Is Oil About to Collapse?

US producers simply don’t play along with OPEC and Russia.
WTI really does look like it is about to collapse. Let’s be clear, I am not necessarily talking about a return to the sub-$30 of the beginning of 2016 here, but a return to the more recent lows around $42 before too long is distinctly possible, and if that happens, who knows where we go from there? There are, as I have noted in the past, reasons to believe that the long-term path of oil is still upward, but more immediately there is one dominant factor that keeps adding downward pressure, large and still growing supply from North American shale producers.
Some say, as in this FT piece, that there are signs that U. S. shale production has peaked, but then that was also supposed to be the case in 2015 and 2016. I am sure that if I could bother to go back further I would find that the same thing was said in previous years too. The fact is though, that as the EIA chart below shows, after dropping off as price declined at earlier this year, U. S. crude production is growing again and will be higher this year than last and is expected to be higher again in 2018.

This post was published at Wolf Street by Martin Tiller ‘ Dec 9, 2017.

More Evidence That Rising Minimum Wages Are Going To Crush The Restaurant Industry

Casual dining investors, despite the retail route, have become increasingly optimistic over the past month and a half with several of the largest names in the industry rallying 15-20% into the holiday season.

As TDn2K points out, part of the optimism is attributable to a recent “acceleration” in average check size across the restaurant space with comps up 2.4% in November and 2.5% in October. Despite many brands focusing on price promotions to drive sales and traffic amid a decline in mall/retail foot traffic, both figures are higher than the 2.0% check growth experienced the first nine months of the year.

This post was published at Zero Hedge on Dec 9, 2017.

Doug Noland: Q3 2017 Flow of Funds

This is a syndicated repost courtesy of Credit Bubble Bulletin . To view original, click here. Reposted with permission.
In nominal dollars, Total U. S. System (Non-Financial, Financial and Foreign) borrowings expanded $1.007 TN during the third quarter to a record $68.012 TN. Total Non-Financial Debt (NFD) rose a nominal $732 billion during the quarter to a record $48.635 TN. It’s worth noting that NFD has expanded 46% since ending 2007 at $33.26 TN.
Total Non-Financial Debt expanded a seasonally-adjusted and annualized rate (SAAR) of $2.954 TN during Q3, the strongest Credit growth since Q4 2015. As has often been the case over the past nine years, Washington led the Credit expansion. Federal borrowings jumped to SAAR $1.656 TN, the strongest in seven quarters. Total Business borrowings expanded SAAR $751 billion, up from Q2’s $692 billion. Total Household debt growth slipped slightly q/q to $550 billion.
On a percentage basis, Non-Financial Debt expanded at a 6.2% rate during Q3, accelerating from Q2’s 3.8%, Q1’s 1.7% and Q4 2016’s 3.1%. Federal borrowings grew at a 10.3% pace, Total Business at 5.4% and Total Household debt expanded at 3.7%.

This post was published at Wall Street Examiner by Doug Noland ‘ December 9, 2017.

Two Portraits from the American Civil War

Here are the portraits of famous figures from the Civil War:
The first is a Democrat. Politically, he was the polar opposite of Abraham Lincoln and the new Republican Party. He was ardently pro-slavery. He supported the Lecompton Constitution that sought to make Kansas a slave state, and favored the Dred Scott decision that threw out the Missouri Compromise and opened even Northern territories to slavery.
In 1860, this person attended the Democratic Convention. Before the party split and produced two rival nominees for president, he supported Jefferson Davis. After the split between the Northern and Southern democrats, he supported the Southern candidate, John C. Breckinridge, instead of the more moderate norther nominee, Stephen Douglas.
Our second figure looks decidedly different. He is a Union officer who worked to recruit volunteers for the Northern cause. He led a regiment into Washington D. C. to defend the capital. His quick action against the South earned him a promotion to general, and he was put in charge of Fort Monroe. While he ran the fort, the general invoked international warfare rules to declare the runaway southern slaves ‘contraband,’ effectively emancipating them, even as President Lincoln was undermining similar actions by his other generals as an attempt to capitulate to Southern slave owners.
But this Union general was brutal toward the South. In New Orleans, he was referred to as a ‘Beast.’ When he was placed in command of the Southern metropolis, one of his first actions was to execute William Mumford for his audacity in lowering the flag of the United States. Southerners saw him as exceedingly cruel, but he epitomized the image of a Northern patriot. Jefferson Davis, who had the political support of the first character, turned his ire on this second figure by publishing a list of his crimes against Southerners, futilely hoping to enrage the North.

