If you weren’t outraged before you certainly have reason to be now — both at Amazon and the press. First, Amazon. They’re now “offering” to anyone on welfare reduced-price “Prime” memberships. Let’s cut this down to size: There is utterly nothing that “Prime” offers that one can today, or should be able to now or in the future, buy with “food stamps” (electronic or not.) Prime’s “pantry” items are all, by definition (sorry folks, truly fresh food that is not laden with sugars and hydrogenated oils doesn’t ship well!) high carb trash. A big part of the reason we have a monstrous obesity epidemic in this country, especially among poor people, is that we stopped handing out literal government cheese (and eggs, meats, etc) as “food assistance” and went first to coupons and then to what are effectively prepaid debit cards. Yes, there are “some” restrictions (e.g. no booze purchases, etc) but if you look at what’s in a typical EBT shopper’s cart you will find things that will both make you fat and diabetic. True “government cheese”, when it was how food assistance was distributed, was both nutritious and did not promote obesity and metabolic dysfunction. Amazon today cannot take an EBT card. But they are lobbying to be allowed to, and if they are permitted to do so that will simply make the obesity and diabetes problem worse among the poor. Unless you support abusing poor people that standing alone is enough to cancel your PRIME membership and tell Amazon to **** off.
#protest now in #SoPaulo against #Brazil #Temer caught negotiating kickbacks & for direct elections in the country (photo: Dani Sampaio) pic.twitter.com/t4ojSzwyoe — ana cernov (@anacernov) May 18, 2017
The presidency of Brazil’s Michel Temer, who replaced disgraced and impeached predecessor Dilma Rouseff last summer, lasted about one year without a major corruption scandal. That changed tonight, when Brazil’s O Globo newspaper which was instrumental in exposing the Carwash scandal which ultimately led to Rouseff’s downfall and the arrest and incarceration of countless politicians, reported that the chairman of meatpacking giant JBS secretly recorded his discussion with Temer about “hush money” payments to jailed former House Speaker Eduardo Cunha in return for his silence. The allegations are the latest development in Operation Carwash, a sprawling corruption probe that has implicated many of Brazil’s business and political elite, including some in the president’s own party. Temer has repeatedly denied any wrongdoing. Readers may recall that in a delightfully ironic case study of political irony and power vacuum, Eduardo Cunha, the conservative Brazilian political leader who led the push in 2016 to oust Dilma Rousseff, was sentenced in March to more than 15 years in prison himself, when a Brazil judge found him guilty of corruption, money laundering and illegally sending money abroad, all in connection with the sprawling graft investigation involving the state-run oil company Petrobras, and which Cunha himself used as a pretext to dispose of Rouseff.
This post was published at Zero Hedge on May 18, 2017.
Goldman, which has been pushing for higher oil prices with seemingly daily bullish research reports for the past month, and which underwrote the last Saudi Arabian bond issue and is expected to also manage the Aramco IPO (explaining the bank’s conflict of interest), released a note commeting on the latest development in the oil market, which sent the price of crude higher by 3% after Saudi and Russia oil minister agreed to extend the OPEC production cuts by another 9 months through the end of Q1 2018. Specifically, Goldman writes that “today’s announcement will likely further extend the oil price rebound started last week on decent stock draws and low positioning, although the rally so far today has remained modest compared to the move that occurred last year when the OPEC cuts were first announced.” Even so, Goldman’s oil analyst Damien Courvalin had some caveats. Specifically, he said that for the strategy to work, however, two things have to take place: compliance needs to remain high and long-term oil prices need to remain low to prevent shale producers from ramping up investment significantly more. In fact, an extension of the cuts should go hand in hand with guidance of future production increases by low cost producers, in our view, with an already notable emphasis by Saudi and others that oil prices will likely remain in a $45-55/bbl long-term range, in line with our forecasts. This leaves us reiterating our 3Q17 $57/bbl Brent price forecast and, with an increasingly likely extension of the cuts, raises our confidence that the oil market will shift into backwardation in 3Q17. His full note below: Saudi and Russia commit to a 9-month extension of oil production cuts Saudi Arabia and Russia announced today, May 15, that they had reached an agreement to extend their oil output cuts for another nine months, through Mar-18. This announcement comes ahead of the scheduled May 25 meeting of OPEC members. Saudi energy minister Khalid al-Falih and his Russian counterpart Alexander Novak further pledged in a joint statement “to do whatever it takes” to reduce global inventories to their five-year average. In our view, this commitment to a longer than expected cut by the two largest participants of the output deal significantly increases the likelihood that all participants will agree to such an extension, with the longer duration likely helping to achieve high compliance through 2017.
