Bill Gates’ Texas energy company has filed for bankruptcy protection as the depressed power market results in untenable financial losses... "The current depressed economic environment of the electric power industry – particularly with respect to coal-fired plants – and the debtors' liquidity constraints have resulted in continuing losses that, simply put, have left the debtors without alternatives." But what about the recovery?!
"The Vampire Squid Strikes Again"- Matt Taibbi Takes On Blythe Masters And The Banker Commodity CartelSubmitted by Tyler Durden on 02/13/2014 17:15 -0400
The story of how JPMorgan, Goldman and the rest of the Too Big To Fails and Prosecutes, cornered, monopolized and became a full-blown cartel - with the Fed's explicit blessing - in the physical commodity market is nothing new to regular readers: to those new to this story, we suggest reading of our story from June 2011 (over two and a half years ago), "Goldman, JP Morgan Have Now Become A Commodity Cartel As They Slowly Recreate De Beers' Diamond Monopoly." That, or Matt Taibbi's latest article written in his usual florid and accessible style, in which he explains how the "Vampire Squid strikes again" courtesy of the "loophole that destroyed the world" to wit: "it would take half a generation – till now, basically – to understand the most explosive part of the bill, which additionally legalized new forms of monopoly, allowing banks to merge with heavy industry. A tiny provision in the bill also permitted commercial banks to delve into any activity that is "complementary to a financial activity and does not pose a substantial risk to the safety or soundness of depository institutions or the financial system generally." Complementary to a financial activity. What the hell did that mean?... Fifteen years later, in fact, it now looks like Wall Street and its lawyers took the term to be a synonym for ruthless campaigns of world domination."
Word count of the word "weather" in Joe LaVorgna's latest note explaining away today's third consecutive miss in retail sales and initial claims: 8. The humor, however, is this punchline: "Eventually, though, we should see some impressive weather-related snapback in economic activity." Wait, so the weather will deposit a few thousand dollars in all tapped-out US consumers' bank accounts? You do learn something every day.
The potential for a golden age of gas comes along with a big “if” regarding environmental and social impact. The International Energy Agency (IEA) - the "global energy authority" - believes that this age of gas can be golden, and that unconventional gas can be produced in an environmentally acceptable way.
As natural gas prices climb, reaching over $5/mcf again on 4 February, and with an unseasonably cold winter, local utilities say that natural gas customers’ bills are 30-40% higher now than last winter.
How long can economic growth continue in a finite world? In simplest terms, our problem is that we as a people are no longer getting richer. The reason we are getting poorer is because hidden parts of our economy are now absorbing more and more resources, leaving fewer resources to produce the goods and services we are used to buying. The promised collapse, from 1972's The Limits of Growth, is practically right around the corner, beginning in the next year or two. In fact, many aspects of the collapse appear already to be taking place, such as the 2008-2009 Great Recession and the collapse of the economies of smaller countries such as Greece and Spain. How could collapse be so close, with virtually no warning to the population?
It's snowing in New York so the market must be down. Just kidding - everyone know the only thing that matters for the state of global risk is the level of USDJPY and it is this that nearly caused a bump in the night after pushing the Nikkei as low as 13,995, before the Japanese PPT intervened and rammed the carry trade higher, and thus the Japanese index higher by 1.23% before the close of Japan trading. However, since then the USDJPY has failed to levitate as it usually does overnight and at last check was fluctuating within dangerous territory of 101.000, below which there be tigers. The earlier report of European retail sales tumbling by 1.6% on expectations of a modest 0.6% drop from a downward revised 0.9% only confirmed that the last traces of last year's illusionary European recovery have long gone. Then again, it's all the cold weather's fault. In Europe, not in the US that is.