This post was published at Ludwig von Mises Institute on Dec 9, 2017.

Wisconsin Governor Pushes Forward With Plan To Drug Test Food Stamp Recipients

After yesterday’s latest botched hit job by CNN on president Trump, which came exactly one week after the fiasco where erroneous ABC reporting on the Flynn affair sent the market tumbling, it was only a matter of time before Trump lashed out at the news network whose credibility and influence is evaporating with every fabricated story.
A little after 8am on Saturday, he did just that slamming CNN of making a “vicious and intentional mistake” over the network’s effective retraction, when it was forced to correct an erroneous news report related to the Trump/Russia probe. Having been on the receiving end of three “fake news” stories in the past week, betwee the ABC Flynn debacle, the Bloomberg Deutsche Bank subpoena, and now CNN, Trump demanded that CNN fire “those responsible,” and commented that an ABC reporter who was suspended for a separate erroneous report should be fired as well.
“Fake News CNN made a vicious and purposeful mistake yesterday. They were caught red handed, just like lonely Brian Ross at ABC News (who should be immediately fired for his ‘mistake’),” Trump wrote. “Watch to see if @CNN fires those responsible, or was it just gross incompetence?” It is worth noting that Ross was not fired but rather suspended for 4 weeks.
In a second tweet, the president suggested CNN change their slogan after the report to “the least trusted name in news.”
“CNN’S slogan is CNN, THE MOST TRUSTED NAME IN NEWS. Everyone knows this is not true, that this could, in fact, be a fraud on the American Public. There are many outlets that are far more trusted than Fake News CNN. Their slogan should be CNN, THE LEAST TRUSTED NAME IN NEWS!” the president tweeted.
Fake News CNN made a vicious and purposeful mistake yesterday. They were caught red handed, just like lonely Brian Ross at ABC News (who should be immediately fired for his ‘mistake’). Watch to see if @CNN fires those responsible, or was it just gross incompetence?
— Donald J. Trump (@realDonaldTrump) December 9, 2017

This post was published at Zero Hedge on Dec 9, 2017.

Trump Lashes Out At “Fake News” CNN For “Vicious And Purposeful” Mistake, Demands Terminations

After yesterday’s latest botched hit job by CNN on president Trump, which came exactly one week after the fiasco where erroneous ABC reporting on the Flynn affair sent the market tumbling, it was only a matter of time before Trump lashed out at the news network whose credibility and influence is evaporating with every fabricated story.
A little after 8am on Saturday, he did just that slamming CNN of making a “vicious and intentional mistake” over the network’s effective retraction, when it was forced to correct an erroneous news report related to the Trump/Russia probe. Having been on the receiving end of three “fake news” stories in the past week, betwee the ABC Flynn debacle, the Bloomberg Deutsche Bank subpoena, and now CNN, Trump demanded that CNN fire “those responsible,” and commented that an ABC reporter who was suspended for a separate erroneous report should be fired as well.
“Fake News CNN made a vicious and purposeful mistake yesterday. They were caught red handed, just like lonely Brian Ross at ABC News (who should be immediately fired for his ‘mistake’),” Trump wrote. “Watch to see if @CNN fires those responsible, or was it just gross incompetence?” It is worth noting that Ross was not fired but rather suspended for 4 weeks.
In a second tweet, the president suggested CNN change their slogan after the report to “the least trusted name in news.”
“CNN’S slogan is CNN, THE MOST TRUSTED NAME IN NEWS. Everyone knows this is not true, that this could, in fact, be a fraud on the American Public. There are many outlets that are far more trusted than Fake News CNN. Their slogan should be CNN, THE LEAST TRUSTED NAME IN NEWS!” the president tweeted.

This post was published at Zero Hedge on Dec 9, 2017.

China Systemic Risk: HNA Group Denies Liquidity Problem, It’s Only “End-Of-The-Year Tightness”

Every few days at the moment, it seems, we return to the subject of systemic risk in China related to its big four highly-indebted conglomerates, HNA, Anbang, Evergrande and Dalian Wanda.
Our main source of concern recently has been HNA, after it issued a bond with less than one year to maturity with the extortionately high coupon of 9%. This prompted us to ask whether China was experiencing the beginning of its Minsky moment? The reason for our continuing focus on HNA is its $28bn of short-term debt which matures before the end of next June, much of it accumulated during a binge of acquisition-driven growth which saw it become a major shareholder in Deutsche Bank, Hilton Worldwide and others.
Last week, as we discussed, S&P downgraded HNA’s credit rating by one notch from b+ to b, five levels below investment grade. in another sign that HNA is under pressure from the Chinese government and its creditors, CEO Adam Tan announced that it was ditching its acquisitive strategy, while considering the IPO of Gategroup, a company it only acquired last year for $1.5 billion.

