Baltic Dry Index. 1153 -34 Brent Crude 68.30
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
“The boom can last only as long as the
credit expansion progresses at an ever-accelerated pace. The boom comes to an
end as soon as additional quantities of fiduciary media are no longer thrown
upon the loan market.”
Ludwig
von Mises.
In global economy news, don’t ask. Those expecting an oil
price upswing anytime soon are likely to be very disappointed, unless “Mad Dog”
McCain, the Biden Boys, “F**k the EU” Nuland, Obama and the American War Party,
can get World War Three started in the Ukraine soon. With the Caliphate on the
rampage, starting WW3 with a Christian
war between Catholic west Ukraine versus Orthodox east Ukraine, doesn’t seem to
be either wise or Christian. In a nuclear exchange between America and Russia,
and Russia, America and Europe, about
half the world’s Christians get vaporised in the first hour. I would hope not
what President Obama and the War Party intend.
Below, the global outlook darkens, even with a coming
boost from collapsing oil prices.
“The
U.S. government has a technology, called a printing press (or, today, its
electronic equivalent), that allows it to produce as many U.S. dollars as it
wishes at essentially no cost…We conclude that under a paper-money system, a
determined government can always generate higher spending and hence positive
inflation.”
Dr.
Ben Bernanke. 2002
China Factory Gauge Drops as Shutdowns Add to Slowdown: Economy
Dec 1, 2014 2:26 AM GMT
A Chinese manufacturing gauge fell as factory shutdowns aggravated a
pullback in the economy, raising pressure on the central bank to ease policy
further after it lowered interest rates for the first time in two years. The government’s Purchasing Managers’ Index (CPMINDX) fell to an eight-month low of 50.3 in November, compared with the 50.5 median estimate of analysts in a Bloomberg survey and October’s 50.8. Readings above 50 indicate expansion.
The government ordered factories in Beijing and surrounding regions to shut down during the Asia-Pacific Economic Cooperation forum to curb pollution. China’s central bank cut interest rates last month as the economy heads for its slowest full-year expansion since 1990.
“Today’s official PMI reading points to continued downward pressure on manufacturing activity,” said Julian Evans-Pritchard, China analyst in Singapore at Capital Economics Ltd. “The recent cut in the benchmark rate will do little to boost economic activity unless followed by a loosening of quantitative controls on lending, which policymakers will remain cautious about given concerns over mounting credit risk.”
More
Global Business Outlook: “Darkest Picture since Financial Crisis.” US Deterioration “of Greatest Concern”
by Wolf Richter • November 24, 2014
The plunging price of oil since June has been a leading indicator: global
economic growth is in trouble, despite six years of unprecedented central-bank
free-money policies that caused asset prices to soar but has accomplished
little else. This scenario has now been confirmed by businesses that help drive
the economy forward – not by economists and Wall Street hype mongers: their
outlook for the next 12 months has plummeted since June to the worst level
since crisis year 2009.Business leaders are an optimistic bunch. Projecting a 12-month period that is worse than the past 12 months is frowned upon; because business leaders are supposed to make their business grow, even when it looks tough out there. They’ve been optimistic over the years, despite multiple recessions in the Eurozone, a slowdown in China, a quagmire in Japan, and disappointing growth in the US, where “escape velocity,” dangled out in front of our noses for five years, has become a figment of Wall Street imagination. Throughout, business optimism has been fairly strong, according to Markit’s Global Business Outlook, a survey taken in February, June, and October.
But results from the October survey, released today, are a doozie. The number of businesses around the globe that expect activity to rise over the next 12 months exceeded the number expecting a decline by 28%, the worst in the survey history going back to 2009.
This “net balance” was down from
39% in June. The peak of global business optimism in the survey’s history was
in February 2011, when the net balance hit 48%. Manufacturing wasn’t that much
of a problem; optimism fell “only” to the level of June 2013. But in the
all-important service sector, by far the largest sector in most economies,
optimism plunged to the lowest level in the survey’s history.
It was all-around lousy. In the
UK, where businesses were among the most upbeat, so to speak, optimism
about future activity fell to the lowest level since June 2013. In the
Eurozone, which has been battered by a series of apparently intractable
problems, optimism dropped to the already low levels of June 2013. The big
drags on optimism in the Eurozone were in the two largest economies,
Germany and France.
In France, the number of
businesses expecting activity to rise over the next 12 months exceeded the
number expecting a decline by only 12.6%. This was the second worst net balance
of all countries in the survey.
----In Japan, optimism hit a
two-year low and came to rest even below the low level in the Eurozone, as
businesses “have become increasingly disillusioned” with Abenomics.
