Speculators Causing Havoc With Oil Prices, & More Insights

Why So Much Oil Price Volatility? Blame The Speculators

Oil prices crashed last week only to rebound at lightning speed. On August 28, oil prices surged 10 percent, the largest one-day gain in seven years. So, what happens next for oil prices?

On the face of it, the crash and massive rebound makes little sense, with many oil market analysts undoubtedly left shaking their heads.

But there is a logic to what unfolded, just not the logic of the physical market for crude. Oil prices, as if we needed a reminder, are largely driven by speculation. Why else would oil prices plummet by five percent, then spike by 10 percent just a few days later? Not much changed in terms of actual supply and demand of oil in the intervening days.

Sure, Royal Dutch Shell declared force majeure on some oil shipments from Nigeria, as two pipelines had to be shut down. That could interrupt some oil supplies. But other than that, the physical market for crude didn’t see a whole lot of change in just a few days’ time.

The Fed Is Dead Wrong 

The Fed won’t raise rates until the world economy looks healthier, but the world economy is actually OK. Even China is OK. (Apple said that the China consumer is pretty healthy). World economic numbers will look much better in 2016, and central banks outside the U.S. will begin raising rates … and that will finally give the Fed the cover it needs to raise.

Are There Investing Opportunities For The Remainder Of 2015? 

The seriousness of last week’s shocking action in the market is shown by the volatility index, which posted its second highest reading since its inception in 1990. This is comparable to the great crash of 2008/9.

An Escalating Migrant Crisis and an Intensifying Search for Solutions 

Many migrants are crossing from Turkey to Greece, Macedonia and Serbia before entering Hungary and then moving on to wealthier countries in northern Europe. (There is an important legal distinction between a migrant who has fled his or her country and a refugee seeking asylum.) The conditions in which they would wait out approval of their applications in Germany and Sweden are better than in places such as Hungary or Greece.

Everything you’ve heard about China’s stock market crash is wrong 

Both moves—the government pulling back from its market bailout and the currency devaluation—stem from the same ominous problem: China’s leaders are scrambling to find the money to keep its economy running. To understand the broader forces that led to this predicament, here’s a chart-based explainer tracing its origins.

The Cross of the Moment

Fermi's Paradox, climate change, capitalism, and collapse are some of the subjects discussed in this feature length documentary on the environmental crisis. Interviewees include Bill McKibben, Gary Snyder, Derrick Jensen, Peter D. Ward, Jill Stein, Bill Patzert, Guy McPherson and other top academics, scientists and public intellectuals.

US Oil Production Nears 

Previous Peak

The EIA’s Monthly Energy Review came out a couple of days ago. The data is in thousand barrels per day and the last data point is July 2015.

US consumption of total liquids, or as the EIA calls it, petroleum products supplied, reached 20,000,000 barrels per day for the first time since February of 2008.

Related: OPEC Divorce And Self-Destruction Thanks To Saudi Oil Strategy?

Something I never noticed before, consumption started to drop in January 2008, seven months before the price, along with world production, started to drop in August 2008. This had to be a price driven decline. Could the current June and July increase in consumption be price driven also?

A Passing Thought...

Expect Increasing Lies As Global Economy Collapses, & More Insights

Investors' Insights Comments

Any serious investor who believes that the CPI numbers (etc.) created by governments everywhere are real and accurate is the sort of bigger fool everyone is looking for - to support  many ventures. Now, sooner or later, the markets are going to wake up to  this reality,inclusive of  China, to Greece to Brazil and  the USA, plus many more - and then watch the proverbial "you-know-what ' hit the fan.

In turn, the spin doctors and other Pinocchios will be fully employed in very secure long-term activities as they seek to baffle the feeble-minded towards ratification and consumption. So yes, Eric Sprott is right.- so Is Noam Chomsky; so was John Steinbeck..

Never forget Arthur Anderson, Enron , China, the Fed, and all the rest. For as always, remember this utter wisdom -  figures lie, only because liars figure. 

Beware, and good luck!

August 31, 2015

Lies You Will Hear As The

 Economic Collapse 

Progresses

It is undeniable; the final collapse triggers are upon us, triggers alternative economists have been warning about since the initial implosion of 2008. In the years since the derivatives disaster, there has been no end to the absurd and ludicrous propaganda coming out of mainstream financial outlets and as the situation in markets becomes worse, the propaganda will only increase. This might seem counter-intuitive to many. You would think that the more obvious the economic collapse becomes, the more alternative analysts will be vindicated and the more awake and aware the average person will be. Not necessarily...

 

In fact, the mainstream spin machine is going into high speed the more negative data is exposed and absorbed into the markets. If you know your history, then you know that this is a common tactic by the establishment elite to string the public along with false hopes so that they do not prepare or take alternative measures while the system crumbles around their ears. At the onset of the Great Depression the same strategies were used. Consider if you've heard similar quotes to these in the mainstream news over the past couple months:

Optimistic About Inflation, Stanley 

Fischer Suggests

 That Fed Will Stick to Plan on Rates

The Fed’s preferred measure of inflation shows that prices rose 0.3 percent during the 12 months ending in July, well below the 2 percent annual pace the Fed considers healthy. A narrower measure excluding food and oil prices, which the Fed regards as more predictive, increased 1.2 percent over that same period.

