en Japan's Broken Economy - 25 Years Of Failed "Stimulus" & "Temporary Illusions" <p><a href=""><em>Submitted by Jeffrey Snider via Alhambra Investment Partners,</em></a></p> <p><span style="color: #000000;"><strong>So thoroughly destroyed is Japan&rsquo;s economy that some of the numbers it produces are beyond comprehension, just staggering in any meaningful context.</strong> For example, Japan&rsquo;s real GDP (SAAR) for Q1 2016 was &yen;530 trillion (chained 2005). That compared to &yen;447 trillion in Q1 1994. Over two decades and two additional years the Japanese economy has grown by a grand total of 18.5%. <span style="text-decoration: underline;"><em><strong>On straight arithmetic alone it doesn&rsquo;t work out to 1% per year let alone on a compounded basis.</strong></em></span></span></p> <p><span style="color: #000000;">Since the first quarter of 2001, meaning fifteen years, real GDP &ldquo;advanced&rdquo; 10.4% total. <strong>Clearly the Japanese economy as bad as it was has slowed from even that revolting baseline.</strong> We don&rsquo;t have to venture far or try too hard to guess when this new &ldquo;slowing&rdquo; occurred: since the first quarter of 2008, Japanese GDP thanks to Q1&rsquo;s positive number is now the slightest amount more than eight years ago (&yen;530.01 trillion now vs. &yen;529.63 trillion, or +0.1%). <strong>As everywhere else around the world, the Great Recession was not only a global event, it &ldquo;somehow&rdquo; broke the global economy in chillingly uniform fashion.</strong></span></p> <p><img alt="ABOOK May 2016 Japan GDP Trajectory GDP" class="aligncenter size-full wp-image-38408" src="" style="width: 600px; height: 341px;" /></p> <p><span style="color: #000000;">There is something quite sinister contained within this review, particularly since I haven&rsquo;t presented the Japanese economy much of any baseline at all. It is fashionable especially of late to believe this is all some trick of slowing demographics and therefore all &ldquo;stimulus&rdquo; is to some degree helpless in the face of Japan&rsquo;s determined self-extinction. There is some truth to the charge, which is the same of any good lie, but it doesn&rsquo;t amount to a 1% baseline.<strong> Capitalism is not strictly population; in fact, that is the true hidden genius and value of capitalism as it creates productive, sustained societal gain well above any demographic shifts. <u>At 1% and less over nearly a <em>quarter century</em> we can safely assume there has been no capitalism practiced in Japan during that time.</u></strong></span></p> <p><span style="color: #000000;">For sake of further (and more damning) argument, let&rsquo;s just assume that the aging population is actually to blame for Japan&rsquo;s 1% unevenness. That still leaves the final slowing, the right hand side of the chart above where<strong> even 1% is now a dream and a seemingly unattainable goal. Retirement and aging didn&rsquo;t suddenly amplify in 2008 and 2009.</strong></span></p> <p><img alt="ABOOK May 2016 Japan GDP Trajectory QE Drags" class="aligncenter size-full wp-image-38409" src="" style="width: 600px; height: 341px;" /></p> <p><span style="color: #000000;"><strong>Given the history of intervention and &ldquo;stimulus&rdquo;, and more so when it occurs and really re-occurs, any impartial observer would be forgiven if they believed that QE&rsquo;s were actually constant impediments to growth</strong> (a negative multiplier in the parlance of the orthodoxy). The proliferation of &ldquo;stimulus&rdquo; after the GR correlates only with this downshift in the Japanese economy that cannot be due to demographics. At best, QE&rsquo;s have accomplished nothing at all positive, leaving no trace of something actually being stimulated for all the sustained &ldquo;stimulus&rdquo;; <u><strong>at worst, QE is <em>the cause</em> of Japan&rsquo;s further nightmarish descent.</strong></u></span></p> <p><span style="color: #000000;">There is an easy case to be made against quantitative easing &ndash; starting with the distinct inability of the Bank of Japan (or any central bank inflicting it upon whatever economic system) to get the quantity &ldquo;right.&rdquo; If it is supposed to be a precisely-determined amount of precisely-measured &ldquo;stimulus&rdquo; then having to do it over and over and over invalidates at least the &ldquo;Q&rdquo; if not the &ldquo;E&rdquo; too. <strong>In Japan, the damage from QE is a little easier to observe than in other places, but as anywhere else it is households/consumers that bear the brunt of these unfortunate distortions that amount to little other than PR stunts</strong> (no matter how poorly QE&rsquo;s perform, the media dutifully and reflexively continues to call it all &ldquo;stimulus&rdquo;).</span></p> <p><img alt="ABOOK May 2016 Japan GDP Trajectory HH" class="aligncenter size-full wp-image-38406" src="" style="width: 600px; height: 341px;" /></p> <p><span style="color: #000000;"><strong>Household spending in Japan has underperformed even overall GDP during these lost decades &ndash; not even managing steady 1%. </strong>After the rift in 2008 and 2009, HH&rsquo;s further underperformed like overall GDP though had managed to get close to the pre-crisis trajectory. That was before QQE devastated even that likeness of recovery. Monetarists have claimed that somebody has to lose in these kinds of redistribution schemes, and the elevated quantity of QQE makes clear who that was.</span></p> <p><span style="color: #000000;"><strong>These losers are only supposed to be on the short end for a short while until the stimulated recovery brings the economy roaring back so that they are paid in full for their forced &ldquo;contributions.&rdquo; </strong>Yet, as is clear of overall GDP, QQE, as the numerous QE&rsquo;s before it, has been all cost with no recovery at all; in fact, as noted above, the Japanese economy is worse off now than it was before. The massive scale of QQE intrusion and the violent, negative reaction to it in household spending shows the true nature of all QE no longer entangled in other economic factors; the purest distillation of cause and effect.