Baltic Dry Index. 530 -10 Brent Crude 61.45
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
Average temperatures as much as 8 degrees below normal may reach
as far as Florida through Feb. 16, then will begin to recede by next week,
according to Commodity Weather Group LLC in Bethesda, Maryland.
While North America suffers yet again from global
warming, and a shaky ceasefire of sorts takes hold in the Ukraine trapping 8000
hapless surrounded Ukrainian troops, the EU gets down to a showdown with tiny
“irrelevant” Greece. Marketeers everywhere complacently expect both the new
Greek government, and tag team Germany/ECB, to back down. Come Friday it’s all
going to be business as usual in dying Euroland. Cue the ECB to fire up next month’s
QE for all except Greece. All well and good if the Goldilocks ending happens.
But marketeers everywhere will panic if it all goes wrong and a hungry Grizzly
Bear eats Goldilocks.
Below, the state of play as much of the USA freezes
and shops on Presidents Day.
The state — or, to make the
matter more concrete, the government — consists of a gang of men exactly like
you and me. They have, taking one with another, no special talent for the
business of government; they have only a talent for getting and holding office. Their principal device to that end is to
search out groups who pant and pine for something they can't get and to promise
to give it to them. Nine times out of ten that promise is worth nothing. The
tenth time is made good by looting A to satisfy B.
H. L. Mencken.
Greece Faces Crunch Talks After Show of Domestic Support
6:20 PM WET February 15, 2015
(Bloomberg) -- Greece’s
government faces crunch time in its standoff with international creditors as
euro-area finance ministers prepare to reconvene in Brussels to try and break
an impasse over financing Europe’s most indebted state.
Finance Minister Yanis Varoufakis
leads a Greek government delegation back to Brussels Monday buoyed by a
demonstration of support in front of Parliament in central Athens the previous
evening that police put at more than 20,000 people. His goal is to secure a
bridge accord that allows Greece the time and financial space to negotiate a
post-bailout era.
Greek stocks and bonds rose on
Friday as officials on both sides signaled some willingness to compromise after
an initial meeting yielded little progress. With Greece’s current bailout due
to run out at the end of this month, discussions continued into the weekend to
try and identify areas of common ground.
“We’re looking at difficult
negotiations on Monday,” Prime Minister Alexis Tsipras was cited as saying in a
weekend interview with Germany’s Stern magazine. “Nevertheless, I’m full of
confidence.”
After committing 240 billion
euros ($273 billion) in aid and pursuing the largest debt writedown in history,
creditors say Tsipras’s government must abide by the agreements struck by
previous Greek administrations.
More
Greek drama puts eurozone at risk
The outbreak of investor optimism that greeted signs of progress for Greece and Ukraine rests on fragile foundations
Global equity markets ended the
week on a positive note, buoyed by signs of progress on EU debt talks with
Greece and a glimmer of East-West rapprochement at the Minsk summit.
Stocks rallied on Thursday and
Friday, with investors’ risk appetite rising as the German chancellor, Angela
Merkel, shook hands with, and then smiled at, Greek finance minister and
negotiator-in-chief Yanis Varoufakis. That came alongside a Ukraine ceasefire
deal — again, brokered by Merkel — which pushed European shares and bonds
higher, amid hopes of easing tensions between Russia and the West.
Then we had news of better than
expected eurozone growth during the fourth quarter of 2014. The combined
economy of the 19-country currency bloc expanded 0.3pc during the final three
months of last year, reported Eurostat, with GDP rising at an annual rate of
0.9pc.
---- While last week’s market upswing felt good, this sudden improvement in investor sentiment, an almost effervescent return to “risk-on”, could be built on precarious presumptions.
Across the world, geo-political
risks remain legion — not just Russia-Ukraine, but also in the Middle East,
where the Isil terrorist group is trying to return the region to its pre-1914
borders. Oil prices, having quietly risen by around 25pc over the last month,
as cheap crude limits supply, could be in for prolonged volatility. The Western
world’s multi-trillion dollar sovereign debt markets, meanwhile, remain propped
up by printed money.
All of these issues — not least a
renewed oil price spike — have the capacity to seriously dent emerging investor
optimism. The main determinant of global market sentiment, though, the keystone
now propping up the tower of confidence, is Greece. For a full-blown crisis,
involving a near-default or even Greece crashing out of the eurozone, could
spark a “Minsky moment”, dealing a shattering Lehman-style blow to global
markets.
So, ahead of the next round of
talks between eurozone finance ministers tomorrow, followed by Thursday’s
session of the ECB’s governing council, what are the prospects for Greece? Will
there be a resolution that avoids disaster? Or will these EU-Athens
negotiations tear the single currency, and the entire “European project” apart?
Two massive bail-outs in 2010 and
2012 kept Greece afloat, and within the eurozone, but sent the national debt
soaring to 170pc of GDP. While Athens has so far met most “austerity” measures
imposed by international creditors, one in four workers are now unemployed,
with national income now some 25pc below pre-crisis levels — a downturn as long
and deep as the 1930s Great Depression that so traumatised America.