This post was published at Zero Hedge on Dec 8, 2017.

America First (After All Of You…) – Mapping Billions Of Dollars In Foreign Aid

Donald Trump ran for President on the concept of ‘America First.’ What does this mean in practice for his governing philosophy and foreign policy? Drastic cuts to foreign aid expenditures, namely, the money the U. S. sends to other countries for humanitarian, developmental and economic reasons. This made us wonder how much foreign aid the U. S. currently sends overseas and where the money is going, so we created a new viz. Per HowMuch:

This post was published at Zero Hedge on Dec 8, 2017.

The WTO: Useless for Trade, Useful for the State

On Monday, WTO officials will gather in Buenos Aires for their 11th ministerial conference. There is very little hope that any of the deals on the agenda will be reached, as both the WTO’s negotiations and its dispute settlement system have long been paralyzed by political bickering and a deep-seated inefficiency in the organization itself. Anxious WTO ministers (such as the EU’s trade commissioner) are now grasping at straws and blaming Trump and his lack of support for the WTO’s troubles.
Yet twenty-two years after its creation, the organization has almost nothing to show for it as far as trade liberalization is concerned. Juggling 164 member countries, each with its own protectionist agenda, was never likely to bring about ‘more open trade’, ‘more competitive markets’, or ‘market stability and predictability’. Especially not after trade rules, services, intellectual property, and environmental protection were brought to the negotiations table alongside tariffs and non-tariff barriers. Countries started by holding agreements hostage to their demands, continued with disregarding agreements completely, and now end on quibbling over the language used in joint statements.
An easy, albeit crude, depiction of WTO’s failure can be seen in the figure below, where the world tariffs effectively applied (which include unilateral liberalization and preferential trade agreements) have been consistently lower than those achieved via multilateral negotiations (most favored nation) in the first twelve years after WTO’s creation – when it was allegedly most successful.

This post was published at Ludwig von Mises Institute on Dec 9, 2017.

Shocking New Stock Market Prediction Shows When We’ll Hit a Top

The current bull market is in its ninth year, but Money Morning Liquidity Specialist Lee Adler’s newest stock market prediction shows that we are now in its final stages. In fact, he sees the S&P 500 hitting its final high sometime in the first quarter of 2018.
As December unfolds, we’ve seen a breakout in stocks, and Adler’s technical analysis bumped up his long-term price target on the S&P 500 to 2,800. That’s based on his work with market cycles and published in his Wall Street Examiner Pro Trader Market Updates each week. Simply put, by rising above 2,630, the market’s character changed for the better, suggesting one more leg higher.
However, December looks like the last chance to ride the current bull markethigher before conditions change and a bear market becomes likely…
Stock Market Prediction: Expect a Market Top in Q1
Pundits considered the U. S. Federal Reserve’s quantitative easing (QE) program as the punch bowl keeping the recovery party going and goosing the economy and the stock market for several years.
However, as Adler has been warning, things will change in 2018…
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And it already has, now that the Fed’s bond purchases are over. Plus, we’ve already seen the first of several planned hikes in short-term interest rates.
So far, it has not made much of a dent.
However, the forces of monetary policy and liquidity will be hostile to the markets in 2018. The Fed’s program, which it calls ‘normalization,’ is designed to reduce the size of its balance sheet.

This post was published at Wall Street Examiner on December 6, 2017.

November Jobs Report: 228K New Jobs, Better Than Forecast

This morning’s employment report for November showed a 228K increase in total nonfarm payrolls, which was better than forecasts. The unemployment rate remained at 4.1%. The Investing.com consensus was for 200K new jobs and the unemployment rate to remain at 4.1%. September and October nonfarm payrolls were revised for a total gain of 3K.
Here is an excerpt from the Employment Situation Summary released this morning by the Bureau of Labor Statistics:
Total nonfarm payroll employment increased by 228,000 in November, and the unemployment rate was unchanged at 4.1 percent, the US Bureau of Labor Statistics reported today. Employment continued to trend up in professional and business services, manufacturing, and health care.
Here is a snapshot of the monthly percent change in Nonfarm Employment since 2000. We’ve added a 12-month moving average to highlight the long-term trend.

This post was published at FinancialSense on 12/08/2017.