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"Euphoria Turns To Terror": Dow To Open 750 Points Lower As VIX Eruption Accelerates


by Tyler Durden
Tue, 02/06/2018 - 07:07




Update: VIX SURGES ABOVE 50 FOR FIRST TIME SINCE AUGUST 2015

* * *

It's a bloodbath, with the Dow set to open 750 points lower "thanks" to the +377 fair value...




... but it could have been much worse, with S&P futures actually trading toward the highs of the overnight session after tumbling an additional 3.5% from Monday's close, as risk assets around the world crashed then modestly rebounded even as traders remain on edge over what the implosion in the vol complex means for everyone.



World stock markets nosedived for a fourth day running on Tuesday, having seen $4 trillion wiped off from what just eight days ago had been record high values.

"Playtime is officially over, kids," analysts at Rabobank said. “Rising volatility painfully reminds some investors that one-way bets don’t exist.”

"Since last autumn, investors had been betting on the ‘Goldilocks’ economy - solid economic expansion, improving corporate earnings and stable inflation. But the tide seems to have changed,” said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities.

Meanwhile, "The euphoria has turned to terror."

There was a modest bound in European bourses, which opened sharply lower in the wake of the largest ever point loss in Dow Jones Industrial Average history. London’s FTSE 100 lost 3.5% at the opening bell, with every constituent falling and financial stocks hit hardest. The Europe-wide Stoxx 600 fell 2.2 %, while Frankfurt’s Xetra Dax 30 fell 3.5%, before recouping some losses. As of this writing, core European cash equity markets trade around -1.5%/-2.0%.

In fact, as Bloomberg notes, the Stoxx Europe 600 Index at one point today slumped the most since Brexit, with every industry sector falling as much as 2 percent.

This came after massive falls on Asian bourses. Stocks in Japan and China were the worst hit, with Hong Kong tumbling over 6% in early trading. Japan’s Topix index was down by more than 6%, marking its biggest one-day fall in a year and a half, while Japan's Nikkei entered a correction, after plunging as much as 7.1%, triggering JSCC intraday margin call for Japanese index futures.




And while Asian stocks also managed to rebound modestly from overnight lows it was not before the MSCI Asia Pacific index erased 2018 gains, just like the Dow Jones, which is itself on the verge of a -10% correction.

Meanwhile, in some welcome news, there was at least a little normalcy as Treasuries extend their safe-haven rally with 10-year yield down three basis points to 2.68%, while euro-area bonds found support.

The currency market was stock-driven for another day with the dollar turning negative as European equities pared losses and S&P futures traded briefly in the green, although after the Bloomberg Dollar index was modestly in the red, it has since surge higher suggesting things are about to get ugly again.



As Bloomberg notes, major G-10 FX pairs again remain relatively immune to wild equity swings, yuan rallies after PBOC says the market will have a larger role in FX rate; USD/JPY holds close to 109.00. Haven demand eased modestly, with the yen and the Swiss franc turning defensive. The euro moved above the $1.24 handle as short-term accounts closed shorts with a loss. The Aussie remains lower after uneventful RBA policy meeting.

Whipsaw in core fixed income, early trades see fading of rally in UST, Bund and Eurodollar futures before uptick in volatility measures prompts reversal; UST/bund spread wider by 7bps with futures block trades in focus, iTraxx crossover opens sharply wider but settles close to key 260bps level. Bitcoin briefly trades below $6k level.

In the commodities complex, both WTI and Brent crude futures trade lower albeit off worst levels with prices suppressed by the ongoing global risk sentiment; the recovery for WTI has also been stalled by a failure to reclaim USD 64/bbl to the upside with energy newsflow otherwise relatively light ahead of tonight’s API inventories. In metals markets, spot gold (+0.25%) continues to benefit from its safe-haven appeal and the softer USD despite the World Gold Council stating that demand for the yellow metal fell to its lowest level since 2009 during 2017. The Bloomberg Commodity Index is trading 0.2% lower, having pared loss of as much as 0.4% earlier.

But unlike recent days, when attention was on US TSYs and the Dollar, today - and for the coming days - it will be all about the VIX, which extended its advance after Monday’s biggest-ever jump, which sent it higher by 116% on the session, heading for a level not seen since August 2011.

As of 6:39am in New York, the VIX climbed another 24% to 46.37. As discussed last night, the surge in the volatility measure is already claiming casualties, with various VIX-linked ENT set for "termination" and raising questions about the future of exchange-traded products tied to it.



And while we wait for today's trading session to unfold, here is what else happened overnight.

Bulletin Headline Summary from RanSquawk
  • European equities join the global sell-off as markets look to see whether Wall St will endure another day of heavy losses
  • That said, markets have gradually pared losses throughout the morning as commentators debate whether this is a minor blip or part of a larger correction
  • Looking ahead, highlights today include Canadian trade, APIs, NZ jobs and a slew of speakers
Market Snapshot
  • &P 500 futures little changed at 2,608
  • STOXX Europe 600 down 1.6% to 375.99
  • MXAP down 3.4% to 173.27
  • MXAPJ down 3.5% to 568.36
  • Nikkei down 4.7% to 21,610.24
  • Topix down 4.4% to 1,743.41
  • Hang Seng Index down 5.1% to 30,595.42
  • Shanghai Composite down 3.4% to 3,370.65
  • Sensex down 1.6% to 34,198.34
  • Australia S&P/ASX 200 down 3.2% to 5,833.34
  • Kospi down 1.5% to 2,453.31
  • German 10Y yield fell 4.8 bps to 0.688%
  • Euro up 0.3% to $1.2404
  • Brent Futures down 0.7% to $67.13/bbl
  • Italian 10Y yield fell 2.4 bps to 1.757%
  • Spanish 10Y yield fell 2.9 bps to 1.43%
  • Brent Futures down 1% to $66.93/bbl
  • Gold spot up 0.3% to $1,343.64
  • U.S. Dollar Index down 0.1% to 89.48
Top Overnight News from BBG
  • ECB’s Jens Weidmann says the greatest risk is now to assume that all problems are solved. “Shocks in specific regions or specific sectors of the economy can still put the euro area to an endurance test -- despite the progress that has been made in the past years”
  • RBA leaves interest rates unchanged at record-low 1.5% as seen by all 28 economists surveyed by Bloomberg; its chief, Philip Lowe, reinforced that a return of rapid wage growth remains a distant prospect despite strengthening business investment and a hiring bonanza
  • Germany’s factory orders increased 7.2% y/y in December versus estimate increase of 3.1% y/y; Germany construction PMI rose to 59.8 in January from 53.7 in December
  • Janus Henderson Group’s return to inflows proved to be short-lived, another sign that active managers have a long way to go before they stop the bleeding; the firm reported $2.9b of outflows in the three months through December, compared with the $700m of net new money it attracted in the three months through September
  • U.S. House sets Tuesday vote on stopgap spending measure
  • U.K. January BRC like-for-like retail sales 0.6% vs 0.7% estimate
  • Kuroda: Carefully watching stock markets; economic fundamentals are firm
  • RBA leaves rate unchanged; sees low wage growth to continue for a while
  • Australia December trade balance - A$1.4b vs A$0.2b estimate; Australia December retail sales -0.5% vs -0.2% estimate
Asia stocks continued the global equity sell-off and saw hefty losses across the board, as panic selling rolled over to the region following a slaughtering on Wall St. in which the DJIA (-4.6%) tumbled nearly 1200 points and briefly slipped into correction territory with sell programmes pushing the space lower but closed well off session lows amid a recovered on low volume. ASX 200 (-3.2%) and Nikkei 225 (-4.7%) slumped at the open in which losses in crude weighed on Australia’s energy stocks, while the Japanese benchmark was the worst performer amid JPY strength and with the index in a technical correction. Hang Seng (-5.1%) and Shanghai Comp. (-3.4%) were also heavily weighed amid the ongoing market turmoil and after the PBoC refrained again from liquidity operations. Finally. 10yr JGBs traded higher and tracked the gains in T-notes which were up over a point, as the ongoing stock market sell-off spurred a flight-to-quality and lifted bond across the curve which saw the Japanese 40yr yield drop to its lowest since April last year. Furthermore, today’s 10yr inflation-indexed auction from Japan also attracted stronger demand and higher accepted prices. PBoC skipped open market operations again today for a daily net drain of CNY 80bln. PBoC set CNY mid-point at 6.3072.

Top Asian News
  • Ex-Goldman Volatility Trader Sees More Blood Before Rout Ends
  • Kuroda Says 10-Year Yield Target Won’t Change ‘Even a Bit’
  • Singapore, Malaysia Agree to New Stock Exchange Trading Link
  • What Global Policy Makers Are Saying About the Stock Slide
  • Currency Fundamentals Aren’t Shifting Much: FX Macro Ranking
  • Evergrande January Contract Sales 64.4B Yuan

European equities have kicked the session off on the backfoot (Eurostoxx 50 -1.8%) in a continuation of the sentiment seen late last night on Wall Street and overnight during Asia-Pac trade. There’s been a lack of fresh catalysts in European trade for the sell-off with participants in the region catching up to yesterday’s aforementioned losses; prices have recovered modestly from initial losses but remain markedly lower with all the ten sectors firmly in the red. Losses across all sectors are relatively broad-based with some slight underperformance in financials amid the downtick in yields and a disappointing earnings update from Munich Re (- 3.9%) who sit at the bottom of the DAX. Focus in the financial sector has also been placed on Credit Suisse (-3.7%) who opened with heavy losses (-7.2%) amid fears over declines in the XIV (a product issued by the company). In the Stoxx 600, very few companies trade in the green with Intesa Sanpaolo (+1.7%) a notable exception following their pre-market earnings.

Top European News
  • ECB’s Weidmann Says Complacency Is Biggest Risk for Euro Area
  • Freezing Russian Air Hits Europe After Third-Mildest January
  • AMS Potential Convertible Bond Placement Up to EU600m
  • Investec’s Koseff, Kantor Step Down After 40 Years at Helm

In currencies, Usd/Jpy and Eur/Jpy are edging higher again as EU cash bourses pare worst losses and flight to quality flow/positioning wanes somewhat. The headline pair has rebounded above 109.00 vs circa 108.50 lows overnight and bids at that level extending down to 108.30, just ahead of strong technical support at 108.28. The cross has traded up to 136.75 from around 134.00 in Asia, as Eur/Usd briefly reclaimed 1.2400+ status and the DXY continues to struggle on recoveries above 89.6000 near term resistance (within an 89.720-370 range). Cable is back below 1.4000 and briefly took out 1.3980 ‘support’ as Sterling succumbs to more UK political/Brexit uncertainty – Eur/Gbp pulling away from 0.8900. Usd/Cad edging back down towards 1.2500 having tested 1.2550+ levels when risk aversion was running rife (Dow crashing almost 1600 points for example). Elsewhere, some marked region-specific divergence in the Aud and Nzd, as the former was hit by disappointing data (weak retail sales and an unexpected trade deficit) plus some RBA concerns about wages, household consumption and the growth/inflation outlook, if the currency appreciates too much. Aud/Usd is now under 0.7900 albeit off 0.7835 lows, while the Aud/Nzd cross has lost the 1.0800 handle and the Kiwi is back above 0.7300 vs the Greenback.

In the commodities complex, both WTI and Brent crude futures trade lower albeit off worst levels with prices suppressed by the ongoing global risk sentiment; the recovery for WTI has also been stalled by a failure to reclaim USD 64/bbl to the upside with energy newsflow otherwise relatively light ahead of tonight’s API inventories. In metals markets, spot gold (+0.25%) continues to benefit from its safe-haven appeal and the softer USD despite the World Gold Council stating that demand for the yellow metal fell to its lowest level since 2009 during 2017. Elsewhere, base metals were seen notably lower overnight in-fitting with the lack of global risk appetite with nickel said to have led the complex lower.

US Event Calendar
  • 8:30am: Trade Balance, est. $52.1b deficit, prior $50.5b deficit
  • 10am: JOLTS Job Openings, est. 5,961, prior 5,879
DB's Jim Reid concludes the overnight wrap

If you turned off your phone after dinner last night in Europe or if you had to leave early in the US you’ll be waking up to an extra-ordinary last hour on Wall Street. In fact the DOW dropped c.800 points in 10 minutes at 3pm NY time to be down -5.87% at the time. The DOW and S&P 500 eventually closing at -4.60% and -4.10% respectively - the worst day since August 2011. 10 yr Treasuries rallied 13.6bps (18bps from the day’s highs) to 2.707% - the biggest rally since June 2016. The biggest talking point though has to be the VIX which saw its biggest daily climb EVER, both in percentage and absolute terms (+116%, +20.0 to 37.32). This was the highest level since August 2015 when the Shanghai Comp.’s c8.5% drop briefly led to a vol spike after their currency devaluation. However before that you’d have to go back to October 2011 to see a higher close. Indeed if we look at the 7,077 trading days since VIX data is available (back to 1990), yesterday’s close would be in the top 96.85% percentile with most of the higher points occurring in 2008/09. Given how many products (including leverage ETFs) that have set up to exploit low vol, yesterday surely would have done some serious damage.

This morning in Asia, markets are extending the US selloff. The Nikkei (-5.23%) is on track for the largest fall since November 2016, while the Kospi (-1.36%), Hang Seng (-4.03%), and China’s CSI 300 (-2.55%) are all down as we type. S&P futures are 1.5% lower. The UST 10y yield is another c2bp lower and the House Republicans will vote later today to extend government funding until 23 March.

Indeed the last few days have really emphasised how easy it would be to get the next financial crisis if inflation really started to misbehave as most of this price action stems from a hint of it. When we published the note of the same name last September, we said the next crisis was inevitable soon and that the most likely cause over the next 2-3 years was if what we called the great withdrawal of unconventional policy coincided with higher inflation, especially given what are still record high levels of global market debts. If higher inflation materialised then central banks would be unable to respond in the way they have done in recent years (and even decades). Our structural view was that the next financial crisis was probably unavoidable before the end of the decade. In our 2018 outlook the base case was higher than expected inflation and yields but a controlled widening of spreads as the year progressed reflecting this and the likely associated higher levels of vol that this would bring. So the price action of the last few sessions is an extreme version of our 2018 view but perhaps more in line with medium term views.

For 2018 it all still rests with inflation. If US inflation is just a bit above expectations this year then our base case is still probably something we feel comfortable with (IG +25bps and HY +100bps over 2018). However if US inflation beats by more, the glue that has held the carry trade - and associated recent multi-year risk rally - will unfold very quickly and the timing of the next financial crisis will be brought forward. The problem is that a number of US labour market statistics look increasingly stretched. So could wages really break out much higher in 2018? One to ponder but Torsten Slok’s latest chart book on the stretched US labour market is useful on this.

For balance, we should say if this fails to lead to US inflation breaking out on the upside then we will almost certainly go back to carry and risk will rally back big time. So inflation is absolute key. If we get through 2018 without some pick up, economists may have to throw out all their inflation/wages models. In listening to one of our US economists Matt Luzzetti last night, he made the point that this recent move will matter in so far as in impacts financial conditions. They have tightened sharply from record easy levels but their analysis suggest that the tightening needs to last for at least 6 weeks for it to impact growth momentum. So we have some time before growth expectations should be materially influenced. Interesting Bloomberg’s March Fed hike calculator went down from 82% to 80% yesterday. Not a big move so far.

Staying with rates, a big difference yesterday was that bonds seemed to benefit from a flight to safety even though they are the root cause of the move. Interestingly DB’s Alan Ruskin has shown that consecutive weeks of higher US bond yields and lower equity prices, have become progressively less common since the 1980s/1990s, and especially since the 2008 financial crisis. Three weeks of equities down, 10y yields up (as we’ve just seen) has not happened for more than a decade. The normal crisis relationship between equities and bonds was restored yesterday.

