OPEC’s War Against Shale Is Far From Over

Authored by Gregory Brew via OilPrice.com,
Despite the recent market rally and current bullish streak in oil prices, the years-long competition for market share between OPEC and U. S. shale producers shows no sign of abating, and will likely continue for the next several years at least.
That was OPEC’s conclusion in the group’s World Oil Outlook released this week. OPEC believes U. S. shale production will grow faster than previously expected, reaching 7.5 million bpd by 2021, an increase of 56 percent from the group’s estimate last year.

This post was published at Zero Hedge on Nov 10, 2017.

November Macro Update: Recession Risk Remains Low

Summary: The macro data from the past month continues to mostly point to positive growth. On balance, the evidence suggests the imminent onset of a recession is unlikely.
The bond market agrees with the macro data. The yield curve has ‘inverted’ (10-year yields less than 2-year yields) ahead of every recession in the past 40 years (arrows). The lag between inversion and the start of the next recession has been long: at least a year and in several instances as long as 2-3 years. On this basis, the current expansion will last well into 2018 at a minimum. Enlarge any image by clicking on it.
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Unemployment claims are also in a declining trend; historically, claims have started to rise at least 6 months ahead of the next recession. Note that recent hurricanes had a short-term negative impact on economic data. In the past, growth has quickly resumed. Thus, jobless claims recently spiked higher after Harvey/Irma, as it also did after Katrina and Sandy, but recent claims are already at a new 40+ year low.

This post was published at FinancialSense on 11/10/2017.

Financial Markets Still Blowing Off the Fed

But after the last two times, there was a ‘financial event.’
There has been a lot of hand-wringing about junk bonds this week, that they have gotten clobbered, that losses have been taken, that this is a predictor of where stocks are headed, etc., etc., because after a steamy rally in junk-bond prices from the February 2016 low, there has now been a sell-off.
When bond prices fall, bond yields rise by definition. And the average yield of BB-rated junk bonds – the upper end of the junk-bond spectrum – did this:

This post was published at Wolf Street by Wolf Richter ‘ Nov 10, 2017.

Goldman’s Top Strategist Reveals The Two Biggest Risks To The Market Today

The past few months have been a very nervous time at Goldman Sachs, and not just because Gary Cohn wasn’t picked to replace Janet Yellen as next Fed chair.
Back in September, Goldman strategist Peter Oppenheimer wrote that the bank’s Bear Market Risk Indicator had recently shot up to 67%, prompting Goldman to ask, rhetorically, “should we be worried now?” The simple answer, as shown in the chart below, is a resounding yes because the last two times Goldman’s bear market risk indicator was here, was just before the dot com bubble and just before the global financial crisis of 2008.

This post was published at Zero Hedge on Nov 10, 2017.

Bannon Reportedly Pushing Mark Cuban To Run In 2020

According to a new report from the Daily Beast, Trump’s former Chief Strategist Steve Bannon has been actively pushing Dallas Mavericks owner Mark Cuban to run for President in 2020 as a Democrat.
As he publicly flirts with a run for the presidency in 2020, Mark Cuban has also privately been in touch with potential allies and strategists to plot out a campaign.
The Dallas Mavericks owner confirmed that he has corresponded on multiple occasions since the 2016 election with Steve Bannon, President Donald Trump’s former chief strategist.
He downplayed the interactions in an email exchange with The Daily Beast, saying merely that he ‘texted with him a few time[s]’ and that none, he believed, had ‘been more than one full sentence.’ But according to four sources familiar with their conversations, the two have been in touch for months about a possible 2020 bid. Bannon, these sources say, has encouraged Cuban to run and to consider doing so as a Democrat, seeing it as a realistic path to a viable presidential run.
‘They talk regularly,’ said Sam Nunberg, a former Trump adviser who is close to Bannon.’They’re very similar. They have a lot of synergy there. Even when [Steve] went to work for Trump, Mark would be interviewed and say nice things about Steve.’

This post was published at Zero Hedge on Nov 10, 2017.

