en The S&P Has Closed At New Record Highs 37 Times In 2017, The Most In 20 Years <p>In a testament to the "buy the dip" mentality, or rather only remaining investing strategy in quasi-nationalized capital markets, BofA reports that the S&amp;P 500 has closed at a new record high 37 times so far during 2017, <strong>the most in the Q1 to Q3 period since 1997, when the S&amp;P closed at a new record 40 times before the start of Q4 </strong>(the most occurred in 1995 when there were 61 record closes). </p> <p>Additionally, 2017 still has the potential to top ’97 (40 records) as four trading days still remain in Q3, and judging by today's strong rebound we just may go for 38 by end of day. As BofA's Benjamin Bowler writes, "<strong>this high number of record closes further depicts how US stocks have continuously grinded higher as investors continue to buy every dip and keep volatility suppressed.</strong>"</p> <p><a href=""><img src="" width="540" height="421" /></a></p> <p>It's not just the cash market however: another record was just observed in the VIX, which as we reported over the weekend, just saw the lowest September level on record.</p> <p>As BofA notes, despite NK, storms, and the Fed, the VIX has remained unusually low in Sep Shrugging off rising geopolitical tension with North Korea, several destructive storms, and the Fed’s plan to normalize its balance sheet, the VIX remained heavily subdued during September, defying seasonal trends. The average VIX close in September month-to-date is currently 10.60, which is the lowest average September on record.&nbsp;</p> <p><img src="" width="540" height="393" /></p> <p> What’s more, the 10.60 average close is actually lower than the minimum levels seen in any prior September (before this year, the lowest min was 11.10 in Sep-95).</p> <p>Perhaps even more notable is the Sep-17 VIX settlement, which was 9.87. <strong>This is the lowest monthly settlement on record and only the second sub-10 monthly settlement (the other was in Feb-07 when the VIX settlement was 9.95).</strong> Even more striking, monthly settlements are typically high in September as the average settlement during September since 2004 is 19.69, the fifth highest relative to other months. </p> <p>PUtting the VIX performance in context, <strong>comparing 2017 monthly VIX settlements to historical norms, this month’s 9.87 print was the farthest below the mean.</strong></p> <p><a href=""><img src="" width="540" height="401" /></a></p> <p>The question, naturally, is how much longer can central banks keep volatility suppressed to such record-breaking levels? </p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="540" height="372" alt="" src="" /> </div> </div> </div> Capital Markets Central Banks Mathematical finance North Korea S&P 500 Technical analysis US Federal Reserve VIX Volatility Volatility Tue, 26 Sep 2017 14:01:06 +0000 Tyler Durden 604195 at Is The Rally In Oil Sustainable? <p><a href=""><em>Authored by Lance Roberts via,</em></a></p> <p>I have been getting a tremendous number of emails as of late asking if the latest rally in oil prices, and related energy stocks, is sustainable or is it another<em> &ldquo;trap&rdquo;</em> as has been witnessed previously.</p> <p>With geopolitical turmoil mounting, for North Korea to Iran, and as natural disasters have rocked the refinery capital of the world (Houston,) the question is not surprising.</p> <p>As regular readers know, we exited oil and gas stocks back in mid-2014 and have remained out of the sector for technical and fundamental reasons for the duration. <strong>While there have been some opportunistic trading setups, the technical backdrop has remained decidedly bearish.</strong></p> <p>Today, I am going to review the fundamental supply/demand backdrop, as well as the technical price setup, as things have improved enough to warrant some attention. As a portfolio manager, I am interested in setups that potentially have long-term tailwinds to support the investment thesis. The goal today is to determine if such an environment exists or if the latest bounce is simply just that.</p> <p>Let&rsquo;s get to it.</p> <p>With OPEC discussing the extension of oil production cuts into 2018, the question is whether such actions have made any headway in reducing the current imbalances between supply and demand? This is an important consideration if we are going to see sustainable higher prices in&nbsp;<em>&ldquo;black gold.&rdquo;&nbsp;</em></p> <p>With respect to the oil cuts, the current cut is the 4th by OPEC since the turn of the century.&nbsp;<strong>These cuts in production did not last long, generally speaking, but tend to occur at price peaks, rather than price bottoms, as shown below.</strong></p> <p><a href=""><img class="alignnone size-full wp-image-23865" src="" style="width: 600px; height: 399px;" /></a></p> <p>Despite the occasional rally, it&rsquo;s hard to see that the outlook for oil is encouraging on both fundamental and technical levels. The charts for WTI remain bearish, while the fundamentals seem to be saying Economics 101:&nbsp;<strong>too much supply, too little demand.</strong>&nbsp;The parallel with 2014 is there if you want to see it.</p> <p><strong>The current levels of&nbsp;supply potentially creates a longer-term issue for prices globally particularly in the face of weaker global demand due to demographics, energy efficiencies, and debt.</strong></p> <p>Many point to the 2008 commodity crash as THE example as to why oil prices are destined to rise in the near term.&nbsp;<strong>The clear issue remains supply as it relates to the price of any commodity.</strong>&nbsp;With drilling in the Permian Basin expanding currently, any&nbsp;<em>&ldquo;cuts&rdquo;</em>&nbsp;by OPEC have already been&nbsp;offset by increased domestic production.&nbsp;<strong>Furthermore, any rise in oil prices towards $55/bbl will likely make the OPEC&nbsp;<em>&ldquo;cuts&rdquo;</em>&nbsp;very short-lived.&nbsp;</strong></p> <p><a href=""><img class="alignnone size-full wp-image-23866" src="" style="width: 599px; height: 378px;" /></a></p> <p><strong>As noted in the chart above, the difference between 2008 and today is that previously the world was fearful of&nbsp;<em>&ldquo;running out&rdquo;</em>&nbsp;of oil versus worries about an&nbsp;<em>&ldquo;oil glut&rdquo;</em>&nbsp;today.