In Europe, 10y Bunds fell as much as 4.7bps at one stage to 0.715% before paring that move to close just over 3bps lower by the end of play. The Stoxx 600 however tumbled -1.56% and suffered its biggest one day and two day fall (-2.92%) since July 2016, while the six-day tumble of -4.64% is the biggest since June 2016. However this all happened before the bulk of the US sell-off so stand by for a wild ride at the open this morning. It’s worth highlighting that the moves in the last two days have now pushed most major US/European markets into negative territory YTD.

Rounding out the stats for the US, all sectors fell with losses led by the financials, health care and industrials sectors. Wells Fargo dropped 9.2% after the story we discussed yesterday concerning the Fed banning the bank from increasing its total assets beyond their size at the end of 2017 (US$1.95trn) until it cleans up its consumer and compliance issues.

Turning to currencies, the US dollar index gained for the second consecutive day (+0.40%), while the Euro and Sterling fell -0.77% and -1.13% respectively, with the latter weighed down by softer PMI readings. In commodities, WTI oil retreated for the third consecutive day to $63.55/bbl (-0.94%). Elsewhere, precious metals rebounded given the risk off tone (Gold +0.47%; Silver +0.87%) and other base metals were mixed but little changed (Copper +0.92%; Zinc +0.79%; Aluminium -0.24%).

Away from the markets, the ECB’s Draghi seemed relatively dovish on his annual report to the EU parliament. On rates and inflation, he noted that “while our confidence that inflation will converge toward our aim of close to 2% target has strengthened, we cannot yet declare victory”. Further, he added “monetary policy will evolve in a fully data-dependent and time consistent manner” and that “….patience and persistence with regard to monetary policy is still warranted for underlying inflation pressure to build up”. Elsewhere, the Fed’s Kashkari noted in last Friday’s jobs report “we saw a little hint that wages might finally be rising…

but its’ not yet enough”. He added “it could be a blip, but let’s not ignore it”. In Germany, today may be the deciding day for Ms Merkel to form the next coalition government as talks resume at the CDU’s headquarters. The Saxony State Premier Haseloff expects a coalition deal with the SPD today and noted “we’ve covered most topics (with the SPD), just several fundamental questions on health care policy remain”. On the other side, the SPD General Secretary Klingbeil said today “is the decisive day…it’ll be decided whether we successfully close the talks or not”. He added “all of us are willing to get to a solution, but the talks are contentious”.

Now onto some of the Brexit headlines. The EU negotiator Barnier and the UK’s Brexit secretary Davis have met officially for the first time in 2018 but their respective positions seemed broadly unchanged. Mr Davis emphasised that the UK has been “very clear” on what it wants, but Mr Barnier disagreed and noted “the time has come to make a choice” and that barriers to goods and services are unavoidable if the UK leaves the customs union. For now, the EU side “will wait for an official UK position of the government, in the next few weeks”. Elsewhere, the head of the UK’s Financial Conduct Authority warned that both sides need to reach a transitional agreement for financial services by March, in part as some derivatives and insurance financial contracts may no longer be “serviceable”.

Before we take a look at today’s calendar, we wrap up with other data releases from yesterday. In the US, the January ISM non-manufacturing index was above market at 59.9 (vs. 56.7 expected) – the highest since 2005. In the details, the employment gauge rose to 61.6 - the strongest since 1997 and the new orders index rose to a seven year high. The final reading of January composite and services PMIs were unrevised at 53.8 and 53.3 respectively. In the Fed’s latest senior loan officers survey, banks reported demand for commercial and industrial loans (C&I) were broadly unchanged but weaker for auto loans and residential mortgages. Looking ahead, the survey found that banks expect to ease standards on residential mortgages and C&I loans, while tightening standards on commercial real estate and credit card loans.

The Euro area retail sales was broadly in line at -1.1% mom (vs. -1% expected), while the February Sentix investor confidence index was slightly lower than expected at 31.9 (vs. 33.2). The final reading of the Euro area January PMIs was revised slightly higher, with the composite PMI up 0.2 to 58.8 to a c11 year high and services PMI up 0.4 to 58. Across the countries, Germany’s composite PMI was revised 0.2 higher to 59 while France was revised down 0.1 to 59.7.

Elsewhere, the flash PMIs for Italy were above market, with the composite PMI at 59 (vs. 57.4 expected) and services at 57.7 (vs. 55.9 expected). In the UK, the flash PMIs were lower than expectations, with the composite PMI at 53.5 (vs. 54.6) and services PMI at 53 (vs. 54.1 expected) - the lowest since September 2016.

Looking at the day ahead, a fairly quiet data day all round with December factory orders in Germany the only release of note in Europe, while in the US the December trade balance and JOLTS job openings data is scheduled to be released. Away from that it'll be worth keeping an eye on Fed Bullard's comments when he speaks in the afternoon on the US Economy and Monetary Policy, while the ECB's Weidmann speaks in the morning. General Motors and Walt Disney are due to report earnings.

Good luck navigating what looks set to be a volatile period for markets.

https://www.zerohedge.com/news/2018...pen-750-points-lower-vix-eruption-accelerates
 

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Asian Metals Market Update: February-6-2018
By: Chintan Karnani, Insignia Consultants
This is the reason why I prefer everyone to invest in physical gold in small percentages. The value of your stock investment can fall fifty percent under a rout. I do not think gold prices will fall fifty percent under any price crashes in the next few years. There may be times when gold investment returns may not cover real inflation. Safe haven asset classes have very low returns with almost zero chances of capital erosion.
 

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Photos: Teekay’s New Icebreaking LNG Carrier ‘Eduard Toll’ Makes Historic Northern Sea Route Passage

February 1, 2018 by Mike Schuler


The icebreaking LNG carrier Eduard Toll during sea trials in Korea. Photo: Teekay

Bermuda-based shipping company Teekay has taken delivery of the icebreaking LNG carrier Eduard Toll, which has now completed its first unescorted trip across the Northern Sea Route.

Eduard Toll is the fourth of 15 Arc7 LNG carriers being built for Russia’s $27 billion Yamal LNG project and Teekay’s first of six LNG newbuildings contracted to service the project.

Over the New Year, the vessel made history as it underwent the latest seasonal independent passage by a merchant ship on the Northern Sea Route.


Photo: Teekay

Photo: Teekay
The vessel was technically accepted by Teekay in Korea at the beginning of December 2017 after successfully completing sea trials. From there, the vessel departed for her journey to the port of Sabetta, Northern Russia, via the Northern Sea Route.

At times during the trip, the unescorted Eduard Toll broke ice 1.8 meters thick at speeds of five knots astern, arriving at Sabetta ahead of schedule sometime in early January.


Photo: Teekay

Photo: Teekay
“This marked a major milestone for shipping in the arctic as this was the first time a shipping vessel made independent passage, without the support of an ice breaker, during this time of year,” Teekay said in a media release it issued this week.

“With the inaugural passage now successfully behind us, we look forward to loading for someplace sunnier as soon as Yamal LNG’s busy quay becomes available, and to doing it all over again for decades to come on the Eduard Toll and our five other five newbuilds comprising the Arc7 fleet that we own with our joint venture partner, China LNG,” said Mark Kremin, President and Chief Executive Officer, Teekay Gas Group Ltd.


Photo: Teekay

Photo: Teekay
The ship’s namesake, Baron Eduard Toll, was a Russian geologist and explorer who dedicated his life to the discovery of the Arctic and pioneered Russian Polar expedition.

Filed Under: Interesting, Maritime News Tagged With: Teekay

http://gcaptain.com/photos-teekays-...rd-toll-completes-northern-sea-route-passage/
 

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Rogue Mornings - Worst In History, Lost Dollars & The Disruptor (02/06/18)
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Peter Schiff – Dollar & Economic Crisis Bigger Than 2008
Greg Hunter


Published on Feb 6, 2018
Financial expert Peter Schiff predicts, “Now, the crash in the dollar that I envisioned (years ago) and the crash in the U.S. economy is going to be much bigger than 2008 and much more dramatic and devastating to the average American as a result of the delay. We haven’t dodged the bullet, we have ended up stepping on an even bigger landmine.”

Schiff contends it’s not a matter of “if” there is going to be a dollar crisis, it’s simply a matter of “when.” Schiff points out, “All measures of gold and silver show it is inexpensive. The reason it is inexpensive is many people have the wrong view of the state of the U.S. economy and where monetary policy is headed. That’s where the value is because so few understand. It’s just like the 2008 financial crisis, people didn’t understand what was coming. I did.”

Join Greg Hunter as he goes One-on-One with Peter Schiff, founder of Euro Pacific Capital and Schiff Gold.

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Student-Loan Crisis Worsens; Looming Defaults Strain Govt Bailout Program

by Tyler Durden
Tue, 02/06/2018 - 23:50


As the student loan bubble continues to burst, record numbers of Americans enrolling in government subsidized student loan debt-forgiveness plans, known as income-driven repayment, are on track to send the US student-loan program into negative territory, according to a report by the Department of Education's inspector general.


Debt-laden graduates search for the six-figure jobs they were promised

The plans, known as income-driven repayment, set monthly payments as a percentage of a borrower’s earnings and typically forgive balances after 10 or 25 years, depending on the borrower’s career field and debt amounts.

Overall, borrowers in income-driven repayment will repay less than what they originally borrowed, the report said, draining the program of billions of dollars in expected revenue. -WSJ

As we reported last month, nearly 40% of student loans taken out in 2004 may default by 2023 according to a report by the Brookings Institute - blowing past all previous projections.



Of note, approximately 5% of undergraduates took out private student loans in 2004, which swelled to 14% of undergraduates by 2008 - 2,901,000 students according to ticas.org. Private student loans, as opposed to federal student loans, are unable to participate in income-driven government repayment programs.

The federal student loan system had originally been projected to turn a profit of $25 billion on all loans made up to Sept. 30, 2015 - however that number has been revised down to $5 billion, according to the IG report. The income-driven repayment program alone will cost the government $11.5 billion in revenue.

“The data show the total costs for all loans...approaching an overall positive subsidy,” which translates to a net cost to taxpayers, i.e. the program going into the red - according Patrick Howard, the department’s assistant inspector general for audit.




The IG report was highly critical of the Department of Education for a glaring lack of transparency over the student loan program - which has grown to one of America's largest consumer loan portfolios. A cumulative $1.4 trillion in federal student debt is owed by 43 million Americans - which is unable to be discharged in bankruptcy. As such, the debt forgiveness program is the only hope if the six-figure job borrowers were promised before taking out a six-figure loan didn't materialize.

Republicans in Congress have criticized the debt forgiveness plan created by the Obama administration, as they say the plans are being taken advantage of on a large scale.

“What was designed as a temporary safety net has become the standard where students expect their debt to be forgiven after a certain amount of time,” Sen. Lamar Alexander (R., Tenn.), head of the committee overseeing education, told the Senate during a hearing last week. “We will not know the impact of so many borrowers being in this program for another decade, when the first set of borrowers begin to have their debt forgiven.”

The Department of Education has committed to providing more transparency going forward, stating in the report that it is "committed to the transparent communication of the Federal student loan program costs, including describing trends in repayment options that may impact future estimated costs."

As we reported last July, the US saw its largest one-month outlay on record at $429 billion, 33% higher than its July 2016 outlay - because the Treasury revised up its estimates of the subsidy cost of student loans, and to a lesser extent housing, it guarantees.



Here is the CBO explanation:

Outlays for the Department of Education rose by $31 billion (or 51 percent), because the department revised upward, by roughly $39 billion, the estimated net subsidy costs of loans and loan guarantees issued in prior years—a change much larger than last year’s $7 billion upward revision. If the effects of those revisions were excluded, outlays for the department for the first nine months of fiscal year 2017 would have fallen by $2 billion (or 3 percent).

Outlays for the Department of Housing and Urban Development rose by $29 billion, primarily because the department made upward revisions in June 2017, but downward revisions in April 2016, to the estimated net subsidy costs of loans and loan guarantees issued in prior years.

While the federal student loan debacle is going to fall on the shoulders of US taxpayers, it will be interesting to see how private lenders - such as Wells Fargo, adapt to 40% of their 2004 loans defaulting within the next five years.

https://www.zerohedge.com/news/2018...-looming-defaults-strain-govt-bailout-program
 

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Nomi Prins: Trump's New Dark Money Man Takes Over

by Tyler Durden
Tue, 02/06/2018 - 21:30


Authored by Nomi Prins via The Daily Reckoning,

During her last news conference in December, Janet Yellen stood firm on her record stating, “The global economy is doing well. We’re in a synchronized expansion. This is the first time in many years that we’ve seen this.”

While attempting to lock in her record, Yellen urged, “There’s less to lose sleep about now than has been true for quite some time.”

Well, a lot of people lost sleep these past few days. And they might lose more sleep in the days to come.

Markets were due for a correction. Whether it turns out to be something worse, time will tell.

A recent article in MarketWatch said 2018 could “be the year the stock market rally screeches to a halt.” That’s because at some point debt bubbles are going to pop, and after they do, stocks will follow.

The Fed has continued to provide what I call dark money to big Wall Street banks while they continue to buy back their shares with it.



Dark money comes from central banks. Ultimately, central banks “print” money or electronically create funds to purchase bonds or stocks. They also use tools like adjusting interest rate policy and currency agreements with other central banks.

Dark money then flows out to the biggest Wall Street banks and financial institutions. Policy makers set the tone for central bank fabrication and movements of money through markets, banks and the world.

Because of dark money provided by central banks, corporations have been piling on debt like arsonists hoarding lighters before a fire. They’ve been using that debt either to service old debt or to buy their own stocks. That move artificially elevates their share values and in turn makes more bond investors relish buying their debt.

Apple, for example, has been one stalwart that’s been riding “the borrowing bandwagon as it looks to fund its massive share buyback program.” Apple went as far as to issue $12 billion of debt in the last four months of 2017 in order to buy its own stock.

The entire U.S. primary corporate bond, or debt, market has been at record levels. There was $1.44 trillion of investment-grade issuance in 2017 compared with $1.34 trillion in 2016. There was $266.3 billion of high-yield issuance last year, that sector’s fourth-biggest year.

This debt creation can’t sustain itself forever. It doesn’t take but a tiny mistake by central bankers to throw the bond markets into disarray.

Equity markets don’t always follow right away, but they will eventually follow. And these past few days, equities marched in lockstep with the spike in bond yields.

The Fed’s balance sheet reductions until now have basically been a rounding error. But last week, the Fed sold $22 billion of assets. Is it a coincidence that stocks sold off?

But this would just be a taste of what could happen.

As the MarketWatch article I mentioned says, “If and when the bubble does pop, however, the deleveraging by lenders could create a credit crunch the likes of which haven’t been seen since the Great Recession.”

Let’s briefly review how we got here…

After the 2007–08 financial crash, the Federal Reserve starting buying $3 trillion worth of U.S. Treasury and mortgage-backed bonds from banks and the market. This epic purchasing power manipulated prices, drove down bond yields and “provided an artificial boost to the stock market.”

That’s not free market economics. The artificial nature of this move should concern any investor. The Fed’s maneuvers have only grown from there.

All told, the Fed’s book of assets has quadrupled from $914.8 billion in late 2007 to $4.5 trillion in 2014. It did this through a bond-buying program dubbed quantitative easing (QE) and in stages called QE1, QE2 and QE3. Even now the size of its asset book is over $4.4 trillion.

The Fed, or any of the major central banks that took the same course, never had any real unwind strategies for this. While outgoing Fed Chair Janet Yellen may have given speeches about how the Fed will “normalize its balance sheet back to something resembling pre-crisis days,” she really did nothing about it. The Fed has been talking about this since 2011.

Right now, we’re looking at another five years or so before the Fed’s balance sheet would normalize under the current schedule. Finally, in October 2017 the Fed supposedly began to cut its bond buying program by “shrinking the amount of its maturing bonds that it will roll over into new bond purchases.”

But as I explained, it was mostly cosmetic until a more substantial reduction last week. The question now becomes whether or not Janet Yellen’s successor, Jerome Powell, will change course.

