WTI Jumps Above $50 On Report US Prepping Sanctions Against Venezuela Oil Industry

After both Brent and WTI rose above their respective 50DMAs on Friday, capping 2017’s best weekly rally for oil, the rising tide is accelerating as the latest CFTC COT data confirmed, when net specs boosted bullish Nymex WTI crude oil bets by 27K net-long positions to 423K, the highest in two months, as producers continued to cover short hedges, sending their net position to the most bullish since the summer of 2015.

Meanwhile, oil started the Sunday session jumping out of the gate, with WTI rising above $50 for the first time since May in early Asian trading, following the usual non-material weekend chatter and “noise” out of OPEC (which to exactly nobody’s surprise “can’t stop pumping“), however what has attracted traders’ attention, is a WSJ report that following last week’s latest round of sanctions, and after today’s vote to overhaul Venezuela’s constitution further entrenching Maduro’s unpopular regime, US government officials are considering announcing sanctions against Venezuela’s oil industry as early as Monday, although as the WSJ notes, a full-blown “embargo against Venezuelan crude oil imports into the U. S. is off the table for now.”

This post was published at Zero Hedge on Jul 30, 2017.

“Why Does Extraordinarily Low Volatility Matter” Baupost Explains…

With elites increasingly sounding the alarm about the state of the stock market, and various market participants fearing the complacency is masking the fragility of the market’s true character; it is no surprise that Baupost’s recently named President and Head of Public Investments, Jim Mooney, has joined the chorus.
While Mooney (and Klarman’s) warning regarding market volatility is not new, perhaps the most interesting nuance is the ‘difference this time’.
Confirming JPMorgan’s Marko Kolanovic’s concern that “we may be very close to a tipping point” as he explained that “low volatility would not be a problem if not for strategies that increase leverage when volatility declines,” Baupost’s Mooney explains that crucial market structure differences between current times and the 2008 market crash could lead to an exacerbation of any stock market price readjustment.
A Period of Subdued Volatility
“Stability leads to instability. The more stable things become and the longer things are stable, the more unstable they will be when the crisis hits.” – Hyman Minsky

This post was published at Zero Hedge on Jul 30, 2017.

Rome’s Transport System Faces “Meltdown,” On Brink Of Collapse

New York City’s deteriorating subway has a rival for world’s most dysfunctional public transportation system. After only three months on the job, Bruno Rota, the head of Rome’s public-transit company has announced that he’s leaving his post, saying that the Italian capital city’s decaying transportation system should declare bankruptcy, according to Reuters.
Rota’s departure is an embarrassment for the anti-establishment five-star movement and one of its most high-profile politicians, Rome Mayor Virginia Raggi. Since taking office last year, Raggi’s administration has been paralyzed by internal tumult while the city’s infrastructure has continued to decay. The party’s failures in Rome suggest that it’s not prepared to govern, and may have contributed to Five-Star’s losses in a series of municipal elections last month. Meanwhile, the situation could hurt the party’s chances in next year’s general election.

This post was published at Zero Hedge on Jul 30, 2017.

JPM: “Investors Are Starting To Hedge Against A Crash”

It’s probably not a coincidence that in the same week in which one of the most level-headed investors of all, Oaktree’s Howard Marks issued an alarm on the current state of the market, that JPM has come out with not one (as discussed previously, Marko Kolanovic’s latest “tipping point” note last Thursday was blamed for the small and sharp selloff at the end of last week), but two reports in which JPMorgan makes it clear that not only is the market on the edge, but increasingly more traders, both institutional and equity, are getting ready for what comes next.
First, as another reminder, these are the 4 bullet points with which Marks summarized the current investing environment:

This post was published at Zero Hedge on Jul 30, 2017.

MAULDIN: One Of These 3 Black Swans Will Likely Trigger A Global Recession By End Of 2018

Exactly 10 years ago, we were months way from a world-shaking financial crisis.
By late 2006, we had an inverted yield curve steep to be a high-probability indicator of recession. I estimated at that time that the losses would be $400 billion at a minimum. Yet, most of my readers and fellow analysts told me I was way too bearish.
Turned out the losses topped well over $2 trillion and triggered the financial crisis and Great Recession.
Conditions in the financial markets needed only a spark from the subprime crisis to start a firestorm all over the world. Plenty of things were waiting to go wrong, and it seemed like they all did at the same time.
We don’t have an inverted yield curve now. But when the central bank artificially holds down short-term rates, it is difficult if not almost impossible for the yield curve to invert.
We have effectively suppressed the biggest warning signal.
But there is another recession in our future (there is always another recession), which I think will ensue by the end of 2018. And it’s going to be at least as bad as the last one was in terms of the global pain it causes.
Below are three scenarios that may turn out be fateful black swans. But remember this: A harmless white swan can look black in the right lighting conditions. Sometimes, that’s all it takes to start a panic.