</strong></p> <p>The issues of supply versus price becomes clearer if we look further back in history to the last crash in commodity prices which marked an extremely long period of oil price suppression.</p> <p><a href=""><img class="alignnone size-full wp-image-23867" src="" style="width: 601px; height: 379px;" /></a></p> <p>Despite the rising exuberance as money chases the <em>&ldquo;beaten up&rdquo;</em> energy stocks on a sector rotation basis,<strong>&nbsp;ultimately, it always comes down to supply and demand.</strong></p> <h2><u><strong>Reviewing History</strong></u></h2> <p>In 2008, when prices crashed, the supply of into the marketplace had hit an all-time low while global demand was at an all-time high.&nbsp;<strong>Remember, the fears of&nbsp;<em>&ldquo;peak oil&rdquo;</em>&nbsp;was rampant in news headlines and in the financial markets. Of course, the financial crisis took hold and quickly realigned prices with demand.</strong></p> <p><a href=""><img class="alignnone size-full wp-image-23869" src="" style="width: 600px; height: 380px;" /></a></p> <p><strong>Of course, the supply-demand imbalance, combined with suppressed commodity prices in 2008, was the perfect cocktail for a surge in prices as the&nbsp;<em>&ldquo;fracking miracle&rdquo;</em>&nbsp;came into focus.</strong>&nbsp;The surge of supply alleviated the fears of oil company stability and investors rushed back into energy-related companies to&nbsp;<em>&ldquo;feast&rdquo;</em>&nbsp;on the buffet of accelerating profitability into the infinite future.</p> <p><strong>Banks also saw the advantages and were all too ready to lend out money for drilling of speculative wells which was fostered by Federal Reserve liquidity.</strong></p> <p><a href=""><img class="alignnone size-full wp-image-23870" src="" style="width: 601px; height: 379px;" /></a></p> <p><strong>As investors gobbled up equity shares, the oil companies chased every potential shale field in the U.S. in hopes&nbsp;to push stock prices higher. It worked&hellip;for a while.</strong></p> <p>Of course, lessons have not been learned as of yet, as banks and investors once again begin to chase speculative&nbsp;<em>&ldquo;shale&rdquo;</em>&nbsp;flooding capital into the Eagleford and Permian Basin fields as prices have finally risen to more profitable levels. <strong>Furthermore, the Fed is now talking about <em>&ldquo;extracting&rdquo;</em> liquidity from the markets as they continue hiking rates. Neither of those prospects are good longer-term from energy prices or stocks.</strong></p> <p>The problem currently, and as of yet not fully recognized, is the supply-demand imbalance has reverted.&nbsp;<strong>With supply now back at levels not seen since the 1970&rsquo;s, and global demand growth weak due to a rolling debt-cycle driven global deflationary cycle, the dynamics for a repeat of the pre-2008 surge in prices is unlikely.</strong></p> <p><a href=""><img class="alignnone size-full wp-image-23871" src="" style="width: 601px; height: 369px;" /></a></p> <p>The supply-demand problem is not likely to be resolved over the course of a few months.&nbsp;<strong>The current dynamics of the financial markets, global economies and the current level of supply is more akin to that of the early-1980&rsquo;s.</strong>&nbsp;Even is OPEC does continue to reduce output,&nbsp;<strong>it is unlikely to rapidly reduce the level of supply currently as shale field production increases.</strong></p> <p><a href=""><img class="alignnone size-full wp-image-23872" src="" style="width: 600px; height: 379px;" /></a></p> <p><strong>Since oil production, at any price, is the major part of the revenue streams of energy-related companies,</strong>&nbsp;it is unlikely they will dramatically gut their production in the short-term. The important backdrop is extraction from shale continues to become cheaper and more efficient all the time. In turn, this lowers the price point where production becomes profitable increases the supply coming to market.</p> <p><strong>Then there is the demand side of the equation.</strong></p> <p>For example, my friend<a href="" rel="noopener" target="_blank"> Jill Mislinski </a>discussed the issue of a weak economic backdrop.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em>&ldquo;There are profound behavioral issues apart from gasoline prices that are influencing miles traveled. These would include the&nbsp;<strong>demographics of an aging population in which older people drive less, continuing high unemployment, the ever-growing ability to work remote in the era of the Internet and the use of ever-growing communication technologies as a partial substitute for face-to-face interaction.&rdquo;</strong></em></p> </blockquote> <p><a href=""><img class="alignnone size-full wp-image-23873" src="" style="width: 600px; height: 436px;" /></a></p> <p>The problem with dropping demand, of course, is the potential for the creation of a&nbsp;<em>&ldquo;supply glut&rdquo;</em>&nbsp;that leads to a continued suppression in oil prices.</p> <p>Couple the weak economic backdrop with the&nbsp;slow and steady growth of renewable/alternative sources of energy as well as technological improvements in energy storage and transfer.&nbsp;<strong>Add to those issues that over the next few years EVERY major auto supplier will be continuously rolling out more efficient automobiles including larger offerings of Hybrid and fully electric vehicles.&nbsp;</strong></p> <p><strong>All this boils down to a long-term, structurally bearish story.</strong></p> <h2><u><strong>Technical Set-Up Still Bearish</strong></u></h2> <p>In the short-term, the recent rally in oil prices and energy stocks has been exciting. As shown below, that rally has pushed oil prices back above the 200-dma and is attempting to breakout above $52. <strong>This puts the old highs of $55/bbl back into focus.</strong>&nbsp;I have added XLE <em>(the energy-sector exchange-traded fund)</em> as a proxy for energy stocks to show the high correlation between oil prices and the underlying companies.