&nbsp;</span></p> <p><span style="color: #000000;">What we find, then, of Japan is the combination of factors that are evident almost everywhere else around the world post-Great Recession. <strong><em>Monetary &ldquo;stimulus&rdquo; is asking consumers and households to bear the burdens of that &ldquo;stimulus&rdquo; in order that the full recovery will take place &ndash; except as we find elsewhere, the post-GR environment has already proven that the recovery will never take place. Central banks are thus placing greater burdens upon their people for an outcome that simply can&rsquo;t happen. </em></strong>I think that easily amounts to &ldquo;stimulus&rdquo; that adds only more negative factors to a global economy with already a huge burden. &nbsp;</span></p> <p><span style="color: #000000;">The reason for it is straight forward owing to a fallacy about the GR itself. It was never a cyclical event, nor was it the <em>cause</em> of this split in the economy &ndash; all economies for that matter. <strong><u>The Great Recession was instead a revelation of the true global economic state that existed for a long time before it</u></strong>. Growth and prosperity, even in Japan where GDP actually accelerated for the briefest of moments near to the 1.25% &ldquo;upper bound&rdquo; (a very sad commentary on Japan where just 0.25% more in GDP compounding amounts to a different world entirely) was never more than a <em>temporary illusion</em>.</span></p> <p><span style="color: #000000;"><u><strong>All the world&rsquo;s &ldquo;stimulus&rdquo; has not been able to budge it since the paper economy of the precrisis evaporated</strong></u> into the credit default swaps of AIG, and the collateral shortage that never has replaced the uniformity of MBS repo; like Humpty Dumpty, all Bernanke&rsquo;s horses and all Kuroda&rsquo;s men haven&rsquo;t been able to put together the one unifying factor from Japan to the United States, from Europe to China. It&rsquo;s as if there was something else all along that took every monetarism that every central bank offered anywhere it was offered and swallowed it whole without leaving the slightest economic trace, only further and further slowing. <em><u><strong>What can possibly be bigger than all the world&rsquo;s QE&rsquo;s and &ldquo;stimulus&rdquo; combined?</strong></u></em></span></p> <p><img alt="ABOOK Apr 2016 Econ Baselines GDP Dark Leverage Supply" class="aligncenter size-full wp-image-37944" src="" style="width: 600px; height: 681px;" /></p> <p><img alt="ABOOK May 2016 Europe GDP Nominal Baseline" class="aligncenter size-full wp-image-38209" src="" style="width: 600px; height: 341px;" /></p> <p><img alt="ABOOK May 2016 China Trade Paradigm Shift" class="aligncenter size-full wp-image-38125" src="" style="width: 600px; height: 324px;" /></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="574" height="319" alt="" src="" /> </div> </div> </div> AIG Bank of Japan Central Banks China Credit Default Swaps default Demographics Global Economy Japan Quantitative Easing Recession recovery Yen Tue, 24 May 2016 23:30:00 +0000 Tyler Durden 561724 at With The Lowest Volume Since Q1 2014, The Global M&A Boom May Be Over <p>Global M&amp;A <a href="">fell off a cliff</a> in Q1, <strong>with volume levels not seen since Q1 2014</strong>. <span style="text-decoration: underline;"><em>Dollar volume was down 49.2 percent sequentially, and 13.8 percent on a YoY basis<strong>.</strong></em></span></p> <p><a href=""><img height="245" src="" width="600" /></a></p> <p>&nbsp;</p> <p>According to Goldman Sachs, <strong>economic uncertainty, higher levels of volatility, and uncertainty around global central bank activity all played a role in the slowdown.</strong></p> <p>From Goldman&#39;s <a href="">10-Q</a></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em><strong>During the first quarter of 2016, our business activities were negatively impacted by a challenging operating environment characterized by economic uncertainty, higher levels of volatility and significant price pressure across both equity and fixed income markets</strong>, particularly during the first half of the quarter. These factors,<span style="text-decoration: underline;"> as well as uncertainty around global central bank activity</span>, impacted investor conviction and risk appetite for market-making activities, and industry-wide equity underwriting and mergers and acquisitions activity for investment banking activities. </em></p> </blockquote> <p>The question is whether or not the slowdown is indicative of the M&amp;A boom being over, or is it just a temporary hiccup. <u><strong>Using Goldman&#39;s rationale, the boom may just be over.</strong></u></p> <p>Economic uncertainty abounds after the <a href="">US posted a Q1 GDP of dismal .5%</a>, and <a href="">central bankers are as confused as they ever were</a>, with planners unable to come to a consensus on who can intervene in the markets, or when, and whether or not it&#39;s ok for the US to raise rates.</p> <p><a href=""><img height="379" src="" width="600" /></a></p> <p>If the M&amp;A boom is over, <a href="">here</a> are the banks that will be hardest hit by the slowdown</p> <p><a href=""><img height="418" src="" width="600" /></a></p> <p>As the WSJ <a href="">points out</a>, banks such as Goldman Sachs and JP Morgan have diversified enough businesses where they can absorb some of the slowdown in M&amp;A, but the smaller boutique firms such as Lazard, Evercore Partners, Greenhill, Moelis, and Houlihan Lokey don&#39;t have that luxury, and may see shares hit the hardest over the coming months because of it.</p> <p><strong>As the very same conditions persist throughout the second quarter that drove such a severe slowdown in the first quarter, it&#39;s reasonable to expect that the M&amp;A boom may have just hit the wall.</strong></p> Evercore fixed goldman sachs Goldman Sachs Houlihan Lokey Lazard Volatility Tue, 24 May 2016 23:00:00 +0000 Tyler Durden 561723 at Northwest Territorial Mint Scandal: Investors Had Fair Warning On This Blowup As Well <p><em>Submitted by Clint Siegner of <a href="">Money Metals Exchange</a></em><a href=""></a></p> <p><strong>Northwest Territorial Mint Scandal: Investors Had Fair Warning On This Blowup As Well</strong></p> <p>The news unfortunately just keeps getting worse for customers and<br /> creditors of Northwest Territorial Mint. The prominent bullion dealer<br /> located near Seattle, Washington filed for bankruptcy court protection<br /> at the end of March. The losses of customers who never received delivery<br /> of orders plus the losses of other creditors could be as high as $50<br /> million, according to news reports.