Does Jeff Bezos Need To Go To Prison?

Maybe.
Unless you live under a rock you know that Roy Moore, who is the Republican candidate to replace Jeff Session’s Senate seat out of Alabama, has been accused of some extraordinarily-salacious and in one case illegal act.
There’s a problem — the alleged act(s) occurred nearly forty years ago and yet not one allegation of same has occurred until now.
I won’t get into the actionability of the claim in the first place since with one exception all the so-called accusers were 16 or older and thus of the age of consent at the time. Further, there has been no allegation of force or improper influence being used, and Moore was unmarried. In other words unlike the “star allegations” we’re not talking about harassment, rape, (statutory) abuse of underage individuals or even adultery, although it still smells like dead fish if the allegations are true.
Now add to this that Judge Moore is not some random dude that just decided to run for Senate. He has a decades long history of being extraordinarily controversial and a public political figure, including being elected as a judge twice in Alabama with the second time after being ousted for refusing to remove the Ten Commandments from a court.
There were plenty of reasons for anyone who had a legitimate beef with his sexual proclivities, and plenty of opportunity with the capacity to do him real political damage, to act before now. Yet I’m aware of exactly zero in the way of “rumblings”, say much less allegations, on this point until a few days ago.
That’s enough to call the question about a political hit (that is, a lie) standing alone.
But it’s not standing alone.

This post was published at Market-Ticker on 2017-11-10.

One Trader Urges “Extreme Caution”

Something has changed. While stocks are exhibiting their usual BTFD patterns still, other asset classes are not playing along – most notably the junk bond market and the sovereign yield curve. Furthermore, while a few megacaps continue to rise ubiquitously, small caps have suffered and breadth is terrible. As former fund manager Richard Breslow warns, “sometimes markets look really bad and it’s prudent to exhibit extreme caution.”

This post was published at Zero Hedge on Nov 10, 2017.

NOV 10/GOLD DROPS $13.00 AND SILVER FALLS BY 11 CENTS AS THE BANKERS UNLOAD A HUGE $4 BILLION NAKED COMEX GOLD SHORT/BITCOIN DROPS A HUGE $718.00/CHINA WILL NOW OFFICIALLY ALLOW FOREIGNERS TO TAK…

GOLD: $1274.00 UP $13.00
Silver: $16.89 DOWN 11 cents
Closing access prices:
Gold $1276.20
silver: $16.91
SHANGHAI GOLD FIX: FIRST FIX 10 15 PM EST (2:15 SHANGHAI LOCAL TIME)
SECOND FIX: 2:15 AM EST (6:15 SHANGHAI LOCAL TIME)
SHANGHAI FIRST GOLD FIX: $1293.33 DOLLARS PER OZ
NY PRICE OF GOLD AT EXACT SAME TIME: $1285.70
PREMIUM FIRST FIX: $7.63
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
SECOND SHANGHAI GOLD FIX: $1292.60
NY GOLD PRICE AT THE EXACT SAME TIME: $1284.45
Premium of Shanghai 2nd fix/NY:$8.15

This post was published at Harvey Organ Blog on November 10, 2017.

Government “Funding” Can’t Grow the Economy

A key factor that constrains people’s ability to generate goods and services is the scarcity of funding. Contrary to popular thinking, funding for consumption and production is not about money as such, but about real savings.
Note that various tools and machinery or the infrastructure that people have created is for only one purpose and it is to be able to produce final consumer goods that are required to maintain and promote life and well-being.
For a given consumption of final consumer goods, the greater the production of these goods the larger the pool of real funding or savings is going to be. The quantity and the quality of various tools and machinery (i.e., the available infrastructure) place a limit on the quantity and the quality of the production of consumer goods.
Through the increase in the quantity of tools and through the introduction of better tools and machinery a greater output can be secured. The increase in the quantity of tools and their enhancement requires funding to support various individuals that are engaged in the production of new tools and machinery.
This of course means that through the increase in real savings, a better infrastructure can be built and this in turn sets the platform for a higher rate of economic growth.
A higher economic growth means a larger quantity of consumer goods, which in turn permits more savings and also more consumption. With more savings a more advanced infrastructure can be created and this in turn sets the platform for a further strengthening in the economic growth.