Printing Money Goes Haywire in Venezuela 

Venezuela seems to be hovering on the edge of tipping into hyperinflation. Or perhaps it has already fallen into the abyss. Given the paucity of official data -- the none-too-believable official figures were last published in February -- it's a little hard to tell.

China Construction Bank Posts Zero Profit Growth on Weak Economy 

Industrial overcapacity, a build-up of corporate debt and a $5 trillion stock-market slump are making it harder for Premier Li Keqiang to prevent a deeper economic slowdown. The combined earnings of China’s five biggest banks are projected to rise 2 percent this year, the least since at least 2004, according to analysts’ estimates compiled by Bloomberg.

The Coddling of the American Mind 

There’s a saying common in education circles: Don’t teach students what to think; teach them how to think. The idea goes back at least as far as Socrates. Today, what we call the Socratic method is a way of teaching that fosters critical thinking, in part by encouraging students to question their own unexamined beliefs, as well as the received wisdom of those around them. Such questioning sometimes leads to discomfort, and even to anger, on the way to understanding.

Bond Market Explosion Not Stoppable: Craig Hemke 

What I really worry about is that transition from one financial scheme to the next is never done peacefully. The hegemon that has the printing press, that has the reserve currency, they don’t just sit back and say we’ve had our time in the sun. Now it’s your turn. No, they fight as hard as they can to protect and defend that. That’s my biggest concern.

Eric Sprott Was Right,

 Inflation Is Rising

Eric showed the above table in his presentation. It shows that the true level of inflation, a persistent increase in prices, has been sitting around 10% since 2011. Indeed, a far worse picture than what the US Federal Reserve paints. The Fed argues that prices have been rising below 2% for the past four years. That said, the Fed doesn’t include food, petrol and taxes in its inflation index. This is similar to the Reserve Bank of Australia’s inflation calculation.

But then who needs petrol and food, right?

So it’s not surprising that Jim Rickard’s, over at Strategic Intelligence, argues that there’s no worse forecaster in the world than the US Fed.

You may have noticed each year that Australian healthcare companies raise their premiums by roughly 6%. Well, costs are also rising over in the US.

I’ve been speaking to many US citizens up here at the conference. The word on the street is that Obamacare is one of the worst policies of all time. It’s legally forced those who can’t afford health care to buy; at the same time, hiking insurance premiums for those who require modest healthcare.

And it’s only going to get worse…

A Passing Thought...

China Piles Up Staggering $5 Trillion In Losses & More #Insights

China  Meltdown So Large That Losses Eclipsed BRICS  Peers 

Take the combined size of all stocks traded in Brazil, Russia, India and South Africa, multiply by two, and you'll get a sense of how much China's market value has slumped since the meltdown started. Shanghai-listed equities erased $5 trillion since reaching a seven-year high in June, half their value, as margin traders closed out bullish bets and concern deepened that valuations were unjustified by the weak economic outlook. 

The four other countries in the BRICS universe have a combined market capitalisation of $2.8 trillion, according to data compiled by Bloomberg. 

How China's economic slowdown could weigh on the rest of the world 

In the year to July, China's customs agency reports that imports from Australia are down by $15bn dollars on the same period last year - a loss which is already equal to 1% of Australia's GDP, and many other countries stand to lose out to similar degrees. China's imports overall are down by 14.6% over 2015. Find out what happens if this decline continues for the rest of the year - or worsens - and how that loss compares to each country's GDP

Deflationary Collapse Ahead?

Eventually, even at near zero interest rates, the amount of debt becomes too high, relative to income. Governments become afraid of adding more debt. Young people find student loans so burdensome that they put off buying homes and cars. The economic “pump” that used to result from rising wages and rising debt slows, slowing the growth of the world economy. With slow economic growth comes low demand for commodities that are used to make homes, cars, factories, and other goods. This slow economic growth is what brings the persistent trend toward low commodity prices experienced in recent years.

The Amazing Harbinger of the Dow's 531-Point Slide 

A strange thing happened fifteen minutes after stock markets opened for regular trading on Friday, August 21, 2015. At least some people on the nationally prominent MarketWatch website were privileged to see in advance what would prove to be the full-day losses for both the Dow Jones Industrial Average (INDU) and the Standard & Poors 500 (SPX) indices. This harbinger or revelation of what was to come occurred six hours and fifteen minutes before the market's close. The uncanny trend projections, or perhaps target prices, were made available while the Dow was down about 180 points -- more than 350 points above its astonishing Friday close.

What If The "Crash" Is as Rigged as Everything Else? 

There is an almost touching faith that markets are rigged when they loft higher, but unrigged when they crash. Who's to say this crash isn't rigged? A few things about this "crash" (11% decline from all time highs now qualifies as a "crash") don't pass the sniff test.

