhat, as more people have been coming in my direction lately, keeping me from having to get on the road. And that is a good thing.

    Being in and out of the cold in Boston last week – even though I was dressed for the weather – must have weakened my immune system, and then I sat in the plane across the aisle from somebody who was coughing his lungs out. But whatever the reason, I have had a serious head cold that is finally starting to get somewhat better. Last night was the first decent night’s sleep I’ve had. But I shouldn’t complain, as I rarely get sick. And at least I haven’t had a run-in yet with this season’s flu, which I am told is really devastating.

    I’m spending a great deal of time on the phone, talking with speakers who will join us at the Strategic Investment Conference, going over details and getting a heads-up on where they are going with their presentations. I am actually shuffling the speaking order around in order to make things flow better. Planning this conference is my personal art form, and from the response I get, it seems I do a reasonably good job. But it helps to have an incredible team. Shannon Staton is the primary reason it all comes together. We are looking to add one or two more speakers and panel members that I think would be strategic, but with the conference just six weeks away, we are really having to lock things in.

    Let me wish you a great week, and I think I will make myself some nighttime TheraFlu, which seems to help, and then began to wind down for the weekend.

    Your worried about Federal Reserve monetary policy errors analyst,

    [​IMG]
    John Mauldin
    subscribers@MauldinEconomics.com

    Copyright 2018 John Mauldin. All Rights Reserved.

    http://news.goldseek.com/GoldSeek/1517156160.php
     
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    farm talk monday 29th
    Ag Talk In The Raw



    Published on Jan 29, 2018
    i am here to talk about farming and al that goes with it.
     
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    Asian Metals Market Update: January-29-2018
    By: Chintan Karnani, Insignia Consultants
    The FOMC meeting and US January nonfarm payrolls will be the key. The US economy will see a rise in consumer spending as bonuses rise due to Trump’s tax and trickle down effects. If the Federal Reserve is aggressive then we might just see a March interest rate hike. The US dollar is oversold. Any positive news can result in the US dollar paring most of January’s losses and even gain. Bubbles happen when all financial markets rise at the same time for a long period of time. There is a global asset bubble.
     
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