</p> <p>The rally following hurricanes <em>&ldquo;Harvey&rdquo;</em> and <em>&ldquo;Irma,&rdquo;</em>&nbsp;is derived from the imbalances in gasoline and oil supply. Those imbalances will be short-lived and we will begin to get a mean reversion very soon. <strong>It is where that next mean reversion settles that will determine the intermediate-term outlook for the commodity and sectors.&nbsp;</strong></p> <p><a href=""><img class="alignnone size-full wp-image-23877" src="" style="width: 600px; height: 264px;" /></a></p> <p>While the short-term backdrop is indeed bullish, the longer-term dynamics still remain decidedly bearish. Currently, <strong>prices of Energy stocks have been pushed into extremely overbought levels <em>(3-standard deviations above their longer-term mean)</em>, but remain in a longer-term bearish trend.</strong></p> <p><a href=""><img class="alignnone size-full wp-image-23879" src="" style="width: 600px; height: 358px;" /></a></p> <p><strong>While investors have chased energy stocks&nbsp;on expectations of continued production cuts from OPEC, little has been done to resolve the fundamental valuation problems which face a majority of these companies.</strong>&nbsp;Revenues, while improved, will remain suppressed as leverage in many of these companies have risen sharply. The negative trends of both oil and energy stocks keeps downward pressure on stocks in the intermediate term.</p> <p><a href=""><img class="alignnone size-full wp-image-23881" src="" style="width: 600px; height: 449px;" /></a></p> <p>Importantly, note the monthly&nbsp;<em>&ldquo;buy signal&rdquo;</em>&nbsp;<em>(vertical dashed&nbsp;black line)</em>&nbsp;for oil. That signal occurred in conjunction with the initial oil production cuts announced by OPEC. <strong>While there is hope the production cuts will continue into 2018, a bulk of the current price gain has likely already been priced in.&nbsp;</strong>With oil prices once again overbought on a monthly basis, the risk of disappointment is substantial.</p> <p>With respect to investors, the argument can be made that oil prices have likely found a long-term bottom in the $40 range. However, the fundamental tailwinds for substantially higher prices are still vacant. OPEC won&rsquo;t keep cutting production forever, the global economy remains weak, efficiencies are suppressing demand.</p> <p><strong>Furthermore, given the length of the current economic expansion, the onset of the next recession is likely closer than not.</strong> A recession will negatively impact oil prices <em>(which are driven by commodity traders)</em> and energy investments as the proverbial <em>&ldquo;baby is thrown out with the bathwater.&rdquo;&nbsp;</em>This is where we will be looking for long-term bargains in the space.</p> <p>Sure, this could certainly be the start of the next great bull-market for energy shares.<strong> However, after having missed the bulk of the decline to start with, I am more than happy to wait for a clearer opportunity to become aggressive in the sector again.</strong> Currently, I can&rsquo;t make that case.</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="588" height="365" alt="" src="" /> </div> </div> </div> Business Chronology of world oil market events communication technologies Demographics Economy Energy crises Energy crisis Federal Reserve Global Economy headlines Iran Marketing Mean Reversion North Korea OPEC OPEC Organization of Petroleum-Exporting Countries Peak oil Petroleum Petroleum industry Petroleum politics Price of oil Pricing Recession Unemployment US Federal Reserve Tue, 26 Sep 2017 13:55:18 +0000 Tyler Durden 604179 at FBI Arrests Several NCAA Coaches Amid Broad Crackdown On College Basketball Corruption <p>In a broad crackdown on college basketball corruption, U.S. prosecutors unveiled charges Tuesday against 10 coaches, managers, financial advisers and representatives of a sportswear company, <strong>accusing them of bribery, fraud and corruption in recruitment in college basketball</strong>. Additionally, a key part of the case includes allegations that an <strong>executive at a global apparel company bribed students to attend universities where the company sponsored athletic programs</strong>.</p> <p>Federal prosecutors in Manhattan said Tuesday the charges followed a two-year investigation into criminal influence in NCAA basketball. According to <a href="">Bloomberg</a>, among those charged are four coaches, who are accused of steering players to advisers who had paid bribes to the coaches. Federal prosecutors in Manhattan said they will announce the charges against the defendants at a noon news conference.</p> <p>The defendants include coaches at top U.S. college basketball programs, one agent, one financial adviser and a former referee. The coaches are Lamont Evans, an assistant at Oklahoma State University, Emanuel Richardson, an assistant for the Arizona Wildcats, and Chuck Person, associate head coach at Auburn University.</p> <p>According <a href="">to the WSJ</a>, law-enforcement officials are expected to arrest at least a half-dozen people and unseal charges Tuesday "as part of a wide-ranging investigation into alleged bribery and kickback schemes at several of the country’s top-tier college basketball programs, people familiar with the matter said."</p> <p>Investigators have been looking at whether coaches at these schools have been paid by outside entities—such as financial advisers, agents, and apparel companies—in exchange for pressuring players to associate with those entities, people familiar with the investigation said. Executives at at least one apparel company are expected to be among those arrested, a person familiar with the matter said.