Here’s my answer:

Don’t expect Powell’s policies to differ from Yellen’s. He also won’t change from her predecessor, Ben Bernanke, as his voting record shows us, aside from pressing for more leniency for Wall Street.

As the former number two man on the Federal Reserve Board of Directors, he has a record of pressing Congress to weaken the Volcker Rule provision of the Dodd-Frank Act. The Volcker Rule was a security measure meant to prevent banks from making risky bets using taxpayer money.

His stance dovetails with that of the Trump administration — specifically that of Treasury Secretary Steven Mnuchin, who endorsed him for the post. So Powell will be friendly to dark money creation.

While Powell may have once had some reservations about voting for the Fed’s quantitative easing (QE), or dark money creation, in the past — he ultimately voted for it.

Powell and the Fed board, under his leadership, will continue to watch for blips in the market or amongst banks. Any signs of distress, like we’re seeing now, implies more dark money will enter into the market. At the very least, I think they will hold off tapering of the Fed’s books (quantitative tightening) as promised last year.

As I revealed in my book, All the Presidents’ Bankers, the revolving door between Wall Street and Washington is very real. It is also one of the most powerful and influential aspects of government. Power and money have no real party allegiance.

See, no matter who sits in the White House, dark money calls the shots. Effective today, we have a new financial alchemist in Washington.

Don’t expect Trump to talk about his newest Dark Money Man at the Federal Reserve. By law, the Fed is supposed to be regulating Wall Street. What Trump brings to the halls of the Fed will, however, matter to us all.

A reservoir of dark money is waiting to flow into the places that offer opportunity and security. It will flow into the stock and bond markets if things get dicier. Look for a massive amount of central bank money to enter the market and infiltrate sectors like renewable energy, infrastructure and construction, blockchain innovations and cryptocurrency.

What all of this means is the more dark money entering the financial markets, the better the opportunity for investors.

While this bubble continues to grow it won’t last forever. It can’t.

https://www.zerohedge.com/news/2018-02-06/nomi-prins-trumps-new-dark-money-man-takes-over
 

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US Futures Resume Slide As VIX Rises: Dow Set To Open Down 200 As Dip Buying Fails In Asia

by Tyler Durden
Wed, 02/07/2018 - 07:02


"To Buy, or not to buy the dip", that is the question this morning across the world.




In the US, for now, the answer appears to be no, as yesterday's dead cat bounce is hanging, with S&P futures retreating, even as European stocks rebound, and while Asia started off well higher, it faded almost all gains paring earlier gains, with Chinese shares dropping and Japan and South Korea fading gains of as much as 3%. Meanwhile, S&P 500 futures are down 0.6% after gaining 1.7% Tuesday, and the Dow is set to open around 200 points lower after adding 2.3%.



Understandably, attention is squarely focused on the VIX, which is elevated and remains glued to 30 where it was at the Tuesday close, not providing much clarity in terms of direction.



“The stock market has a way of “cleansing out” the emotion and rhetoric. While we never like to see clients lose money, investors need to remember that pullbacks, corrections, and pauses are vital components to any secular or cyclical bull market. Yes – the bull market is very much alive. This too shall pass,” Brian Belski, chief investment strategist at BMO Capital Markets, wrote in note. “As such, allow the market to do its job and focus on the fundamentals of investing relative to the noise, machines, and emotion.”

Asian markets were mixed, mostly higher as the region attempted to track Wall Street's rebound where stocks found shelter from the 2-day violent market turmoil on dip buying, which saw S&P 500 briefly reclaim 2700 and the DJIA home in on the 25000 level. Australia (+0.8%) traded positive in which energy and resources names led the recovery as commodities rebounded, while Japan's Nikkei 225 (+0.2%) was initially the best performer and gained over 3% in early-trade before it gradually pared most the advances amid a choppy currency and as momentum waned. China, meanwhile, saw surprising weakness, with Hang Seng (-0.9%) and the Shanghai Comp. (-1.8%) both lifted at the open by the early rising tide, although mainland stocks then retreated amid Shenzhen volatility and after the PBoC continued to drain liquidity from the banking system with its inaction.



The broad Asian weakness was especially evident in Korea, which saw the Kospi open at the highs, only to fade all day and close at session lows.



After yesterday's sharp losses, Europe's Stoxx 600 gains 0.8% in early trade, bouncing after a seven-session selloff which sent the index to its lowest level since August 2017. The benchmark still remains down 7% since peak on Jan. 23; and is below both the 50- DMA, 200-DMA. Euro Stoxx 50 up 0.7%, DAX up 0.7%, CAC up 0.5%, FTSE 100 up 1%, FTSE MIB up 0.9%, IBEX up 1.1%.

Over in FX, it has been another day of choppy price action for the major currencies, and yet the ranges remain tighter compared to other asset classes, as they remain buffered and - so far - immune to the stock turbulence. The dollar picked up as U.S. futures pointed to a lower open and Treasury yields fell, while VIX rebounded.



The yen led gains in G-10 even as European equities traded in the green and Asian counterparts were mixed. The EUR/USD reversed gains to trade as much as 0.3% lower, with the retreat coming amid a strong BBDXY rebound that reverses an early drop of 0.2%; the USD/JPY stayed near day low of 108.92 as Treasuries remain supported; Cable dropped by 50 pips within 10 minutes, heads below 1.39 after reaching a day-high of 1.3994 in European morning as algo trading in the pair continues to dominate. According to Bloomberg, sellers of FX volatility in the majors emerged across tenors.

WTI and Brent crude futures are trending lower this morning, with the latter breaking below USD 67.00/bbls despite the last nights API crude inventory data showing an unexpected drawdown. Some of the bearish sentiment could be attributed to the latest EIA forecasts, in which the agency upped their US oil production led by shale to 11.2mln bpd in 2019 from 10.85mln bpd. In metals markets, spot gold is modestly higher whilst copper was supported during Asia-Pac trade amid the improved risk appetite.

Several Fed representatives are due to speak. Economic data include mortgage applications, consumer credit. Scheduled earnings include Fox, Tesla, Suncor Energy

Market Snapshot
  • S&P 500 futures down 0.6% to 2,673.00
  • STOXX Europe 600 up 0.8% to 375.85
  • MSCI Asia Pacific up 0.2% to 173.46
  • MSCI Asia Pacific ex Japan down 0.1% to 567.73
  • Nikkei up 0.2% to 21,645.37
  • Topix up 0.4% to 1,749.91
  • Hang Seng Index down 0.9% to 30,323.20
  • Shanghai Composite down 1.8% to 3,309.26
  • Sensex unchanged at 34,196.75
  • Australia S&P/ASX 200 up 0.8% to 5,876.81
  • Kospi down 2.3% to 2,396.56
  • German 10Y yield rose 0.2 bps to 0.694%
  • Euro down 0.2% to $1.2359
  • Italian 10Y yield fell 3.7 bps to 1.72%
  • Spanish 10Y yield fell 5.2 bps to 1.374%
  • Brent Futures up 0.07% to $66.91/bbl
  • Gold spot up 0.4% to $1,329.84
  • U.S. Dollar Index up 0.2% to 89.73
Top Overnight News
  • House passes stopgap spending bill to fund U.S. govt until March 23
  • Prime Minister Theresa May is unlikely to provide the kind of clarity on her government’s Brexit blueprint that the European Union wants by the end of this week, according to a senior U.K. official; Banks must continue to prepare for any outcome, including a hard Brexit, ECB Executive Board member and Supervisory Board vice chair Sabine Lautenschlaeger says
  • German Chancellor Angela Merkel’s bloc and the Social Democratic Party have agreed on the ministries each will get in a coalition government, people familiar with the matter said; Hamburg Mayor Olaf Scholz will be Germany’s next finance minister, DPA reports without saying where it got the information
  • Nomura Holdings Inc. issued an apology after investors in a $300 million product betting on low volatility were all but wiped out during this week’s stock-market turmoil. Nomura said it will redeem the exchange-traded notes at 1,144 yen per unit, a 96 percent discount to the previous day’s close
  • Casino mogul Steve Wynn, caught amid a deluge of sexual harassment allegations, stepped down Tuesday night as chairman and chief executive officer of the company he founded
  • Fed’s Bostic sees slow gradual rate hikes pace if growth robust: CBS
  • China Jan. FX Reserves rise $21.5b from Dec. to $3.16t, 12th consecutive increase
  • India: holds rates unchanged at 6.00% as expected; policy stance stays neutral
  • API inventories according to people familiar w/data: Crude -1.1m; Cushing -0.6m; Gasoline -0.2m; Distillates +4.6m
  • Newfangled investments linked to volatility in the stock market -- until a few years ago, obscure niche products -- have exploded in spectacular fashion. The shock waves have only just begun
  • Goldman Sachs Group Inc. Co-President Harvey Schwartz said he believes investors are confident that stocks will bounce back from this month’s rout and welcomed efforts to bring interest rates back to normal
  • An Italian court rejected a 1.8 billion-euro ($2.2 billion) civil claim filed by Parmalat SpA against Citigroup Inc. related to the food company’s collapse in 2003
  • An elated Elon Musk pulled off another seemingly impossible feat Tuesday when SpaceX launched the world’s most powerful rocket in 45 years, then flew two of its spent boosters back to the Florida coast for a spectacular, simultaneous recovery on land
In Asia, equity markets were mostly higher as region attempted to track the rebound on Wall St. where stocks found reprieve from the 2-day market turmoil on dip buying, which saw S&P 500 briefly reclaim 2700 and the DJIA home in on the 25000 level. ASX 200 (+0.8%) traded positive in which energy and resources names led the recovery as commodities nursed losses, while Nikkei 225 (+0.2%) was initially the best performer and gained over 3% in early-trade before it gradually pared most the advances amid a choppy currency and as momentum waned. Elsewhere, Hang Seng (-0.9%) and Shanghai Comp. (-1.8%) were both lifted at the open by the early rising tide, although mainland stocks then retreated amid Shenzhen volatility and after the PBoC continued to drain liquidity from the banking system with its inaction. Finally, 10yr JGBs shrugged off the initial safe-haven outflows and returned flat, as price action proved to be as indecisive as the recovery in Japanese stocks. Furthermore, the BoJ’s Rinban announcement failed to spur any market reaction as the bank kept its purchase amounts in line with the previous. PBoC skipped open market operations again today for a net daily drain of CNY 100bn.

Top Asian News
  • India Holds Rates Again to Balance Weak Growth, Strong Inflation
  • Masayoshi Son Plans Push to Cut Discount on SoftBank’s Stock
  • More Rich Chinese Forgo Hong Kong, Invest in Singapore Instead
  • Even Mainland Chinese Investors Are Abandoning Hong Kong Stocks
  • Yuan Nears Pre-Devaluation Level Despite China’s Policy Hints
European equities (Eurostoxx 50 +0.7%) are broadly higher this morning in a typical dead cat bounce. US equity futures are pointing to a negative open on Wall Street, which has capped the upside this morning. European bourses are also failing to be excited by the reports of an agreement between the CDU, CSU and the SPD to form a grand coalition. In terms of stock specific movers, earnings continue to dictate price action with earnings from Rio Tinto (flat), ABN Amro (-2.7%), Sanofi (-1.8%). The healthcare sector will come into focus when GSK report their latest financial reports at midday.

Top European News

  • Osram Sees Slowdown in Headlamps as China Car Sales Dip
  • ARM Embraces Tech Revolution Under SoftBank and Loses Money
  • Spain Nominates de Guindos as Candidate for ECB Post

In FX, the Dollar is broadly firmer against all G10 rivals apart from the Jpy, which has tested the resolve of bids at 109.00 again amidst more topside flow/heavy offers in Jpy crosses such as Eur/Jpy and Gbp/Jpy. However, the DXY has failed to sustain a rebound above near term resistance (89.600 treble top and then 89.700-750) or seriously challenge the next key tech levels above 90.000 (between 90.113-150). Hence, Wednesday could be key for the Buck in terms of whether its recent recovery continues or the end-2017 through January bear market resumes, and this also applies to Wall Street and equities in general after Monday’s rout and partial recovery yesterday. Looking at headline currency pairings, Eur/Usd is drifting lower having breached the 1.2400 level amidst conflicting headlines about a deal or no deal struck on a German grand coalition, but comfortably above the 20 DMA at 1.2303, while Cable has retreated further from 1.4000 and through a similar MA at 1.3958 to a 1.3920 low amidst reports that the EU will insist on harsh Brexit transition conditions if terms are violated. Usd/Cad remains anchored around 1.2500 after trade deficit misses on both side of the NA divide, while the Aud and Nzd are both hovering nearer recent lows around 0.7860 and 0.7300 respectively, with the Kiwi not getting much traction from better than expected NZ jobs data as attention quickly shifts to the RNBZ policy meeting later today.

In commodities, WTI and Brent crude futures are trending lower this morning, with the latter breaking below USD 67.00/bbls despite the last nights API crude inventory data showing an unexpected drawdown. Some of the bearish sentiment could be attributed to the latest EIA forecasts, in which the agency upped their US oil production led by shale to 11.2mln bpd in 2019 from 10.85mln bpd. In metals markets, spot gold is modestly higher whilst copper was supported during Asia-Pac trade amid the improved risk appetite.

Looking at the day ahead, the data calendar continues to remain fairly sparse with December consumer credit data in the US the only releases of note. However there is plenty of central bank speak due with the ECB's Nouy and Lautenschlaeger speaking in Frankfurt in the morning, while the Fed's Kaplan, Dudley, Evans and Williams are all due to speak throughout the day.

US Event Calendar
  • 7am: MBA Mortgage Applications, prior -2.6%
  • 3pm: Consumer Credit, est. $20.0b, prior $28.0b
  • 8:30am: Fed’s Dudley Speaks in Moderated Q&A
  • 10:15am: Fed’s Evans Speaks on Economic and Policy Outlook
  • 5:20pm: Fed’s Williams Speaks in Hawaii
DB's Jim Reid concludes the overnight wrap

If you’ve only been working in markets for a handful of years then treat the last 36 hours as a mild dress rehearsal for what can happen when a bear market hits. Yesterday actually felt relatively orderly though in spite of a 1,000 point range on the DOW and a c28 point range in the VIX. Orderly unless you were at the epicentre of things and an equity volatility trader. I’m teaching 2 and a half year old Maisie how to count to five at the moment and the VIX yesterday felt like watching her do that as when I ask her to count for me she says something likes this “....four, two, three, one, five”. It closed at 37.32 the previous session before climbing to 50.30 around noon London time, then collapsing to 22.42 just after the US opened 2.5-3 hours later, a spike back to 46.34 occurred less than an hour later and then after oscillating between 30-40 for the rest of the day we closed at 29.98 (-19.7%). The 50.30 print was the highest since early March 2009 when equity markets hit rock bottom. Remarkable really.

Yesterday afternoon Craig and I put a note out showing what happens 1 week, 1 month and 3 months after the largest 10 VIX spikes in history. Basically the VIX usually rallies over all subsequent periods but equities tend to be strong the week after but on average fall 3 months later. The reverse is true for bonds. See the quick note here for more details.

What might make this VIX spike slightly different to previous ones is that although it had a macro catalyst (higher inflation and yields) the scale of the wounds are mostly self inflicted within the equity derivatives product as the scale of the moves have been caused by low volatility ETPs/ETFs being liquidated, suspended and/ or suffering major losses.

In other words all the other previous major spikes have been more to do with a big macro event or a crisis. The higher average earnings print could turn 2018 into a year of higher inflation and a big macro shift but we’re certainly not in crisis territory yet.

This morning in Asia, markets are broadly higher after the positive lead from the US, but the rebound has been fading as we type though. The Nikkei (+0.84%) and Hang Seng (+0.70%) are up but have pared earlier gains of around 3%. The Kospi (-1.44%) and China’s CSI 300 (-1.13%) are now lower. The UST 10y yield is down c3bp. In the US, the House has voted 245-182 to extend government funding until 23 March. The bill will now go to a Senate vote, but one of the prior obstacle is now largely mitigated as Senator McConnell noted he’ll allow the Senate to debate the immigration bill later on if the government is not shut down this week. Elsewhere, President Trump noted “if we don’t change it (immigration laws), let’s have a (government) shutdown”.

