Natural Gas

North American crude oil has been in the news on several fronts this week, including some rapid price moves and an unexpected intervention by President Obama. Despite the publication of a new report projecting a much more rapid rate of tight oil supply growth than is generally expected and the entire Buffet-Railroad-Traffic-Pipeline meme relying on increasingly exponential dreams of the Bakken et al. saving us from our excess-energy-consuming selves, Barclays questions just how realistic these forecasts are, noting "it is perhaps wise to exercise a degree of caution over longer-term shale oil forecasts... partly because of the steepness of decline rates for shale oil wells, a lot of the very big productivity gains have already been made, and finally, skepticism around some of the more ambitious projections of US shale output due to the existence of numerous logistical barriers."

• Pretty much as expected from George W. Bush: Edward Snowden ‘damaged’ security (Politico)
• Gotta love the Keynesian-Monetarist religion: True 'Bullievers' Are Still Sweet on Japan (WSJ)
• Canadian Takes Reins at Bank of England (WSJ)
• Egypt streets quiet, political standoff goes on (Reuters)
• Private Banks Leave Switzerland as End of Secrecy Hurts (BBG)
• How Next Debt-Ceiling Fight Could Play Out (WSJ)
• Easy Money Is Still Central (WSJ)
• Lew Says China Needs Market Policies and Stop Spying (BBG) - China replies with the same
• Ireland Preparing Plan to Tap Euro-Area Rescue Fund, Noonan Says (BBG)
• Poll shows strong shift to Australian PM Rudd, new ministry named (Reuters)

• Fashionable 'Risk Parity' Funds Hit Hard (WSJ)
• No 1997 Asian Crisis Return as China Trembles (BBG)
• Greece Faces Collapse of Second Key Privatization (FT)
• China Bad-Loan Alarm Sounded by Record Bank Spread Jump (BBG)
• Iranian official signals no scaling back in nuclear activity (Reuters)
• Asmussen Says Any QE Discussions at ECB Not Policy Relevant (BBG)
• Flat Japanese consumer prices aid Kuroda (FT)
• Vietnam Devalues Dong for First Time Since ’11 to Boost Reserves (BBG)
• World Bank Sees ‘Vulnerable’ Food System on Climate Change (BBG)
• Fed big-hitters seek to quash QE fears (FT)
• EU Leaders Set to Slow Support for Ailing Banks (BBG)

Norwegian energy company Statoil said last week it was forming a special operations division to handle emergency operations in response to a terrorist attack on a natural gas facility in Algeria. The company said it would double the amount of employees it had designated for existing security operations after reviewing the measures in place at the In Amenas gas facility. A January attack there left employees with Statoil and BP dead in what al-Qaida said was a response to French intervention in Mali. With the economy just as much a viable target as any, counter-terrorism may becoming more than just the military's game. With the international economy depending on a reliable source of energy to keep churning, Statoil's actions suggest the energy sector may start to take on some of that burden itself.

• Hilsenrising interest rates Business Feels Pinch of Swift Rate Rise (WSJ)
• Yellen Betting Defies 100-Year Jinx of Fed No. 2 Never Elevated (BBG)
• No sign of cyber leaker Snowden on flight to Cuba (Reuters)
• Back to the Future 2 is finally coming: Honda Sees ‘Flying Sports Car’ Making Profit by Decade’s End (BBG)
• Europe’s Richest Person Kamprad to Move Back to Sweden (BBG)
• Li’s Shock Treatment to China Lenders Evokes Ex-Reformer (BBG)
• In India, Gold-Related Shares Melt Down (WSJ)
• Citigroup Opens in Iraq to Tap $1 Trillion of Oil Spending (BBG)
• France warned on budget deficit  (FT)

It’s not mere anecdotal evidence: Visibly melting sea ice is the best evidence that the planet is warming. So prospecting for oil in the Arctic is a tricky endeavor that must be undertaken slowly and with extreme caution. So just how hot is it going to get? Hotter than we can handle if we fail to reduce greenhouse gas emissions significantly...

If oil and gas is a profoundly dynamic phenomenon, then so too must be environmental risk and conflicts over natural resources - and we are not getting the full picture from the mainstream media, according to Michael T. Klare, professor of peace and world security studies at Hampshire College. As risks multiply, conventional sources evaporate and we are left with “extreme” energy, renewables may be the only way to avoid war and disaster.

Meet General Keith Alexander, "a man few even in Washington would likely recognize", which is troubling because Alexander is now quite possibly the most powerful person in the world, whom nobody talks about. Which is just the way he likes it. ... And also meet Bonesaw: "Bonesaw is the ability to map, basically every device connected to the Internet and what hardware and software it is."