More
OPEC Inaction Spurs Survival of Fittest as Oil Below $65
Dec 1, 2014 5:40 AM GMT
West Texas
Intermediate tumbled below $65 a barrel to the lowest level since July 2009
amid speculation prices have further to drop before OPEC’s decision to maintain
output slows U.S. shale supply. Benchmark futures in New York and London slumped more than 3 percent after capping their biggest monthly loss in about six years as the Organization of Petroleum Exporting Countries signaled the group will leave it to the market to reduce a global glut. Current prices are no guarantee of a significant decline in U.S. shale output, Iran’s Oil Minister Bijan Namdar Zanganeh said in an interview on Nov. 28.
Oil has collapsed into a bear market as the U.S. pumps crude at the fastest rate in three decades while global demand growth slows. OPEC last week resisted calls from members including Venezuela, Iran and Iraq to reduce its production target of 30 million barrels a day at a meeting in Vienna.
“It’s clear that a production war is on and it will be survival of the fittest,” Phil Flynn, a senior market analyst at the Price Futures Group in Chicago, said by e-mail today. WTI “will see a test of $60 soon,” he said
----Brent for January settlement dropped as much as $2.33, or 3.3 percent, to $67.82 a barrel on the ICE Futures Europe exchange, the lowest intraday price since October 2009. The contract slid $2.43 to $70.15 on Nov. 28. Prices declined 18 percent last month and are 38 percent lower in 2014.
More
OPEC Gusher to Hit Weakest Players, From Wildcatters to Iran
Nov 29, 2014 1:00 AM GMT
Saudi Arabia and its
OPEC allies’ firm stand against cutting crude output to slow the plunge in oil prices has set the
energy world on a painful course that will leave the weakest behind, from
governments to U.S. wildcatters. A grand experiment has begun, one in which the cartel of producing nations -- sometimes called the central bank of oil -- is leaving the market to decide who is strongest and how to cut as much as 2 million barrels a day of surplus supply.
Oil patch executives including billionaire Harold Hamm have vowed to drill on, asserting they can profit well below $70 a barrel, with output unlikely to fall for at least a year. Marginal producers in less profitable U.S. shale areas, as well as countries from Iran to Russia and operations from Canada to Norway will see the knife sooner, according to analyses by Wells Fargo & Co., IHS Inc. and ITG Investment Research.
“We’re in a very nerve-wracking environment right now and will be for probably the next couple of years,” Jamie Webster, senior director for global crude markets at IHS, said yesterday in a phone interview. “This is a different game. This isn’t just about additional barrels, this is about barrels that are going to keep coming and keep coming.”
----In the U.S., output is expected either to remain flat or rise by almost 1 million barrels a day next year, according to the Paris-based International Energy Agency and ITG.
That’s because only about 4 percent of shale production needs $80 or more to be profitable. Most drilling in the Bakken formation, one of the main drivers of shale oil output, returns cash at or below $42 a barrel, the IEA estimates.
ITG estimates it will take six months before lower prices slow production growth from U.S. shale, which is responsible for propelling the country’s production to the highest in more than three decades.
More
Oil Crash Will See Drillers Cut Spending to Shield Dividends
Nov 28, 2014 4:00 PM GMT
For the world’s largest oil
companies, the accelerating crash in crude prices will probably mean
scrapping investments from America’s shale fields to the seas off Brazil as CEOs protect dividend
payments. The parts of the industry most exposed to cutbacks include certain U.S. shale deposits, where break-even costs vary from $40 to more than $100 a barrel. While some, such Russian oil tycoon Leonid Fedun, say the slump will halt a good deal of production, others argue that the shale industry will be able to maintain production for some time at these price levels.
In the longer term, the greater dilemma for oil producers is that even as crude drops the costs of developing new reserves remain higher than ever. An extended period of lower prices will prevent companies from being able to replace production as existing fields dwindle. In ensuring investors get paid, companies may have to sacrifice future growth.
----As well as shale, the most vulnerable projects include deep water offshore developments and Canadian tar sands, the sources that the International Energy Agency said this month are vital to ensuring global energy supply in coming years.
U.S. shale, for instance, accounted for about 20 percent of world investment in oil in 2013 and supplied only four percent of global production, according to Mark Lewis and Peter Oppitzhauser, analysts at Kepler Cheuvreux SA in Paris. Other places vulnerable to lower spending include heavy oil fields in Venezuela, Brazil’s deepwater and Iraq, Lewis said.