Now recapping market performance from yesterday. US bourses were volatile with trading volumes the highest since the November 2016 election. The S&P initially fell 2.1%, then quickly recovered to trade sideways before a late rally to close +1.74% higher. The Dow (+2.33%) and Nasdaq (+2.13%) also rebounded. Within the S&P, gains were led by tech, materials and consumer discretionary stocks, with only the real estate and utilities sectors in the red.

In Europe, markets were all lower following the prior day’s selloff in US equities. The Stoxx 600 fell for the seventh consecutive day and was down 2.41% (biggest fall since June 2016), while the Dax (-2.32%) and FTSE (-2.64%) also fell. Credit Suisse dropped 6%, in part following headlines that one of its short-term EFN will be liquidated after the spike in VIX futures (from c$2bn market cap in late Jan.). Notably, CS said it has not suffered any trading losses related to the exchange traded note. Elsewhere, the VSTOXX jumped 60% back to June 2016 levels (30.18).

European government bonds benefited from the flight to safety with core 10y bond yields down c4bp (Bunds -4.3bp; Gilts -3.7bp; OATs -3.9bp). The UST 10y jumped 9.6bp to 2.803%, largely reversing the prior day’s rally. US credit indices also rebounded, with the spreads on CDX IG and CDX HY 2.8bp and 11.8bp tighter respectively. Turning to currencies, the US dollar index rose for the third consecutive day (+0.15%), while the Euro (+0.08%) and Sterling (-0.07%) were little changed. In commodities, WTI oil retreated for the third straight day (-0.36%) to $63.92/bbl. Elsewhere, precious metals weakened c1% (Gold -1.16%; Silver -0.55%) and other base metals also fell modestly (Copper -0.51%; Zinc -0.81%; Aluminium -1.19%).

Away from the markets and onto Germany. The coalition talks between Ms Merkel and the SPD are still ongoing, but Ms Merkel seemed more conciliatory. She noted “all of us will have to make painful compromises…I’m willing to do this if we can ensure that the advantages outweigh the disadvantages”. Elsewhere, a wage increase settlement was reached between the labour union IG Metall and employers. Overall, the deal will lead to 3.9% annual pay increase in 2018 and c3.5% in 2019 for union workers, which is at the upper end of expectations. This in our view should add to the evidence that inflation is indeed firming at a global level.

Finally before we recap the data and look at the day ahead, based on documents sighted by Bloomberg, the EU plans to implement the leverage ratio surcharge for globally systemically important banks, broadly in line with global standards agreed back in December. This implies large EU banks will be subjected to an extra 50bp-100bp leverage ratio buffer. Elsewhere, a spokesman for the Bulgarian presidency of the EU said there is “overall support” amongst EU members for the measure.

Now to yesterday’s data. In the US, the December trade deficit was slightly higher than expected at -$53.1bln (vs. -$52.1bln) and was also the largest monthly deficit since the GFC. In the details, exports rose 1.8% mom while imports grew 2.5% mom, with particularly strong growth in imports of consumer goods. The December JOLTS job openings was below market at 5,811 (vs. 5,961), but the quits rate edged up a tenth to 2.2%, broadly in line to last year’s readings.

Germany’s December factory orders was above market at 3.8% mom (vs. 0.7% expected) and 7.2% yoy (vs 3.1% expected), with growth mainly boosted by big ticket items in the month. The UK’s January BRC like for like sales was slightly below expectations at 0.6% yoy (vs. 0.7%), with that growth owing to a price-driven 2.9% yoy lift in spending on food. Elsewhere, France’s December budget deficit was narrower than last month at -€67.8bln (vs. -€84.7bln).

Looking at the day ahead, the data calendar continues to remain fairly sparse with December industrial production in Germany, December trade data in France and December consumer credit data in the US the only releases of note.

However there is plenty of central bank speak due with the ECB's Nouy andLautenschlaeger speaking in Frankfurt in the morning, while the Fed's Kaplan, Dudley, Evans and Williams are all due to speak throughout the day.

https://www.zerohedge.com/news/2018...s-dow-set-open-down-200-dip-buying-fails-asia
 

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Frontrunning: February 7

by Tyler Durden
Wed, 02/07/2018 - 08:22


  • Volatility Inc.: Inside Wall Street’s $8 Billion Bomb (BBG)
  • Wall Street set to fall again after Tuesday's recovery (Reuters)
  • Congress Seeking Bigger Budget Deal While Avoiding Shutdown (BBG)
  • Merkel's conservatives make big concessions to SPD in coalition deal (Reuters)
  • What were the chances? U.S. stock selloff sinks Probabilities Fund among others (Reuters)
  • An Inventor of the VIX: ‘I Don’t Know Why These Products Exist’ (BBG)
  • Oil World Turned Upside Down as America Sells Oil in Middle East (BBG)
  • With Yellen Out of the Picture, Get Ready for Trump vs. Powell (BBG)
  • Democratic House Hopefuls Out-Raise Vulnerable GOP Candidates (WSJ)
  • Get Ready for Most Cryptocurrencies to Hit Zero, Goldman Says (BBG
  • UK crops left to rot after drop in EU farm workers in Britain after Brexit referendum (Indep))
  • Navy Presses Mattis to Delay ‘Shock Testing’ Costliest Carrier (BBG)
  • Snap surges 24 percent after user growth bounce (Reuters)
  • Kim Jong Un's Sister to Become First Dynasty Member to Enter South Korea (BBG)
  • Musk’s Big Questions: Can Tesla Make Model 3s and Burn Less Cash? (BBG)
  • German pay deal heralds end of wage restraint in Europe's largest economy (Reuters)
  • Kushner, Trump Jr. May Escape Public Hearings With Help From GOP (BBG)
  • Chinese Police Go RoboCop With Facial-Recognition Glasses (WSJ)
Overnight Media Digest

WSJ

- Steve Wynn, the billionaire casino visionary considered to be the architect of modern Las Vegas, resigned Tuesday as chairman and chief executive of Wynn Resorts Ltd in the wake of sexual-misconduct allegations detailed in a Wall Street Journal investigation last month. on.wsj.com/2BZkK1Z

- Tronc Inc is in advanced talks to sell its troubled flagship newspaper, the Los Angeles Times, to billionaire biotech investor Dr. Patrick Soon-Shiong for around $500 million, a person familiar with the matter said. on.wsj.com/2C0s0us

- Space Exploration Technologies Corp successfully launched the Falcon Heavy rocket Tuesday on its initial test flight, marking another coup for founder Elon Musk. on.wsj.com/2C0Q5RX

- The White House signaled little flexibility on immigration on Tuesday, saying lawmakers must pass a bill on President Donald Trump's terms and offering no relief on the tight timeline for Congress. on.wsj.com/2C1fevy

- After years of considering the European Union's external borders set, Brussels is proposing to add some of the continent's poorest countries to check the influence of Russia, China and Turkey in the Balkans. on.wsj.com/2C28opz

- Apple Inc's acquisition of the popular song-recognition app Shazam Entertainment Ltd may adversely impact competition in Europe, European Union antitrust authorities said Tuesday, announcing they would take over the merger review from national regulators in Austria. on.wsj.com/2BZmCb1

FT

BP Plc’s fourth-quarter earnings more than quadrupled from the year before as the UK oil and gas group benefited from higher crude prices and a surge in production from new projects.

A multimillion pound criminal trial of three former Tesco Plc executives accused of fraud and false accounting in a 250 million pound ($349.05 million) scandal at the retailer has been abandoned after one of the defendants had a heart attack.

Tronc Inc is expected to sell the Los Angeles Times to Patrick Soon-Shiong, the pharmaceuticals billionaire who invested in the U.S. publisher in 2016, capping a tumultuous period for its flagship newspaper.

NYT

- U.S. casino mogul Steve Wynn resigned Tuesday as chairman and chief executive of his company, Wynn Resorts Ltd, in response to sexual misconduct allegations. (nyti.ms/2C06xSu)

- Tronc Inc, the owner of the Los Angeles Times, is close to a deal to sell the newspaper to Patrick Soon-Shiong, a billionaire Los Angeles doctor and one of Tronc's major shareholders. (nyti.ms/2nNCzvO)

- German carmaker Daimler AG publicly apologized on Tuesday after its Mercedes-Benz brand caused an outcry in China by quoting the Dalai Lama in a social media post. (nyti.ms/2nJkm39)

- SpaceX's Falcon Heavy roared into space in its debut test flight on Tuesday from a Florida launch site, in another milestone for billionaire entrepreneur Elon Musk's private rocket service. (nyti.ms/2BKkwQI)

Canada

THE GLOBE AND MAIL

** Premier Rachel Notley has instructed Alberta's alcohol regulator to block about C$70 million ($56 million) worth of wine imports from British Columbia in retaliation for proposed rules that would effectively prevent Kinder Morgan's Trans Mountain pipeline expansion. (tgam.ca/2Ep67Kl)

** Barrick Gold Corp says it will incur a pretax charge of C$429 million ($343 million) in its upcoming fourth-quarter results as a result of downgrading a portion of its gold reserves at its troubled Pascua-Lama project. (tgam.ca/2Es6mok)

** WestJet Airlines Ltd plans to increase capacity in the first quarter and full year of 2018 as it expands domestically, internationally and with its ultralow-cost carrier taking flight later this year. (tgam.ca/2Es7xnK)

NATIONAL POST
** Nutrien Ltd, the newly formed company from the merger of Potash Corp of Saskatchewan and Agrium Inc, is well on course to achieve savings of half a billion dollars in synergies annually, according to its CEO Chuck Magro. (bit.ly/2EnDAVz)

** Canadian Radio-television and Telecommunications Commission is once more asking America's tech giants for coveted online streaming data to help it plot the future of Canadian content consumption, a move that could test its clout with U.S. companies that previously refused to hand over their subscriber information. (bit.ly/2Epb4Tr)

Britain

The Times

Ocado Group Plc has raised 144 million pounds ($200.94 million) to invest in its international licensing division, despite admitting that it "didn't have to". bit.ly/2BJc0RP

Frustrated customers defecting from Barclays Plc boosted the number of net new clients won by Hargreaves Lansdown Plc to 61,000 in the six months to December. bit.ly/2BJXjy7

The Guardian

Royal Bank of Scotland Group Plc misled parliament over the extent of its mistreatment of struggling business customers, the shadow Treasury minister has claimed. bit.ly/2BIv0jf

An 18-week fraud trial involving three former directors of Tesco Plc's UK business has been abandoned after one of the defendants was taken ill. bit.ly/2BIGO54

The Telegraph

MI6 has raised concerns after a Russian oligarch with links to military hardware production was able to use the London Stock Exchange to raise an estimated 1 billion pounds. bit.ly/2BIeY9e

European regulators will assess Apple Inc's takeover of British song-recognition app Shazam, after seven countries argued the deal could limit competition. bit.ly/2BKdH1t

Sky News

An American hedge fund H/2 Capital Partners will this week hand Four Seasons Healthcare Group, Britain's biggest care home operator, a 70 million pounds ($97.68 million) lifeline even as the deadline for a long-term rescue deal is pushed back by two months. bit.ly/2BIGu6j

Eat, one of Britain's biggest sandwich chains, is considering a wave of shop closures as it becomes the latest retailer to be forced to react to a rising high street cost-base. bit.ly/2BKvG7V

The Independent

Robert Chote, the chair of the Office for Budget Responsibility, has said it was a mistake for ministers to have tried to keep the Treasury forecast, which shows Brexit is likely to do long-term harm to the UK economy, secret. ind.pn/2BIzu9Q

https://www.zerohedge.com/news/2018-02-07/frontrunning-february-7
 

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DB - Opening Bell: 2.7.18
https://dealbreaker.com/2018/02/opening-bell-2-7-18/

Naked Capitalism Links 02/07
https://www.nakedcapitalism.com/2018/02/links-2718.html

SA - Market News Live Feed 02/07
https://seekingalpha.com/market-news

CWS - Morning News: February 7, 2018
http://www.crossingwallstreet.com/archives/2018/02/morning-news-february-7-2018.html

RR - Fat Fingers, Rogue Planets and Buying Bitcoin 02/07
https://www.bloomberg.com/view/articles/2018-02-07/fat-fingers-rogue-planets-and-buying-bitcoin

MD - Let Us Erradicate Poverty, Not Demolish Wealth 02/07
https://mises.org/wire/let-us-erradicate-poverty-not-demolish-wealth

SA - Wall Street Breakfast: Volatility Plagues The Markets 02/07
https://seekingalpha.com/article/4143906-wall-street-breakfast-volatility-plagues-markets

MtM - Guns and Butter May Resolve US Legislative Logjam 02/07
http://www.marctomarket.com/#!/2018/02/guns-and-butter-may-resolve-us.html

MtM - Cool Video: Bloomberg Double Feature--BOE Meeting and the Yield Curve 02/07
http://www.marctomarket.com/#!/2018/02/cool-video-bloomberg-double-feature-boe.html
 

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Stocks, Shares & Cryptos in Free Fall - Gold, Silver & Platinum on the rise!
Backyard Bullion


Published on Feb 7, 2018
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Panama Canal Sees LNG Carrier Traffic Rising 50%

February 7, 2018 by Reuters


The Teekay LNG carrier Oak Spirit, destined for Japan, transits the Panama Canal in 2017 carrying a cargo of U.S. Shale gas exported from Cheniere’s Sabine Pass terminal. Photo credit: Teekay Photo credit: Teekay

By Elida Moreno PANAMA CITY, Feb 7 (Reuters) – The number of liquefied natural gas (LNG) tankers traversing the Panama Canal is expected to jump 50 percent by September due to rising exports of the fuel from the United States, the head of the canal’s governing agency told Reuters.

After adding a third set of locks in 2016, the Panama Canal Authority expects that growing global demand for LNG will boost transit through the waterway, said Jorge Quijano, head of the authority.

Demand for LNG has taken off in recent years because of abundant supplies of natural gas, especially from United States shale fields, and because natural gas is a cleaner burning fuel than coal or oil.

“We are about to reach one (LNG tanker) per day,” Quijano said.

The canal received 60 LNG tankers in the last quarter of 2017, up sharply from 43 tankers in the same period a year earlier. Most carriers are loaded in the United States for delivery to the Pacific coast of Mexico or South America.

Houston-based Cheniere Energy, which owns and operates the Sabine Pass LNG export facility in Louisiana, has been expanding exports while building a new LNG plant near Corpus Christi, Texas, expected to come online in December.

An LNG plant is used to process natural gas for export.

Cheniere, which signed an agreement last month to sell trading firm Trafigura 1 million tonnes of LNG per year for 15 years beginning in 2019, plans to inaugurate a second liquefaction at Corpus Christi and a fifth train at Sabine Pass next year.

U.S. LNG exports via the Panama Canal fell temporarily in September due to damages caused by Hurricane Harvey to several Texas and Louisiana ports, but have recovered in recent months, Quijano said. U.S. export capacity jumped to 18 million tonnes per annum (Mtpa) last year from less than 2 Mtpa in 2015.

Panama is trying to be more flexible for LNG transit bookings so exporters can choose to pass through the canal even if that was not originally planned, Quijano said. (Reporting by Elida Moreno, writing by Marianna Parraga; additional reporting by Scott DiSavino; Editing by Ernest Scheyder and David Gregorio)

(c) Copyright Thomson Reuters 2018.

http://gcaptain.com/panama-canal-sees-lng-carrier-traffic-rising-50/


Filed Under: News Tagged With: expanded panama canal, LNG, lng carriers
 

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Gold Seeker Closing Report: Gold and Silver Fall with Stocks, Bonds, and Oil
By: Chris Mullen, Gold Seeker Report
Gold gained $10.60 to $1332.30 in Asia, but it then fell back off in London and New York and ended near its midafternoon low of $1311.90 with a loss of 0.48%. Silver climbed up to $16.775 before it dropped back to $16.297 and then bounced back higher in late trade, but it still ended with a loss of 1.63%.
 