</p> <p>The investigation, which is being led by the Federal Bureau of Investigation and the Manhattan U.S. Attorney’s office, has shed light on the highly competitive recruiting pipeline that brings elite high-school basketball players through Division I college programs and into the professional leagues, and the role played by assistant coaches in that process, WSJ sources said. </p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="1000" height="522" alt="" src="" /> </div> </div> </div> Auburn University Corruption Criminal law FBI Federal Bureau of Investigation Law Law Law enforcement Local government Oklahoma Oklahoma State University Prosecution Prosecutor South Carolina University Sports Tue, 26 Sep 2017 13:38:32 +0000 Tyler Durden 604193 at One Trader Warns "There's A Serious Amount Of 'Scary' Out There" <p>By all appearances it seems the <strong>market has now reduced the half-life of global nuclear armageddon threats to around 20 hours </strong>as Gold&#39;s gains have been erased overnight and USDJPY retraced its losses...</p> <p><a href=""><img height="384" src="" width="600" /></a></p> <p>Which is not surprising given the new normal&#39;s continued bulletproof markets. However, as former fund manager Richard Breslow discusses today, at some point these now-ingrained biases - this expectation that every dip is a buy, no matter what - may be set for a challenge as he reminds raeders<strong><em> &quot;you know what they say happens when you assume.&quot;</em></strong></p> <p><em>Via Bloomberg,</em></p> <p>We&rsquo;re getting some jockeying of positions as befits the lead-up to the start of the fourth quarter. And it&rsquo;s happening with a very confused and confusing backdrop of conditions tugging in different directions.<strong> It will be especially important to avoid assuming the same causality in every trade. We will get meaningful periods of risk on or off, but that isn&rsquo;t what we&rsquo;ve been experiencing.</strong> Certainly not yet.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>The S&amp;P 500 begins today within a stone&rsquo;s throw of all-time highs. If you hate it, you haven&rsquo;t missed the trade. If you like it, there&rsquo;s plenty of technical indicators telling you it has still avoided doing anything wrong. </strong>The Korean won and Kospi index have ceded some ground but are trading, in orderly markets, at very familiar levels. They too have oodles of chart points to tell you when it&rsquo;s time to panic. And if you think potential gap risk is too great, you shouldn&rsquo;t be running the position to begin with.</p> <p>&nbsp;</p> <p>So <u><strong>on the one hand, you have a global economy putting up some decent numbers.</strong></u> And when that&rsquo;s a global phenomenon, it can be contagious.</p> <p>&nbsp;</p> <p><u><strong>On the other hand, there&rsquo;s a serious amount of scary, or at the very least, disappointing, happenings out there.</strong></u></p> <p>&nbsp;</p> <p><u><strong>So what will it be? Look on the bright side or embrace your inner disgust?</strong></u> One thing you should know at this time of year is that there will be serial overshoots in price action and you&rsquo;ll need to decide just what a particular day&rsquo;s movements actually signify -- opportunity to fade or trend extension. Take today&rsquo;s move in kiwi as a good example where both sides of that question can be reasonably argued.</p> <p>&nbsp;</p> <p><strong>We often marvel at the difficulty markets have putting a price on geopolitical risk.</strong> Especially in a central bank world where they are only too happy to write puts for you.<strong> But trust me, very few of us really have any clue about North Korea or Kurdistan. Even easy ones like Venezuela keep tripping up smart people.</strong></p> <p>&nbsp;</p> <p>And now there is one new known unknown that, in theory, we should be pretty good at trying to analyze, and that is Sunday&rsquo;s election results in Germany. <strong>I&rsquo;m watching in fascination how investors take it. With remarkable sanguinity so far. </strong>But it&rsquo;s no mean feat putting together a coalition with potential partners whose make-or-break conditions will undoubtedly affect European fiscal integration, energy policy, migration and a whole lot more. Including how the ECB tiptoes toward tapering.</p> <p>&nbsp;</p> <p>This is a really big deal, no matter how you score it. Is Germany Europe? Will this make burden-sharing DOA or ultimately open the door? <strong>There are countless portfolios constructed with a view about the economy, central bank intentions and policies that will either be reinforced by business as usual or shot to pieces. </strong>What an interesting issue to contemplate as you await quarter-end rebalancing and the technical support the euro is trading right on top of.</p> </blockquote> <p><u><strong>But don&rsquo;t ignore it:</strong></u> global markets are highly correlated no matter what anyone says and bund yields now trade back below 40 basis points. <strong><em>Which is something really important to contemplate as we anxiously await Chair Yellen&rsquo;s speech on inflation, uncertainty, and monetary policy.</em></strong></p> <p>So all eyes on 1245ET with a view to what happens next...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 402px;" /></a></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="758" height="508" alt="" src="" /> </div> </div> </div> Business European Central Bank Finance Financial market Futures contract Germany Germany Europe Global Economy Investment Kospi Monetary Policy Money New Normal North Korea Price Action Rebalancing investments Risk S&P 500 Technical Indicators Tue, 26 Sep 2017 13:32:09 +0000 Tyler Durden 604187 at McMaster Says US Has "Four or Five" North Korea Scenarios, "Some Are Uglier Than Others" <p>As tensions between North Korea and the U.S. continue to escalate with every Trump tweet and subsequent response by Kim Jong-Un, National Security Adviser H.R. McMaster said that the U.S. has prepared "four or five different scenarios" for how the crisis with North Korea will be resolved, adding ominously that “<strong>some are uglier than others</strong>."&nbsp;</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>McMaster declined to comment on the extent to which North Korea’s deeply-buried nuclear program was vulnerable to U.S. military strikes -- an assessment made of Iran before the 2015 framework agreement designed to stop its nuclear program.</p> <p>&nbsp;</p> <p><strong>He acknowledged that every military option assumed a reaction from North Korea that endangered South Korean citizens, adding it’s “foremost in our minds.” </strong>That danger “is certainly taken into consideration in all our planning and war gaming, table-top exercise efforts,” McMaster said.