This post was published at Ludwig von Mises Institute on Nov 10, 2017.

Gold Slammed After Someone Pukes $4 Billion Notional In Gold Futures

As we approach the European close, the dolar index just spiked and precious metals (and crude) were pummeled. Gold futures tumbled on massive volume as over $4 billion notional was purged instantaneously…
Over 30,000 contracts ripped through gold futures – over $4.2 billion notional – in the space of a minute. That’s around 10% of a normal days’ volume.

This post was published at Zero Hedge on Nov 10, 2017.

Biden Reportedly “Shifts In Favor” Of 2020 Presidential Bid

Earlier this week, former Vice President Joe Biden admitted that his “biggest regret in life” was not currently occupying the White House…the statement left us wondering whether he also regrets growing old, balding and not owning 75 Lambo’s…perhaps we’ll never know for sure.
But, of all of Joe’s “regrets” in life, perhaps his missed opportunity at occupying the Oval Office is one that he may seek to rectify in the near future. As Politico reports, after months/years of waffling on the topic, Joe Biden has apparently “shifted in favor” of a new Presidential bid in 2020.
Joe Biden thinks it’s critical that Donald Trump not get a second term – and though it’s early, he doesn’t yet see anyone else who could stop that from happening.
So, he’s been telling people privately, that might mean he’ll just have to run himself.
After beginning the year both teasing a 2020 bid and ruling one out – sometimes on the same day – Biden in recent months has shifted unmistakably in favor of running, say multiple people who’ve been in touch with the former vice president and his team.
For the first time in what would be the sixth presidential campaign that he’s either seriously flirted with or launched, Biden sees an argument for a candidacy for which he is the only answer: An elder statesman who can help repair the damage and divisions in the country and around the world, unite the competing wings of the Democratic Party, and appeal to traditional Democratic voters who fled last year for Trump.

This post was published at Zero Hedge on Nov 10, 2017.

Credit Card Losses: How High Can They Go?

According to data from the Federal Reserve, US consumer credit grew by 5.5% annualized during Q3 the fastest quarterly pace this year. Credit now tops $1 trillion after a multi-year splurge by consumers on auto debt funded by rock-bottom interest rates and relaxed lending criteria. However, now that interest rates are starting to rise again, investors, analysts, and banks are beginning to vent concerns about the state of the American consumers’ balance sheet and credit card losses are among the largest of those concerns, but maybe there is some room for optimism on that front?
Credit Card Losses Rising
Banks have enjoyed years of declining losses from fewer consumers defaulting on debts, but this trend is now starting to reverse. Synchrony Financial was the first major issuer to issue a profit warning on rising losses earlier this year when it announced first quarter provisions for loan losses surged 21% to $1.3 billion compared with the prior quarter — $300 million more than expected. Management expects the write-off rate for the full year to be around 5% or slightly higher according to Bloomberg.
Citi came next reporting $1.2 billion in losses at its consumer lending business in North America for the third quarter. Most of the losses stemmed from its credit cards division. To add insult to injury, management set aside a further $500 million to cover additional losses. At the same time Citi announced its losses, JP Morgan also told investors that it was increasing provisions for unsecured credit losses.

This post was published at FinancialSense on 11/10/2017.

“The Leaders Are Crashing” – It’s Not Just Junk Bonds That Have Given Up

We have been warning about significant divergences between equity prices and other asset classes for a few weeks (most notably the decoupling from equity risk and credit risk, junk bonds), but as BofA notes its not just these assets that are breaking away from soaring Nasdaq levels, in fact many of the rally’s leaders are crashing… in a way we have not seen recently.
High yield risk has suddenly decoupled from equity markets…

This post was published at Zero Hedge on Nov 10, 2017.