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California Move Meant to Challenge Trump’s Offshore Drilling Plan

February 7, 2018 by Reuters


Photo: By Theo Fitzhugh / Shutterstock

By Sharon Bernstein SACRAMENTO, Calif., Feb 7 (Reuters) – California will block the transportation through its state of petroleum from new offshore oil rigs, officials told Reuters on Wednesday, a move meant to hobble the Trump administration’s effort to vastly expand drilling in U.S. federal waters.

California’s plan to deny pipeline permits for transporting oil from new leases off the Pacific Coast is the most forceful step yet by coastal states trying to halt the biggest proposed expansion in decades of federal oil and gas leasing.

Officials in Florida, North and South Carolina, Delaware and Washington, have also warned drilling could despoil beaches, harm wildlife and hurt lucrative tourism industries.

“I am resolved that not a single drop from Trump’s new oil plan ever makes landfall in California,” Lt. Governor Gavin Newsom, chair of the State Lands Commission and a Democratic candidate for governor, said in an emailed statement.

The commission sent a letter on Wednesday to the U.S. Interior Department’s Bureau of Ocean Energy Management (BOEM) urging the bureau’s program manager Kelly Hammerle to withdraw the draft proposal, saying the public did not have an adequate opportunity to provide input on the plan.

“It is certain that the state would not approve new pipelines or allow use of existing pipelines to transport oil from new leases onshore,” the commission wrote in the letter seen by Reuters.

California has clashed repeatedly with President Donald Trump’s administration over a range of other issues since last year, from climate change to automobile efficiency standards to immigration.

The Interior Department last month announced its proposal to open nearly all U.S. offshore waters to oil and gas drilling, sparking protests from coastal states, environmentalists and the tourism industry.

Governors from nearly every U.S. coastal state except Alaska and Maine expressed opposition, and even Alaska’s governor requested sensitive areas be removed.

The proposal also comes amid low U.S. oil industry demand for new offshore leases, as drillers focus on cheaper and highly-productive wells onshore that have pushed U.S. production over 10 millions barrels per day for the first time since 1970.

Heather Swift, spokeswoman for Secretary of the Interior Ryan Zinke, said developing the five-year plan for offshore oil and gas leases is “a very open and public process.”

“Secretary Zinke looks forward to meeting with more Governors and other coastal representatives who want to discuss the draft program,” she said, adding the bureau “has planned 23 public meetings, in our coastal states, to secure feedback directly from citizens.”

In an interview on Tuesday, William Brown, the Bureau of Ocean Energy Management’s chief environmental officer, said state input is taken seriously, and has resulted in past drilling plans being scaled back. He said the approval process would take two years and include an environmental review.

PROTESTS
Trump has said more offshore drilling would boost the U.S. economy and national security by reducing reliance on imported oil.

Opponents of offshore drilling have complained that Congress has passed no new safety standards since BP Plc’s Deepwater Horizon explosion and oil spill in the Gulf of Mexico in 2010. It took months to stop that leak, which became the largest oil spill in American history, despoiling the environment of Gulf Coast states and causing billions of dollars in economic damage.

Offshore drilling has been restricted in California since a 1969 oil spill off the coast of Santa Barbara. In 2015, another spill in Santa Barbara County sent as much as 2,400 barrels of oil (101,000 gallons or 382,000 liters) onto the coast and into the Pacific, leaving slicks that stretched over nine miles (14 km).

Major oil companies, like Chevron Corp, have long since abandoned their efforts in California’s offshore region, despite its estimated 250 million barrels of proven oil reserves, due in part to legislative and political hurdles and easier prospects elsewhere.

Chevron gave away the U.S. Geological Survey seismic data on offshore California and other parts of the U.S. West Coast for research use in 2005, deeming it no longer commercially useful.

Neal Kirby, a spokesman for the Independent Petroleum Association of America, which represents small and mid-sized drilling companies, said his members support the administration’s drilling plan.

But, he said that the industry was primarily interested in the Eastern Gulf of Mexico, a region close to existing oil infrastructure and highly-productive fields. He said if California bars oil from passing through pipelines, companies would be even less likely to seek new offshore leases there.

A number of other states have asked the Interior Department to exempt them from the drilling plan. So far, Secretary Zinke has said he would exempt Florida, which borders the Eastern Gulf and the Southeastern Atlantic, to protect its tourism industry and he has promised to hold discussions with other states that have expressed concerns.

On Jan. 24, U.S. lawmakers from Florida sent Zinke a letter pressing him to honor his pledge, noting that the acting chief of the Bureau of Ocean Energy Management had said Florida’s coast is “still under consideration for offshore drilling.”

Environmentalists and some elected officials plan to protest the drilling plan at a public meeting on Thursday in Sacramento. (Reporting by Sharon Bernstein; additional reporting by Jessica Resnick-Ault; editing by Richard Valdmanis, David Gregorio and Clive McKeef)

(c) Copyright Thomson Reuters 2018.

Filed Under: News Tagged With: california, trump offshore drilling plan

http://gcaptain.com/california-move-meant-to-challenge-trumps-offshore-drilling-plan/
 

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Dow Set For Another -200 Point Open After A Volatile, Extremely Illiquid Session

by Tyler Durden
Thu, 02/08/2018 - 06:57


U.S. stock index futures turn negative in an illiquid, volatile session as investor sentiment has yet to stabilize amid doubts whether the U.S. equity selloff is over as yields remain just south of the critical 2.85% level. S&P E-mini contracts slid 0.1%, while the VIX is up 1% to 28.1 after 2 days of declines. Including fair value, the Dow is expected to have an implied open of over 200 points lower while the S&P will open around 2,665.



Meanwhile, in this post-VIX ETP world, liquidity remains non-existent, as this chart from nanex shows.




It's not just the US however which can't find its footin, as all risk-related assets trade under pressure in a generally muted session following yesterday's whipsawed session which saw stocks spend much of the day in the green, only to slide at the close.

European equity losses hit ~1.0% as the mining sector underperforms while banks are supported by decent earnings reports from Commerzbank, SocGen and UniCredit. In terms of sector specifics, the financial sector is the outperformer with earnings from the likes of Commerzbank (+2.4%), SocGen (+4.1%), UniCredit (+2.6%) and Zurich Insurance (+3.8%) lifting the sector with Swiss Re (+3.8%) also lending a helping hand near the top of the SMI after news that Softbank could acquire a stake in the Co. Elsewhere, GSK (+2.3%) has been supported by news that Novartis’ launch of their Advair copy will be delayed. In terms of bourses, the CAC (-0.3%) has seen some modest outperformance, with domestic earnings from Total (+1.8%), Pernod Ricard (+2.2%) and Publicis (+3.8%) capping losses.

Earlier, shares in Japan closed higher after a turbulent session while China’s stocks fell for a third day, even as Hong Kong equities climbed. Australia's ASX 200 (+0.2%) was lower for most of the day as weakness in the commodity complex weighed on mining names, however, the index then gradually pared losses as strong Chinese Imports provided some encouragement. The Nikkei 225 (+1.1%) outperformed with corporate earnings back in the limelight, while Hang Seng (+0.4%) and Shanghai Comp. (-1.4%) ignored strong trade data and were indecisive after the PBoC skipped open market operations for the 11th consecutive occasion, and with heavy losses seen across the big 4 banks in the mainland.

The biggest highlight of the overnight session, however, was the yuan which, as we reported overnight, fell the most since the currency’s devaluation in August 2015 after China reported a much narrower-than-expected trade surplus as imports jumped. According to Reuters, China has resumed its Qualified Domestic Limited Partnership plan after a two-year halt, granting licenses to about a dozen global money managers that can raise funds in China for overseas investments. Increasing imports and investment overseas both contribute to a weaker currency, and the result was a sharp plunge in the Yuan, a move which may again be criticized by Trump as indicative of currency wars.





"Selling of offshore yuan has spurred short covering of the dollar,” said Ko Haruki, head of the financial solutions group at CIBC World Markets (Japan) in Tokyo. "The dollar’s gain against the yuan is lifting dollar-yen, which had also seen short covering as the Nikkei 225 stayed in positive territory."

In other words, in today's interlinked market, the plunge in the Yuan, ended up boosting Japanese stocks by way of a dollar, that traded higher much of the overnight session.

Meanwhile, the all important catalyst for the recent equity selloff, U.S. 10-year Treasuries, were steady after Senate leaders unveiled a bipartisan deficit busting deal while weak demand at Wednesday's 10Y auction pushed the yield back toward the recent four-year high.



At the same time, the pound drifted higher before a Bank of England rate decision, and the euro weakened as ECB member Jens Weidmann said the central bank will monitor the impact of the currency on inflation. USD continues to find support across G-10, with ZAR and TRY particularly weak; yuan in focus after overnight selloff, which was driven by narrower trade surplus and increased outbound investment reports.

A summary of key macro moves, courtesy of Bloomberg:
  • EUR/USD reached a two-week low of 1.2232 amid broad dollar strength; BBDXY rose for a second day and earlier reached its highest since Jan. 23
  • GBP/USD slips for fifth day, headed for its worst run in 11 months
  • USD/JPY climbed, as the yen tracked the plunge in the yuan
  • Yield on 10Y Treasuries little changed; dollar-curve bear steepened with 30Y underperforming
In commodities, WTI and Brent crude futures have seen relatively sideways trade overnight and this morning as prices remain in close proximity to yesterday’s lows seen in the wake of the ramp up in US production shown via the DOE’s with output above 10mln bpd and perhaps more crucially, above that of Saudi Arabia. Elsewhere, latest reports confirm that the Forties pipeline has now resumed operations. In metals markets, spot gold is trading lower as the yellow metal succumbs to the firmer USD, while copper’s attempt to nurse losses during Asia-Pac trade was restricted by the risk averse tone in its largest consumer China.

Bulletin Headline Summary from Ransquawk
  • European bourses trade lower across the board in sympathy with the pull-back seen on Wall Street yesterday
  • DXY has rallied above 90.000 and as far as 90.500. Nzd/Usd has pared some losses to trade back over 0.7200
  • Looking ahead, highlights today include the BoE rate decision and a slew of speakers including ECB’s Villeroy, BoE Governor Carney, Fed’s Harker, Fed’s Kashkari, BoC’s Wilkins
Market Snapshot
  • S&P 500 futures down 0.1% to 2,665.0
  • STOXX Europe 600 down 0.3% to 378.89
  • MSCI Asia Pacific up 0.3% to 173.47
  • MSCI Asia Pacific ex Japan up 0.09% to 566.67
  • Nikkei up 1.1% to 21,890.86
  • Topix up 0.9% to 1,765.69
  • Hang Seng Index up 0.4% to 30,451.27
  • Shanghai Composite down 1.4% to 3,262.05
  • Sensex up 1% to 34,405.30
  • Australia S&P/ASX 200 up 0.2% to 5,890.70
  • Kospi up 0.5% to 2,407.62
  • Gold spot down 0.6% to $1,309.95
  • U.S. Dollar Index up 0.3% to 90.53
  • German 10Y yield rose 1.9 bps to 0.764%
  • Euro down 0.3% to $1.2233
  • Brent Futures down 0.09% to $65.45/bbl
  • Italian 10Y yield fell 3.8 bps to 1.682%
  • Spanish 10Y yield rose 1.1 bps to 1.426%
Top Overnight News from BBG
  • Fed’s Kaplan: 3 hikes this year is appropriate; best way to continue expansion is to remove accommodation

  • Reuters: China revives QDLP outbound investment scheme; licenses granted for some funds to raise money in China for investment overseas ending a 2-year halt, according to people familiar

  • Japanese investors dumped U.S. sovereign bonds for a third month in December, taking sales last year to the highest in a decade. Total withdrawals for 2017 were 3.83 trillion yen, the most since 2007, when they offloaded 3.98 trillion yen. They were net buyers between 2014 and 2016.

  • Senate leaders in the U.S. announced a bipartisan two-year budget agreement Wednesday that would provide nearly $300 billion in additional funding, a crucial step toward averting a Friday government shutdown
  • The European Commission is struggling to translate the U.K.’s Brexit pledges on Ireland into a legally binding text, even before they present it to the U.K. in negotiations, according to people familiar with the EU side.
  • New Zealand’s central bank held interest rates at a record low and projected they will stay there until mid-2019 as inflation remains subdued amid slower economic growth.
  • Federal Reserve Bank of San Francisco President John Williams said he isn’t altering his view on the U.S. economy or preference for a continued gradual rate hike path after several days of volatile markets. “The risks seem to be moving toward the likelihood of more inflation, and that’s a good thing,” Federal Reserve Bank of Chicago President Charles Evans says
  • The greenback gained as much as 0.9% against the offshore yuan, while advancing 0.3% against the yen to 109.61 after earlier being down as much as 0.2%. The Nikkei 225 index climbed 1.1%
  • China’s yuan sank the most since the aftermath of the shock devaluation in August 2015. Reuters reported that the Chinese government will relax controls on investment fund outflows. China’s trade surplus figures missed estimates and speculation policy makers will step up efforts to rein in gains, pressured the yuan
  • Franklin Templeton bond chief, Michael Hasenstab, is doubling down on bets that Treasuries are doomed due to rising rates. He’s been loading up on wagers that protect against a spike in yields in his $38 billion flagship Global Bond Fund. The move has pushed average duration in the portfolio to the shortest on record.
  • The German grand-coalition agreement helped pare peripheral spreads versus bunds to the lowest since 2010, which should allow Greece to resume plans for a 7Y EUR note, Commerzbank analysts said in a note today
  • BOE Governor Mark Carney may be less reassuring if he signals more tightening today amid expectations the central bank will upgrade its quarterly outlook


Asian equity markets traded mixed with the region somewhat cautious following the subdued lead from Wall St. where price action was choppy and all majors closed in the red. ASX 200 (+0.2%) was lower for most of the day as weakness in the commodity complex weighed on mining names, and with industry giant Rio Tinto also pressured after investors bought the rumour and sold on the news of a strong earnings report. However, the index then gradually pared losses as strong Chinese Imports provided some encouragement. Elsewhere, Nikkei 225 (+1.1%) outperformed with corporate earnings back in the limelight, while Hang Seng (+0.4%) and Shanghai Comp. (-1.4%) ignored strong trade data and were indecisive after the PBoC skipped open market operations for the 11th consecutive occasion, and with heavy losses seen across the big 4 banks in the mainland. Finally, 10yr JGBs were marginally lower with demand subdued amid gains in Japanese risk assets, while the 30yr JGB auction also failed to provide support despite increased demand and higher accepted prices. PBoC skipped open market operations and was net neutral on the d



Top Asian News

  • China’s Yuan Plunges Most Since Aftermath of Devaluation in 2015
  • BOJ’s Suzuki Is Monitoring Impact of Monetary Easing on Banks
  • China Jan. Exports Rise 6.0% Y/y in Yuan Terms; Est. 2.6%
  • Australia’s Lowe Sees No ‘Strong Case’ for Near-Term Rate Move
  • Turkey’s Big Year for IPOs Is Off to an Underwhelming Start
  • Everything’s a Sell in China After $660 Billion Equity Wipeout


China trade from CapEco:
Trade appears strong but seasonal effects muddy the waters. Chinese trade beat expectations at the start to 2018. But seasonal volatility means that we won’t get a clear reading on the pace of foreign shipments until next month. Export growth edged down from 7.4% y/y in December to 6.0% last month in renminbi terms (the Bloomberg median was 2.6%, our forecast was 0.0%). Adjusting for a rise in export prices, we estimate that growth in export volumes dropped from 6.9% y/y to 5.2%. It is surprising that growth in outbound shipments didn’t decline by a wider margin given that Chinese New Year falls later this year than last, which should have meant that less of the pre-holiday rush to meet orders took place in January. We estimate that export volumes rose around 3% m/m in seasonally adjusted terms last month, reaching an all-time high. This suggests that strong foreign demand – the global manufacturing PMI remained close to a seven-year high in January – has continued to support shipments of Chinese goods. Meanwhile, import growth jumped in January, from 0.9% y/y to 30.2% (Bloomberg 5.3%, CE 6.0%). Adjusting for price effects, we estimate that growth in import volumes also surged, from -3.9% y/y to 26.0%. A pick-up was expected given that more of the build-up in inventories ahead of the pre-New Year rush should have taken place in January this year relative to 2017. But as with exports, the outturn exceeded expectations. We estimate that, even after stripping out seasonal factors, import volumes jumped 15% m/m last month, more than reversing a 7.2% fall in December. On the face of it then, the data point to a very strong start to the year for Chinese trade. But the figures need to be treated with caution since although we have done our best to adjust for shifts in the timing of Lunar New Year, it is not always possible to iron out these distortions entirely. The picture will become clearer once we are able to average across the data for first two months of the year. We think export growth will rise further in February but expect import growth to drop back sharply as the seasonal base effects reverse.