</p> </blockquote> <p> Still, while McMaster said the threat from Pyongyang is “much further advanced” than anticipated and the Pentagon said the president has a “deep arsenal” to draw upon if needed, <a href="">Bloomberg quoted </a>U.S. officials who dismissed North Korean Foreign Minister Ri Yong Ho’s comment that President Donald Trump’s warnings to Pyongyang at the United Nations amounted to a declaration of war.</p> <p>That said, both governments have said “all options” are on the table in dealing with the tensions. Defense Secretary Jim Mattis, speaking in India on Tuesday, said the U.S. wants to keep engagement with North Korea in the diplomatic realm as long as possible. But on Monday Ri escalated tensions with his remark that North Korea would be within its rights to shoot down U.S. warplanes flying in international airspace. That startled markets, coming just days after the Pentagon sent planes near North Korea’s border.</p> <p>Additionally, as <a href="">reported this morning</a>, North Korea boosted defenses on its eastern coastline after the US flew B-1B Lancer bombers and F-15C Eagle fighter escorts from Okinawa, Japan, just off the coast of North Korea - the farthest north of the demilitarized zone any U.S. fighter or bomber aircraft have flown off North Korea’s coast this century, the Pentagon said. North Korea was surprised by the bombers, which weren’t caught by its radar,<br /> Yonhap News reported, citing the head of the intelligence committee of<br /> South Korea’s parliament.</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>The Pentagon said its most recent bomber and fighter exercises were meant to underscore “the seriousness with which we take DPRK’s reckless behavior,” White said last week, using the initials for North Korea’s formal name. “This mission is a demonstration of U.S. resolve and a clear message that the President has many military options.”</p> </blockquote> <p>The question of course, is how would Pyongyang respond to any potential strike: military analysts have said any conflict between the U.S. and North Korea would risk a devastating attack by Pyongyang on the South Korean capital Seoul. </p> <p><strong>“There’s not a ‘precision strike’ that solves the problem,” </strong>McMaster said at an event in Washington hosted by the Institute for the Study of War. “<strong>There’s not a military blockade that can solve the problem. What we hope to do is avoid war, but we cannot discount that possibility.”</strong></p> <p>Meanwhile, Lu Kang, a spokesman for China’s foreign ministry said assertiveness from both sides would only increase the risk of confrontation. “We have witnessed a lot of saber rattling recently on the Korean peninsula,” he said. “We hope the U.S. and DPRK politicians can realize that resorting to military means will never be a viable way out for this issue.”</p> <p>* * *</p> <p>In conclusion, Bloomberg reminds us that in 1969, President Richard Nixon considered tactical nuclear strikes after North Korea shot down a U.S. reconnaissance plane, according to documents declassified in 2010 and published by the National Security Archive. </p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="900" height="500" alt="" src="" /> </div> </div> </div> Aftermath of the Korean War Foreign relations of Korea Foreign relations of North Korea Foreign relations of South Korea India Institute for the Study of War International relations Iran Japan Japan KIM Korea national security North Korea North Korea crisis North Korea–South Korea relations North Korea–United States relations Pentagon Politics South Korea’s parliament United Nations War Tue, 26 Sep 2017 13:15:04 +0000 Tyler Durden 604191 at Case-Shiller Home Prices Rise At Fastest Pace In 3 Years, Hit New Record High <p>Despite a slew of disappointing sales (new, existing, and pending), Case-Shiller reports national home prices rose 5.94% YoY - the <strong>fastest rise since June 2014 - hitting a new record high (now over 5% above 2006&#39;s peak)</strong>.</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 315px;" /></a></p> <p>It has now been 36 straight months that the S&amp;P CoreLogic Case-Shiller 20-City Compoosite home price index has risen at approximately 5 to 6% annually and it has been 62 months without any YoY price drops...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 315px;" /></a></p> <p>&nbsp;</p> <p>Gains in New York and Los Angeles dominated the annual performance.</p> <p>As Bloomberg highlights, <strong>buyers are competing for a limited number of for-sale homes, allowing sellers to boost asking prices.</strong> Property values are consistently outpacing wage growth, helping explain why the share of first-time buyers of previously owned homes in August was at a&nbsp;one-year low. At the same time, owners&rsquo; equity as a share of total real-estate holdings climbed in the second quarter to the&nbsp;highest level&nbsp;in 11 years.</p> <p><strong>Home prices may also get a boost in coming months after hurricanes Harvey and Irma reduced housing supply in parts of Texas and Florida. </strong>Affordability may remain challenging, as both sales and construction are interrupted by clean-up efforts. At the same time, a strong labor market and low-borrowing costs continue to encourage hopeful homebuyers.</p> <p><strong>While home prices continued to advance strongly along the northwest part of the country, values were also picking up in Denver, Dallas and Las Vegas -- underscoring a broadening of appreciation throughout the U.S. </strong></p> <p>Las Vegas, one of the hardest-hit cities during the housing collapse, registered the third-largest year-over-year advance in July.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;While the gains in home prices in recent months have been in the Pacific Northwest, the leadership continues to shift among regions and cities across the country,&rdquo;&nbsp;David Blitzer, chairman of the S&amp;P index committee, said in a statement.</p> <p>&nbsp;</p> <p><strong>&ldquo;Rebuilding following hurricanes across Texas, Florida and other parts of the south will lead to further supply pressures.