Less than a month ago, potash stocks around the world cratered overnight following news that Russian potash producer OAO Uralkali announced its decision to break up a 'marketing venture' that controlled around 43% of global potash exports in the process ending the cartel that many US fertilized companies enjoyed for years. The end of the cartel was also a big hit for former partner Belarusian Potash Company (BPS) and the host nation Belarus, a country of 9.5 million people, where revenue from its potash industry accounts for almost 20 percent of the budget. Everyone, Goldman Sachs, included were confounded by the move: Such behavior by Belaruskali in a structurally oversupplied potash industry should push for stricter competition for end customers and result in a significant swift decline in pricing... " What was most surprising is that Uralkali would voluntarily engage in this move, knowing full well that the Belarus government would retaliate. The only question is how severely. Turns out the answer is "very."
Radiation Levels Will Concentrate in Pockets In Baja California and Other West Coast Locations
- Libor Settlements Said to Ease CFTC’s Path in Rate-Swaps Probe (BBG)
- Manhattan Homes Under $3 Million Never Harder to Buy (BBG)
- Just two years late: Abe Pledges Government Help to Stem Fukushima Water Leaks (BBG)
- Chesapeake drops energy leases in fracking-shy New York (Reuters)
- Hedge Fund Magnetar Won't Face Charges Tied to Mortgages (WSJ)
- U.S. envoy leaves Cairo after talks declared over (Reuters)
- Credit-Crisis Oracle Rajan to Head India’s Central Bank (BBG)
- Bank of England Changes Policy Tack (WSJ)
- Botulism toxin? There's an apology for that - Fonterra CEO apologizes, sees China dairy curbs lifted within days (Reuters)
- Patent troll-In-Chief strikes again: Veto of Apple Ruling Likely to Upend Big Patent Battles (WSJ)
- Because scapegoating means justice FTW - SEC Gets ‘Shot in the Arm’ With Victory in Tourre Case (BBG)
- Insider-Trading Probe Caught in a Washington Knot (WSJ)
- Miners return to hedging as gold (FT)
- Toyota’s $37 Billion Cash Pile Means Turning Point for Abenomics (BBG)
- Inside the battle at Germany's Siemens (Reuters)
- ‘One million’ UK workers on zero hours contracts (FT)
- Wag the dog, part 1984: Iran Seen Trying New Path to a Bomb (WSJ)
- Tokyo Cheap to Hong Kong Luring Asian Bargain Hunters (BBG)
Over two years after Zero Hedge first accused Goldman and JPMorgan of becoming monopolists in the commodity warehousing business (see "Goldman, JP Morgan Have Now Become A Commodity Cartel"), and two weeks after the NYT's reminder the world of just this leading to the latest Kangaroo Court congressional hearing on the matter, which may or may not have resulted in JPMorgan announcing it would exit the physical commodities business, the long overdue legal fight began this Friday when lead plaintiff Superior Extrusion sued Goldman and London Metal Exchange owner HKEx for engaging in "anticompetitive and monopolistic behaviour in the warehousing market in connection with aluminium prices" and accusing the firms of violating the Sherman anti-trust act. Precisely what Zero Hedge said, some 26 months ago.
- Headlines only idiots, Schrodinger and Goebbels could love:
- For nuns and analysts alike, bank commodity earnings are a mystery (Reuters)
- US spying comes under fresh attack (FT)
- Summers Backed Yellen for Fed Before Rivals Now Prove More Alike (BBG)
- Good Luck Leaving Your Wireless Phone Plan (WSJ)
- Spain's Rajoy says he was wrong to trust treasurer in party funding scandal (Reuters)
- Shell's Profit Falls on Shale Write-Down (WSJ)
- Why Rand Paul and Chris Christie went to war (Politico)
- Sony Returns to Profit Aided by TV Business (WSJ)
Following OAO Uralkali's decision to break up a 'marketing venture' that controlled around 43% of global potash exports, the world's largest producer is breaking the cartel that many US fertilizer companies have enjoyed. This move signals prices will weaken as the Russian company tries to grab market share shifting sales to its own unit. As Goldman notes, such behavior by Belaruskali in a structurally oversupplied potash industry should push for stricter competition for end customers and result in a significant swift decline in pricing to a level of marginal cost production. This slashing of margins has crushed the fertilizer stocks with POT, MOS, and AGU all down significantly in the pre-market."Uralkali’s announcement completely turns the global potash market upside down," noted one analyst. "If previously global potash producers were acting like an oligopoly, working with the rule that benefited higher potash prices over shipped volumes, now the market will be fully competitive." Shock, horror!