Australia 'sleepwalking into a mess' 

"Unless we recognise that, and recognise that the productivity challenge and the fiscal challenge are intimately linked, and we have to deal with both of them, then we will go on continuing to repeat the mistakes that we've been making and that will get us into a situation that none of us want to be in."

Dr Parkinson earlier told a room of more than 90 corporate, community and academic leaders that productivity reform could not be detached from fiscal reform.

Did Global Stock Market Meltdown Hurt UK Pension Schemes?

The ‘Black Monday' stock market turmoil on 24 August saw the FTSE 100 index plummet 14% below its peak of almost 7,000 points in February.

Investors across the globe began panic selling stocks, particularly in commodities, amid fears of the much anticipated growth slowdown in China.

While about £96bn was wiped off share values in the UK blue chip index, the Dow fell 1,000 points on opening and the Shanghai Composite experienced total losses of 35% since June.

Hymans Robertson put the total pain for UK defined benefit (DB) schemes at a staggering £30bn surge in aggregate deficits in a day, as equities values and bond yields headed south. 

Commentators are divided on whether the event was merely a market correction or an indication of more chaos to come.

But what many agree on is the fact that China is no longer the world's economic growth engine, posing the question of where future investment returns will come from.

Learning Success: 

APPLY Tips From The Best

Sir Richard Branson, Virgin Group – Anyone who owns more than 400 companies and is worth billions of dollars is clearly doing many things right. I admire Richard Branson’s tenacity, and I admire his personal brand

 

Tale Of Black Monday In Amazing Charts, & More #Insights

A Seven Amazing Charts From Black Monday

The damage in the markets created by the decline since last Thursday, particularly on Monday, is significant. We have noticed 7 amazing facts on Monday August 24th, which will go into history books as another ‘Black Monday.’

The volatility index VIX registered a 6-year high, spiking ‘out of the blue’ to levels not seens since the great crash of 2008 / 2009. See the two red circles in the first chart.

The Dow Jones literally crashed in 3 trading days, a decline not seen in many, many years. The days of the October lows of last year were ugly, but that is nothing compared to the last 3 days. The Dow Jones lost more than 2,000 points in those 3 days, a loss of 11.4% from high to low.

What the Latest Currency 'War' is All About

The heart of the matter is that Beijing has stepped on the gas in a quite complex long game; to liberalize the yuan exchange rate; allow it to free float against the US dollar; and establish the yuan as a global reserve currency.

China’s Dramatic Rise, and What It Means

Over the past 30 years, real per capita income has grown by more than 1,300%. Over the last decade alone, China quadrupled its industrial output. It now produces more automobiles than the US and Japan combined.

The Rise and Fall of Arab intellectual discussion concerning the “Arab Spring” 

Discussion has shifted in recent years – from one concerning freedom, justice, democracy and rights into a political wrangle between antagonist camps. The people, who revolted across various Arab countries are now marginalized.

Millions of Yemenis 'staring at famine' as war rages

UN food agency describes conditions in war-torn nation as "perfect storm" as millions face massive food insecurity.13 million, adding that one in five of the country's population were suffering from severe food insecurity.

Yemen after 5 months 'already looks like Syria after five years of war'

 

Entrenched poverty, months of intensified warfare and limits on imports because of an international embargo have contributed to "catastrophic" conditions 

Why The Bear Of 2015 Is Different From The Bear Of 2008

Are there any conditions now that are actually better than those of 2008?

It's tempting to see similarities in last week's global stock market mini-crash and the monumental meltdown that almost took down the Global Financial System in 2008-2009. The dizzying drop invites comparison to the last Bear Market that took the S&P 500 from 1,565 in October 2007 to 667 on March 9, 2009.

But this Bear is beginning in circumstances quite different from 2007-08. 

Let's list a few of the differences:

1. Then: Markets and central banks feared inflation, as WTIC oil had hit $133 per barrel in the summer of 2008.

Now: As oil tests the $40/barrel level, markets and central banks fear deflation.

2. Then: China had a relatively modest $7 trillion in total debt, considerably less than 100% of GDP.

now: China's debt has quadrupled from $7 trillion in 2007 to $28 trillion as of mid-2014, an astonishing 282% of gross domestic product (GDP)

3. Then: Central banks had a full toolbox of unprecedented monetary surprises to unleash on the market: TARP, TARF, BARF (OK, that one is made up) rescue packages and credit guarantees, quantitative easing (QE), zero interest rate policy (ZIRP) and direct purchases of mortgages, to name just the top few.

Now: The central bank toolbox is empty: every tool has already been deployed on an unprecedented scale. Every potential new program is simply a retread of QE, yield curve bending, asset purchases, etc.--the same old bag of tricks.

Learning Success: 

APPLY Tips From The Best

Sir Richard Branson, Virgin Group – Anyone who owns more than 400 companies and is worth billions of dollars is clearly doing many things right. We admire Richard Branson’s tenacity, and his personal brand