This post was published at Mauldin Economics on JULY 28, 2017.

WSJ Asks “Who Paid For The ‘Trump Dossier’?”

Democrats don’t want you to find out – and that ought to be a scandal of its own…
It has been 10 days since Democrats received the glorious news that Senate Judiciary Chairman Chuck Grassley would require Donald Trump Jr. and Paul Manafort to explain their meeting with Russian operators at Trump Tower last year. The left was salivating at the prospect of watching two Trump insiders being grilled about Russian ‘collusion’ under the klieg lights.
Yet Democrats now have meekly and noiselessly retreated, agreeing to let both men speak to the committee in private. Why would they so suddenly be willing to let go of this moment of political opportunity?

This post was published at Zero Hedge on Jul 30, 2017.

FX Week Ahead: Can The Swiss National Bank Breathe A Sigh Of Relief?

Is the SNB at it again? EURO-phoria takes off as longer term investors get the nod.
Having focused on the USD in recent weeks, and how the market has rounded on the greenback ‘en masse’, we can finally look to some exchange rate moves outside of the major spot rates. Sharp losses in the CHF have shown that the big money is taking note of the recovery in the Euro zone, and that investment prospects look good as the smaller member states are gaining traction alongside the power house that is Germany. Last week, IFO economists said they saw little which could derail the domestic economy, including the strengthening EUR, which has traded to a little shy of 1.1800 in the past week, but more significantly, taking out the 1.1711/12 (long term range highs in the process. This led to the ‘follow through’ which saw EUR/CHF shooting up to levels close to 1.1400, having spent a year long slumber inside a 1.0600-1.1000 range.
More data out next week is expected to confirm the above, headlined by EU wide Q2 GDP on the Tuesday, with updated manufacturing PMIs due out for all the leading states, as well as unemployment data. Focus on Germany will be shared out a little to Spain and Italy, also seeing marked improvement in economic activity. Spanish jobs have increased significantly, and in Italy, industrial orders have taken off, so no surprise for widespread calls for the ECB to rein in their APP, but once again, market forces are threatening to choke off some of this recovery. As such, there is growing sentiment that once the ECB do signal policy change in Autumn, there will be a sense of disappointment – naturally linked to the rampant gains in the EUR seen already. German 10yr hit levels shy of 0.65% a few weeks back, but the moderation of some 10bps or so looks to have been a short lived affair as Bunds took a sharp hit as the regional inflation data out of Germany saw healthy pick up. On Monday we will see whether CPI is rising across the region as a whole, but consensus is looking for 1.3% in the headline, 1.1% in the core.

This post was published at Zero Hedge on Jul 30, 2017.

Indicators Are All Over The Place Warning That The Economy Is About To Implode – Episode 1344a

The following video was published by X22Report on Jul 30, 2017
UMich consumer confidence implodes and it is the lowest since before the elections. Another indicator that we are in a recession, Americans are saving the least amount of money and this is a sign that we saw leading up to the last two recessions. The US government is working their magic they are going back and revising the GDP data. BofA is warning that the market is cracking and falling apart. The sales of RV’s is booming, this indicator occurred during the last couple of recessions.

Chris Whalen: “Gundlach Isn’t Wrong, He’s Just Early”

Chris Whalen, Chairman of Whalen Global Advisers and a very well-known financial analyst (he was one of the original forecasters of Lehman’s inevitable demise) appeared on MacroVoices podcast this week to discuss the equity valuations, the path of the US dollar and DoubleLine Capital founder Jeff Gundlach’s declaration that the 35-year bull market in bonds is dead. Some of the key highlights:
“Erik: I want to start with the US dollar because, you know, we’ve had quite a few guests talking up a secular bullish argument on the dollar and, boy, it really all sounds very compelling, but look at the chart. The dollar bulls – the chart is telling us dollar bulls that we’re wrong. So how do you see this playing out? What do you think is driving the weakness that we’re seeing in the US dollar? And does it represent a secular change in direction, or is this just a natural pullback in an ongoing bull market?
Chris: Well, you know, it’s hard for analysts to get their hands around the dollar because the old relationships, particularly interest rates and trade balances, which used to give you a good idea of where a currency was going to go don’t seem to matter anymore. So the dollar was rising against major currencies after the financial crisis, and particularly over the last four or five years, in large part because people were fleeing whatever country they were in and going to the perceived safety of the United States. So Russian oligarchs, members of China’s communist party, they sent trillions of dollars to the United States over the past five years. Much of it went into American real estate. They also like Canada by the way, because both the US and Canada protect property rights, and they have a reasonable degree of confidentiality when it comes to investment flows. So if you’re a communist party cadre in China and you’ve stolen millions of dollars, you want a safe place to hide it.