</p> <p>The U.S. Trustee in charge, Mark Calvert, <a href="" target="_blank">recently estimated</a><br /> the firm has $56 million in liabilities and only $6.4 million in<br /> assets. He figures the recovery for unsecured creditors will be less<br /> than 10%.</p> <p>Northwest Territorial’s former owner, Ross Hansen, seems to be<br /> blaming the bankruptcy on a defamation lawsuit that he and his firm<br /> recently lost.</p> <p><img src="" width="275" height="221" /></p> <p>The judgment was $38.3 million in total and the court ordered Hansen<br /> to pay $12.5 million promptly. He filed for bankruptcy protection<br /> instead.</p> <p>The libel damages stem from a website Hansen created apparently to<br /> wage a campaign comparing a former landlord to infamous Ponzi scheme<br /> operator Bernie Madoff. &nbsp;He and the former landlord apparently had some<br /> disagreements.</p> <p>Ironically, it appears Hansen is the one who may have something in common with Madoff. <a href="" target="_blank">At a creditor’s meeting last week</a>, trustee Calvert said, “Based on our analysis to date, the bullion sale of operations have attributes of a Ponzi scheme."</p> <p>The libel judgment may have been the final straw, but it wasn’t the<br /> only problem. Customers who ordered from this mint often experienced<br /> extraordinarily long delivery delays – 8 to 10 weeks, and <a href="" target="_blank">even as long as 6 months</a>.</p> <p>Calvert believes the funds received for new orders were used to buy<br /> metal needed to deliver orders placed long before. If that's the case,<br /> the mint was effectively borrowing money from its hapless customers to<br /> finance its business. And this practice may have been going on for as<br /> long as a decade. Yet, remarkably, customers continued to do business<br /> with the mint even as most other precious metals dealers across America<br /> make immediate delivery.</p> <p>The bankruptcy, the potential fraud now under investigation, and the<br /> millions in likely losses represent another black eye for the industry.<br /> It comes on the heels of other high profile failures including a<br /> “low-price” dealer known as <a href="" target="_blank">Tulving Company</a> and Bullion Direct.</p> <p><strong>Regulation Won’t Help: There Is NO SUBSTITUTE for Doing YOUR OWN Due Diligence</strong></p> <p>No one should be surprised if bureaucrats in state and federal<br /> government take up the issue and “ride to the rescue” with new<br /> regulations claiming to protect customers.</p> <p>The problem is that do-gooder politicians have a miserable track<br /> record when it comes to defending consumers generally – and metals<br /> investors in particular. In the Northwest Territorial Mint case, the <a href="" target="_blank">Washington State Attorney General’s Office had received hundreds of complaints</a>,<br /> but didn’t take any actions which prevented the blowup. History shows<br /> that regulations will definitely increase costs to customers and<br /> probably not have any positive effect on reducing corruption.</p> <p>The Northwest Territorial Mint debacle may cost people $50 million.<br /> The only thing worse would be to bring in the regulators to inflict<br /> further harm on all dealers and all customers nationwide.</p> <p>The <a href="" target="_blank">CFTC spent 5 years investigating</a><br /> the bullion banks for price rigging the silver futures market.<br /> Ultimately they declared there was “no viable basis to bring an<br /> enforcement action.” That’s embarrassing, given that <a href="" target="_blank">Deutsche Bank just admitted</a><br /> to price rigging in the gold markets during the period when the CFTC<br /> was investigating. In mid April, they agreed to pay a settlement and<br /> provide evidence to assist plaintiffs in their suit against the<br /> remaining banks.</p> <p>But the CFTC isn’t the only bureaucracy to fail in protecting<br /> investors. The Federal Reserve, which has been charged with regulating<br /> banks despite being privately owned by the largest among them, and the<br /> SEC complete a triumvirate of incompetence.</p> <p>Banks have paid more the $200 billion in fines and penalties<br /> associated with fraud, rigging markets, and cheating customers since the<br /> 2007 financial crisis. Not a single high-ranking executive at any major<br /> bank has been prosecuted or sent to prison. It looks like these fines<br /> are simply a cost of doing business. The ill-gotten profits and bonuses<br /> run far in excess of what was paid.</p> <p>SEC staffers may have been <a href="" target="_blank">too busy watching porn</a><br /> to prosecute anyone. Or maybe regulators are worried about damaging<br /> their prospects for a great paying job on Wall Street. The most<br /> competent people responsible for regulating the banks <a href="" target="_blank">wind up working for them</a> instead. And many of those who remain would like to do so as well.</p> <p>While they are substantial to the 3,500 poor souls who are impacted,<br /> the losses at Northwest Territorial don’t amount to much in comparison<br /> to these larger swindles. Investors should pray politicians and<br /> government bureaucrats don’t try to “help.”</p> <p><strong>Getting Actual, Prompt Delivery of Your Metals Is More Important Than Getting the Lowest Price</strong></p> <p>Bullion buyers are going to have to help themselves. <a href="" target="_blank">Customers following a couple simple steps</a> could have avoided most of the losses in recent dealer bankruptcies.</p> <p>Do an internet search for Better Business Bureau reviews on the<br /> company and look for a pattern of problems, particularly slow<br /> deliveries. There must be a reasonable explanation for delivery delays,<br /> and they should not be persistent and across all products. WARNING: a<br /> company that constantly struggles with making prompt delivery may be<br /> undercapitalized or outright insolvent.