More
Up next, crude oil. Last week’s rally might not be
all it seemed. While Citigroup is looking for WTI crude to trade later this
year in the 20s, I suspect that we are more likely to be in for a series of
ever wilder erratic price swings. My own guess is that we are headed for an
unstable trading range of $35-$70 on America’s benchmark West Texas
Intermediate. “Paper oil,” i.e. futures gambling contracts, now seems to have
replaced supply and demand in setting oil prices. With central banksters
fuelling leveraged gambling via QE, ZIRP and NIRP, paper games are the new
norm. Oil is the new gold manipulation.
This Chart Shows Why the Number of Oil Rigs May Not Matter Anymore
Rig history repeats itself
9:31 PM WET February 13, 2015
The number of oil rigs drilling new
wells in the U.S. has collapsed at an unprecedented rate. The weekly
number has gathered a huge following as investors try to figure out when
the crash in oil prices has reached its bottom. Strangely, the number may
be irrelevant.
Rig counts have long been used to help predict future oil and gas production. In the past week drillers idled 98 rigs, marking the 10th consecutive decline. The total U.S. rig count is down 30 percent since October, an unprecedented retreat. The theory goes that when oil rigs decline, fewer wells are drilled, less new oil is discovered, and oil production slows.
But production isn't slowing yet. In fact, last week the U.S. pumped more crude than at any time since the 1970s. “The headline U.S. oil rig count offers little insight into the outlook for U.S. oil production growth,” Goldman Sachs analyst Damien Courvalin wrote in a Feb. 10 report.
We've seen this before, in natural gas. The chart below shows a striking separation between natural gas production, in orange, and natural gas rigs, in blue. The massive increase in efficiency this represents helped fuel the U.S. fracking boom and has led to some of the world's lowest prices in natural gas, in gray.
Oil Output Expected to Follow Similar Pattern to Gas
Why
is this happening? For one thing, both the rigs and the oil wells are becoming
more productive. Producers are getting better at blasting oil and gas out of
the ground. The rigs that are being idled tend to be the older machines,
and the most effective rigs are being concentrated on the most-productive oil
fields.
More
Next top American economics Guru questions, the Fedster’s narrative of the USA achieving “escape velocity.” Under QE and ZIRP, the only thing that seems to have escaped is sanity form the casino.
What ‘Escape Velocity’? December Business Sales And Inventories Repudiate The Money Printers’ Myth
by David Stockman • February 13,
2015
It is plain as day that massive
central bank money printing and perpetual ZIRP do not rejuvenate the main
street economy under conditions of “peak debt”. And the reason is so obvious
that only Keynesian economists can’t grasp it.
To wit, if the balance
sheets of households and businesses are tapped out—–then artificially
suppressing interest rates cannot induce them to borrow even more
money. Accordingly, spending is constrained to what can be funded
from current income and cash flow after any set aside for new
savings. In contrast to the four decades of the great credit expansion
between 1970 and 2008, therefore, GDP can no longer be stimulated by
incremental outlays derived from hocking household and
business balance sheets.
The graph below of the
long-term trend of household leverage—measured as total mortgage, credit card
and other consumer debt compared to wage and salary income—–demonstrates the
new normal. During the long period of credit expansion, the Fed’s resort to low
interest rates to stimulate borrowing and spending worked because households
started the period with relatively clean balance sheets. As a result, central
bank monetary stimulus caused leverage ratios to be ratcheted higher and higher
in response to each round of rate cutting.
Self-evidently that ratcheting
process has stopped, and household leverage ratios have fallen, albeit to
levels which are still aberrantly high by historical standards. What this means
is that after the peak debt inflection point was reached, the constraint
on borrowing would not be the interest rate, as had been the case during the
great credit inflation, but the availability of income to leverage.
More
We close today with a discredited man-made global
warming update, now rebranded and re-launched by the looney left and their
anti-west fellow travellers, as “Climate Change”. The world’s weather doesn’t
seem to have read the UNFCCC, and New Labour promoting BBC script.
Explanations exist; they have existed for all time; there is
always a well-known solution to every human problem — neat, plausible, and
wrong.
H. L. Mencken.
It's About to Get So Cold That You Could Get Frostbite in 30 Minutes
10:00 AM WET February 13, 2015
(Bloomberg) -- As another
possible blizzard takes aim at Boston, the rest of the eastern U.S. is
threatened with some brutal winter weather of its own this weekend.
That will come from temperatures
so low and winds so high that exposed skin could become frostbitten in about 30
minutes.
“By Sunday morning, wind-chill
values are really low from North Dakota to the Northeast,” said Bob Oravec, a
meteorologist with the U.S. Weather Prediction Center in College Park,
Maryland. “Almost across the entire area, the wind chills are below zero.”