&rdquo;</strong></p> </blockquote> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="961" height="504" alt="" src="" /> </div> </div> </div> Business Business Case-Shiller Case–Shiller index CoreLogic Economy Florida Las Vegas Northwest Real estate bubble S&P Structure United States Department of Housing and Urban Development Tue, 26 Sep 2017 13:10:17 +0000 Tyler Durden 604190 at Equifax Chairman, CEO Richard Smith Retiring Effective Immediately <p>Less than two weeks after the top security individuals at Equifax "retired" after what may have been the biggest hack in U.S. corporate history, moments ago the company announced that the exodus from the sinking ship continued when company Chairman and CEO, Richard Smith, has also "retired" effective immediately. As such, it remains unclear if anyone at the organization will actually be "fired" for what is gross, and potentially criminal, corporate negligence. </p> <p>Smith took the helm of Equifax 12 years ago and transformed it from what he once described as a staid, slow-growing credit-reporting company into a data giant.</p> <p><img src="" width="500" height="333" /></p> <p>Smith bought companies with databases that contained information about consumers’ employment histories, salaries and savings while also expanding internationally to places like Australia and India. </p> <p>The result: by 2016, credit-reporting activities accounted for less than a third of revenues versus about 80% a decade earlier. Equifax’s market value soared to nearly $18 billion, more than quadruple its value when Smith started.</p> <p>The Board also said it had appointed current Board member, Mark Feidler, to serve as Non-Executive Chairman, while Paulino do Rego Barros, Jr., who most recently served as President of Asia Pacific has been appointed as interim Chief Executive Officer, succeeding Smith</p> <p>Commenting on the resignation, the company's non-executive Chairman Mark Fielder said that "the Board remains deeply concerned about and totally focused on the cybersecurity incident. We are working intensely to support consumers and make the necessary changes to minimize the risk that something like this happens again. Speaking for everyone on the Board, I sincerely apologize. We have formed a Special Committee of the Board to focus on the issues arising from the incident and to ensure that all appropriate actions are taken."</p> <p>It is unclear if Smith's retirement clears him and any others of potential insider stock sales that may have taken place during the time when the company was aware of the data breach, which was only disclosed to the public some three weeks ago. </p> <p><em>From the press release:</em></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>Equifax Chairman, CEO, Richard Smith Retires; Mark Feidler Named as Chairman; Paulino do Rego Barros, Jr. Named as Interim CEO </strong></p> <p>&nbsp;</p> <p>The Board of Equifax Inc. today announced that Richard Smith will retire as Chairman of the Board and Chief Executive Officer, effective September 26, 2017. The Board of Directors appointed current Board member, Mark Feidler, to serve as Non-Executive Chairman. Paulino do Rego Barros, Jr., who most recently served as President, Asia Pacific, and is a seven-year veteran of the company, has been appointed as interim Chief Executive Officer, succeeding Smith. The Board will undertake a search for a new permanent Chief Executive Officer, considering candidates both from within and outside the company. Mr. Smith has agreed to serve as an unpaid adviser to Equifax to assist in the transition. </p> <p>&nbsp;</p> <p>Mark Feidler stated, "The Board remains deeply concerned about and totally focused on the cybersecurity incident. We are working intensely to support consumers and make the necessary changes to minimize the risk that something like this happens again. Speaking for everyone on the Board, I sincerely apologize. We have formed a Special Committee of the Board to focus on the issues arising from the incident and to ensure that all appropriate actions are taken." </p> <p>&nbsp;</p> <p>"Our interim CEO, Paulino, is an experienced leader with deep knowledge of our company and the industry. The Board of Directors has absolute confidence in his ability to guide the company through this transition," Feidler continued. </p> <p>&nbsp;</p> <p>Richard Smith said, "Serving as CEO of Equifax has been an honor, and I'm indebted to the 10,000 Equifax employees who have dedicated their lives to making this a better company. </p> <p>&nbsp;</p> <p>"The cybersecurity incident has affected millions of consumers, and I have been completely dedicated to making this right. At this critical juncture, I believe it is in the best interests of the company to have new leadership to move the company forward," Smith added. </p> <p>&nbsp;</p> <p>"On behalf of the Board, I express my appreciation to Rick for his 12 years of leadership," Feidler said. "Equifax is a substantially stronger company than it was 12 years ago. At this time, however, the Board and Rick agree that a change of leadership is in order." </p> <p>&nbsp;</p> <p>Feidler is a partner and co-founder of MSouth, a private equity investment firm. He has served as an independent director for Equifax since 2007. Feidler served as president and COO of BellSouth Corporation until its merger with AT&amp;T in December 2006. Previously, from 2000 to 2003, Feidler was the COO of Cingular Wireless, commencing upon the formation of Cingular when BellSouth and AT&amp;T (formerly SBC) merged their domestic wireless operations to form Cingular. </p> <p>&nbsp;</p> <p>Paulino Barros most recently led the company's Asia-Pacific business, which includes the largest acquisition in Equifax's history – Veda, the leading provider of credit information and analysis in Australia and New Zealand. Previously, Barros led the company's U.S. Information Solutions (USIS) business and prior to that led the company's International business unit. Prior to Equifax, Barros founded and served as president of PB&amp;C – Global Investments, LLC and previously served in several executive positions at BellSouth Corporation and AT&amp;T, including president of Global Operations for AT&amp;T. His previous experience includes executive and managerial roles at Motorola, Inc., The NutraSweet Company and Monsanto Company.