</p> <p>Mounting issues were apparent at both Tulving and Northwest<br /> Territorial Mint going back months or even years. So when purchasing<br /> precious metals from any dealer, get a commitment upfront regarding when<br /> your order will be delivered – and pay close attention to whether that<br /> commitment is kept.</p> <p>Businesses can and do fail, but it rarely happens suddenly and without warning. They generally start missing commitments first.</p> <p>Remember that getting a good deal is nice, but getting delivery of<br /> what you paid for is far nicer. Choose your bullion dealer carefully,<br /> and you’re unlikely to get a raw deal.</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="275" height="221" alt="" src="" /> </div> </div> </div> Corruption Creditors Deutsche Bank Fail Federal Reserve Futures market Precious Metals recovery Tue, 24 May 2016 22:28:46 +0000 Tyler Durden 561738 at Why China Is Being Flooded With Oil: Billions In Underwater OPEC Loans Repayable In Crude <p>When the price of oil was above $100, many of the less developed oil exporting OPEC members decided to capitalize on the high price and cash out by taking loans using the precious liquid as collateral very much the same way corporate CEOs use their inflated stock (thanks to buybacks they authorize) to issue loans against said stock. And why not: even if the price of oil were to drop, they could just pump more until the principal is repaid. However, few oil exporters anticipated such an acute oil plunge in such as short time span, which resulted in the value of the collateral tumbling by 70%, <strong>and now find themselves have to repay the original loan by remitting as much as three times more oil!</strong>&nbsp; </p> <p><a href="">According to Reuters</a>, this is precisely what happened in the years preceding the great 2014-2015 oil bust: "poorer oil-producing countries which took out loans to be repaid in oil when the price was higher are having to send three times as much to respect repayment schedules now prices have fallen." </p> <p>As a result, the finances of countries such as Angola, Venezuela, Nigeria and Iraq have been crippled, in the process creating further division within the Organization of the Petroleum Exporting Countries.</p> <p>But while these already poor and corrupt OPEC nations were the biggest losers, one country was a huge winner, the country that provided the billions in virtually risk-free, oil-collateralized loans to any country that requested them. <strong>China</strong>. The same China which has once again proven smart enough to not demand repayment in fiat but in physical commodities, be they oil, copper or gold.</p> <p>Take Angola for example: Africa's largest oil producer has borrowed as much as $25 billion from China since 2010, including about $5 billion last December, which according to Reuters <strong>forced its state oil firm to channel almost its entire oil output toward debt repayments this year.&nbsp;</strong></p> <p>Or Venezuela: ever since 2007, China, which has become Venezuela's top financier via an oil-for-loans program, has funneled an amazing $50 billion into the Chavez first and then Maduro regimes, in exchange for repayment in crude and fuel, including a $5 billion deal last September.&nbsp; While details of the loans have not been made public, analysts from <strong>Barclays estimate Caracas owes $7 billion to Beijing this year and needs nearly 800,000 bpd to meet payments, up from 230,000 bpd when oil traded at $100 per barrel</strong>. </p> <p><a href=""><img src="" width="500" height="336" /></a></p> <p><em>Oil pumps are seen in Lake Maracaibo, in Venezuela</em></p> <p>Ecuador, one of OPEC's smallest member countries, <strong>borrowed up to $8 billion from Chinese and Thai firms</strong>, repayable with oil, between 2009 and 2015, according to the national oil company</p> <p>Many other countries have borrowed money from China (and others such as producers Exxon, Shell and Lukoil, as well as traders Vitol and Trafigura) and promised to repay in oil included Nigeria, Iraq, Venezuela and others. </p> <p>Fast forward to today <strong>when Angola, Nigeria, Iraq, Venezuela and Kurdistan are due to repay a total of between $30 billion and $50 billion with oil, </strong>Reuters calculates.&nbsp;Repaying $50 billion required only slightly over 1 million barrels per day (bpd) of oil exports when it was trading at $120 per barrel but with prices of around $40, <strong>the same repayment would require exports of over 3 million bpd.</strong> </p> <p>This is terrible news for all the indebted exporters because not only do they now have to pump three times as much just to repay the same loan, they have little if anything left over to fund critical budget needs and certainly nothing left over to invest.</p> <p>"All of those oil nations – Angola, Nigeria, Venezuela – have taken money for survival but haven't got any money left for investments. That is very damaging to their long-term growth prospects," said Amrita Sen from Energy Aspects think-tank. "People tend to look at current production volumes but if you have committed your entire production to China or other buyers under loans – then you cannot invest to keep growing and won't benefit from higher prices in the future." </p> <p>While the poorer OPEC exporters find themselves pumping unprecedented amount just to stay afloat, the rich OPEC producers have understandably stayed away from debt: according to Reuters, OPEC's Gulf Arab members - Saudi Arabia, the United Arab Emirates, Kuwait and Qatar - have very few joint ventures with oil companies, do not have pre-payment deals with China and do not need to borrow from trading houses. </p> <p>And so, while Saudi Arabia saw every dollar from its oil sales going to state coffers, the poorer members had a large part of their oil revenue eaten up by debts - read China - leaving no money to invest in infrastructure and field development. As a result, Nigeria and Venezuela are now facing steep production declines at a time when Saudi Arabia is preparing to further ramp up supplies as it invested heavily in new fields. </p> <p>This curious dynamic explains two things: </p> <ul> <li><strong>First, </strong>it gives another reason why OPEC is