European equities (Eurostoxx 50 -0.6%) trade lower across the board in sympathy with the broader pull-back in risk around the globe today and in the US on Wednesday. In terms of sector specifics, the financial sector is the outperformer with earnings from the likes of Commerzbank (+2.4%), SocGen (+4.1%), UniCredit (+2.6%) and Zurich Insurance (+3.8%) lifting the sector with Swiss Re (+3.8%) also lending a helping hand near the top of the SMI after news that Softbank could acquire a stake in the Co. Elsewhere, GSK (+2.3%) has been supported by news that Novartis’ launch of their Advair copy will be delayed. In terms of bourses, the CAC (-0.3%) has seen some modest outperformance, with domestic earnings from Total (+1.8%), Pernod Ricard (+2.2%) and Publicis (+3.8%) capping losses. Finally, Talk Talk (-10%) are enduring a difficult morning of trade after announcing a GBP 200mln share placement.

Top European News

  • TDC Soars After News of a Cash Takeover Bid From Giant Funds
  • May Said to Plan Instant Split From Some EU Rules After Brexit
  • Merkel’s Fourth Term Now Rides on Germany’s Changing Rust Belt
  • Zurich Delivers on Dividend Pledge as Insurer Slashes Costs

In currncies,
the Nzd/Usd has pared some losses to trade back over 0.7200 from a circa 0.7175 low overnight after the RBNZ stood pat on rates as widely expected, but surprised with a broadly dovish accompanying statement and additional comments projecting a further downturn in the Kiwi on a TWI basis. While maintaining guidance for tightening from Q2 next year, Governor Spencer and his assistant McDermott cautioned that the next move could be a cut or hike. Hence, the Aud/Nzd cross has rebounded above 1.0800 again and almost touched 1.0900 at one stage, as Aud/Usd keeps its head above 0.7800 despite RBA governor Lowe RBA Governor Lowe stating that the RBA does not see a strong case for raising interest rates in the near term. Elsewhere, Usd/Jpy has climbed towards the top of a broad 109.00-110.00 range amidst a renewed pledge from BoJ head Kuroda to continue with powerful QE to achieve price stability as it remains some way from reaching the inflation target. Eur/Usd has also broken out from recent trading parameters, partly on ECB claims that the US is keeping the Dollar weak, but mainly as the Greenback gleans more of a yield advantage. The headline pair has bounced in advance of a series of key chart supports in the 1.2222-27 area, but may not get close to decent option expiry strikes between 1.2300-10 (1.35 bn). Sterling is holding up relatively well in the run up to a potentially more hawkish BoE post-meeting QIR with Cable above 1.3850 and Eur/Gbp sub-0.8850 vs 0.8900 and over of late. Note, option pricing suggests a big market move on the event, 120 pips either way. Usd/Cad still hovering just below 1.2600 as Canadian President Trudeau repeats that no NAFTA deal is better than the wrong one, while Usd/Chf is sitting near the top of a higher 0.9425-50 band having pushed through strong tech resistance at the lower end. Usd/Cny has bounced firmly on a much smaller than forecast Chinese trade surplus and reports about relaxed capital controls – hence the DXY has rallied above 90.000 and as far as 90.500.

In commodities, WTI and Brent crude futures have seen relatively sideways trade overnight and this morning as prices remain in close proximity to yesterday’s lows seen in the wake of the ramp up in US production shown via the DOE’s with output above 10mln bpd and perhaps more crucially, above that of Saudi Arabia. Elsewhere, latest reports confirm that the Forties pipeline has now resumed operations. In metals markets, spot gold is trading lower as the yellow metal succumbs to the firmer USD, while copper’s attempt to nurse losses during Asia-Pac trade was restricted by the risk averse tone in its largest consumer China. North Sea Forties crude oil pipeline has restarted.

Looking at the day ahead, the BoE should be the highlight today with the MPC meeting due around midday. The latest inflation report will be released alongside this and Governor Carney will then follow with his press conference. Away from that, the December trade data is out in Germany and the latest weekly initial jobless claims data in the US are also due. The Fed's Kashkari and Harker are also slated to speak in the afternoon at separate events, while the ECB's Mersch, Praet and Villeory will speak. AIGand CVS Health are due to report earnings.

US Event Calendar
  • 8am: Fed’s Harker Speaks on Economy: Outlook and Impact for College
  • 8:30am: Initial Jobless Claims, est. 232,000, prior 230,000; Continuing Claims, est. 1.94m, prior 1.95m
  • 9am: Fed’s Kashkari Speaks in Moderated Q&A
  • 9pm: Fed’s George Speaks on the Economy
DB's Jim reid concludes the overnight wrap

Has the phrase “healthy correction” ever been used more than it has over the past 24 hours? Given that the VIX traded above 50 on Tuesday (a level it hasn’t closed at since March 2009) I’d hate to see what an unhealthy correction looks like. Having said that markets are broadly adhering to the script of what normally happens after the largest VIX spikes seen on record. As a reminder on Tuesday night we published a quick note showing what happens 1 week, 1 month and 3 months after the largest 10 VIX spikes in history. Basically the VIX usually rallies over all subsequent periods but equities tend to be higher the week after but on average fall 3 months later. The reverse is true for bonds.

Things were adhering to this script for most of the day (especially in Europe) but a late US equity sell-off provided some renewed jitters to markets. The VIX did fall 7.5% to 27.73 but the S&P 500 fell -0.50% - well off the day’s highs of +1.21% just before Europe’s strong close (more below) and including a near 1% drop in the last 20 minutes of trading. Activity remains high and according to Bloomberg volume on US exchanges exceeded 9 billion shares for a fourth straight day after surpassing that total just once in the past seven months.

The reversal seemed to stem from a disappointing 10 year Treasury auction which lifted yields around 8bps from the lows for the session (+3.4bps on the day to 2.837%) and perhaps also because of the Senate’s additional spending plans (more below). Given the turmoil this week it is very telling that 10yr US yields are back to where they were at payroll Friday’s close having climbed 19.1bps from Tuesday’s lows.

Very soon we’ll start building up to next Wednesday’s US January CPI print and although the importance of one number should be downplayed in theory, in reality it’s fair to say that this will be an incredibly closely watched number for global markets. A higher than expected print will likely extend the volatility and probablycause risk to sell-off whereas an in-line or softer print will be very risk positive.

We’ve got no idea about where one number is going to come in but we’d expect inflation to more often beat on the upside in 2018. Interestingly DB’s Alan Ruskin yesterday highlighted that over the last 25 years, January core CPI m/m% was lower than Dec core CPI m/m% on only 5 occasions. The Feb core CPI was higher than January core CPI on only 6 of the last 25 occasions. He points out that there is a bias in the seasonally adjusted data for a bump up in January m/m% relative to both December and February. Food for thought.

In the US, Senate leaders have announced a bipartisan two year budget deal – including c$300bn of new spending and suspension of the federal debt ceiling until March 2019. The agreement is expected to extend the government funding until 23 March while the lawmakers refine details on the longer term plans.

Looking ahead, the bill will be voted on in the Senate today and then move to the House, where it is not certain that it will pass. House Minority leader Ms Pelosi noted she won’t back the bill without a commitment from Speaker Ryan to allow an open debate on the immigration issues, similar to the promise made earlier by Senator McConnell.

In Germany, Ms Merkel and the SPD have reached an agreement to form the next coalition government, with the SPD likely to gain the finance and foreign affairs ministry posts as part of the concession (as per Bloomberg). Notably, the SPD has held these two ministries before, back in the 2005-2009’s grand coalition government. For now, Ms Merkel has reaffirmed her commitment to a “solid” fiscal policy and noted “you can only spend the money you have…I’m not worried at all”. In view of the SPD gaining many of the key Government positions and their previously stated desire to create a United States of Europe by 2025, the result could boost the potential for a deeper EU integration as proposed earlier by France’s President Macron where he advocated a joint budget and common finance ministers for the region. Looking ahead, the deal needs to be approved by the SPD’s 463k rank and file members, where confirmation is not certain.

This morning in Asia, markets are mixed but firming as we type. The Nikkei (+1.22%), Kospi (+0.74%) and Hang Seng (+0.77) are all up whilst the China’s CSI 300 (-0.89%) is lower. Datawise, China’s January trade surplus was less than expected at $20.3bn (vs. $54.7b) as a strong rise in imports (36.9% vs. 10.6% expected) outpaced exports growth (11.1%). Elsewhere, in his first public speech since joining the BOJ’s board, Mr Suzuki noted the central bank must continue with easing for a while as inflation is still far from the BOJ’s 2% target.

Now recapping other market performance from yesterday. As mentioned earlier, US bourses fluctuated during the day before closing lower (S&P -0.50%; Dow -0.08%; Nasdaq -0.90%). Within the S&P, modest gains in the telco and financials were more than offset by losses from energy and tech stocks. European markets were all up and rebounded c2%, in part playing a catch up to the positive US lead from the prior day. The Stoxx 600 rose for the first time in seven days and printed the largest gain since June 2016 (+1.97%), while the DAX (+1.60%) and FTSE (+1.93%) also rose. The VSTOXX fell 29% back to April 17 levels (21.37).

Over in government bonds, core 10y bond yields rose 3-5bp (UST +3.4bp; Bunds +5.2bp; Gilts +3bp) while peripherals outperformed, with yields down 1-4bp, in part boosted by the potential for tighter EU integration post the German coalition talks. Turning to currencies, the US dollar index firmed for the fourth consecutive day (+0.75%), while the Euro and Sterling weakened 0.91% and 0.49% respectively. In commodities, WTI oil dropped 2.52% following the latest EIA data showed a rise in US crude inventories and domestic oil output.

Elsewhere, precious metals weakened c1% (Gold -0.44%; Silver -1.64%) and other base metals also retreated (Copper -2.1%; Zinc -1.56%; Aluminium +0.32%). Away from the markets and onto the four Fed speakers. On the recent US equity sell off, they all seemed to be taking it in their stride. The Fed’s Dudley noted that “having a bump like this has virtually no consequences on my view of the economic outlook”. The Fed’s Kaplan added these corrections “can be healthy” and has little implication for the US economy. Then the Fed’s Williams noted “I don’t see any of the movements in asset prices of late to fundamentally change my view of the economy”. Elsewhere, the Fed’s Evans noted the US economy is “firing on all cylinders” and believe the recent equity selloff was “an outsized response”.

Moving onto rates and inflation. Mr Williams who is a voter this year said “we should have a gradual increase in rates this year and next…right now, I’m not taking any signal” from the data, although he also added “even four rate hikes is very gradual”. Elsewhere Mr Evans has reaffirmed his views of keeping rates flat until mid-18 in order to assess the incoming inflation data. Although he also added “suppose inflation picks up more assuredly….then we still could easily raise rates another three or even four times in 2018 if that were necessary”.

Finally, Mr Kaplan noted that “we are likely to overshoot full employment and it would be wise to be removing accommodation in a patient and balance manner”. Back in the UK and ahead of today’s BOE, DB’s Oliver Harvey argues that it will be difficult for the Bank to out-hawk current market pricing at this meeting. While the Bank is unlikely to push back against the tighter path implied by the market forward curve, they think that it is still too difficult for it to signal confidence in a May hike given ongoing risks about Brexit transition, the wedge between domestic and external demand and limited evidence of an overheating labour market.

Staying in Europe, the European Commission has upgraded its GDP growth forecasts for the Euro area. Growth for 2018 is now 2.3% (+0.2ppt from previous) and 2% for 2019. Elsewhere, inflation is expected to be marginally higher to 1.5% this year but unchanged at 1.6% for 2019. The EC forecasts UK growth to slow to 1.4% this year and 1.1% next year (DB expects growth of 1.3% and 1.5% respectively). Elsewhere, the ECB’s Lautenschlaeger noted price trends justify ending the QE program this year.

Before we take a look at today’s calendar, we wrap up with other data releases from yesterday. In the US, the December consumer credit was lower than expected at $18.5bln (vs. $20.0bln), but prior revisions meant annual growth was up 5.4% yoy. Following a stronger November reading, Germany’s December IP fell a bit less than expected at -0.6% mom (vs. -0.7%), leading to an annual growth of 6.5% yoy. In France, the December trade balance deficit narrowed to -EUR3.5bln (vs. -EUR4.9bln) - the smallest deficit since May 2016. A rebound in exports boosted annual growth to 4.1% yoy whereas imports rose 3.0% yoy. In the UK, the January Halifax house price index fell -0.6% mom (vs. 0.2% expected) leading to an annual growth of 2.2% yoy (vs 2.4% expected). Finally, Italy’s December retail sales was lower than expectations at -0.1% yoy (vs 1%).

Looking at the day ahead, the BoE should be the highlight today with the MPC meeting due around midday. The latest inflation report will be released alongside this and Governor Carney will then follow with his press conference. Away from that, the December trade data is out in Germany and the latest weekly initial jobless claims data in the US are also due. The Fed's Kashkari and Harker are also slated to speak in the afternoon at separate events, while the ECB's Mersch, Praet and Villeory will speak. AIGand CVS Health are due to report earnings.

https://www.zerohedge.com/news/2018...pen-after-volatile-painfully-illiquid-session
 

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Gulf Coast Shipping Boom: U.S. Oil Exports Pour Into Worldwide Markets

February 8, 2018 by Reuters


The Theo T departs the port of Corpus Christi with the first export cargo of US crude oil since the United States government repealed a 40 year ban on the export of crude oil in December 2015. Picture taken December 31, 2015. Photo credit: Port of Corpus Christi

By Catherine Ngai, Libby George and Florence Tan NEW YORK/LONDON/SINGAPORE, Feb 8 (Reuters) – In the two years since Washington lifted a 40-year ban on oil exports, tankers filled with U.S. crude have landed in more than 30 countries, ranging from massive economies like China and India to tiny Togo.

The repeal has unleashed a flood of U.S. shale oil, undercutting global crude prices, eroding the clout of the Organization of Petroleum Exporting Countries (OPEC) and seizing market share from many of its member countries.

In 2005, before the shale revolution, the United States had net imports of 12.5 million barrels per day (bpd) of crude and fuels – compared to just 4 million bpd today.

U.S. producers are making new customers out of some of the world’s biggest oil-importing nations in Asia and Europe, posing a serious competitive threat to the only other countries that produce as much crude: Saudi Arabia and Russia. At home, the export boom has filled pipelines and sparked a surge of investment in new shipping infrastructure on the Gulf Coast.

U.S. producers now export between 1.5 million and 2 million barrels of crude a day, which could rise to about 4 million by 2022. The nation’s output is expected to account for more than 80 percent of global supply growth in the next decade, according to Paris-based International Energy Agency.

Much of the increased flow will go to China, the world’s top importer and, since November, the largest buyer of U.S. crude other than Canada.

Chen Bo, president of Unipec – China’s largest buyer of U.S. crude – told Reuters that the firm expects to double U.S. imports this year to 300,000 bpd as it seeks to expand sales in Asia and find new customers for U.S. exports in other regions, including Europe.

