This year, China is set to burn more coal than the rest of the world combined!
Update: it appears Carl Icahn agrees with our assessment: CARL ICAHN SAYS CHESAPEAKE'S COLLECTION OF ASSETS "ARE THE BEST PORTFOLIO OF ENERGY ASSETS IN THE COUNTRY"
Back in May 2012, when Reuters' all out aggressive campaign against Chesapeake Energy was in full swing and the stock was trading around $14 per share but before Icahn and Loeb were publicly involved, we predicted that contrary to the endless balance sheet bashing there was, in fact, much upside to CHK. We said that the argument rests on one simple fact: its asset base, which ignoring the firm's liabilities - as in a ZIRP environment, even CHK could easily refi its debt at very agreeable terms - and the CEO's lousy industry reputation implied a far higher stock price for the company. To wit: "the company has lots of good assets, as well as quite a few legacy liabilities, combined with an industry environment that is as bad as it has ever been. And sure enough, in betting that the environment might actually improve for a change, there are quite a few big firms which may be happy to onboard the assets and the liabilities, knowing they wouldn't impair the right side of their balance sheet, while acquiring some good real estate and substantial reserves on the left, at a valuation that is the cheapest in the industry. Because in finance, once central planning is (finally) stripped away, valuation is all that matters." And even before that, a far more immediate catalyst we predicted would be a simple succession event "which eventually will culminate with the long overdue termination of the company's head." Or, said simply, the sacking or resignation of the disgraced CEO would unlock material upside value. Moments ago just this happened, as the company just announced a "succession plan" the direct result of which is that the CEO is out as of April 1. The upside value in question: just about 10% as the stock is currently soaring in the after hours session.
- U.S. Wants Criminal Charges for RBS (WSJ)
- Bernanke Seen Buying $1.14 Trillion in Assets in 2014 (BBG)
- Irish banks at mercy of international paymasters (Reuters)
- Do badly, and we will let you do even worse: Rehn Signals EU May Ease Spain Budget Goal in Austerity Retreat (BBG)
- Too Soon to Celebrate for Europe's Banks (WSJ)
- Army says political strife taking Egypt to brink (Reuters)
- Media Firms Probed on Data Release (WSJ) - No Criminal Charges Seen
- Japan’s Government Proposes First Spending Cut in 7 Years (BBG)
- Nazi Goebbels’ Step-Grandchildren Are Hidden Billionaires (BBG)
- Goldman seeks to reduce China exposure (FT)
- More than 70% of Chinese airports generate losses (People's Daily)
- CAT beats ex-Chinese fraud: $1.91, Exp. $1.70; Warns 2013 could be a "tough year"; sees 2013 EPS in $7.00-$9.00 range, Exp. $8.54, sees Q1 sales well below Q1, 2012
- Yi Warns on Currency Wars as Yuan Close to ‘Equilibrium’ (BBG)
- Monte Paschi seeks new investor as scandal deepens (Reuters)
- Assault Weapons Ban Lacks Democratic Votes to Pass Senate (BBG)
- Toyota Again World's Largest Auto Maker (WSJ)
- Curious why all those Geneva Libor manipulators moved to Singapore? Bank probes find manipulation in Singapore's offshore FX market (Reuters)
- Japan eased safety standards ahead of Boeing 787 rollout (Reuters) - so like Fukushima?
- Goldman is about to be un charge: Osborne cools on changing inflation target (Telegraph)
- Abe Predicts Bump in Revenue as Japan Emerges From Recession (BBG) - actually, "hopes" is the correct verb here
- Toxic Smog in Beijing Fueling Auto Sales for GM, VW (BBG)
- Fed waits for job market to perk up (Reuters) ... any minute now that S&P to BLS trickle down will hit, promise
- BofA shifts derivatives to UK (FT)
The economy as we know it is facing a lethal confluence of four critical factors - the fall-out from the biggest debt bubble in history; a disastrous experiment with globalisation; the massaging of data to the point where economic trends are obscured; and, most important of all, the approach of an energy-returns cliff-edge. Through technology, through culture and through economic and political change, society is more short-term in nature now than at any time in recorded history. This acceleration towards ever-greater immediacy has blinded society to a series of fundamental economic trends which, if not anticipated and tackled well in advance, could have devastating effects. The relentless shortening of media, social and political horizons has resulted in the establishment of self-destructive economic patterns which now threaten to undermine economic viability.