This post was published at Zero Hedge on May 15, 2017.
In February 2000, the FOMC quietly switched from the CPI to the PCE Deflator as its standard for inflation measurement. There were various technical reasons for doing so, including the CPI’s employment of a geometric mean basis (which was in 2015 finally altered to a Constant Elasticity of Substitution formula). But it was one phrase that in hindsight did the Fed no favors, as it explicitly cited the expected fruits of the PCE Deflator’s methodology which would ‘avoid some of the upward bias associated with the fixed-weight nature of the CPI.’ I am not a conspiracist by any means, but there are times when you have to shake your head as these economists lack even a modicum of self-awareness. The central bank has been given a legal mandate for price stability, so the average American might wonder why that central bank is allowed to choose the measure most inherently stable (and low). At the very least, it seems like a conflict of interest, one among so many. In that regard, the last five years have been almost fitting. The PCE Deflator has, as expected, avoided the higher beta tendencies of the CPI and in both directions. For that, it has remained stable, alright, but stable below target no matter what the Fed does with its own balance sheet. I hope the irony is not lost on them, especially as it was oil prices that ‘achieved’ what they could not despite considerable expenditure on their part.
This is part I of a 3-part series introducing Plunger’s ‘Trade of the Year’. This section gives a review of the oil price from 1946 to present explaining the essential forces which powered its price through various bull and bear markets. It explains how we ended up where we are today in the oil market. Part II will explore the macro forces driving today’s economy which lays the groundwork for introducing my trade of the year in part III. To acquire a broader view of oils path over the past century I highly recommend the following resources on the oil market. Daniel Yergin’s ‘The Prize’ is an in-depth review of the history of oil up to the First Gulf war. It is indispensable in understanding the growth of the industry. Other books provide entertaining color to the industry by reviewing the swashbuckling nature of the early players who formed the industry as independents. I recommend ‘The Big Rich’ by Bryan Burrough and JP Getty’s autobiography ‘The Way I See It’. Finally, David Stockman’s ‘The Great Deformation’ is essential reading as it corrects all the false economic narratives of the past which have been masquerading as truth.
This post was published at GoldSeek on 17 April 2017.
News coming out of Venezuela over the past two years has reeked of corruption and failed political leadership: a long list of shortages, rampant poverty, incrimination of the opposition, and a recent move that puts the regime of Nicolas Maduro one step closer to a dictatorship. And these are only the developments that are recorded, with a recent LA Times Op-Ed suggesting that a Venezuelan homicide epidemic rages ‘unreported’ due to the country’s scrapping of crime statistics reporting over a decade ago. Despite all of this, the Organization of Petroleum Exporting Countries (OPEC) expects Venezuela, endowed with the world’s largest oil reserves (depending on who you ask), to play a major role in the cartel’s plan to curb global supply. In OPEC’s November agreement, Venezuela accounted for almost 10 percent of the net supply cut from member nations (calculated as cuts minus allotted increases)
This post was published at Zero Hedge on Apr 11, 2017.
In the hint that members of Trump’s administration may be “compromised” by conflicts of interest, the WSJ reports that Trump’s pick for Commerce Secretary, Wilbur Ross Jr, plans to keep millions of dollars invested in offshore entities “whose values could be affected by policies that he implements as commerce secretary.” Ross, the 79-year-old private-equity billionaire has said that if he is confirmed, he will sell at least 80 business assets and investment funds over the next several months. But he plans to hold on to investments in an oil-tanker company and 10 other entities that invest in shipping and real-estate financing, according to federal financial-disclosure and ethics filings. It isn’t clear why Mr. Ross is retaining these 11 assets. One particular assets which will raise eyebrows is a co-investment with the Chinese government’s sovereign- wealth fund in Diamond S Shipping Group Inc., one of the world’s largest owners and operators of medium-range oil tankers, according to its website. Ross’s private-equity firm in 2011 led a group of investors, including state-owned China Investment Corp., which injected a total of about $1 billion into the company. The Chinese fund was still a co-investor in 2014, according to a filing for an intended public offering that was later canceled. Diamond S Shipping Group, which is registered offshore but based in Greenwich, Conn., is private and doesn’t publicly list all its shareholders. The company, which has 33 tankers, didn’t respond to requests for comment.
This post was published at Zero Hedge on Feb 13, 2017.
