Exxon Cuts Reserves By A Record 3.3 Bilion Barrels As Oil Crash Finally Takes Toll

Last September, when the price of oil was well below where it had been trading for the bulk of the past several years, we reported that NY Attorney General Eric Schneiderman was probing why Exxon Mobil hasn’t written down the value of its assets, two years into a pronounced crash in oil prices. The complaint was simple: out of the 40 biggest publicly traded oil companies in the world, Exxon – then still led by now Secretary of State Rex Tillerson – was the only one that hasn’t booked any impairments in the prior 10 years.
As the WSJ wrote at the time, “since 2014, oil producers world-wide have been forced to recognize that wells they plan to drill in the future are worth $200 billion less than they once thought, according to consultancy Rystad Energy. Because the fall in prices means billions of barrels cannot be economically tapped, such revisions have become a staple of oil-patch earnings, helping to push losses to record levels in recent years.” And yet, Exxon had – until the later half of 2016 – declined to take any write-downs, the only major oil producer not to do so, which has led some analysts to question its accounting practices.
Maybe the NYAG was on to something?

This post was published at Zero Hedge on Feb 22, 2017.

Ten Great Economic Myths

Our country is beset by a large number of economic myths that distort public thinking on important problems and lead us to accept unsound and dangerous government policies. Here are ten of the most dangerous of these myths and an analysis of what is wrong with them.
Myth #1
Deficits are the cause of inflation; deficits have nothing to do with inflation.
In recent decades we always have had federal deficits. The invariable response of the party out of power, whichever it may be, is to denounce those deficits as being the cause of our chronic inflation. And the invariable response of whatever party is in power has been to claim that deficits have nothing to do with inflation. Both opposing statements are myths.
Deficits mean that the federal government is spending more than it is taking in taxes. Those deficits can be financed in two ways. If they are financed by selling Treasury bonds to the public, then the deficits are not inflationary. No new money is created; people and institutions simply draw down their bank deposits to pay for the bonds, and the Treasury spends that money. Money has simply been transferred from the public to the Treasury, and then the money is spent on other members of the public.
On the other hand, the deficit may be financed by selling bonds to the banking system. If that occurs, the banks create new money by creating new bank deposits and using them to buy the bonds. The new money, in the form of bank deposits, is then spent by the Treasury, and thereby enters permanently into the spending stream of the economy, raising prices and causing inflation. By a complex process, the Federal Reserve enables the banks to create the new money by generating bank reserves of one-tenth that amount. Thus, if banks are to buy $100 billion of new bonds to finance the deficit, the Fed buys approximately $10 billion of old treasury bonds. This purchase increases bank reserves by $10 billion, allowing the banks to pyramid the creation of new bank deposits or money by ten times that amount. In short, the government and the banking system it controls in effect “print” new money to pay for the federal deficit.

This post was published at Ludwig von Mises Institute on Feb 22, 2017.

Mnuchin Praises Strong Dollar, Adds To Currency Confusion

Following today’s more dovish than most expected minutes, the dollar tumbled and its main carry counterpart, the yen spiked. However, shortly after 4pm, the USDJPY resumed its levitation, a time when the traditional trust bank intervention on behalf of the BOJ was not yet in play. The reason for the updraft in the dollar was the publication of an interview in the WSJ with Treasury Secretary Steven Mnuchin, his first since being sworn in as Treasury Secretary last week, in which he appeared to advocate a “strong dollar”, and said the strong U. S. currency “is a reflection of confidence in the U. S. economy”, adding that its performance compared with the rest of the world and was a ‘good thing’ in the long run.

This post was published at Zero Hedge on Feb 22, 2017.

A CRUCIAL Week For Silver Prices

The following video was published by SilverDoctors on Feb 22, 2017
Gold and silver prices have been kept in a tight range this past week, with silver prices trading at $18 an ounce, and gold prices trading in a tight range between $1230 and $1245 an ounce.
Silver in particular stubbornly refuses to stay down, absorbing every raid the bullion banks have thrown at it the past few days attempting to cap silver under the 200-day moving average at $17.93, and paint a large head and shoulders pattern on silver’s weekly chart.
Much to the chagrin of the bullion banks and their nearly 50,000 new silver shorts, however, silver has absorbed every punch thrown, and keeps bobbing back up.