effectively defunct as a result of Saudi Arabia's resistince to reduce output. Quite simply, the lack of debt means it is able to use the money for development and reinforce its dominant position in oil markets. Nigeria and Venezuela, meanwhile, are desperate for a deal that would reduce output and push up prices to help them invest in oil fields and repay fewer barrels to creditors. "It may ultimately be mounting supply disruptions in stressed states, rather than collective cartel action, that causes an accelerated market rebalancing,” RBC Capital's head of commodity strategy Helima Croft said. </li> <li><strong>Second, </strong>and maybe even more important, it explains why China suddenly finds itself flooded with so much oil, the country has unleashed its teapot refining army into overdrive. More importantly, it may shift the entire dynamic of China's soaring imports on its head, because according to Reuters, <strong>the reason why China is being flooded with oil has little to do with a surge in demand, but because OPEC exporters are forced to ship far greater amounts of crude to China</strong>!</li> </ul> <p>In fact, so great is the amount of oil headed to China, that <a href="">Bloomberg wrote a story today </a>showing how just like in the case of tankers parked off Singapore, China is simply unable to process all the oil. To wit:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>In late February, the tanker Jag Lok loaded oil from Equatorial Guinea in western Africa and set sail for the Chinese port of Qingdao, the gateway to the world’s newest buyers of crude, a journey of more than 12,000 nautical miles. <strong>After reaching its destination in early April, the ship churned in circles for 20 days before it got a chance to deliver its cargo. That’s because the port in Shandong province was struggling to handle a record number of vessels arriving to supply the privately held refineries called “teapots” that dot the region, ship-tracking data compiled by Bloomberg show</strong>.</p> </blockquote> <p>What is ironic is that Bloomberg, as one would expect before reading the Reuters piece, confuses cause and effect, and attributes the surge in Chinese oil traffic to soaring demand, when in reality much of it is about exporters seeking to repay their debt to Beijing as fast as possible.</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>The backup illustrates the challenges facing the independent refiners, which have emerged as a bright spot of rising demand amid a global glut. The processors are forecast by ICIS-China to purchase a combined 1 million barrels a day of crude from overseas this year, up from 620,000 barrels in 2015</strong>. While small individually, together they account for almost a third of China’s refining capacity. Any curb on imports would threaten oil’s rebound from a 12-year low, according to Nomura Holdings Inc. and Samsung Futures Inc.</p> </blockquote> <p>What curb on imports? <strong>China is getting millions in barrels of oil for free, </strong>which is why it is ramping up refining production to unprecedented levels! The Bloomberg punchline:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>From being dependent on state-owned energy giants for their feedstock needs as little as a year ago, teapots are now driving Chinese crude purchases after the government allowed them to buy overseas supplies directly. As of end-February, 27 of the companies had received or applied for annual import quotas totaling 89.5 million metric tons, or about 1.8 million barrels a day, according to Zhang Liucheng, chairman of the China Petroleum Purchase Federation of Independent Refinery, a group of 16 processors.</p> <p>&nbsp;</p> <p><a href=""><img src="" width="600" height="338" /></a></p> <p>&nbsp;</p> <p><strong>Total purchases from overseas into the world’s second-largest oil user climbed to a near record 7.96 million barrels a day in April</strong>, <strong>while shipments to Qingdao surged to unprecedented levels in April.</strong></p> </blockquote> <p>And much of this traffic may have nothing to do with current Chinese purchases, but everything to do with tens of billions in loans China has issued in prior years which are only now being repaid in the form of what is effectively free oil.</p> <p>The question then, regardless of whether China is buying oil now, or is simply taking delivery for oil as collateral on loans made in prior years, as accurately laid out by Bloomberg is just how much oil can China process. The answer is that China is rapidly reaching its refining capacity, due to both structural bottlenecks as well as prices:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>With infrastructure not developing as fast as oil purchases, imports are at risk of slowing because of the ship traffic and lack of storage capacity, according to BMI Research. </strong>Concern about the creditworthiness of companies with no prior experience in international trade is also deterring some sellers. Slowing refining profits mean the plants may have to cut processing rates, weakening their appetite for cargoes from overseas, while the implementation of higher fuel quality standards could force some of them to shut. </p> <p>&nbsp;</p> <p>"Teapot buying could slow due to logistical constraints which are already stretched to their limits,” said Nevyn Nah, a Singapore-based analyst at consultant firm Energy Aspects Ltd. </p> <p>&nbsp;</p> <p>"<strong>Weakening margins are likely to have a stronger impact on independent refineries in China and this will lead to lower crude imports,” </strong>said Hong Sung Ki, a senior analyst at Samsung Futures Inc. in Seoul. “That will result in a downward revision for China demand and this will inevitably have a negative impact on oil prices.”</p> </blockquote> <p>The summary is fascinating: China is being flooded with oil, on one hand due to ongoint purchases, but to a large extent because its oil-exporting counterparts (who need to remain on good terms with lender of last resort China) are scrambling to repay their Chinese loans by shipping out record amount of oil in the direction of China, so much so that even China's infrastructure can no longer handle the inbound traffic. As Bloomberg notes, "<strong>ships continue to be held up at Qingdao. At least 16 oil tankers with capacity to carry 21.2 million barrels have stayed near the port for more than 10 days over May 1-23. Half of them were there for more than a month</strong>."