A very powerful man is now facing the whole country in a very public way for what may be the first time. He appears a bit nervous and perhaps rehearsed. Rex Tillerson, Donald Trump’s pick for Secretary of State, is facing confirmation hearing today as the next administration prepares to begin. Here’s some biographical info. Nevertheless, it seems that former Exxon Mobil CEO will likely be confirmed as Secretary of State with ease. Many of the questions have been quite friendly, and perhaps even soft ball. Key issues include foreign policy, his past ties with Russia, Middle East issues, a commitment to defense and use of war ‘to back up diplomacy.’ Also discussed were potential conflicts of interest with ExxonMobil, the company he spent his entire career with, as well as climate change policies. Oil (and natural gas) as a weapon of foreign policy has been little appreciated until now, but has played a huge role in Venezuela’s volatile economic crisis, and has stoked tensions with Russia.
This post was published at shtfplan on January 11th, 2017.
Google has spun off its self-driving car project X into a separate company called Waymo. That’s not a contraction of ‘Way more’, although it certainly sounds like it. The name of the company is actually an acronym of ‘A new way forward in mobility,’ which, according to Waymo’s CEO John Krafcik is the mission of the brand new company. Since Google’s self-driving car is an electric one, this development could have, though perhaps a long way off at this point, implications for gas demand, after earlier this year, Wood Mackenzie said that Tesla’s first affordable car, the Model S, could shave off 300,000 bpd in gas demand in the US. For the time being, however, it’s much too early to make any inferences about gas and oil demand for two reasons. First, Waymo is not restricting itself exclusively to electric cars. Second, electric cars have a long way to go before becoming part of the everyday landscape, and this way is even longer for self-driving vehicles.
In a move that is certain to infuriate those who see Trump as nothing more than a puppet of the Kremlin, moments ago NBC reported that Rex Tillerson, CEO of Exxon Mobil and late entrant into the SecState race after his first meeting with the president elect this past Tuesday at the Trump Tower, has been picked by Trump to serve as his next Secretary of State. As NBC adds, Tillerson met Saturday with Trump at Trump Tower in New York, the president-elect’s spokesperson confirmed. The selection of Tillerson comes after Trump and his transition team spent weeks searching for someone to fill the post of the top U. S. diplomat. Former Republican presidential candidate Mitt Romney and former New York City Mayor Rudy Giuliani were reportedly in the running. Giuliani said Friday he had taken his name out of consideration. The 64-year-old Texas oilman, whose friends describe as a staunch conservative, emerged as a Secretary of State contender only last week following a meeting with Trump, when it was speculated that he would consider the offer “due to his sense of patriotic duty and because he is set to retire from the company next year.” Tillerson’s appointment would introduce the potential for sticky conflicts of interest because of his financial stake in Exxon: he owns Exxon shares worth $151 million, according to recent securities filings.
This post was published at Zero Hedge on Dec 10, 2016.
One day after Julian Assange officially revealed for the first time that the source of hacked Podesta and DNC emails in Wikileaks’ possession is not Russia, in the second excerpt from the John Pilger Special, to be broadcast by RT on Saturday Julian Assange accuses Hillary Clinton of misleading Americans about the true scope of Islamic State’s support from Washington’s Middle East allies. As previously reported, in an August 17, 2014 email made public WikiLeaks last month, Hillary Clinton, who had served as secretary of state until the year before, urges John Podesta, then an advisor to Barack Obama, to ‘bring pressure’ on Qatar and Saudi Arabia, ‘which are providing clandestine financial and logistic support to ISIS and other radical Sunni groups.’ “I think this is the most significant email in the whole collection,’ Assange, whose whistleblowing site released three tranches of Clinton-related emails over the past year, told Pilger in the interview. ‘All serious analysts know, and even the US government has agreed, that some Saudi figures have been supporting ISIS and funding ISIS, but the dodge has always been that it is some ‘rogue’ princes using their oil money to do whatever they like, but actually the government disapproves. But that email says that it is the government of Saudi Arabia, and the government of Qatar that have been funding ISIS.’ As recounted by RT, Assange and Pilger, who sat down for their 25-minute interview at the Ecuadorian Embassy in London where the whistleblower has been a refugee since 2012, also talked about the conflict of interest between Clinton’s official post, her husband’s nonprofit, and the Middle East officials, whose stated desire to fight terrorism may not have been sincere.
This post was published at Zero Hedge on Nov 4, 2016.