Stocks and Precious Metals Charts – Round and Round She Goes

The Fed’s minutes came out today, and they were yet mildly hawkish in that vague sort of way that has preceded twenty-nine of the last two actual rate increases.
There is a theory about that because of the failure of the EU and alternatively China, the inflows of monies into dollar assets are bound to continue to drive the major stock indices higher, and will prompt the Fed to raise rates higher than many think.
This is a variant of the ‘money on the sidelines’ theory that, for whatever reasons, will be compelled to toss their wealth into overpriced assets because they have ‘no other choice.’
Now of course this is possible. The real question is, ‘how probable.’ And what sorts of things might we watch to determine if this particular scenario is genuinely falling into place.
Nothing in the markets is uni-dimensional. A Fed raising rates to try and stem a stock bubble fueled by a flight to safety from Europe/Asia is certainly a scenario, but there are a lot of other things that go along with it.
For example, what happens to the real economy and wage growth in the US as the Fed starts jacking up rates to try and halt an exogenously driven stock bubble? What other steps might the Fed and the regulators take?
To what extent will the market ignore expectations for US business performance and just run with the rallies with abandon?
I do not know. But one thing I am almost certain of is that no one else does either. And to the extent that they do know, they certainly are not telling the general public about it, or selling it for ten bucks a toss to retail investors.

This post was published at Jesses Crossroads Cafe on 22 FEBRUARY 2017.

Dow Jumps To Longest Record-Setting Streak Since 1987

Quick… look over there..
The Dow was the only major to close green today… (DD and MMM created 35 points of The Dow’s 32 point gain)
The Dow has notched its 9th record close in a row – the longest streak since Jan 1987…
The US equity market and VIX have now been decoupled for 8 trading days… (closing higher with stocks for the 2nd day in a row)

This post was published at Zero Hedge on Feb 22, 2017.

FEB 22/GOLD AND SILVER REBOUND ON FOMC MINUTES RELEASED AT 2 PM/GLD AND SLV INVENTORY REMAIN CONSTANT/GOLD AND SILVER EQUITY SHARES WHACKED/BOTH CHINA AND IRAN ANGRY AT THE USA/TRUMP NOW WORRIED …

Gold at (1:30 am est) $1232.00 DOWN $5.50
silver was : $17.94: DOWN 5 CENTS
Access market prices:
Gold: $1237.90
Silver: $18.03
THE DAILY GOLD FIX REPORT FROM SHANGHAI AND LONDON
The Shanghai fix is at 10:15 pm est last night and 2:15 am est early this morning
The fix for London is at 5:30 am est (first fix) and 10 am est (second fix)
Thus Shanghai’s second fix corresponds to 195 minutes before London’s first fix.
And now the fix recordings:
WEDNESDAY gold fix Shanghai
Shanghai FIRST morning fix Feb 22/17 (10:15 pm est last night): $ 1245.45
NY ACCESS PRICE: $1236.40 (AT THE EXACT SAME TIME)/premium $9.05
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Shanghai SECOND afternoon fix: 2: 15 am est (second fix/early morning):$ 1246.39
NY ACCESS PRICE: $1235.00 (AT THE EXACT SAME TIME/2:15 am)
SPREAD/ 2ND FIX TODAY!!: 11.39
China rejects NY pricing of gold as a fraud/arbitrage will now commence fully
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
London FIRST Fix: Feb 22/2017: 5:30 am est: $1237.50 (NY: same time: $1237.40 (5:30AM)
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
London Second fix Feb 22.2017: 10 am est: $1236.65(NY same time: $1237.60 (10 am)
It seems that Shanghai pricing is higher than the other two , (NY and London). The spread has been occurring on a regular basis and thus I expect to see arbitrage happening as investors buy the lower priced NY gold and sell to China at the higher price. This should drain the comex.
Also why would mining companies hand in their gold to the comex and receive constantly lower prices. They would be open to lawsuits if they knowingly continue to supply the comex despite the fact that they could be receiving higher prices in Shanghai.