This post was published at Zero Hedge on Jul 30, 2017.

The Bad Guys Are Cowering In The Corner As The Good Guys Clean House – Episode 1344b

The following video was published by X22Report on Jul 30, 2017
Trump and the good guys are now pushing the bad guys out, the elite are now panicking. A special counsel has been created to investigate Clinton, Comey and Lynch. US and Canada are telling its citizens to leave Venezuela. North Korea fired another missile, the bad guys want war and they are pushing the story that NK fired and ICBM and now its time to take action. The deep state is pushing the story that Russia is arming the Taliban, this is to push Trump into sending more troops. Russia invites BRICS to fight terrorism. The bad guys are still pushing their agenda they are training terrorists covertly in Jordan.

“This Time Will Be Different”: A Bullish Morgan Stanley Says “2017 Is Unlike 2012-2016”

Following a flood of warnings in the past week about both the precarious state of markets and the global economy, most recently from the otherwise stoic Howard Marks warning about bubble-like condition in the market (especially when it comes to passive investors), as well as Robert Shiller who explained what “keeps him up at night”, we were due for some good news. It came over the weekend courtesy of Morgan Stanley’s co-head of economics, Chetan Ahya, who writes in his Sunday Start weekly piece that “2017 is unlike 2012-2016” – a period characterized by an economy that rebounded on several occasions, prompting several narratives of “false starts”, only to see the global recovery fade and keep central banks stuck in printing mode.
In other words, this time – Morgan Stanley predicts – will be different. We are not so confident.
Here is Morgan Stanley’s explanation why this time the handoff from central banks to the private sector should work out:
Why 2017 is unlike 2012-16
Over the last five years, the global economy has been through a number of wobbles. Initially, DMs faced unprecedented deleveraging headwinds. Subsequently, China and other EMs underwent a period of deep adjustment. The outcome was a global expansion that was un-synchronous and heavily dependent on policy stimulus, which has been reflected in years of below-par growth. From 2012 to 2016, global GDP growth has averaged just 3.3%Y and more recently, since 2Q14, global GDP growth has averaged just 3.2%Y, well below the long-term average of 3.5%Y.

This post was published at Zero Hedge on Jul 30, 2017.

With The Drought Over, “Gold Fever” Grips California

The heavy rains that pummeled California this year ended the state’s historic drought in spectacular fashion, saving the state’s farming and tourism industries from an uncertain future. But the return of rainfall has had other less obvious economic ramifications, including, as the Los Angeles Times reports, the revival of an activity that’s been associated with the state for more than 150 years: Prospecting for gold.
Thanks to the rain, the yellow metal is once again being found in the state’s riverbeds for the first time since a judge’s controversial ruling prohibited the use of pumps and other equipment that were once required to extract gold from the state’s rivers.
***
And now that word has spread, the possibility of discovering immense riches underfoot is inspiring entrepreneurial Californians of a variety of ages and backgrounds to venture to the state’s rivers and creeks in search of the shiny yellow metal, sometimes equipped with little more than a pan, as they hope to collect gold fragments buried in the muck under the water, according to the LAT.

This post was published at Zero Hedge on Jul 30, 2017.