The overthrow of President Mohamad Morsi by popular demand and supported by the army inaugurates yet another volatile episode in Egypt’s long and turbulent transition. Macro stabilisation in Egypt hinges on a swift and cohesive transition, and given the current bloodshed, that appears unlikely - which leaves Barclays 'muddle-through scenario' - where political/religious divides delay formation of civilian government - as the most likely; postponing fiscal reforms indefinitely, and undermining further the fiscal and debt sustainability of the already-troubled nation. This is a major problem, since, after all; among the main reasons behind the mass protests of 30 June were the continued deterioration in most socioeconomic indicators, faltering public services (notably provisions of fuel and electricity), rising risks of macroeconomic instability and slow progress in implementing socioeconomic and fiscal reforms over the past year.
Following the most recent shift 'away' from a USD-centric world (with the China-Australia direct currency convertibility), it seems the possibility of China's Yuan as the next global reserve currency is getting closer. The Brits, Germans, and now the Swiss (who just signed a free-trade-agreement with China) are all actively vying to become Europe's Yuan trading hub as it seems the long line of developments to internationalize the currency over the past two years. As Bundesbank board member Joachim Nagel noted in a speech entitled "Reniminbi as a potential reserve currency" this week, "the Chinese currency is well on its way to becoming one of the future global reserve currencies." He noted that, although the USD is still the most commonly-used currency for settling trade with China; from virtually zero in 2010, the Yuan is used to settle over 12% of trading transactions now - and is likley to increase further.
- Egypt Girds for Muslim Brotherhood Protests (WSJ)
- SAC Capital's Steven Cohen Expected to Avoid Criminal Charges (WSJ)
- SAC insider-trading probe could last years (Reuters)
- RBI seen selling dollars around 60.59 levels: dealers (Reuters)
- China signals will cut off credit to rebalance economy (Reuters)
- Egypt army arrests key Muslim Brotherhood figures (BBC)
- Rise in Steel Prices Alarms Buyers (WSJ)
- Draghi-Carney Seek Independence Day Break From Bernanke (BBG)
- Samsung Warns Results Will Miss Forecasts (WSJ)
- Russia Prosecutor Seeks 6 Years in Jail for Putin Critic Navalny (BBG)
The all important ECB press conference is set to begin momentarily. Will Draghi answer questions regarding the readiness of the OMT's use in Portugal whose short end has exploded this morning, or will he be forced to wait for the German court's decision first? Or maybe Draghi will finally have some comments on either the ongoing Monte Paschi scandal or the recently revealed Italian derivative debacle which took place under Draghi's watch. We somehow doubt it...
*DRAGHI SAYS ECB RATES TO STAY LOW FOR EXTENDED PERIOD OF TIME
*DRAGHI: IMPROVEMENT IN FINANCIAL MARKETS SHOULD REACH ECONOMY
*DRAGHI SAYS INFLATION RATES MAY BE VOLATILE THROUGHOUT YEAR
*DRAGHI: RECENT TIGHTENING OF MARKET RATES MAY WEIGH ON GROWTH
"The biggest problem currently is that there is virtually no expectation, or analysis that incorporates the impact, of an average economic recession ever occurring again."
- 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)
Jean-Claude Trichet, the former head of the European Central Bank, in an interview with CNBC stated that there was only so much that central banks could do to save the economic situation at the present time.
For most people, the collapse of civilizations is a subject much more appetizingly viewed in the rear-view mirror than straight ahead down whatever path or roadway we are on. Jared Diamond wrote about the collapse of earlier civilizations to great acclaim and brisk sales, in a nimbus of unimpeachable respectability. The stories he told about bygone cultures gone to seed were, above all, dramatic. No reviewers or other intellectual auditors dissed him for suggesting that empires inevitably run aground on the shoals of resource depletion, population overshoot, changes in the weather, and the diminishing returns of complexity. Yet these are exactly the same problems that industrial-technocratic societies face today, and those of us who venture to discuss them are consigned to a tin-foil-hat brigade, along with the UFO abductees and Bigfoot trackers.