Speaking of poor policymaking, hyperinflation and violence – Venezuela is sliding closer and closer to the brink of collapse, with some sobering consequences. This was among the topics of conversation this week at the Mining & Investment Latin America Summit in Lima, Peru. While there, I had dinner with a couple of Canadian lawyers who represented a few Latin American oil producers, some of them based in Venezuela. Things have gone from bad to worse, they informed me. Since 2013, when Nicols Maduro took power after the death of Hugo Chvez, the socialist country has struggled with skyrocketing inflation, food and medicine shortages, a shrinking economy and rising violence and corruption. (Its capital city of Caracas recently overtook San Pedro Sula, Honduras, for having the world’s highest homicide rate.) These have only intensified since oil prices fell by half more than two years ago, as oil accounts for 95 percent of Venezuela’s export earnings.
This post was published at Zero Hedge by Frank Holmes, originally posted ValueWalk.com Oct 30, 2016.
Every “revolution” has it: the moment when the sequence of events unleashed by the initial decision ultimately boomerangs and takes down the very people who started the revolution. In Brazil, that would be the powerful former speaker of Brazil’s lower house, Eduardo Cunha, who spearheaded the ouster of President Dilma Rousseff, and who almost singlehandedly ushered in Michel Temer into the presidential office. Alas, for Cunha the “game of thrones” now appears to be over after he himself was arrested early on Wednesday as part of a sprawling graft probe involving state oil giant Petrobras. As a reminder, Cunha initiated impeachment proceedings against Rousseff in December when he was speaker of the Chamber of Deputies. That led to a Senate vote to remove her from office in August. Cunha, who until recently was a key ally of new President Temer, was accused of corruption, money laundering and tax evasion related to an oilfield purchase that Petrobras made in 2011 in the west African nation of Benin. Prosecutors said in a statement that they requested Cunha’s detention on the grounds that he represented a threat to the integrity of the investigation and was a flight risk. They also asked for bank accounts he holds totaling some $60 million to be frozen.
This post was published at Zero Hedge on Oct 19, 2016.
Mustafa Denktas had twin sons. One of them, a Kurdish militant, was killed fighting the Turkish army in 2012. Denktas was still in mourning when news arrived three weeks later that the other son had met the same fate. Back then Turkey’s war with separatist Kurds, however bloody and protracted, was essentially a domestic issue. Now it’s an international conflict. When President Recep Tayyip Erdogan sent his army into Syria last month, he wasn’t just striking a blow against Islamic State: a second goal was to stop Kurds from creating a de facto state. That’s the element of Erdogan’s Syrian gambit that poses the biggest political risks. It threatens to ensnare his soldiers in a civil war that’s already lasted 5 1/2 years, and drive a wedge between Turkey and its NATO allies – especially the U. S., which considers the Syrian Kurds an ally against Islamic extremists. When Moody’s Investors Service cut Turkey’s rating to junk last week, it cited ‘the persistence of geopolitical threats’ among other reasons. Erdogan is trying to stem a tide that turned more than two decades ago, when war in Iraq left Kurds in charge of that country’s oil-rich north. Since 2011, civil war has given a similar opportunity to Syrian Kurds, who now control of much of the territory along the 900-kilometer border with Turkey. Among the world’s largest ethnic groups without a state of their own, the Kurds can now glimpse a viable one.
The third quarter was supposed to be when earnings growth returned to U. S. companies. Not anymore. Companies in the S&P 500 are now expected to report an earnings decline for the sixth consecutive quarter in the coming weeks, according to analysts polled by FactSet. That slump would be the longest since FactSet began tracking the data in 2008. The prolonged contraction has raised questions about how far stocks can rise without corresponding strengthening in corporate earnings. As recently as three months ago, analysts estimated U. S. corporate earnings growth would return to positive territory by the third quarter. As of Friday, they were predicting a 2.3% contraction from the year-earlier period. Many of the factors pressuring U. S. corporate earnings in recent quarters – including a stronger dollar and falling oil prices – have abated in 2016. The WSJ Dollar Index, which measures the U. S. dollar against a basket of 16 currencies, is down 4% this year, versus up 8.6% for all of last year, and the price of U. S.-traded crude oil has risen 20% in 2016, rebounding from its extreme lows. Still, those moves haven’t been enough to project an end to the earnings recession.
The Federal Reserve wants to take away the ability of Goldman Sachs and other banks to invest in companies rather than acting as bankers and lending. The U. S. banking regulators are urging Congress to prohibit merchant banking where firms buy stakes in companies rather than lend them money. They are pushing for limits on Wall Street’s ownership of physical commodities after lawmakers accused Goldman Sachs and other banks of seizing unfair advantages in metal and energy markets in recent years. Merchant banking has generally become the business of making private equity investments in non-financial firms, in particular, equity investments that have a venture capital character. Based upon a report on a multi-agency study of banks’ investment activities required by the Dodd-Frank Act, they highlighted ways to fix potential risks that regulators didn’t think were handled by the Volcker rule ban on certain trading and investments. However, Congress needs to pass legislation and they are subject to bribes that we call lobbying, which presents the greatest hurdle to actually changing anything. The Fed’s recommendations on merchant banking would end the ability to operate mines, warehouse metals, and engage in shipping oil.