</p> <p>How this unprecedented dynamic plays out, is at this point impossible to predict, but with such dramatic pockets of zero-sum inefficiency, where half of OPEC-loss is China's gain, we eagerly look forward to the conclusion and how it will impact the price of oil.</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="640" height="430" alt="" src="" /> </div> </div> </div> Barclays China Copper Creditors Crude Equatorial Guinea Exxon Iraq Kuwait Nomura OPEC Reality Reuters Saudi Arabia Tue, 24 May 2016 22:01:17 +0000 Tyler Durden 561737 at Here's The Full List Of Organizations That Paid Hillary Clinton From 2013-2015 <p><a href=""><em>Submitted by Michael Krieger via Liberty Blitzkrieg blog,</em></a></p> <p><img alt="Screen Shot 2016-05-23 at 3.35.50 PM" class="alignnone wp-image-34460" height="189" src="" width="316" /></p> <p>In its&nbsp;article titled,&nbsp;<a class="postid-10205754" href="">How Corporate America Bought Hillary Clinton for&nbsp;$21M</a>, <em>The New York Post</em> details&nbsp;the companies and organizations that paid Hillary in speaking fees from 2013-2015.</p> <p>The total comes to $21.7 million, which is a remarkable sum for one of the least charismatic and unimaginative&nbsp;orators the world has ever known.</p> <p>The <em><a href="">New York Post</a>&nbsp;</em>reports:</p> <p><img alt="Screen Shot 2016-05-23 at 3.26.08 PM" class="alignnone size-large wp-image-34450" height="668" src="" width="620" /></p> <p><img alt="Screen Shot 2016-05-23 at 3.19.03 PM" class="alignnone size-large wp-image-34448" height="650" src="" width="620" /><br /><img alt="Screen Shot 2016-05-23 at 3.27.49 PM" class="alignnone size-large wp-image-34453" height="724" src="" width="620" /><br /><img alt="Screen Shot 2016-05-23 at 3.28.30 PM" class="alignnone size-large wp-image-34454" height="683" src="" width="620" /></p> <p><img alt="Screen Shot 2016-05-23 at 3.29.21 PM" class="alignnone size-large wp-image-34455" height="630" src="" width="620" /></p> <p><img alt="Screen Shot 2016-05-23 at 3.32.02 PM" class="alignnone size-large wp-image-34457" height="693" src="" width="620" /><br /><img alt="Screen Shot 2016-05-23 at 3.32.35 PM" class="alignnone size-large wp-image-34458" height="375" src="" width="620" /></p> <p>So are you ready?</p> <p><img alt="Screen Shot 2016-05-09 at 8.32.36 AM" class="alignnone wp-image-34003" height="187" src="" width="411" /></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="364" height="219" alt="" src="" /> </div> </div> </div> Corporate America New York Post Tue, 24 May 2016 21:55:32 +0000 Tyler Durden 561665 at Clinton Adviser, Nobel Prize Winning Economist Endorsed Venezuelan Socialism <p><a href=""><em>Submitted by Tho Bishop via The Mises Institute,</em></a></p> <p><strong>Venezuela is in a state of complete crisis.</strong> The country has been forced to face the horrors of hyperinflation, food shortages, and devastating depression. In spite of having the world&rsquo;s largest oil reserves, the country has had to resort to rationing electricity. A <a href="" target="_blank">horrifying article by the <em>New York Times</em></a> depicts the state of Venezuelan hospitals, with children dying by the day due to a lack of medicine and basic supplies. &nbsp;</p> <p><strong>This is the terrifying reality of socialism, </strong>the inevitable consequence of the economic policies of the late Hugo Chavez and his successor, Nicolás Maduro.&nbsp; Since 1999, the two socialist administrations championed price controls, nationalization of industries, and wealth redistribution.</p> <p>While it is not surprising to see these policies supported <a href="" target="_blank">by Marxist politicians</a>, <strong>what is deeply troubling is the amount of support the Venezuelan model has received from prominent economists over the years</strong>. <a href="" target="_blank">During a visit in 2007</a>, Joseph Stiglitz, who received the 2001 Nobel Prize in economics, praised what he called &ldquo;positive policies&rdquo; of the Chavez administration: &nbsp;</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>Venezuelan President Hugo Chavez appears to have had success in bringing health and education to the people in the poor neighborhoods of Caracas. ... It is not only important to have sustainable growth, but to ensure the best distribution of economic growth, for the benefit of all citizens.</p> </blockquote> <p><strong>What should alarm Americans is that Stiglitz, who has been described as an &ldquo;<a href=";module=meter-Links&amp;pgtype=Blogs&amp;contentId=&amp;mediaId=&amp;;priority=true&amp;action=click&amp;contentCollection=meter-links-click" target="_blank">influential advisor to Hillary Clinton</a>,&rdquo; appears determined to bring similar policies here.</strong></p> <p>Last year, as chief economist for the Roosevelt Institute, <strong>Stiglitz called for &ldquo;rewriting the rules of the American economy&rdquo; in a crusade against income inequality.</strong> His policy recommendations include higher taxes, more &ldquo;smarter&rdquo; regulation, and having the Federal Reserve focus more on unemployment than keeping inflation low &mdash; a call for an even more activist Fed than we&rsquo;ve had since 2008.</p> <p>It is ironic that Stiglitz has chosen to brand his policy recommendations as some new innovative concept for the country, when it is <strong>simply doubling down on the interventionist policies that the nation has suffered from for over 100 years.</strong></p> <p><span style="text-decoration: underline;"><strong>Unfortunately, hearing such drivel come from a Nobel Prize winner isn&rsquo;t surprising.</strong></span> Karl-Friedrich Israel has recently noted how the Nobel Prize has a history of being used <a href="">as an endorsement of central planning</a>. Socialist governments have long been able to count on American economists to serve as apologists for their schemes. In the 1960s, Paul Samuelson&rsquo;s widely read economics <a href="">textbook infamously described the socialist economy of the Soviet Union as growing faster than America&rsquo;s</a>.