The Size Of The Financial Avalanche Coming Grows Larger

Inflation vs deflation. The true economic definition of ‘inflation’ is the rate of increase in the money supply in excess of the rate of increase in wealth output. Inflation is monetary in nature. Rising prices are the manifestation of inflation. Someone I follow on Twitter posted an ingenious example from which to conceptualize the true concept of inflation using the game of Monopoly:
The players all start out with reasonable amounts of money to speculate on real estate. As the game proceeds, players collect $200 by simply passing Go and use this money to speculate on real estate. By the end of the game, only $500 dollar bills are worth anything, the whole thing blows up, and most players end up destitute. In a twist of irony, an original game board sells for about $50,000.
A fixed amount of real estate and continuously increasing money supply, with ‘passing Go’ functioning as the game’s monetary printing press. The monopoly analogy is readily applied to the current real estate market. The Fed tossed roughly $2 trillion into the mortgage market, which in turn has fueled the greatest U. S. housing bubble in history. The most absurd example I saw last week is a 264 sq ft studio in Los Angeles listed on 10/26 for $550,000. The seller bought it a year ago for $335,000. This is the degree to which Fed money printing and easy access Government guaranteed mortgages have distorted the system.
Here is monetary inflation as it is showing up in the stock market and housing markets:

This post was published at Investment Research Dynamics on November 10, 2017.

Dijsselbloem Admits “We Used Taxpayers’ Money To Bailout The Banks”

‘We had a banking crisis, a fiscal crisis and we spent lot of the tax-payers’ money – in the wrong way, in my opinion – to save the banks’ outgoing Eurogroup head Jeroen Dijsselbloem said adding ‘so that the people criticizing us and saying that everything was being done for the benefit of the banks were to some extent right.’
As KeepTalkingGreece.com reports, Dijsselbloem was responding to a question posed by leftist MEP Nikos Chountis during a session at the European Parliament’s Employment and Social Affairs Committee on Thursday.
‘This is valid for the banks of all our countries. Everywhere in Europe banks were saved at taxpayers’ cost,’ he underlined. ‘This was the reason for banking union and the introduction of higher standards, better supervision and a reform and rescue framework when banks have losses,’ he said stressing ‘precisely so that we don’t find ourselves in that situation again.’

This post was published at Zero Hedge on Nov 10, 2017.

Equifax Discloses its Coming Nightmares

‘It is not possible to estimate the amount of loss or range of possible loss.’
Equifax reported that revenue ticked up 4% year-over-year in the third quarter to a less-than expected $835 million and that net income plunged 27% to $96 million due to the initial costs related to the most damaging consumer data hack in US history. But it also disclosed in the fine print of its SEC filing just what a legal and financial nightmare it is getting into over what it calls the ‘cybersecurity incident.’
The ‘cybersecurity incident’ occurred in mid-May, was discovered in July, and was first disclosed on September 7. Its dimensions have since expanded. It compromised the personal-data crown jewels, including Social Security numbers, of 145.5 million US consumers, credit card numbers of 209,000 US and Canadian consumers, ‘certain dispute documents with personal identifying information’ for 182,000 US consumers, personal information of 8,000 Canadian consumers, and personal information of at least 690,000 UK consumers.
The initial expenses related to the ‘cybersecurity incident’ were an undramatic $27.3 million. But that’s just the timid beginning.
Then the costs related to the ‘free credit file monitoring and identity theft protection’ will likely range between $56 million and $110 million. And that too is just the beginning.

This post was published at Wolf Street on Nov 10, 2017.

Consumer Confidence Unexpectedly Drops On Inflation, Rate-Hike Fears

UMich consumer sentiment declined from 100.7 to 97.8 in the preliminary November print, disappointing expectations of a small rise as anticipation of a pickup in inflation and higher interest rates weighed on the gauge.
Even with the decline, sentiment was the second-highest since January, reinforcing other reports that Americans remain optimistic about employment and the economy.
Other highlights include:

This post was published at Zero Hedge on Nov 10, 2017.