This post was published at Harvey Organ Blog on February 22, 2017.

So It Begins, Corporate Media Sets Up Narrative That The Economy Is Worsening – Episode 1211a

The following video was published by X22Report on Feb 22, 2017
Philadelphia passed a soda tax and sales have plummeted and the companies will be laying off employees. Restaurant traffic and sales have declined as people shy away from eating out. Existing home sales magically rebound as mortgage applications are declining. Corporate media will use the immigration ban as the catalyst to the housing crash. Trump says the budget is out of control. Corporate media saying Trump will use alternative facts to counter the economic decline.

Can Americans Really Depend On Social Security?

In 1935 the government passed Social Security into law setting up a government managed retirement plan for the majority of US workers. To fund the plan, they passed the Federal Insurance Contribution Act (FICA). The law mandates that employers withhold a portion of the worker’s salary (contribution) and requires the employer to match the contribution.
It was sold to the public as a form of annuity, with each worker’s contributions and benefits based on their income. While Social Security has features similar to an annuity (paying lifetime benefits), in many ways it is different.
In 1960 the Supreme Court (Flemming v. Nestor) ruled, ‘that no one has an accrued property right to benefits from Social Security.’ Contributions are now taxes with an indirect correlation to benefits.
An annuity with a private insurance company is a legally binding contract. The insurance company must honor the agreement or risk being sued for breach of contract.

This post was published at Zero Hedge on Feb 22, 2017.

The only commodity supply-demand indicator that matters

For an industrial commodity with a liquid futures market, the ‘term structure’ of the futures market is the most useful – perhaps even the only useful – indicator of whether physical supply is tight, abundant or somewhere in between.
The term structure of a commodity futures market is the prices of futures contracts for the commodity over all available expiration months. It can be displayed as a chart, with price along the vertical axis and the expiration months along the horizontal axis. Here are examples for oil and copper.
If a market is in ‘contango’ then the later the delivery month the higher the price, resulting in the chart of the term structure being an upward-sloping curve. If a market is in ‘backwardation’ then the earlier delivery months will have the higher prices and the term structure will be represented by a downward-sloping curve. It is also possible for the curve representing the term structure to have an upward slope over some future delivery periods and a downward slope over others. This often happens with commodities that experience large seasonal swings in production (e.g. grains) or consumption (e.g. natural gas), but it can also happen with other commodities.
For an industrial commodity such as oil or copper it will be normal for the term-structure curve to slope upwards, that is, for the market to be in ‘contango’, with the extent of the ‘contango’ reflecting the cost of physical-commodity storage.

This post was published at GoldSeek on 22 February 2017.

Seven Earth-Like Planets Discovered 40 Light Years Away

After holding us in suspense for days with promises of a “major” announcement, NASA has just revealed that it has discovered 7 “Earth-sized” planets orbiting a nearby star that are relatively well positioned to support life. Which is shocking really that among the literally billions of planets in the universe there might be a couple that are roughly the size of Earth and also roughly the same distance from their star…this is the kind of investigative work that is undoubtedly going to earn some scientists at NASA a really large taxpayer-funded raise.
But before you pack your bags, you should know that the planets are roughly 40 light-years away in the constellation Aquarius. And for those not familiar with exactly how fast light travels, according to NASA, it would take you roughly 44 million years to get there using modern technology.
Scientists say they need to study the atmospheres before determining whether these planets could support some type of life but at least three of them are in the so-called habitable zone, where water and, possibly life, might exist.


This post was published at Zero Hedge on Feb 22, 2017.