Hedonically-adjusted inflation is in check, and the housing "recovery" is in doubt: the perfect cocktail for Bernanke to announce no tapering... Or to shock the world and in just over 24 hours say that as we prepares to wave bon voyage he will start to reduce the liquidity injection into the markets as he has been warning for the past 3 months.

Why do the debt crisis in Cyprus and the subsequent "bail-in" confiscation of bank depositors' money matter? They matter for two reasons: 1. The banking/debt crisis in Cyprus shares many characteristics with other banking/debt crises. 2. The official Eurozone resolution of the crisis--the "bail-in" confiscation of 60% of bank depositors' cash in an involuntary exchange for shares in the bank (which are unlikely to have any future value)--may provide a template for future official resolutions of other banking/debt crises. In other words, since the banking/debt crisis in Cyprus is hardly unique, we can anticipate the resolution (confiscation of deposits) may be applied elsewhere.

So much for continued disinflation: moments ago the PPI headline number came out at the highest level since February, or 0.5%, well above the expected 0.1% and up significantly from the -0.7% in April. The core PPI ex-food (which rose 0.6%) and energy (increasing 1.3% in May, the highest since February) rose a far more manageable 0.1% in May, and just 1.7% Y/Y, below the statutory accepted 2% annual growth on both the producer and consumer side: a break down of just which finished products led to this increase (gasoline, eggs and imitation cheese as it turns out) is provided below. Luckily, since nobody in the US either eats or uses energy (because they are such a "small component" of the hedonically-adjusted purse), nobody will mind when companies have no option but to pass through rising input costs to consumers.

When it comes to the validity, accuracy and honesty of government-sourced data, sadly there is much to be desired in the time of the New Normal, when governments have made it very clear they will resort to any measure to boost confidence - from the wealth effect to flagrantly doctoring economic (dis)information. Luckly for now at least, the private sector provides a somewhat credible alternative, although even that is rapidly being subsumed by the government apparatus (see ADP morphing into BLS-lite). Still, it is a useful data point for those who still care about the anachronism known as "fundamentals." So in order to supplement the retail data disclosed earlier which according to some was the "most important retail spending" report in years, one useful counterpoint is sales data as disclosed by credit card processors such as MasterCard (sadly often hiding behind subscription paywalls). Here are some highlights of what a parsing such a recent report reveals, courtesy of Bloomberg.

• Global shares pummeled, dollar slumps as rout gathers pace (Reuters)
• Hong Kong to Handle NSA Leaker Extradition Based on Law (BBG)
• Lululemon chairman sold $50 million in stock before CEO's surprise departure (Reuters)
• Companies scramble for consumer data (FT)
• Traders Pay for an Early Peek at Key Data (WSJ)
• When innovation dies: Apple looking at bigger iPhone screens, multiple colors (Reuters)
• Washington pushed EU to dilute data protection (FT)
• Japan-U.S. drill to retake remote island kicks off (Japan Times)
• EM economies in danger of overheating, World Bank says (FT)
• Don't forget the Indian crisis: Chidambaram seeks to quell concerns over rupee (FT)

"It all began with Greece," and as Mark Grant notes today, "somebody, somewhere is going to take a hit." It appears the 'news' is piling up thick and fast in the 'islands' nation. As Reuters reports, Greece did not receive any binding bids for natural gas producer DEPA. This was part of the asset-sale program demanded by the TROIKA, with Hellenic Petroleum's sale later in the year now potentially on hold. The sad truth is that the country cannot pay their bills, cannot pay their pension obligations, cannot fund social services and is just about out of money to even run their government. The reality is; they are bankrupt again and there is no way out without some form of debt forgiveness and more money. Debt forgiveness, alone, will not cut the mustard now by itself and some kind of end game may well be near. That is increasingly reflected in 2012's no-brainer trade as GGBs are now back below 60 and down over 10% from their highs and the Athens Stock Index just entered bear market territory, down 20% from its highs.

• In Hong Kong, ex-CIA man may not escape U.S. reach (Reuters)
• Backlash over US snooping intensifies (FT)
• Apple to Revamp IPhone Software, Ending Product Funk (BBG)
• Nothing like revising history: Japan revises up Q1 growth to annual 4.1% (FT), just don't look at the trade deficit
• Coffee Exports From Indonesia Seen Slumping to Two-Year Low (BBG)
• Euro bailout Troika nears end of road with patchy record (Reuters)
• Treasuries Little Changed Before Bullard Speaks Amid QE Debate (BBG)
• Schwab Topping Goldman Sachs Presages Return to Stocks (BBG)
• Hedge funds take over another city: London’s Forced Renters Fuel Apartment Investing Boom (BBG)