</p> </blockquote> <p>Considering the recent stock price performance, Smith's decision is hardly surprising.<em><strong> (EFX just re-opened down 3% following the news)</strong></em></p> <p><a href=""><img src="" width="500" height="320" /></a></p> <p>Meanwhile, the question of how some 143 million Americans will protect their hacked personal data remains unanswered.</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="259" height="141" alt="" src="" /> </div> </div> </div> Asia Pacific Asia-Pacific AT&T AT&T Mobility Australia Bell System BellSouth Business Business Chief operating officer Credit scoring Economy Equifax Equifax Inc. India Monsanto Motorola New Zealand NutraSweet Private Equity Richard Smith Special Committee Tue, 26 Sep 2017 13:08:29 +0000 Tyler Durden 604189 at Bill Blain: "Oil Could Change Everything" <p><em>Submitted by Bill Blain of <a href="">Mint Partners</a></em><a href=""></a></p> <p><strong>Blain's Morning Porridge: A Short Distraction In The Oil Market</strong></p> <p>Did I detect a distinct change in the market wind yesterday? There is a new freshening blow out the East. <strong>It feels like the world is changing: a slide in tech stocks and a wobble in sentiment, stronger oil prices and all the noise about Germany and where that leaves Europe, and Macron’s France’s dreams of Empire closer union.</strong></p> <p>Of course we still have all the usual worries, like North Korea saying Trumps twittering gives them carte blanche to shoot down American planes – which, to be honest, is unlikely because nobody is really that stupid… are they? And as Trump plays to red-neck sports fans, we also saw the death knell spike delivered on Obamacare reform. Then there is Spain vs Catalunya – perhaps a topic we should pay more attention to. And I think there was probably more news about Brexit, but to be honest I wasn’t paying attention and could not be ar**d to read about it. Bored of it. Get on with it.</p> <p>As always, there is so much to think about.</p> <p><strong>Oil is one I’m watching closely because it’s the global commodity and market price that could change everything.</strong></p> <p>We’ve been arguing across the desk these past few years about whether $55-45 is the new normal range for oil, or do prices revert back towards $100? Some argue a stronger global economy means higher prices, others that the demand and supply dynamics have so fundamentally changed that a lower long term range is nailed-on for decades.</p> <p><strong>In this current rising oil phase – highest levels in over 2 years - prices have been driven higher on a number issues: </strong>concerns about Kurdistan supply (a whole can of worms in itself), OPEC generally sticking to cutting production, an uptick in anticipated demand from Asia and China in particular as it builds reserves, declining stockpiles, and the general sense the world is in recovery. That’s a long-term plus: as the global economy has “recovered” we’ve seen oil demand expand about 1.9%, while supply has lagged at 1.1% expansion. I’m seeing expressions like “rebalancing”, “turning a corner” and “price reversion” in the reports.</p> <p>The fact China is supposedly building up strategic reserves as a hedge against future energy stocks is fascinating. But that’s a strategic rather than market issue. The FT reports one oil trader saying “China has helped to clean up the glut.”</p> <p>Meanwhile, Bloomberg are looking to backwardation in the oil futures and predicting a potential scarcity of supply by 2019, quoting Citicorp reports on weak investment in new drilling. These sound like arguments for a higher long-term price – and all the implications that will have on global inflation.</p> <p>But, the oil equation is a particularly interesting one in light of the “new-oil” revolution of the 2000s identifying new more efficient production methods and new sources – of which fracking, oil sands and shale were just part. The cost of oil has changed dramatically. In recent weeks we’ve seen US oil stocks back in vogue and a bright spot in stocks – they weathered the price crash, cut costs to the bone, and can now pump out as much oil as America needs at a far lower swing price.</p> <p><strong>Energy exports are underway – putting the US head-to-head with OPEC and its allies</strong>. The fact the US can profitably turn on the gas spigot whenever they like means they stand to benefit from any rally, and stem it. That puts the oil-funded spending junkies of OPEC at a chronic disadvantage. <strong>The old strategic oil imperatives change dramatically now the US is oil-independent and offering to supply core allies.</strong></p> <p>Of course there is always a rogue element in oil – for instance Iran, coming back on line after years of sanctions and able to produce at cheapest levels, <strong>while Saudi is so broke it just has to produce..&nbsp;&nbsp; </strong></p> <p><strong>As a story, oil has further to run. </strong>The issue for markets is how dramatically will higher oil prices impact inflationary expectations in the current rosy Macro world-view? That could solve the lack of inflation at a stroke – but probably push stressed full employment economies like the UK into stagflation.</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="1022" height="588" alt="" src="" /> </div> </div> </div> Backwardation Business China Economy Energy crisis Germany Global Economy Iran New Normal North Korea Obamacare Oil sands OPEC OPEC Organization of Petroleum-Exporting Countries Peak oil Petroleum industry Petroleum politics Price of oil Primary sector of the economy recovery Stagflation Tue, 26 Sep 2017 12:48:51 +0000 Tyler Durden 604186 at Venezuela's Grim Reaper: A Weekly Report <p class="p1"><strong style="box-sizing: border-box; font-style: inherit; font-variant: inherit; font-stretch: inherit; font-size: 13px; line-height: inherit; font-family: lucida_granderegular, Verdana, sans-serif; color: #000000;">Authored by Steve H. Hanke of the Johns Hopkins University. Follow him on Twitter @Steve_Hanke.