</p> <div class="ds-1col file file-image file-image-png view-mode-wide_player clearfix">&nbsp;</div> <div class="img img-responsive"><img height="613" src="" width="389" /></div> <div class="img img-responsive">&nbsp;</div> <p><strong>This explains how Bernie Sanders has been able to receive the <a href="" target="_blank">endorsement of 170 self-proclaimed</a> &ldquo;economists and financial experts&rdquo; during his campaign.</strong></p> <p>Ludwig von Mises once wrote, &quot;No one can escape the influence of a prevailing ideology.&rdquo; <em><strong>The images coming from Venezuela should serve as a potent reminder of how dangerous the ideas of men like Joseph Stiglitz are.</strong></em></p> <p>Statism and economic interventionism must be rejected, in order for humanity to thrive.</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="292" height="184" alt="" src="" /> </div> </div> </div> Bernie Sanders Federal Reserve Hyperinflation Israel Joseph Stiglitz Ludwig von Mises Mises Institute Nationalization New York Times Paul Samuelson Reality Unemployment Tue, 24 May 2016 21:30:00 +0000 Tyler Durden 561716 at Q1 2016 Canadian Silver Maple Sales Surge To Highest Record Ever <p><img height="123" width="230" src="" alt="srsroco" /></p> <p><strong><a href="">By the SRSrocco Report</a></strong></p> <p>The Royal Canadian Mint just published its Q1 2016 Report, and the silver bullion coin sales figures were stunning to say the least.&nbsp; Not only did sales of Canadian Silver Maple Leafs surpass its previous record during the third quarter last year, it did so by a wide margin.</p> <p>Why is this such a big deal?&nbsp; Because Q1 2016 sales of Silver Maples topped the Q3 2015 record, without surging demand and product shortages.&nbsp; Last year, there was a huge spike in silver retail investment demand due to the supposed "Shemitah" or the collapse of the broader stock markets.&nbsp; Investors piled into silver in a big way as they perceived a year-end market crash was inevitable.</p> <p>During last August and September, some websites stated 2 month delivery wait times for certain products such as Silver Eagles and Silver Maples.&nbsp; With the huge spike in demand, sales of Canadian Silver Maples reached 9.5 million oz (Moz) in Q3 2015.&nbsp; Although, once investors became more relaxed as the broader markets turned around, demand for physical silver investment cooled down.&nbsp; Thus, Silver Maple sales declined to 9.1 Moz in the last quarter of 2015.</p> <p>However, something very interesting took place during the first quarter this year.&nbsp; <span style="color: #800000;"><strong>Sales of Silver Maples jumped to an all-time record high of 10.6 Moz:</strong></span></p> <p style="text-align: center;"><img height="358" width="500" src="" alt="Q1 2016 Silver Maple Sales" style="vertical-align: middle;" /></p> <p>Actually, I was quite stunned by the figures published in the recent Royal Canadian Mint Report.&nbsp; Sales of Silver Maples jumped 1.1 Moz in Q1 2016 vs Q3 2015, with no real spike in overall retail investment demand.&nbsp;<span style="color: #800000;"><strong> Which means, investors bought more Silver Maples in Q1 2016 than any other quarter in history.</strong></span></p> <p>Furthermore, if Silver Maple sales continue to be this strong, the Royal Canadian Mint is on track to sell over 40 Moz compared to the 34.3 Moz in 2015.&nbsp; If Silver Eagle sales also continue on their strong trend of 1 Moz per week, the U.S. Mint could sell over 50 Moz of these coins.&nbsp; <span style="color: #800000;"><strong>Together, these two official mints could sell over 90 Moz of Silver Eagles and Maples in just one year.</strong></span></p> <p>This goes to show investors who are frustrated by the short-term price moves of gold and silver, that the market continues to purchase record volumes of these official coins... regardless.</p> <p>I do believe the value of the precious metals will rise to levels much higher than we can imagine, but it will come when the Greatest Financial Paper Ponzi Scheme finally collapses.&nbsp; So, it's best to continue focusing on the fundamentals, rather than short-term price predictions.</p> <p>Check back for new articles and updates at the <em><strong><a href="">SRSrocco Report</a></strong></em>.</p> Market Crash Precious Metals Tue, 24 May 2016 21:20:14 +0000 SRSrocco 561732 at More Young Americans Live With Their Parents Than At Any Time Since The Great Depression <p>As we&#39;ve reported, while millennials continue to<a href=""> <strong>earn less and drown in debt</strong></a><strong>,</strong> they have resorted to <a href="">living at home in order to cut costs and save money</a>.</p> <p><a href=""><img height="531" src="" width="600" /></a></p> <p>&nbsp;</p> <p>The trend of millennials returning home to live with their parents has even gotten to the point where <strong><a href="">one out of six home buyers have or plan to have a grown child at home</a>, </strong>and home builders are building to accommodate that fact.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em>As a matter of fact, <strong>the trend of kids living at home with their parents has gotten so strong that home builders are now designing homes with just that in mind.</strong> &quot;<span style="text-decoration: underline;">One out of six buyers have or plan to have a grown child at home</span>&quot; said Richard Bridges, Chicago division sales manager at David Weekly Homes. For a mere $35,000-plus, Richard says the plan can include a bedroom/bathroom suite in a finished basement to accommodate the kids who inevitably will be returning home to live.</em></p> <p>&nbsp;</p> <p><em>Chicago area builder PulteGroup says in their new models, kids can enjoy a bedroom/bathroom suite with a kitchenette and separate living space. &quot;Our NexGen option is the greatest in housing since indoor plumbing.&quot; said Jeff Roos, western regional president at Lennar Corp.</em></p> </blockquote> <p>Stunningly, according to new Pew Research Center <a href="">analysis</a>, <strong>32.1% of all millennials are living with their parents now, </strong><span style="text-decoration: underline;"><em>which is more than any other time since the great depression!