- Fed Pushes Into ‘Uncharted Territory’ With Record Assets (BBG)
- Next up in the currency wars: Korea - Samsung Drops on $2.8 Billion Won Profit-Cut Prediction (BBG)
- China Warns ‘Hot Money’ Inflows Possible on Easing From Abroad (Bloomberg)
- BOJ Shirakawa affirms easy policy pledge but warns of costs (Reuters)
- Merkel Takes a Swipe at Japan Over Yen (WSJ)
- Wages in way of Abe’s war on deflation (FT)
- Italian PM under fire over bank crisis (FT)
- Senior officials urge calm over islands dispute (China Daily)
- Spain tries to peel back business rules (FT)
- Rifts Over Cyprus Bailout Feed Broader Fears (WSJ)
- Soros Says the Euro Is Here to Stay as Currency War Looms (BBG)
It looks like what may be good for the environment is actually bad news for the government.
- Doubt Greets Bank of Japan's Easing Shift (WSJ)
- Japan hits back at currency critics (FT)
- Japan upgrades economic view for first time in eight months (Australian) - only to lower them in a few months again
- GOP critics get opportunity to grill Secretary Clinton on Benghazi (Hill)
- Global economy set for ‘slow recovery’ (FT)
- Obama to back short debt limit extension (FT)
- Unfinished Luxury Tower Is Stark Reminder of Las Vegas’s Economic Reversal (NYT)
- Draghi Says ‘Darkest Clouds’ Over Europe Have Subsided (BBG)
- High-Speed Dustup Hits a Clubby Corner (WSJ)
- U.S. Budget Discord Is Top Threat to Global Economy in Poll (BBG)
- Sir Mervyn King says abandoning inflation target would be 'irresponsible' (Telegraph)
- Spain Says It May Cover 13% of 2013 Funding in January (BBG)
Biggest loser? China.
It’s all a money game on Wall Street.
- Foreign Hostages Die in Algeria’s Battle With Terrorists (Bloomberg)
- The latest bank to soon join the currency wars: McCafferty Says BOE Must Keep Open Mind on New Policy Tools (Bloomberg)
- US debt talks complicated by timing (FT)
- BOJ eyes open-ended asset buying, agrees new inflation goal (Reuters)
- AmEx Says U.S. Card Income Fell 42% as Loss Provisions Increased (BBG)
- Call to raise age for US’s Medicare (FT)
- Obama Promise to Raise Middle Class Living Already Seen in Peril (BBG)
- China Exits Slowdown as Quarterly Growth Tops Forecasts (BBG) - actually, as new Politburo says to make it appear that way
- Britain to drift out of European Union without reforms (Reuters)
- Republicans weigh interim debt-limit hike (FT)
- Abe's aide says Japan shouldn't fret if yen falls to 100 vs dlr (Reuters) ... and it was 90 just a few days ago
- PBOC May Seek More Liquidity Operations (Dow Jones)
Today, Jeff Currie, Goldman Sachs chief commodity strategist said he wouldn’t be surprised if we woke up in summer with $150 oil. Well, I would, and here is why.
The situation in MalgeriaTM continues to remain uncertain but the following updates should provide some color as to where they stand currently (and a primer on the initial French intervention). Critically, Stratfor warns that the escalation in Algeria will possibly lead to further militants crossing the Mali border, further endangering Westerners and energy infrastructure (which is important as Algeria is one of the largest exports of light, sweet crude oil in the world and a significant natural gas exporter to Europe).
- Obama's Gun Curbs Face a Slog in Congress (BBG)
- Euro Area Seen Stalling as Draghi’s Pessimism Shared (BBG)
- China Begins to Lose Edge as World's Factory Floor (WSJ)
- EU Car Sales Slump (WSJ)
- Fed Concerned About Overheated Markets Amid Record Bond-Buying (BBG)
- Australia Posts Worst Back-to-Back Job Growth Since ’97 (BBG)
- Abe Currency Policy Stokes Gaffe Risk as Amari Roils Yen (BBG)
- Japan Opposition Party Won’t Back BOJ Officials for Governor (BBG)
- Fed Reports Point to Subdued Economic Growth (WSJ)
- China Set to Exit Slowdown by Boosting Infrastructure (BBG)
- Greece not out of woods, must stick to reforms: finance minister (Reuters)
- Russian Rate Debate Flares Up as Cabinet Seeks Growth (BBG)
There has been a very strong and concerted public-relations effort to spin the recent shale energy plays of the U.S. as complete game-changers for the world energy outlook. These efforts do not square up well with the data and are creating a vast misperception about the current risks and future opportunities among the general populace and energy organizations alike. The world remains quite hopelessly addicted to petroleum, and the future will be shaped by scarcity – not abundance, as some have claimed.