In some cases, they will be well
below zero. Cleveland may have a wind chill of minus 27 degrees Fahrenheit
(minus 33 Celsius), while Buffalo will feel like minus 28, Oravec said.
The frigid weather will also
follow the Interstate 95 corridor, which serves every major city from Boston to
Richmond, Virginia, well into the Deep South.
The forecast calls for Washington
to have a high of 18 on Sunday and a low of 5, according to the National
Weather Service. With the wind, temperatures will feel like minus 10.
The same holds for Philadelphia,
where the wind chill may reach about minus 14 on an actual low of 2. In New
York City, the low will be 3 degrees and the wind chill may reach minus 15 to
minus 20.
---- Frost on oranges, frozen oil and gas wells and real cold in the southern half of the country is what the market needs to spur a rally, he said. This winter’s cold and snow have been supportive in regional markets without having a wide-ranging impact.
Average temperatures as much as 8
degrees below normal may reach as far as Florida through Feb. 16, then will
begin to recede by next week, according to Commodity Weather Group LLC in
Bethesda, Maryland.
More
I believe that no discovery
of fact, however trivial, can be wholly useless to the race, and that no
trumpeting of falsehood, however virtuous in intent, can be anything but
vicious.
H. L. Mencken.
At the Comex silver depositories Friday final figures were: Registered 67.85
Moz, Eligible 108.49 Moz, Total 176.34 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
While mainstream media, is out spinning madly for
America’s War Party against Russia, the reality might be far from MSM’s spin.
If you only get your news from the disgraced Murdoch media, or the
anti-American, anti-British, anti-Christian, anti-Israel, pro-homosexual,
looney leftist BBC, you might be a little surprised at the reality of modern
Russia.
The
most dangerous man to any government is the man who is able to think things out
for himself, without regard to the prevailing superstitions and taboos.
H. L.
Mencken.
Lawrence Solomon: Russia’s rise
Lawrence Solomon Friday, Feb. 13, 2015
Far from being marginalized,
Russia is winning friends and trading partners around the world
To hear Western commentators say
it, Putin and Russia are on the ropes, reeling from a one-two punch of
sanctions over Ukraine and low oil prices that leaves them, in words broadcast
on countless media outlets, “isolated from the international community.”
Some isolation. Putin’s Russia,
despite the country’s economic woes, is today more influential, and held in
higher regard on the world stage, than it has been in a generation.
This week Putin arrived in Cairo
to a pomp-filled ceremony marked by a 21-gun salute and 200 school children
calling out his name. The occasion marked a host of trade initiatives that
includes Russia’s sale to Egypt of four nuclear reactors, liquefied natural gas
and arms; the creation of a Russian industrial zone near Suez; and Egypt’s
entry into the Russian-led free-trade zone known as the Eurasian Economic
Union.
More than a trade and investment
bonanza, this is a diplomatic coup. Putin has brought Russia back to the Middle
East big time. Not only are relations once again excellent with Sunni Egypt,
the Soviet Union’s closest Arab ally until the 1970s and the largest Arab
nation in the world, but Russia also has strong ties with Iran, the world’s
largest Shiite nation. And to round out the welcome from the region, Russia has
excellent relations with Israel, which it no longer needs to shun to gain
favour with Arab states. Putin has established a hotline to Israeli Prime
Minister Netanyahu’s residence, has twice visited Israel, and has seen trade
between the countries blossom: Israel supplies Russia with drones, is key to
Russian hopes for Skolkovo, Russia’s Silicon Valley, and is expected to soon
join the Eurasian Economic Union.
India inked 20 agreements with
Russia last year, including December deals worth $100-billion
Russia’s biggest trade plays,
though, lie further east, in fast-growing Asian economies where Putin is both
feted and formidable. Trade with China, Russia’s largest trading partner, rose
6.8% last year to almost $100 billion, a trend likely to continue given the
high-profile signing by Putin and Chinese President Xi of a $400 billion deal
to export Russian gas to China over a 30-year period.
Trade and diplomatic relations
have likewise been growing with India, which inked 20 agreements with Russia
last year, including December deals worth $100 billion for the sale of 12
nuclear reactors and increased shipments of oil and natural gas. “The steadfast
support of the people of Russia for India has been there even at difficult
moments in our history, it has been a pillar of strength,” Indian Prime
Minister Narendra Modi said in sealing the deal. “India, too, has always stood
with Russia through its own challenges.” To underline India’s support for
Russia in the conflict over Ukraine, India unveiled the formation of an
Indo-Crimean Partnership to foster trade between India and Crimea, now a
Republic in the Russian Federation. Like Israel and Egypt, India intends to
join the Russian-led free trade zone.
More
Truth would quickly cease to be stranger than fiction, once we
got as used to it.
H. L. Mencken
The monthly Coppock Indicators finished January
DJIA: +124 Down. NASDAQ: +220 Down. SP500: +178 Down.
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