</em></span></p> <p><a href=""><img height="740" src="" width="600" /></a></p> <p>&nbsp;</p> <p>Interestingly, as <a href="">Pew also points out</a>, it&#39;s not just the United States facing this issue. While in the US 32.1% of millennials are living at home, <strong>that number spikes to a mind-boggling 48.1%across the European Union&#39;s 28 member nations.</strong></p> <p><a href=""><img height="813" src="" width="600" /></a></p> <p>&nbsp;</p> <p>Hey millennials, welcome to the recovery.</p> <p><a href=""><img height="267" src="" width="600" /></a></p> European Union Great Depression Lennar recovery Tue, 24 May 2016 21:00:00 +0000 Tyler Durden 561725 at Gold Drops, Oil Pops As Another Volumeless Buying-Frenzy Strikes Stocks <p>We begin today&#39;s end of day catch up with a report from <a href="">The Onion</a> that seemed highly appropriate:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>NEW YORK - According to a brief but conclusive report released Monday, <strong>nobody fucking cares</strong>.</p> <p>&nbsp;</p> <p><strong>&ldquo;Doesn&rsquo;t fucking matter,&rdquo; read the report in part, which went on to inform readers that no one gives two shits, so fuck it.</strong> &ldquo;Seriously. Stop wasting everyone&rsquo;s goddamn time.&rdquo;</p> <p>&nbsp;</p> <p>The report further urged those who still hadn&rsquo;t shut up about it to <strong>quit acting like fucking idiots and just give it a rest, </strong>for Christ&rsquo;s sake.</p> <p>&nbsp;</p> <p><iframe allowfullscreen="" frameborder="0" height="315" src="" width="560"></iframe></p> </blockquote> <p>As following the overnight strength - on a Brexit poll of 1000 people that suggested Brexit fears overblown - the ridiculous beat in new home sales (at a record high price)...<strong> </strong></p> <p><a href=""><img height="241" src="" width="600" /></a></p> <p>&nbsp;</p> <p>...sparked sheer panic bids in homebuilder stocks.. and pretty much everything else. <strong>Dow Futures soared 300 points off the overnight lows... (we saw this manic pattern last week)</strong></p> <p><a href=""><img alt="" src="" style="width: 600px; height: 360px;" /></a></p> <p>&nbsp;</p> <p>Trannies were the laggard on the day but bounced off unch for the week, Small Caps are leading...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 393px;" /></a></p> <p>&nbsp;</p> <p>Futures show the overnight exuberance...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 422px;" /></a></p> <p>&nbsp;</p> <p>For context today&#39;s spikes in stocks - the biggest since March - were very technical - all breaking their 50-day moving-averages...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 519px;" /></a></p> <p>&nbsp;</p> <p>As the short squeeze comes on again...US Open and EU Close sparked big squeezes in &quot;most shorted&quot; stocks - doubling the performance of the market...<strong>biggest 3-day short-squeeze in 6 weeks.</strong></p> <p><a href=""><img alt="" src="" style="width: 600px; height: 316px;" /></a></p> <p>&nbsp;</p> <p>Homebuilders were best (with Utes lagging)...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 311px;" /></a></p> <p>&nbsp;</p> <p>Today&#39;s exuberance lifted The S&amp;P and Small Caps into the green for May...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 430px;" /></a></p> <p>&nbsp;</p> <p>VIX was jammed down to a 14 handle again...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 466px;" /></a></p> <p>&nbsp;</p> <p>Treasury yields were far less exuberant than stocks...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 351px;" /></a></p> <p>&nbsp;</p> <p>But USDJPY 110 was in charge of the day...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 331px;" /></a></p> <p>&nbsp;</p> <p>Treasury yields all rose on the day but the long-end underperformed (10Y +3bps, 2Y unch) - once again the EU close pivoted the trend from selling bonds to buying them...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 316px;" /></a></p> <p>&nbsp;</p> <p>The <strong>USD Index rose once again (9th day in a row)</strong> today (as JPY weakness offset GBP strength - more positive polls) and EUR sunk...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 316px;" /></a></p> <p>&nbsp;</p> <p>Commodities were very mixed today with copper and crude soaring and PMs dumping... <strong>Crude&#39;s 2016 highs...</strong></p> <p><a href=""><img alt="" src="" style="width: 600px; height: 315px;" /></a></p> <p>&nbsp;</p> <p><em>Charts: Bloomberg</em></p> Copper Crude New Home Sales The Onion Tue, 24 May 2016 20:50:33 +0000 Tyler Durden 561722 at Crude Spikes Above $49 After Biggest Inventory Draw Since 2015 <p>Following last week's surprise draw (from the DOE data), <strong>API reported a huge 5.14mm draw (against expectations of a 2mm barrel draw) - the biggest since Dec 2015</strong>. Bear in mind that last week API reported a large build only to se a major draw in DOE data so perhaps this is catch down from the Canada interruption. Cushing saw its first draw in 4 weeks but<strong> Gasoline inventories rose dramatically (+3.06mm vs -1.5mm exp)</strong>. Crude prices are exuberantly looking to run last week's high stops on the news, <strong>breaking above $49 again</strong>.</p> <p>&nbsp;</p> <p>API</p> <ul> <li>Crude -5.137mm (-2mm exp)</li> <li>Cushing -189k (-400k exp)</li> <li>Gasoline +3.06mm (-1.5mm)</li> <li>Distillates -2.92mm (-750k exp)</li> </ul> <p>This is the biggest inventory draw since Dec 18th...</p> <p><a href=""><img src="" width="600" height="441" /></a></p> <p>&nbsp;</p> <p>The reaction, understandably, a surge in oil prices - breaking above $49...</p> <p><a href=""><img src="" width="600" height="354" /></a></p> <p>&nbsp;</p> <p>Bear in mind,<strong> seasonally, the trend is for a draw in May</strong>. <em><span style="text-decoration: underline;"><strong>In fact May of 2015 saw one of the biggest draws of all time at -16.4 million. How did 2015 end?</strong></span></em></p> <p><em><span style="text-decoration: underline;"><strong><a href=""><img src="" width="600" height="311" /></a><br /></strong></span></em></p> <p>&nbsp;</p> <p><em>Charts: Bloomberg</em></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="1450" height="855" alt="" src="" /> </div> </div> </div> Crude Distillates Tue, 24 May 2016 20:36:49 +0000 Tyler Durden 561729 at