More
Oil Rout Ripples Through Latin America as Projects Slow
Nov 29, 2014 2:00 AM GMT
From Venezuela to Argentina, oil’s steepest
plunge in three years is reverberating through a region that accounts for the
largest crude reserves outside of the Middle East. Venezuelan oil bond yields jumped, American depositary receipts of Petroleo Brasileiro SA (PETR4), YPF SA and Ecopetrol SA (ECOPETL) plunged and the Colombian peso fell the most in five years after the 12-nation OPEC opted against measures to prop up crude prices Nov. 27. Brent is down 13 percent this week.
Crude’s accelerating rout, as the U.S. shale boom coincides with slowing demand, is putting pressure on producers to cut spending. Latin America’s largest independent producer Pacific Rubiales Energy Corp. (PRE) said yesterday that it’s battening down for at least a year of lower prices. Some project development and drilling in the region is poised to decelerate, Patricia Mohr, a commodity specialist at Scotiabank Group in Toronto, said.
“If prices remain very low into the second half of next year, it could be a bigger slowdown,” Mohr said in a telephone interview yesterday. The intention of the Saudi-led Organization of Petroleum Exporting Countries decision seeks to “slow developments around the world.”
Petrobras, as Brazil’s state-run oil company is known, is investing $221 billion between 2014 and 2018 to accelerate production at the largest oil discoveries in the Western Hemisphere in almost four decades. The company assumes a Brent crude price of $100 a barrel for 2015-2017 and $95 from 2018-2030 in its 2030 strategic plan.
More
In the dying wealth
destroying EUSSR, the end for all gets nearer. A fine time to get uppity with
Russia and impose suicidal sanctions in the name of America’s lost cause in the
Steppes.
Eurozone edges closer to deflation in November
Eurozone inflation falls to joint lowest level in five years in November, as economist says further stimulus is likely
Eurozone inflation will fall
close to zero by the end of this year, economists said on Friday, after
official data showed price rises dipped to a five-year low in November.
Experts said falling oil prices
and weak demand would push annual inflation down to 0.1pc next month, after
Eurostat figures showed consumer prices rose by 0.3pc in November compared with
a year earlier, from 0.4pc in October.
This was in line with economists'
expectations and the same rate as in September, which was also the lowest since
October 2009.
The fall was driven by a decline in energy prices, which fell by 2.5pc in November compared with a year earlier. Brent crude fell to a five-year low on Thursday after the Opec oil producers' cartel members agreed to leave oil production quotas unchanged.
Economists said Friday's data and updated eurozone inflation projections next month would heighten fears that the 18 nation bloc is edging towards deflation and trigger additional stimulus by the European Central Bank (ECB). Data on Thursday showed prices in Germany rose by just 0.5pc in November, down from 0.7pc in October.
----"The scale of the disinflation problem facing the ECB becomes increasingly concerning as time progresses," said Colin Bermingham, an economist at BNP Paribas. "Three of the 'Big Four' eurozone economies have reported inflation for November and all three are at or below 0.5pc.
"At next week’s ECB meeting,
the ECB will lower their staff projections for inflation in 2015 by 0.3
percentage points to 0.8pc. Downward revisions to their inflation (and growth)
forecasts will be key to justifying an expansion of their asset purchase
programmes."
More
ECB’s Lautenschlaeger Rebuffs QE as German Opposition Grows
Nov
29, 2014 11:59 AM GMT
European Central Bank Executive Board member Sabine Lautenschlaeger said
quantitative easing isn’t the right policy choice for the euro area currently,
hardening a split among officials over the right response to slowing inflation.
“A consideration of the costs and benefits, and the opportunities and risks, of a broad purchase program of government bonds does not give a positive outcome,” Lautenschlaeger, a former Bundesbank vice president, said at an event in Berlin today. “There are very few shared competencies in fiscal policy. As long as this is the case, the ECB’s purchase of government securities is inevitably linked to a serious incentive problem.”
Lautenschlaeger’s comments signal she’s become ECB President Mario Draghi’s highest-ranking opponent in the debate over introducing QE to the euro area. They echo the position of Bundesbank President Jens Weidmann, who has said QE diverts attention from the need for governments to make structural adjustments to their economies.
----“Long-term interest rates on Spanish and Italian (GBTPGR10) government bonds, for example, are already lower than those from the U.S. or the U.K.,” Lautenschlaeger said. “It is therefore questionable whether we should ‘depress’ interest rates for the securities class even further.”
The yield is currently 1.9 percent on Spanish (GSPG10YR) 10-year debt and 2.03 percent on Italian 10-year bonds, compared with 2.16 percent on the equivalent U.S. Treasuries (USGG10YR) and 1.93 percent on U.K. gilts.