Summary Seadelta loaded Libyan crude, headed to China. Sudden rise expected in exports from Libya and Nigeria. Other producers expected to increase production as OPEC meets this week. Potential additions on the order of 1.4 billion barrels. February low in crude prices may be tested. I recently wrote that OPEC’s ‘production risks to the upside,’ as OPEC’s hopes for a supply-demand balance for 2017 have faded. I specifically mentioned that Libya and Nigeria want to restore production if and when they can. Mohamed Oun, the country’s envoy to the Organization of the Petroleum Exporting Countries, said in an interview today, ‘Definitely, we will not agree to a freeze without reaching our quota from before,’ which is 1.6 million barrels per day. On Thursday, a ‘Black Swan Event’ appeared in the news, that Libya was ready to double its production to 600,000 b/d within 4 weeks and to 950,000 b/d by year-end. At the same time, Nigeria was planning to restore more than 500,000 b/d of exports within days. I assessed that this scenario, if it materializes, could cause the crude oil market to re-test its lows of last February.
The Death of the Great Bakken Oil Field has begun and very few Americans understand the significance. Just a few years ago, the U. S. Energy Industry and Mainstream media were gloating that the United States was on its way to ‘Energy Independence.’ Unfortunately for most Americans, they believed the hype and are now back to driving BIG SUV’s and trucks that get lousy fuel mileage. And why not? Americans now think the price of gasoline will continue to decline because the U. S. oil industry is able to produce its ‘supposed’ massive shale oil reserves for a fraction of the cost, due to the new wonders of technological improvement. I actually hear this all the time when I travel and talk to family, friends and strangers. I gather they have no clue that the Great Bakken Oil Field is now down a stunning 25% from its peak in just a little more than a year and half ago:
While correlation is not causation, it is certainly a wink and a nudge in this case. As Donald Trump’s poll numbers soar so the Mexican Peso has been collapsing against the US dollar, and just broke to fresh record lows… *** After last year’s annus horribilis that saw the currency shed more than 14 per cent of its value against the dollar, the peso is down an additional 10.5 per cent so far this year – making it the world’s second worst performing major emerging market currency after the Argentine peso, report The FT’s Pan Kwan Yuk and Jude Webber. Low oil prices have hobbled Mexican president Enrique Pea Nieto’s efforts to open up the country’s energy sector to private investments and forced the government to cut spending and growth forecasts. In addition Mr Pea Nieto has seen his approval ratings sunk to record lows amid anger over his handling of corruption scandals and perceived inability to maintain law and order in Latin America’s second most important economy.
This post was published at Zero Hedge on Sep 16, 2016.
Amid the most enduring global oil glut in decades, two OPEC crude producers whose supplies have been crushed by domestic conflicts are preparing to add hundreds of thousands of barrels to world markets within weeks. Libya’s state oil company on Wednesday lifted curbs on crude sales from the ports of Ras Lanuf, Es Sider and Zueitina, potentially unlocking 300,000 barrels a day of supply. In Nigeria, Exxon Mobil Corp. was said to be ready to resume shipments of Qua Iboe crude, the country’s biggest export grade, which averaged about 340,000 barrels a day in shipments last year, according to Bloomberg estimates. On top of that, a second Nigerian grade operated by Royal Dutch Shell Plc is scheduled to restart about 200,000 barrels a day of flow within days. While there are reasons to be cautious about whether the barrels will actually flow as anticipated, a resumption of those supplies – more than 800,000 barrels a day in all – could more than triple the global surplus that has kept prices at less than half their levels in 2014. It would also come just as members of the Organization of Petroleum Exporting Countries and Russia are set to meet in Algiers later this month to discuss a possible output freeze to steady world oil markets. ‘If you have some restart of Nigeria and some restart of Libya, then the rebalancing gets pushed even further out,’ Olivier Jakob, managing director at Petromatrix GmbH in Zug, Switzerland, said by phone. ‘It complicates matters a lot before the meeting in Algeria.’
This post was published at David Stockmans Contra Corner By Laura Hurst, Elisha Bala-Gbogbo and Angelina Rascouet, Bloomberg Business ‘ September 15, 2016.