- Emerging-Market Rout Seen Enduring on Low Real Rates (BBG)
- After rocky January, markets eye data and central banks (Reuters)
- Europe will feel the pain of emerging markets (FT)
- Lloyds delays dividend prospect after mis-selling charge (Reuters)
- Snow Set to Snarl New York Commute as U.S. Flights Halted (BBG)
- Rate Decision to Drive Yellen's Early Agenda (Hilsenrath)
- Thai protesters move to downtown Bangkok in bid to topple PM (Reuters)
- China says Japan's 'hype' on air defence zone spreads tension (Reuters)
- Hedge funds seek 1.8 billion euros damages from members of Porsche's owning family (Reuters)
Alarms are going off in assorted plunge protecting offices, now that the USDJPY has breached the 102.000 "fundamental" support level, below which the Yen can comfortably soar to sub 100.000 in perfectly even 100 pip increments. The first trading day of February has brought another weaker session across Asia though some equity indices such as the KOSPI (-1.1%) are in catch-up mode given they were shut towards the back-end of last week. Over the weekend, the Chinese government published its latest official manufacturing PMI which showed a 0.5pt drop to 50.5, a six-month low, and consistent with consensus estimates. DB’s Jun Ma believes there was some element of seasonality affecting this month’s result including the fact that Chinese New Year started at the end of January (vs February last year), anti-pollution measures in the lead up to CNY and efforts to control government consumption around the holiday period. The official service PMI was released overnight (53.4) which printed at the lowest level since at least 2011. The uninspiring Chinese data has not helped market sentiment this morning, with the Nikkei plunging -2% and ASX200 once again under pressure. S&P500 futures have fluctuated around the unchanged line this morning although if support below the USDJPY fail solidly, then watch out below. Markets in Mainland China and Hong Kong remain closed for Lunar New Year.
In order to understand what solutions to our energy predicament will or won’t work, it is necessary to understand the true nature of our energy predicament. Most solutions fail because analysts assume that the nature of our energy problem is quite different from what it really is. Analysts assume that our problem is a slowly developing long-term problem, when in fact, it is a problem that is at our door step right now.
The problem is twofold. First, current accounts are a zero sum game, so future improvements in emerging market trade balances have to come at someone else’s expense. Second, we have had, over the past year, only modest growth in global trade; so if EM balances are to improve markedly, somebody’s will have to deteriorate. When the 1994-95 “tequila crisis” struck, the US current account deficit widened to allow for Mexico to adjust. The same thing happened in 1997 with the Asian crisis, in 2001 when Argentina blew, and in 2003 when SARS crippled Asia. In 1998, oil prices took the brunt of the adjustment as Russia hit the skids. In 2009-10, it was China’s turn to step up to the plate, with a stimulus-spurred import binge that meaningfully reduced its current account surplus. Which brings us to today and the question of who will adjust their growth lower (through a deterioration in their trade balances) to make some room for Argentina, Brazil, Turkey, South Africa, Indonesia...? There are really five candidates...
- Only time will define Bernanke's crisis-era legacy at Fed (Reuters)
- Record Cash Leaves Emerging Market ETFs (BBG)
- Investors Look Toward Safer Options as Ground Shifts (WSJ)
- Fed Policy Makers Rally Behind Tapering QE as Yellen Era Begins (BBG)
- Rating agencies criticise China’s bailout of failed $500m trust (FT)
- Russia to await new Ukraine government before fully implementing rescue (Reuters)
- U.S. readies financial sanctions against Ukraine: congressional aides (Reuters)
- Companies resist president’s call for minimum wage rise (FT)
- Secret Swiss Funds at Risk as Italy’s Saccomanni Visits Bern (BBG)
- Top Democrat puts Obama trade deals in doubt (FT)
- Erdogan to Give Rate Increase Time Before Trying Other Plans (BBG)
Natural Gas futures prics are exploding higher... By now everyone is quite aware of the US climatic conditions so whatever squeeze just took place has nothing to do with fundamentals, and everything to do with someone being Amaranth'd. The only question is who, and who is their counterparty (especially if it is a public company).
With the (emerging) world suddenly collapsing, appropriately enough on the Chairsatan's last FOMC conference, here is an amusing update from Denmark where apparently the locals are less than excited about giving away their DONG (that would be Danish Oil & Natural Gas for the perverts) to Goldman Sachs. Specifically, over the past several days, a whopping 186,000 Danes have signed a petition to stop the sale of a 19% stake with extraordinary minority stakeholder rights in DONG to Goldman Sachs. Then again, every DONG has its price...
The Fed tightens by a little (sorry, tapering - flow - is and always will be tightening): markets soar; Turkey tightens by a lot: markets soar. If only it was that easy everyone would tighten. Only it never is. Which is why as we just reported, the initial euphoria in Turkey is long gone and the Turkish Lira is basically at pre-announcement levels, only now the government has a furious, and loan-challenged population to deal with, not to mention an economy which has just ground to a halt. Anyway, good luck - other EMs already faded, including the ZAR which many are speculating could be the next Turkey, and certainly the USDJPY which sent futures soaring last night, only to fade all gains as well and bring equities down with it.