3 Reasons Gold is Rising and the Dollar is Falling

The price of gold is moving in contradiction to its economic purpose, which is to serve as an investor safe haven against inflation. Shortly after the election, the dollar index spiked as gold prices began a quick decline; however, recently the trend has reversed. Gold is now up around 7% since the Fed’s December rate hike, according to Bloomberg.
Last week we saw the Consumer Price Index report showing inflation above 2% and Janet Yellen’s congressional testimony sending firms like Goldman Sachs increasing the odds of a March hike to 30%. With stronger assurance and signals of higher interest rates and rising inflation, why is gold rising and the dollar falling? Here are 3 critical factors:
Donald Trump
Uncertainties surrounding the stability of his administration, the priority of his policies, and responses by other world leaders are keeping investors skeptical of what Trump-o-nomics will look like. The rallies in the dollar and the stock market began quickly after the election results. Investors were looking to campaign promises of fiscal spending and deregulation that would free up more capital investment into construction projects like the border wall. Since then Trump’s focus has been diverted to national security matters, and investors haven’t yet seen the earnestness, political will or Republican support to push through spending increases.

This post was published at Schiffgold on FEBRUARY 21, 2017.

This is a great option for anyone’s Plan B

It seems like every time I come to Panama now the first word that springs to mind is ‘impressive’.
I first traveled to Panama back in 2003… fourteen years ago.
I remember landing at Tocumen International Airport for the first time – it was a depressing backwater that was barely functioning.
And on the way into town there was hardly any sign of civilization; everything seemed completely impoverished.
Basically Panama was just another third world toilet bowl back then.
But over the years as I kept coming back, and even as I lived here back in 2007, Panama really started to grow… thanks in large part to the expansion of the Canal.
Economists can quote figures about GDP and foreign direct investment to measure growth, but what really matters is standard of living.
And people here are living MUCH better than ever before.
Panama’s middle class has exploded, growing from almost nothing to more than a third of the population… and rising. It’s far higher in the capital city.

This post was published at Sovereign Man on February 21, 2017.

‘The End Goal Is To Destroy The Constitution and Subvert The Country’ – How Secretive Non-Profit Organizations Erode The United States

One of the biggest problems facing this nation is the amount of money that has been ‘sequestered,’ to term it, for ‘Non-Profit Organizations,’ or ‘NPO’s.’ Why? They present a problem when they can be used by an unscrupulous individual or groups of unscrupulous individuals (for examples, a George Soros, or the Democratic Party respectively). What is an NPO? Let’s look at what they are and see if the definition is characterized by actual NPO actions.
Here is an excerpt from a book that describes NPO’s (what they should be):
‘The main financial difference between a for-profit and a not-for-profit enterprise is what happens to the profit. In a for-profit company like Ford or Microsoft or Disney or your favorite fast-food establishment, profits are paid to the owners, including shareholders. But a nonprofit can’t do that. Any profit remaining after the bills are paid has to be plowed back into the organization’s service program. So profit can’t be distributed to individuals, such as the organization’s board of directors, who are volunteers in every sense of the word.’
‘Nonprofit Kit for Dummies,’ ISBN: 0-7645-5347-X, pg. 8
Austere and stoic, these NPO’s, all! Ahh, but what is conveniently left out is the salary portion…for the directors. Those salaries are written off as an operating expense by the ‘Non-Profit,’ but they’re hardly the funds gleaned by a ‘simple volunteer for the beneficent NPO.’ Another paragraph from the book shows this:

This post was published at shtfplan on February 22nd, 2017.

FOMC Minute Hint At Hike “Fairly Soon”, But Warn Trump Policies May “Not Materialize”, VIX Too Low

March rate hike odds are unchanged (below 40%) and the yield curve has flattened since The Fed’s February statement (despite heavy jawboning and higher inflation data) and so the Minutes were expected to help ease the markets to not be surprised. And they were… MANY FED OFFICIALS SAW HIKE `FAIRLY SOON’ IF ECONOMY ON TRACK. However, the Minutes also showed ‘balance’ by not proclaiming concern over inflation – *MANY FED VOTERS SAW ONLY MODEST RISK OF SIGNIFICANT INFLATION and FED OFFICIALS SAW DOWNSIDE RISKS FROM FURTHER DOLLAR STRENGTH.
Here is the key excerpt in which the Fed says a rate hike may be needed “fairly soon” if all goes according to plan…
key segment many participants expressed the view that it might be appropriate to raise the federal funds rate again fairly soon if incoming information on the labor market and inflation was in line with or stronger than their current expectations or if the risks of overshooting the Committee’s maximum-employment and inflation objectives increased.
However in a surprising twist, some Fed members explicitly warned that the market has gotten ahead of itself and that Trump’s fiscal policies may never materialize…
A few participants commented that the recent increase in equity prices might in part reflect investors’ anticipation of a boost to earnings from a cut in corporate taxes or more expansionary fiscal policy, which might not materialize.
The Fed also warned once again that “valuation pressures have risen” since the election:

This post was published at Zero Hedge on Feb 22, 2017.