Unipec – the trading arm of Asia’s largest refiner, state-owned Sinopec – is also considering long-term crude supply deals with U.S. pipeline and terminal operators. The firm may also partner with such firms to expand and improve U.S. export infrastructure, Chen said in an interview.

“U.S. crude flowing to Asia is a major trend in global oil trading,” Chen told Reuters.

Separately, China’s state-owned chemical and oil conglomerate Sinochem Group plans to open a trading office in Houston later this year to source U.S. crude for China’s independent refineries, five sources familiar with the plans told Reuters.

Between 2010 and 2017, U.S. oil production rose from 5.5 million barrels a day to 10 million bpd – approaching a record set in 1970 – as shale fields in west Texas and North Dakota lured massive new drilling investments. That brings national production in line with Saudi Arabia and close to top-producer Russia’s 10.9 million barrels a day.

Saudi Arabia cut output last year as part of OPEC’s 2016 deal to reduce supply – after losing a price war with U.S. shale producers that created a global glut.

Most forecasts show U.S. crude output growing about 500,000 to 600,000 barrels per day through the end of 2018, said David Fyfe, chief economist at global commodity trading firm Gunvor Group in Geneva, Switzerland. The U.S. Energy Department is even more optimistic, now expecting growth to rise by 1.2 million bpd – hitting 11 million bpd by year-end.

“The bulk of that growth will likely be exported,” Fyfe said.

U.S. producers are also displacing foreign oil at home.

Total U.S. crude imports have dropped to 7.6 million barrels a day from a peak of 10.6 million bpd in 2006. OPEC’s share has declined from more than half of U.S. imports to about 37 percent as the United States relies more on domestic production and neighboring Canada.

OPEC members Saudi Arabia, Nigeria and Angola have been among the hardest hit. In the second half of 2017, U.S. imports from Saudi Arabia averaged 709,000 bpd, lowest since 1987 and down from a peak of 1.73 million bpd in 2003.

BIG BUYERS IN INDIA, EUROPE
U.S. producers have also broken into the market in India – the world’s third-largest oil importer and home to the world’s largest refining complex, operated by Reliance Industries.

Seeking to diversify its foreign supplies, India first imported U.S. crude in October and bought a total of 8 million barrels of U.S. oil last year, according to Thomson Reuters ship-tracking data and shipping data provided by sources.

In Europe, as of November, the United States had become the fifth-largest oil supplier to France, according to customs data, exceeding Nigeria, Libya, Iran or the North Sea. In November 2016, the U.S. didn’t even make the top ten.

China stopped importing Nigerian crude in the fourth quarter, according to Chinese customs figures, and while China’s overall imports rose by 12 percent in 2017, imports from Saudi Arabia rose just 2.3 percent.

“They’re taking market share really from OPEC nations,” said Olivier Jakob, managing director of PetroMatrix.

GULF COAST SHIPPING BOOM
Surging U.S. exports are rippling through the rest of the domestic energy economy. Shipping terminals Texas and around the Gulf Coast are building out infrastructure to handle larger tankers.

“If we didn’t have the option to send that crude to export markets, I think crude oil production would have been much more distressed,” said Jarl Pedersen, chief commercial officer at Port Corpus Christi in south Texas, referring to 2016, when oil prices were still in the 40s.

Pipeline and logistics firms are among the big beneficiaries, as booming crude demand means steadier profits for companies sending oil to the Gulf and storing it for export.

Enterprise Products Partners – which operates more than 5,000 miles of crude oil pipelines and 38 million barrels of crude storage – reported record profits in 2017, boosted by record volumes for its pipelines and marine terminals.

Magellan Midstream Partners, which operates key pipelines from Texas’s Permian Basin to the Gulf, expects to spend more than $1.7 billion in the next two years on construction projects. Among those are new docks, storage and marine terminals in the Houston area to meet growing demand.

Terminal operators and shippers in the U.S. Gulf are ramping up investment to guard against supply bottlenecks as more barrels leave the U.S. It can take 18 to 24 months to build an export dock.

Gulf Coast terminals handle three-quarters of U.S. crude exports, but only one – the Louisiana Offshore Oil Port (LOOP) terminal – can handle supertankers that can carry up to 2 million barrels of oil.

Most shipping channels are too shallow. Last year, Occidental Petroleum Corp’s Ingleside terminal at Corpus Christi test-loaded a supertanker – but that channel is currently not deep enough to fully load such a vessel.

In late January, the CEO of the Corpus Christi port forwarded a letter from six energy executives pressing the Trump Administration for $60 million in federal funding for ship channel improvements as part of a $320 million project to widen and deepen the port’s ship channel.

Lifting the crude export ban allowed for $50 billion in industrial projects in south Texas alone, the executives wrote.

“If that project for some reason should stall,” said Corpus Christi’s Pedersen, “that would really make U.S. crude less competitive in Asia.”

(Additional reporting by Jessica Resnick Ault in New York, Bryan Sims in Houston and Nidhi Verma in New Delhi; Editing by David Gaffen, Simon Webb and Brian Thevenot)

(c) Copyright Thomson Reuters 2018.

Filed Under: Maritime News Tagged With: u.s. oil exports

http://gcaptain.com/gulf-coast-shipping-boom-us-oil-exports-pour-into-worldwide-markets/
 

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Rogue Mornings - Wag The Dog, Trap for Trump? & Real Numbers (02/08/18)
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DOW PLUMMETS 1000: -8.88% ON WEEK
Junius Maltby


Streamed live 14 hours ago
As today churned on, the markets bled further, requiring another live discussion and look at the news. Dow plummets 1032 points, now down 10% from record; S&P 500 drops 3.7% to new low for week.
 

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Asia Crashes, Europe Slides, US Rebounds But Yields Resume Ominous Rise

by Tyler Durden
Fri, 02/09/2018 - 07:05


"$5 trillion was wiped out from global stocks this week."

After yesterday's violent last hour plunge in US stocks, which also sent the VIX surging back to the mid-30s, the overnight session was somewhat muted, with European stocks falling further on Friday morning, but at a slower pace than the sharp sell offs in Asia and New York.

Europe's 600 Index, down -1% as of this moment and back to session lows after a modest rebound earlier, was set for its worst week since 2016 as banks and financial-services stocks led most industry sectors lower. The drop, however, was relatively modest and followed a sheer plunge in Asia, where stocks tumbled across the region, wiping out most of their gains from the previous two sessions. The Shanghai Composite recouped some gains to close down "only" 4.1% - in what has now been a two-week selloff without the Chinese National Team making an appearance and buying stocks - the Hang Seng was down 3.1% with losses across all sectors. Tokyo’s Topix closed down 1.9 per cent.



The renewed slide followed Thursday's drop in the S&P 500, which pushed the index to a 10 per cent decline from its January high - officially, a correction - stirred renewed concerns over the future of the long bull market that followed the 2008 financial crisis, and whether the selloff that was catalyzed by systematic quant funds would spill over to retail investors. And, as we highlighted overnight, that's precisely what happened following the single biggest weekly outflow from equity funds on record.



And while we look forward to today's session to see if the retail liquidation continues, S&P 500 futures little changed, after earlier rising as much as 0.9%, while Dow contracts reverse advance to slide 0.3%, even as Congress passed a delayed budget deal, after the government was briefly shut down.




The premarket calm may not last: in what has become a vicious Catch 22, as futures rise, so do 10Y yields, and as the last few days have demonstrated, once the 10Y rises above 2.85%, it leads to an almost immediate selloff.



Some perspective: what was until recently the best start since 1987, has turned into a global selloff that has wiped $5 trillion from global stocks since January while the MSCI World Index is set for its biggest weekly drop since 2011.



Meanwhile over in macro, FX traders have one eye on the stock markets and another on positioning and central bank developments. While in earlier trading the dollar stayed under pressure as U.S. futures pointed to a higher open and Treasuries slipped, the entire move has quickly reversed as futures started to sink as yields rebounded, sending the BBG Dollar index (BBDXY) to session highs.




“A reassessment of the inflation outlook at this point in the cycle is natural and markets are adjusting for this,” Kerry Craig, a Melbourne-based global market strategist at JPMorgan Asset management, said in a note. “But given that U.S. markets are now in correction territory it’s likely that the most severe gyrations will hopefully have passed. Volatility may remain for a while longer, but the strong economic backdrop and sustained earnings outlook means we continue to prefer equities.”

Meanwhile, days after Goldman came out with a glowing endorsement of the commodity sector in general, and crude in particular, oil headed toward its worst week in almost a year as the global risk-asset rout further rankled investors already concerned over growing U.S. supply. Gold declined along with most industrial metals. South Africa’s rand strengthened as speculation intensifies that President Jacob Zuma will soon resign. Russia’s ruble was among the best-performing emerging-market currencies after the country’s central bank cut its policy rate.

Bulletin headline summary from RanSquawk
  • Partial government shutdown stopped after US Senate and House passes spending bill.
  • European bourses showing some resilience to the sell-off seen in the US and Asia.
  • Looking ahead, highlights include Canadian Jobs report and a slew of central bank speakers.


Top Headline News from BBG
  • Congress passed a two-year budget agreement early Friday that will boost federal spending by almost $300 billion and suspend the debt ceiling for a year, ending a brief partial government shutdown that began at midnight when lawmakers missed a funding deadline
  • Fed’s Esther George says three rate hikes this year and about the same number next year is a “reasonable baseline unless the outlook changes materially”; she also said that last week’s report of higher wages is a “welcome development” and that she expects inflation to begin to rise as labor markets tighten further and global demand pushes up import prices
  • Investors pulled $30.6b out of global equity funds, the most on record, analysts at BofAML says in research note citing EPFR Global data for week ending Feb. 7
  • Hedge funds investing only in Europe received about $6 billion in 2017, reversing a funding exodus in the previous 12 months, according to eVestment data; money pools targeting the U.S. and Asia suffered combined outflows last year of about $24 billion
  • RBA said in its quarterly policy statement that it will be some time before the economy reaches current estimates of full employment and inflation returns to the midpoint of the target. It left inflation and economic growth forecasts unchanged from three months earlier
  • U.K. PM Theresa May is adamant that Britain must aim high in its demands for an ambitious free-trade deal, just as she’s determined to make the most of her time in office, however long that lasts, officials said
Market Snapshot
  • S&P 500 futures up 0.6% to 2,608.50
  • STOXX Europe 600 down 0.4% to 372.4
  • MSCI Asia Pacific down 1.9% to 170.20
  • MSCI Asia Pacific ex Japan down 1.9% to 554.21
  • Nikkei down 2.3% to 21,382.62
  • Topix down 1.9% to 1,731.97
  • Hang Seng Index down 3.1% to 29,507.42
  • Shanghai Composite down 4.1% to 3,129.85
  • Sensex down 1.4% to 33,937.75
  • Australia S&P/ASX 200 down 0.9% to 5,837.97
  • Kospi down 1.8% to 2,363.77
  • Brent Futures down 0.5% to $64.48/bbl
  • Gold spot down 0.3% to $1,315.09
  • U.S. Dollar Index up 0.02% to 90.25
  • German 10Y yield unchanged at 0.763%
  • Euro up 0.2% to $1.2266
  • Brent Futures down 0.5% to $64.48/bbl
  • Italian 10Y yield rose 4.3 bps to 1.725%
  • Spanish 10Y yield fell 1.6 bps to 1.434%
Asia stocks traded negative across the board with global sentiment lambasted after the return of the market turmoil on Wall St, where the major indices closed in correction territory and the DJIA (-4.2%) tumbled over 1000 points on the day with the move accelerating heading into the close. Furthermore, political uncertainty in the US also added to the downbeat tone with the government officially in a shutdown after Senator Rand Paul blocked to fast track the Senate vote on the 2-year budget deal, other commentators have also paid credence to the continued upside in US yields adding pressure to equities. As such, ASX 200 (-0.9%) was weaker with energy names dampened after Brent crude prices fell to a near 2-month low, while losses in the Nikkei 225 (- 2.7%) were magnified by recent JPY strength. Elsewhere, underperformance in China resumed in which Hang Seng (-3.7%) and Shanghai Comp (-5.3%) slumped as the large cap energy and financials dragged, while the PBoC remained steadfast in its efforts to keep interbank liquidity stable and refrained from open market operations for a 12th day. However, the central bank instead announced it released nearly CNY 2tln in temporary liquidity through the Contingent Reserve Allowance which will allow banks to temporarily utilize deposit reserves to satisfy cash demand ahead of the Lunar New Year. Finally, 10yr JGBs were higher on safe-haven bids and with the BoJ also present in the market for JPY 850bln in JGBs across the curve. PBoC skips open market operations, for the 12th consecutive day, while it said it released temporary liquidity valued nearly CNY 2tln as it seeks to satisfy cash demand before the Lunar New Year.

Top Asian News

  • China Ends 25-Year Wait as Yuan Oil Futures Set to Start Trading
  • Citic Bank to Offer HNA Group 20B Yuan Credit Line
  • Bank Indonesia Intervenes to Stabilize Rupiah at 20-Month Low
  • Shenzhen Stocks Enter Bear Market as New Economy Dreams Fade

European traders were closely watching events in the US on Thursday:
The fresh sell-off late yesterday saw US equities (DJIA and S&P 500) move into correction territory amid the surge higher in yields in which the US 10yr yield made a high of 2.88%, matching the post NFP high. This also transpired into a sell-off in the Asia-Pac region with Chinese bourses seeing its largest weekly decline in 2yrs, prompting Chinese authorities to announce a CNY2tln temporary liquidity package. However, despite this, losses in Europe have been somewhat contained, European bourses showing a relatively mixed picture (EuroStoxx 50 -0.4%). On a stock specific basis, M&A talk has been doing the rounds with the L’Oreal CEO hinting that they may acquire a EUR 23bln stake in Nestle. Umicore shares the best performer following their strong trading update.

Top European News

  • BOE’s Broadbent Says Rate Path Now Slightly Higher Than in Nov.
  • U.K. PM Is Mulling Trip to Northern Ireland Next Week, BBC Says
  • Maersk Drops as Company Misses Estimates After an ‘Unusual’ Year
  • Flow Traders Shares Soar as Volatility Drives 1Q

In FX,
Usd/Jpy is now bouncing further from overnight lows (around 108.50 where decent domestic bids were reported) through 109.00 and offers at 109.20 to a 109.30 peak so far. Similarly, Usd/Chf is firmer up towards 0.9400 vs 0.9350 at one stage and the DXY is deriving some underlying support ahead of the 90.000 level despite Greenback losses against other G10 counterparts. Cable has lost grip of the 1.4000 handle and a degree of its bullish/hawkish BoE impetus, but remains firm ahead of 1.3900, as Eur/Gbp continues to trade below 0.8800 and Eur/Usd is capped by 1.2289 resistance (55 DMA) in front of supply at 1.2300. Usd/Cad is still pivoting around 1.2600 and now awaiting Canadian jobs data amidst the ongoing NAFTA impasse, while Aud/Usd stays on the backfoot after the RBA’s dovish SOMP and weaker than forecast mortgage data within a 0.7795-60 range – 200 DMA at 0.7755 providing support and big 0.7800 option expiry (2.75 bn) also exerting some influence. Nzd/Usd is holding just above 0.7200 in wake of this week’s RBNZ meeting, which opened the door to further easing alongside central guidance for tightening in mid-2019, but Usd/Cnh has retreated from its post-capital control related spike highs.

In commodities, across the commodities complex, WTI and Brent crude futures continue to hover near recent lows, however prices have seen a slight pull back amid source reports that the Forties pipeline system is still running at a restricted rate. China plans to launch crude oil futures on March 26th.

Looking at the day ahead, the only data of note is December wholesale trade sales. The Fed's George is also due to speak early morning.