A Weaker US Economy Could Result in Strong Gold Rally

One possible effect of the ‘America First’ approach the Trump Administration vowed to take was a weaker US dollar. Shortly after we wrote about this earlier this year, the dollar index began a steady march lower, retreating 7% in just five months, from 102 in March to its current level of 95.
Not surprisingly, gold has risen almost 10% in US dollar terms during this time.
***
As recently as six months ago, many investors expected the dollar to continue its rally of the past few years based on stronger economic growth, via Trump’s agenda items, and tighter monetary policy by the Federal Reserve.
However, despite high expectations, so far Trump’s efforts to overhaul healthcare and reform taxes have fallen flat and have been short on substance. In addition, the continued investigation of Trump’s Russia ties has caused more investors to grow skeptical about the chances for meaningful reform, beyond unilateral executive action.
In a surprise move, the International Monetary Fund (IMF) just slashed its GDP growth forecast for the United States from 2.3% to 2.1%. It also cut its 2018 forecast from 2.5% to 2.1%. This type of revision hasn’t been seen anywhere in the world except for Brazil and South Africa, two deeply troubled economies.

This post was published at GoldSilverWorlds on July 28, 2017.

Facebook Employee Lives Out Of Car, Can’t Afford Housing

Google employees aren’t the only tech workers struggling to afford Silicon Valley rents. One (alleged) Facebook employee recently confessed to a local TV station that she cannot afford the Bay Area’s $2,000 a month rents, forcing her to live out of her car. Unique Parsha, the employee in question, opened up about her situation to local Fox affiliate KTVU, hoping to start ‘a real dialogue about the high cost of living in the Silicon Valley’ (although as readers will quickly realize, there is a very real chance that either KTVU, or everyone else has been part of an elaborate trolling scheme).
‘Parsha’s nickname is “Pinky”- she has pink hair, a pink car, and even a pink dog. But she says, things aren’t always as rosy as they appear.
Parsha says, “I tell people all the time, stop looking at what somebody got and what you see on the outside”.
On the outside, Parsha is a model Facebook worker, who runs a non-profit in her spare time. But she’s been living out of her car since April.’

This post was published at Zero Hedge on Jul 29, 2017.

Gold Is On The Move

I was looking for some excellent earnings numbers this past week and in the week to come but they’ve been lacklustre.
My thinking was last week and the week to come would be great, and perhaps compel stocks higher for a week or two after and then we’d be in for a nice period of consolidation until about November when we’d see strength return out of bases and we’d be in for a nice winter.
The market has other plans and we are seeing mixed results and choppy stock action which tells me we may be ready for a couple or few months of consolidation starting pretty much now.
Time will tell, but the action has moved to sloppy so I’m toning down my complacency!
The metals continue to act great and are moving higher, leading me into that sector on a small basis, but I may be into miners more as the days progress.

This post was published at GoldSeek on Sunday, 30 July 2017.

Seasonal Opportunity Knocks with Gold to S&P 500 Ratio Near All-Time Low: GSB Weekly Review for July 27

** News and Nonsense Nonsense: Russia and Putin are the Cause of … nearly every problem we can name. Or is the ‘Blame Russia Thing’ a diversion?
***
Sanctions on Russia: From Mish: ‘Make America Safe: Put Congress on Permanent Recess’
From Zero Hedge: ‘House Passes Veto-Proof Russia Sanctions Deal’
The real reasons for sanctions on Russia:
‘The bill is aimed specifically at the Nord Stream 2 project, with BP and Shell as the largest European partners, and which the US considers as detrimental to its interests.’
‘…the controversial Nord Stream 2 project, which pans to get Russian gas directly to Germany through the Baltic Sea…’

This post was published at GoldStockBull on July 27th, 2017.

Our Brave New ”’Markets”’

One thing is clear: These aren’t your daddy’s markets anymore.
Why? Because about 10 years ago the Rise of the Machines (aka high frequency trading algorithms) completely altered the terrain of what we call the ‘capital markets.’
Let’s look at this as a before and after story.
Before the machines, markets were a place that humans with roughly equal information and reflexes set the prices of financial assets by buying and selling. Fundamentals mattered.
After the machines took over, markets became dominated — in terms of volume, liquidity and pricing — by machines that operate in time frames of a millionth of a second. The machines and their algorithms use remorseless routines and trickery — quote stuffing, spoofing, price manipulations — to ‘get their way.’
Fundamentals no longer matter; only endless central bank-supplied liquidity does. Because such machines and their coders are very expensive and require a lot of funding.
The various financial markets are so distorted that I first resorted to putting that word in quotes – ‘markets’ – to signify that they are not at all the same as in the past. In recent years I’ve taken to putting double quote marks – ”markets” – in attempt to drive home their gross distortion. Not only are todays ”markets” something the human traders of a generation ago would fail to recognize, they’re no longer a place where human actions of any sort have much of a remaining role.

This post was published at PeakProsperity on Friday, July 28, 2017.