</strong></p> <p class="p1">The Grim Reaper has taken his scythe to the Venezuelan bolivar. The death of the bolivar is depicted in the following chart. A bolivar is worthless, and with its collapse, Venezuela is witnessing the world’s worst inflation.<span>&nbsp;</span></p> <p class="p1"><img src="" width="1422" height="1029" /></p> <p class="p1">As the bolivar collapsed and inflation accelerated, the Banco Central de Venezuela (BCV) became an unreliable source of inflation data. Indeed, from December 2014 until January 2016, the BCV did not report inflation statistics. Then, the BCV pulled a rabbit out of its hat in January 2016 and reported a phony annual inflation rate for the third quarter of 2015. So, the last official inflation data reported by the BCV is almost two years old. To remedy this problem, the <a href=""><span class="s1">Johns Hopkins – Cato Institute Troubled Currencies Project</span></a>, which I direct, began to measure Venezuela’s inflation in 2013.<span>&nbsp;</span></p> <p class="p1">The most important price in an economy is the exchange rate between the local currency and the world’s reserve currency — the U.S. dollar. As long as there is an active black market (read: free market) for currency and the black market data are available, changes in the black market exchange rate can be reliably transformed into accurate estimates of countrywide inflation rates. The economic principle of Purchasing Power Parity (PPP) allows for this transformation.</p> <p class="p1">I compute the implied annual inflation rate on a daily basis by using PPP to translate changes in the VEF/USD exchange rate into an annual inflation rate. The chart below shows the course of that annual rate, which peaked at 2432.94% (yr/yr) in mid-September 2017. At present, Venezuela’s annual inflation rate is 2275.78%, the highest in the world (see the chart below).<span>&nbsp;</span></p> <p class="p1"><span><img src="" width="1423" height="1030" /><br /></span></p> <div class="field field-type-filefield field-field-image-blog"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_blog" width="1423" height="1030" alt="" src="" /> </div> </div> </div> Banco Central de Venezuela Business Cato Institute Central Bank of Venezuela Countrywide Currency Economy Exchange rate Financial economics Inflation Macroeconomics Monetary inflation Money Purchasing Power Purchasing power Purchasing power parity Reserve Currency Steve Hanke the Johns Hopkins University Twitter Twitter Venezuelan bolívar Tue, 26 Sep 2017 12:42:54 +0000 Steve H. Hanke 604185 at Angry Steve Bannon Blasts NFL And Mitch McConnell; Predicts "Day Of Reckoning" For Republicans <p>Last night, after a fiery campaign appearance for Judge Roy Moore in Alabama, former White House Chief Strategist Steve Bannon took to Fox News to lash out at everyone from NFL players taking a knee at football games to the "spineless" Republican establishment.&nbsp; Here's a recap of the more salient points:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>“If people in this country take a knee and the national football players want to take a knee, they should take a knee at night, every night, and thank God in heaven Donald J. Trump is president of the United States."</strong></p> <p>&nbsp;</p> <p>“He has saved this country so much grief. He has done such a tremendous job with virtually no help."</p> <p>&nbsp;</p> <p>"I stepped out to make sure that Mitch McConnell and the Republican establishment start to have a Republican back.&nbsp; <strong>Mitch McConnell wouldn’t be majority leader if Donald Trump didn’t drag half a dozen senators across the goal line in November."</strong></p> <p>&nbsp;</p> <p><strong>"So it's time for the Republican establishment to step up and have the back of President Trump."</strong></p> </blockquote> <blockquote class="twitter-video"><p dir="ltr" lang="en">Bannon on anthem protests: They should take a knee...every night &amp; thank God in heaven Donald J. <a href="">#Trump</a> is President <a href=""></a> <a href=""></a></p> <p>— Fox News (@FoxNews) <a href="">September 26, 2017</a></p></blockquote> <script src="//"></script><p>Meanwhile, as <a href="">Politico</a> notes, Bannon's comments on Fox News were somewhat tame compared to the verbal lashing he levied upon McConnell and crew at Moore's campaign event in Alabama.</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>“For Mitch McConnell and Ward Baker and Karl Rove and Steven Law — all the instruments that tried to destroy Judge Moore and his family — your day of reckoning is coming,”</strong> Bannon said, referring to the Republican Senate leader and a trio of prominent GOP strategists backing incumbent Sen. Luther Strange. <strong>“But more important, for the donors who put up the [campaign] money and the corporatists that put up the money, your day of reckoning is coming, too.”</strong></p> <p>&nbsp;</p> <p>Bannon said mainstream Republicans behind Strange's campaign regard Alabama voters as “a pack of morons. They think you’re nothing but rubes. They have no interest at all in what you have to say, what you have to think or what you want to do. And tomorrow, you’re gonna get an opportunity to tell them what you think of the elites who run this country!”</p> <p>&nbsp;</p> <p><strong>“Mitch McConnell and his permanent political class is the most corrupt, incompetent group of individuals in this country!” </strong>Bannon said to loud applause.</p> </blockquote> <p>Of course, if you believe the polls then it's looking increasingly likely that Bannon's candidate, Roy Moore, will score an easy victory in tonight's runoff election.</p> <p><img src="" alt="RCP" width="600" height="373" /></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="682" height="353" alt="" src="" /> </div> </div> </div> Alt-right Bannon Donald Trump Donald Trump Donald Trump presidential campaign Fox News Mitch McConnell National Football League Politics Politics of the United States Republican Party Republicans Salient Senate Steve Bannon Twitter Twitter United States White House White House Tue, 26 Sep 2017 12:35:31 +0000 Tyler Durden 604180 at