SAUT: Fade the Fed, Markets Now Dependent on Fiscal Policy

“By the time a queen bee is five she is old and no longer reproduces, leaving her army of honeybees torn between loyalty and survival. Since the hive cannot survive without a productive queen, the beekeeper reaches into the hive with a long-gloved hand and squashes the enfeebled queen. With the entire hive as a witness, all know the queen is dead. Absent the scent of their leader, the honeybees panic. But, the beekeeper is prepared, having ordered a new queen from a bee breeder. Arriving in a two-inch-long wooden box with a screen at the top and bottom, the queen is accompanied by a court of six to eight escort bees who care for her every whim, cleaning her, feeding her, removing her waste. At one end of the box, a tiny piece of hard candy blocks access to the queen. When the box is inserted into the hive, the first instinct of the worker bees, who immediately know she has the wrong scent, is to kill the new queen. The workers struggle to reach her but are blocked by the candy. Soon they become diverted by the sweet [candy], and over the two or three days it takes to eat through it to succumb to the enticement. Their fealty is won. All hail the new queen.”
– ‘Three Blind Mice’ by Ken Auletta (American writer, journalist, and media critic)
Something similar to this ‘new queen bee’ story is happening now. The ‘old queen’ has been the Federal Reserve and monetary policy. The ‘new queen’ appears to be the White House and fiscal policy. The White House seems nervous that monetary policy, the Fed, and up until recently the continuing policy of lowering interest rates, has not produced the typical strong economic rebound following a ‘soft patch.’ So, the ‘new queen’ looks to be fiscal policy and the White House. As repeatedly stated, ‘The White House is ‘driving’ the equity markets and not the Fed, which is a huge change from the past two decades.’ Now Wall Street loved the old queen. The Street loved lower interest rates, figuring that stimulation would revive the banks, business, and the economy in general. Yet many investors are leery about the new queen. The Street worries that tax cuts could be a catalyst for bigger budget deficits and higher inflation. Moreover, the media, the Democrats, and even many Republicans appear to be taking every opportunity to undermine our new President. However, the White House figures that Wall Street will eventually succumb to the sweet lure of tax cuts, reduced regulation, repatriation of foreign corporate profits, a fix for Obamacare, etc. But, beekeepers sometimes get stung! The head beekeeper in Washington D. C., the President, knows that the economy remains in a fragile state. He knows the worker bees are worried about their jobs, their hive, and their honey. He knows they will sting Republicans in the next election if he does not get the economy moving again, but we think he will.

This post was published at FinancialSense on 02/22/2017.

Mother Nature Massacres Natural Gas Bulls

Natural gas prices plunged to their lowest level since November on mild weather in the U. S., which has caused storage levels to decline at a much slower pace than expected.
Contracts for March delivery on the Nymex exchange dipped to $2.63 on February 21, down a third since December. The bearish swing has come after successive EIA reports showing a modest drawdown in gas inventory levels.
Natural gas consumption is seasonal, with spikes in demand occurring in winter months. As such, storage levels build up over the course of the year, especially in the milder months of spring and fall. Then, gas is used up in the winter. The winter of 2016 was the warmest on record, leading to a paltry drawdown in inventories. The result was a cratering of natural gas prices last year as inventories swelled following the end of winter.
This winter things were supposed to be much tighter. After all, upstream production fell last year after a decade of relentless growth. Meanwhile, the hollowing out of the coal industry has led to a corresponding uptick in natural gas consumption in the electric power sector, which is another way of saying that gas demand is rising on a structural basis. Also, LNG exports started to pick up last year, opening up another source of demand for U. S. natural gas.

This post was published at Zero Hedge on Feb 22, 2017.