Lautenschlaeger’s comments impinge on the customary “quiet period” in the week before monetary-policy meetings when officials refrain from speaking on possible measures. The ECB’s Governing Council gathers in Frankfurt on Dec. 4.
More
Italian Unemployment Rate Rises to Record, Above Forecasts
Nov 28, 2014 11:38 AM GMT
Italy’s unemployment
rate unexpectedly rose above 13 percent in October, setting a record as
businesses refrain from hiring amid the country’s longest recession since World
War II. The unemployment rate rose to 13.2 percent from a revised 12.9 percent the previous month, the Rome-based national statistics office Istat said in a preliminary report today. That’s the highest since the quarterly series began in 1977. The median estimate of seven economists surveyed by Bloomberg called for an unemployment rate of 12.6 percent in October.
The youth unemployment rate for those aged 15 to 24 rose to 43.3 percent last month from 42.7 percent in September, today’s report showed.
Italian Prime Minister Matteo Renzi has been battling labor unions and politicians from the opposition and within his own party to push through reforms to make the labor market more flexbile and eliminate the gap between overprotected workers with open-ended contracts and younger people with no job security.
The proposed reforms are still being discussed by parliament. After the final approval, the government will have another six months to detail the measures and pass them via decrees, meaning the changes won’t be in place until next year at the earliest.
Renzi said today’s increase in the unemployment rate is partly due to more people starting to look actively for a job. The so-called “discouraged” workers who are not looking for work are not counted in the Istat jobless data.
More
True, governments can reduce the rate of interest
in the short run, issue additional paper currency, open the way to credit
expansion by the banks. They can thus create an artificial boom and the
appearance of prosperity. But such a boom is bound to collapse soon or late and
to bring about a depression.
Ludwig
von Mises.
At the Comex silver
depositories Friday final figures were: Registered 65.20 Moz, Eligible 111.81
Moz, Total 177.01 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
How
can anyone govern a nation that has two hundred and forty-six different kinds
of cheese?
Charles
de Gaulle.
France might as well be communist, blasts US tyre tycoon
Chief executive of Titan International attacks power of French unions after plan to rescue stricken Goodyear factory collapses
By Telegraph staff, and agencies 6:59PM
GMT 28 Nov 2014
A US tyre tycoon has ridiculed
French laws and trade unions that he said had prevented him from rescuing a
stricken factory, saying France should become "communist".
Maurice Taylor, chief executive
of Titan International, had initially expressed interest in taking over the
loss-making Goodyear tyre plant in Amiens.
But he pulled out of the deal and
explained why to France Info radio.
"You can't buy Goodyear.
Under your law, we have to take a minimum of 662 or 672 employees. You can't do
that. The most you could take is 333 ... there's no business for that plant
now," said Mr Taylor.
"I tried to tell them all
that before but you guys have got to wake up over there and tell the unions,
'Hey if they're so smart, they should buy the factory'.
"It's stupid. It's the
dumbest thing in the world. France should just become communist and then when
it goes all bad like Russia did, then maybe you'd have a chance," added Mr
Taylor.
Goodyear announced in January
last year that it was closing the factory, which employs 1,173 people, after
years of negotiations with unions failed to come up with a solution to save
jobs.
Unions launched a series of legal
proceedings against the company, but to no avail.
Mr Taylor, known as "The
Grizz" for his tough talk, has made waves before for his comments on
France.
In 2013, he wrote a letter to the
French industrial renewal minister calling the country's workers lazy and
overpaid after years of negotiations by Titan to take over the plant had
failed.
"They get one hour for
breaks and lunch, talk for three and work for three. I told this to the French
union workers to their faces. They told me that's the French way," wrote
Mr Taylor.
The minister at the time, Arnaud
Montebourg, hit back, telling Mr Taylor: "Your extremist insults display a
perfect ignorance of what our country is about. Be assured that you can count
on me to inspect your tyre imports with a redoubled zeal."
The closure of the Amiens plant
has aroused passionate debate, culminating in January when workers held two
executives hostage for 30 hours in a case of so-called "bossnapping".
http://www.telegraph.co.uk/finance/newsbysector/industry/11262012/France-might-as-well-be-communist-blasts-US-tyre-tycoon.html
I
have tried to lift France out of the mud. But she will return to her errors and
vomitings. I cannot prevent the French from being French.
Charles de Gaulle.
The monthly Coppock Indicators finished October.
DJIA: +137 Down. NASDAQ: +275 Down. SP500: +210 Down.
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