It is increasingly certain that the future will not be like the past. Previous downturns have been equally devastating but the primary causes eventually reversed themselves; low commodity prices recovered and damaging government policies were rescinded. This recovery will be different for a variety of reasons which will combine to cap growth, opportunity and profits, even if oil and gas prices spike. The following major changes appear permanent...
Saudi Arabia single-handedly scuttled the Doha meeting, knowing all along that Iran would not participate, with a valid reason. The Russians and others agreed to proceed without Iran, planning to include them at a later date. So if everything was known beforehand, why did the Saudi’s pour cold water on the aspirations of the remaining members, risking its alienation from Russia and the OPEC community? Was it simply Saudi enmity toward Iran? Not exactly. Upon closer scrutiny, we can find the Saudi masterstroke behind Doha.
Amid surging supply of crude and the world's biggest traffic jam of tankers, we suspect more images like the following will be seen going forward. A Russian tanker has caught fire in the Caspian Sea near the territorial waters of Turkmenistan, leaving one dead. On the bright side (for conservationists), the ship's tanks were loaded with seawater only (as ballast), but this does nothing to ease the global oil glut...
For a century, elites have worked to eliminate monetary gold, both physically and ideologically, and yet, like Banquo’s ghost, gold insists on its seat at the monetary table. After decades as net sellers of gold, central banks became net buyers in 2010. A scramble for gold has begun... When it comes to monetary elites, watch what they do, not what they say.
Hillary Clinton recently blasted the hidden financial dealings exposed in the Panama Papers, but she and her husband have multiple connections with people who have used the besieged law firm Mossack Fonseca to establish offshore entities.
Sunday’s producer meeting is all about nothing no matter what agreement might be forged. At best, the agreement will be, as Russia’s energy minister has stated, a gentlemen’s affair, with no binding commitments, no concrete next steps beyond having a review meeting, and no procedure for moving to production cuts.
The supermajors might be protecting their dividends, but they are also risking lower long-term oil production. For now, that is a problem for another day. Referring to his company’s first negative reserve-replacement ratio in 12 years, Shell’s CFO said in February: "While we're not entirely comfortable with a negative number, it's not the most important thing today.”
As central bank policy-makers' forecasts have become more pessimistic (i.e. more realistic), Lord Rothschild is unsurprised at the current malaise: "not surprisingly, market conditions have deteriorated further...So much so that the wind is certainly not behind us; indeed we may well be in the eye of a storm." On this basis, Rothschild highlights a "daunting litany of problems," warning those who are optimistically sanguine about the US economy that "2016 is likely to turn out to be more difficult than the second half of 2015."
While "greed was good" in the '80s, it appears "gold is good" in the new normal. As much as the barbarous relic is despised by all the mainstream money-peddlers in public (aside from those who have left the familia like Alan Greenspan), it seems to be loved in private. Central banks have been net buyers of gold for eight straight years, according to IMF estimates, the longest streak since the first troops were deployed in The Vietnam War.
Biggest Short Squeeze In 7 Years Continues After Bullard Hints At More QE, OECD Cuts Global ForecastsSubmitted by Tyler Durden on 02/18/2016 08:00 -0400
Just when traders thought that the biggest and most violent 3-day short squeeze in 7 years was about to end a squeeze that has resulted in 3 consecutve 1%+ sessions for the S&P for the first time since October 2011, overnight we got one of the Fed's biggest faux-hakws, St. Louis Fed's Jim Bullard, who said that it would be "unwise" to continue hiking rates at this moment, and hinted that "if needed", the most natural option for the Fed going forward would be to do further Q.E.
The recent surge in world production that was brought about by high prices was a USA and Canadian phenomenon only.
"I pledge allegiance to the Flag of the United States of America, and to the Republic for which it stands, one Nation under Allah...."
With the lifting of Iran sanctions, the Tenge has crashed5% to record lows at 377/USD (extending the currencies collapse since the USD-peg was scrapped in August). Furthermore, oil production is entering a new year of decline this year in Kazakhstan - a dismal omen for a country so heavily reliant on energy exports.
Russia has just taken significant steps that will break the present Wall Street oil price monopoly, at least for a huge part of the world oil market. The move is part of a longer-term strategy of decoupling Russia’s economy and especially its very significant export of oil, from the US dollar, today the Achilles Heel of the Russian economy.
The unfolding correction of the visible excesses of the credit inflation - such as overinvestment and malinvestment - will destroy incomes and profits; the Great Unwind of the less visible effects, such as the sovereign wealth fund liquidations, are a giant pin aimed squarely at the monumental worldwide bubbles in stock, bonds and real estate.