US event calendar

  • 10am: Wholesale Inventories MoM, est. 0.2%, prior 0.2%; Wholesale Trade Sales MoM, est. 0.4%, prior 1.5%

DB's Jim Reid concludes the overnight wrap

The Winter Olympics in Pyeongchang starts today and if markets this week were an event I think they’d probably be the Ski Cross. If you haven’t seen this crazy race it consists of wild jumps, fast bends, spectacular crashes, terrifying falls, and jutting elbows. Just like the VIX this week.

The ups and downs continued yesterday with the eventual emphasis on the down with another very poor US close seeing the S&P 500 down -3.75% and 104 points lower than the day’s early highs. Given how sensitive markets were to a slightly hawkish BoE yesterday, one can only imagine the turmoil on Wednesday next week if US CPI comes in ahead of expectations. Obviously a softer/in-line number would be greatly received at the moment. To put the BoE in perspective their forecasts only imply three quarter point hikes over the next three years. So hardly a traditional rate cycle let alone an aggressive one. Initially the sell-off was focused on Government bonds but it spread with a lag of a couple of hours to equities with equity vol spiking again.

Now delving into equities a bit more, US bourses were down c4% yesterday with all sectors in the red and losses led by the financials, tech and discretionary consumer stocks (S&P: -3.75%; Dow -4.15%; Nasdaq -3.90%). Relative to their recent highs two weeks ago, the S&P and Dow are now officially in correction territory with the index down -10.2% and -10.4% respectively, while the Nasdaq is not far behind at -9.7%. European bourses were also lower yesterday, with the Stoxx (-1.60%), DAX (-2.62%) and FTSE (-1.49%) all down.

Over in government bonds, the UST 10 bond yield traded up to 2.882% following a weaker 30y treasury auction but closed -1.2bp lower to 2.825%, in part boosted by the flight to safety that has been absent most of this week. Elsewhere, 10y Bunds yields rose 1.7bp while Gilts rose 6.6bp following the hawkish BOE statements (more below). In credit markets, spreads on IG credit indices widened 4-5bp and the US CDX HY widened 20bp back to December 16 levels. Another focus yesterday was the volatility measures. The VSTOXX jumped c50% to 32.04, now back near the Brexit vote high in 2016 while the VIX traded within a c12pt range before closing c21% higher to 33.46 (+5.7 pt).

This morning in Asia, markets are extending the US sell off. The Nikkei (-2.93%), Hang Seng (-3.56%), Kospi (-1.62%) and China’s CSI 300 (-5.0%) are all down as we type. If these levels hold into close, all indices excluding the Kospi will be down >11% since their recent highs. Datawise, China’s January CPI and PPI both slowed mom but were in line with expectations at 1.5% yoy and 4.3% yoy respectively. In the US, the government may be partially shut down for a few hours. Earlier, Senator Rand argued against the proposed two year spending bill, leaving the Senate to wait till 1am Friday morning (as we go to print) to pass a procedural vote, then the House is expected to pass it sometime between 3am-6am, if not earlier. Elsewhere, the Senate banking committee has narrowly approved (13-12) Trump’s Fed nominee Marvin Goodfriend. His confirmation will now be voted in the full senate where approval may not be certain.

Now recapping other markets performance from yesterday. In currencies, the US dollar index was marginally higher (+0.03%) and rose for the fifth consecutive day, while the Euro dipped 0.14% and Sterling gained 0.23% following the BOE commentaries. In commodities, WTI oil retreated for the fifth straight day to be down 1.04% to $61.15/bbl (-6.6% cumulative). Elsewhere, precious metals strengthened slightly (Gold +0.03%; Silver +0.30%) and other base metals were mixed but little changed (Copper -0.35%; Zinc +0.55%; Aluminium +0.07%).

Turning back to the BOE, as expected the MPC members voted unanimously to keep rates on hold at 0.5%. However the outlook comments seemed more hawkish. The BOE Governor Carney said “it will be likely to be necessary to raise rates to a limited degree in a gradual process but somewhat earlier and…greater extent than what we had thought in November”. A stronger than expected global economy, improving wages and the continuing weak outlook for the UK’s potential supply underpinned the Bank’s more hawkish position. The bank has also upgraded its GDP growth forecasts for 2018 to 1.8% (+0.2ppt) while 2019 was steady at 1.7%. Overall, the meeting was broadly in line with our UK team’s expectations that the MPC would endorse tighter market pricing, without wanting to pre-commit to a May hike. They maintain their view that the BOE will keep rates on hold in May, as they expect demand to slow. For more details, refer to our UK economists’ note. Bloomberg’s implied odds for a May cash rate hike has increased 20ppt to 67%.

Now onto the three Fed speakers overnight. On the recent US equity sell off, similar to their peers, they all seemed to be taking it in their stride. The Fed’s Dudley said “…so far, I’d say this is small potatoes”. The Fed’s Kaplan said “… having a little more volatility, may be a healthy thing”, in part as the recent low volatility was “historically unusual”. Then the Fed’s Harker said “stock market volatility hasn’t changed his economic outlook” and that if you believe the long end of the curve is going up, then “it makes sense that equities would have an adjustment”. That said, he does not think the changes will materially impact business investment and consumer spending.

Moving onto rates and inflation. Mr Dudley noted three rate hikes “still seems like a very reasonable projection” and that “monetary policy around the world is going to become less accommodative”. However, he didn’t put too much weight on the 2.9% yoy wage growth beat last week as it was a single data point and the “question is what’s the trend looking through many months”. Following on, Mr Kaplan noted “my base case right now is the same (3 hikes in 2018)….but it’s a dynamic process”, that is subject to the incoming data and prevailing conditions. He added he “will continue to be vigilant for looking at financial conditions and any spillovers to the economy”, but he is not seeing that at this point. Elsewhere, Mr Harker noted “I’m glad we’re seeing some firming (in inflation)”, but “it’s not obvious that inflation…will absolutely reach our 2% target”, with one of the swing factors being the dollar.

Turning back to the Euro, the ECB’s Weidmann noted “we will monitor closely any impact FX rate movements might have on our primary target of stability”, but should not “allow ourselves to become unsettled by the decline in (the recent) fall in equity prices”. On QE, he reiterated his views that “if the expansion progresses as expected, substantial net purchases beyond the announced amount do not seem to be required”. The ECB’s Praet also noted policy normalisation will be a “long complex” process.

Onto some of the Brexit headlines. Senior EU figures have told Reuters that Britain will not be ready to make a full break from the EU by the end of 2020 and the EU side is bracing for a longer goodbye. Conversely, senior UK officials told Bloomberg that the UK is planning for an instant break from existing EU regulations, such as some rules on financial services to benefit more from Brexit.

Elsewhere, after more talks between the EU and UK counterparts over the past two days, the UK Brexit Secretary Davis said the meeting was “very constructive”, but “…there are still things incomplete”.

Finally, this morning, Michal Jezek in our team published a report “Credit Spread & Vol. Repricing as Equities Go from Melt-Up to Melt-Down”. He reviews the price action in CDS index spreads and their implied volatility during the current market turmoil and shows how their future direction is linked to equity volatility products. The report concludes that the recent vol. shock as a learning event for most market participants is likely to lead to a new, higher regime for both spread levels and their volatility. You can download the report here.

Before we take a look at today’s calendar, we wrap up with other data releases from yesterday. In the US, the weekly initial jobless claims (221k vs. 232k expected) and continuing claims (1,923k vs. 1,940k expected) were both moderately lower than expectations - the former is near mid-January’s c44 year low. The January Bank of France industrial sentiment index eased back to a still solid level of 105 (vs. 110 expected). In Germany, the December trade surplus was smaller than expected at €18.2bln (vs. €21bln), with stronger than expected growth in imports (1.4% mom vs. -0.7%) outpacing exports (0.3%). For 2017, Germany’s annual trade surplus fell for the time since 2009, albeit modest (€244.9bln vs. €248.9bln).

Looking at the day ahead, in Europe we get the December industrial production data out of the UK and France, with trade numbers also due in the former, while across the pond in the US the only data of note is December wholesale trade sales. The Fed's George is also due to speak early morning.

https://www.zerohedge.com/news/2018...slides-us-rebounds-yields-resume-ominous-rise
 

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Asian Metals Market Update: February-9-2018
By: Chintan Karnani, Insignia Consultants
The current volatility in global stock markets should pitch for a very strong case of the need to invest in physical gold to everyone. Gold is the only safe haven. The rest of them can be junk. Once again the debate between paper investment and safe havens. Gold as a safe haven is intended to safe guard against current global investment shocks.
 

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Uber agrees to $245MILLION settlement with Google's Waymo on day four of trial where the ride-hailing giant was accused of ripping off self-driving car technology
  • Uber is settling a lawsuit filed by Google's autonomous car unit, Waymo
  • Waymo alleged the ride-hailing service ripped off self-driving car technology
  • Waymo says Uber agreed not to use its technology in its autonomous vehicles
  • Waymo says Uber also agreed to pay about $245 million


Read more: http://www.dailymail.co.uk/news/article-5372995/Uber-Waymo-settled-trade-secrets-clash.html#ixzz56dPF4Sx3
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How Soaring US Oil Exports to China are Transforming the Global Oil Game

February 9, 2018 by Reuters



Photo: By G-Valeriy / Shutterstock

By Henning Gloystein SINGAPORE, Feb 9 (Reuters) – Bit by bit, the U.S. petroleum industry is turning world oil markets inside out.

First, sharp drops in U.S. imports of crude oil eroded the biggest market that producers like OPEC had relied on for many years. Now, surging U.S. exports – largely banned by Washington until just two years ago – challenge the last region OPEC dominates: Asia.

U.S. oil shipments to China have surged, creating trade between the world’s two biggest powers that until 2016 just did not exist, and helping Washington in its effort to reduce the nation’s huge trade deficit with China.

The transformation is reflected in figures released in recent days that shows the U.S. now produces more oil than top exporter Saudi Arabia and means the Americans are likely to take over the No.1 producer spot from Russia by the end of the year.

The growth has surprised even the official U.S. Energy Information Administration, which this week raised its 2018 crude output forecast to 10.59 million bpd, up by 300,000 bpd from their last forecast just a week before.

When U.S. oil exports appeared in 2016, the first cargoes went to free trade agreement partners South Korea and Japan. Few expected China to become a major buyer.

Data in Thomson Reuters Eikon shows U.S. crude shipments to China went from nothing before 2016 to a record 400,000 barrels per day (bpd) in January, worth almost $1 billion. Additionally, half a million tonnes of U.S. liquefied natural gas (LNG) worth almost $300 million, headed to China from the U.S. in January.

TRADE SURPLUS NARROWS
The U.S. supplies will help reduce China’s huge trade surplus with the U.S. and may help to counter allegations from U.S. President Donald Trump that Beijing is trading unfairly.

“With the Trump administration, the pressure on China to balance accounts with the U.S. is huge… Buying U.S. oil clearly helps toward that goal to reduce the disbalance,” said Marco Dunand, chief executive and co-founder of commodity trading house Mercuria.

As the energy exports rose, China’s January trade surplus with the United States narrowed to $21.895 billion, from $25.55 billion in December, according to official Chinese figures released on Thursday.

The energy sales to China are still modest compared with the $9.7 billion of oil shipped by the Organization of the Petroleum Exporting Countries (OPEC) to China in January. But they are already cutting into a market dominated by the likes of Saudi Arabia and Russia – with the threat of much more competition to come.

“We see U.S. crude as a supplement to our large base of crude” from the Middle East and Russia, said a refinery manager for China’s oil-major Sinopec, declining to be named as he was not cleared to speak to media.

He said that Sinopec was looking to order more U.S. crude this year.

INSIDE OUT
China’s crude imports climbed to a record 9.57 million bpd in January, official data showed on Thursday.

Meanwhile, U.S. imports have fallen below 4 million bpd, against a record 12.5 million bpd in 2005.

At average December/January volumes, American oil and gas sales to China would be worth around $10 billion a year. Including exports to Japan, South Korea and Taiwan, the figure doubles.

U.S. exports would be even greater but for infrastructure constraints: no U.S. port can handle the biggest oil tankers, known as Very Large Crude Carriers (VLCC).

To address that, one of the biggest facilities in the Gulf of Mexico, the Louisiana Offshore Oil Port Services (LOOP), is expanding in order to handle VLCCs soon.

THE PRICE OF OIL
For Chinese buyers, the main attraction of U.S. oil has been price. Thanks to the shale boom, U.S. crude is cheaper than oil from elsewhere.

At around $60.50 per barrel, U.S. crude is currently some $4 per barrel cheaper than Brent, off which most other crudes are priced. <0#WTCL-LCOc:>

For many established oil exporters like the Middle East-dominated OPEC or Russia, who have been withholding production since 2017 in an attempt to push prices higher, these new oil flows mark a big loss in market share.

“OPEC and Russia accepted that the U.S. will become a big producer because they simply wanted to get the price where it is today,” Mercuria’s Dunand said.

Since the start of the OPEC-led supply cuts in January 2017, oil prices have risen by 20 percent, though prices in February have come under pressure again in large part due to soaring U.S. output.

The flood of U.S. oil may even change the way crude is priced.

Most OPEC producers sell crude under long-term contracts which are priced monthly, sometimes retro-actively. U.S. producers, by contrast, export on the basis of freight costs and price spreads between U.S. and other kinds of crude oil.

This has led to a surge in traded volumes of U.S. crude futures, known as West Texas Intermediate (WTI), leaving volumes of other futures like Brent or Dubai far behind.

“Buyers, like sellers of U.S. oil, started hedging WTI,” said John Driscoll, director of Singapore-based consultancy JTD Energy Services.

Despite all these challenges to the traditional oil order, established producers are putting on a brave face.

“We have no concern whatsoever about rising U.S. exports. Our reliability as a supplier is second to none, and we have the highest customer base with long-term sales agreements,” said Amin Nasser, president and chief executive officer of Saudi Aramco, Saudi Arabia’s state-owned oil behemoth.

(Reporting by Henning Gloystein in SINGAPORE, Dmitry Zhdannikov in LONDON, Aizhu Chen in BEIJING, Ernest Scheyder in HOUSTON, Rania El Gamal in DUBAI, and Osamu Tsukimori in TOKYO Writing by Henning Gloystein Editing by Martin Howell)

(c) Copyright Thomson Reuters 2018.

Filed Under: Maritime News Tagged With: China, Oil, tankers, US crude exports

http://gcaptain.com/how-soaring-us-oil-exports-to-china-are-transforming-the-global-oil-game/
 

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COT Gold, Silver and US Dollar Index Report - February 9, 2018
By: GoldSeek.com
COT Gold, Silver and US Dollar Index Report - February 9, 2018


Gold Seeker Weekly Wrap-Up: Gold and Silver Fall Over 1% on the Week While Stocks Drop Over 5%
By: Chris Mullen, Gold Seeker Report
Gold gained $3.20 to $1320.40 in Asia before it chopped back to $1311.50 in late morning New York trade and then bounced back higher at times, but it still ended with a loss of 0.18%. Silver slipped to as low as $16.19 and ended with a loss of 0.37%.
 

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Ira Epstein's End of the Day Agriculture Video 2 9 2018
Ira Epstein


Published on Feb 9, 2018
 

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SD Weekly Metals & Markets Wrap..........

Fund Manager: Stocks Could Easily Drop 50%
SilverDoctors


Published on Feb 9, 2018
https://sdbullion.com
http://www.silverdoctors.com/precious...

Never have we seen the Dow drop more than 1000 points, and now we’ve seen it happen twice in this week. But stocks are still extremely overvalued, Fund Manager David Kranzler tells Silver Doctors. "The stock market could get cut in half and it would still be overvalued."

Volatility spiked this week. The VIX is the highest it's been since 2011. The Dow is down 10 percent from it’s high, but will it drop further? Kranzler says he would not be surprised if stocks fell another 50 percent.

Also in this week's SD Metals & Markets:
- Gold and silver are correcting as well.
- The rising 10-year Treasury yield is bearish for the housing market.
- The new Fed Chairman will not change Fed policy.