OIL Prices Promise Volatility for Months Ahead

EVEN  BAD NEWS MAY DROP PRICES? 

 No terrible economic news has surfaced in recent weeks but that does not change the profound weakness of a global economy that is burdened with debt and weak demand. The announcement last week by the People’s Bank of China that it sees room for more quantitative easing may have comforted stock markets but it only added to my anxiety about reduced oil consumption and future downward shocks in oil prices.... 

Art Berman, Energy Specialist

Oil Prices Should Fall, Possibly Hard

Oil prices should fall, possibly hard, in coming weeks. That is because fundamentals do not support the present price.

Prices should fall to around $30 once the empty nature of an OPEC-plus-Russia production freeze is understood. A return to the grim reality of over-supply and the weakness of the world economy could push prices well into the $20s.

 A Production Freeze Will Not Reduce The Supply Surplus 

An OPEC-plus-Russia production cut would be a great step toward re-establishing oil-market balance. I believe that will happen later in 2016 but is not on the table today.

In late February, Saudi oil minister Ali Al-Naimi stated categorically, “There is no sense in wasting our time in seeking production cuts. That will not happen.”

 Arabia or Russia have the spare capacity to increase production much beyond present levels making the proposal of a freeze cynical rather than helpful.

  

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http://www.artberman.com/oil-prices-should-fall-possibly-hard/ 

Zika, ZIRP, and NIRP Viruses  

There is money to be made on vaccines and GM mosquitos, and money to be lost if sales of pesticides and other chemicals are reduced. It is clear in which direction the politics will lean.

The Zika virus should remind us of other strange activities in the financial world.

Renewable energy’s global growing pains  

The local perspective was provided by UC Berkeley's Deborah Sunter, who works on modeling the future US electrical grid. Dr. Sunter argued that Assembly Bill 32, passed by California in 2007, was a key moment in the US' energy transition. With that legislation, California committed to cut emissions to 1990 levels. Soon after, a number of Northeast states formed the Regional Greenhouse Gas Initiative, the US' largest carbon emissions trading market.

Iran on Oil Freeze: ‘Leave Us Alone’ Until Production Higher  

The Organization of Petroleum Exporting Countries and non-members have intermittently held discussions since November 2014, when OPEC first signaled it was unwilling to cut production on it own to support prices. Saudi Arabia, Venezuela, Russia and Mexico assembled in Vienna that month without reaching any deal. A tour of oil capitals from Moscow to Riyadh last month by Venezuelan Energy Minister Eulogio Del Pino failed to produce an accord.

Morgan Stanley Cuts S&P 500 Target as Recession Fears Rise

Morgan Stanley strategists are growing increasingly concerned about the risk of a global recession, slashing forecasts for all major equity markets and advising investors to sell stocks that have recently rallied.

In a report out on Monday, the bank’s global strategy team cut its 12-month target for the S&P 500 index SPX, -0.13%  to 2,050 from 2,175, indicating the U.S. benchmark over the next year only will rise 1.4% from its close of 2,022.19 on Friday. This comes after the index rallied 8.4% over the past month, driven in part by a rebound in oil prices and upbeat economic data from the U.S.

However, there’s nothing to indicate the rally will continue, neither in the U.S. or elsewhere, according to the Wall Street bank.

“Weaker growth forecasts and rising political risk lead us to close our positive tactical stance and lower exposure in global equities,” the analysts said in the note. “The probability of a global recession has risen.”

Other big bank strategists also have been dialing back their predictions for U.S. stocks.

READ MORE 

http://www.marketwatch.com/story/morgan-stanley-cuts-sp-500-target-as-recession-fears-rise-

Buckle Your Seat Belts - Markets Heading For Freefall, & More

The Dow Correction And Everything Else That Went Wrong in Stocks

The global equity selloff that sent benchmark indexes to their worst week in four years played havoc with individual stocks and industries in the U.S. market.

To energy shares already snared in a bear market, add semiconductor stocks, which crossed the threshold by capping a decline of more than 20 percent. Apple Inc. also entered a bear market, while the Dow Jones Industrial Average entered a so-called correction with a decline of 10 percent from its last record. Biotechnology, small caps, media, transportation and commodity companies have also entered corrections.

The Standard & Poor’s 500 Index sank 3.2 percent on Friday to cap a weekly loss of 5.8 percent, the worst daily and weekly declines in almost four years. The benchmark gauge is down 7.5 percent from its last record in May, after dropping out of a trading range that has supported it for most of the year.

Greek bailout: Alexis Tsipras steps down to trigger new elections 

The prime minister insisted in an address on public television that he was proud of his time in office and had got “a good deal for the country”, despite bringing it “close to the edge”. He added that he was “shortly going to submit my resignation, and the resignation of my government, to the president”. The prime minister will be replaced for the duration of the short campaign by the president of Greece’s supreme court, Vassiliki Thanou-Christophilou – a vocal bailout opponent – as head of a caretaker government.

From Russia to Iran, the consequences of the global oil bust

Nick Butler, former head of strategy for BP, told me, “We are in for a longer and more sustained period of low oil prices than in the late 1980s.” Why? He points to a perfect storm. Supply is up substantially because a decade of high oil prices encouraged producers throughout the world to invest vast amounts of money in finding new sources. Those investments are made and will keep supply flowing for years. Leonardo Maugeri, former head of strategy for the Italian energy giant Eni, says, “There is no way to stop this phenomenon.” He predicts that prices could actually drop to $35 per barrel next year, down from more than $105 last summer.

Greece bailout deal 'will not work': Varoufakis

"Ask anyone who knows anything about Greece's finances and they will tell you this deal is not going to work.""The Greek finance minister... says more or less the same thin,

Germany made €100bn profit on Greek crisis

Greece’s biggest creditor Germany has made a huge profit on the country’s debt crisis over the last 5 years as it saved through lower interest payments on funds borrowed amid investor “flights to safety.”

Pentagon Fears It’s Not Ready for a War With Russia

The U.S. military has run the numbers on a sustained fight with Moscow, and they do not look good for the American side.

Is It Time to Get into Crash Positions?

Maybe this flight won't go into a tailspin; perhaps it simply runs out of fuel.

With stock markets diving around the globe, a pressing question arises: is it time to get into Crash Positions?

In case you forgot how to get into Crash Positions, here's a reminder:

After a dizzying 500+ point drop in the Dow on Friday, should we brace for impact? There are plenty of fundamental and technical reasons to view the swoon this week as the initial downturn that presages a crash landing.

But if we look at the last equivalent spike down in October 2014, we're not so sure. Both spikes (October 2014 and August 2015) smashed through the lower Bollinger band, but the volume in last week's plummet was nothing special compared to the 2014 swoon.

Big moves have a bit more credence if they're accompanied by massive volume.

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—so much so, that when my paired leadership partner, Mary Michelle Scott, and I recently traveled to Australia with several of our team in our launch of Fishbowl Australia, we made the effort and kept the commitment to fly with Virgin Airlines every step of the way.

CRISIS: Government Revenues, Expenditures and Debt Headed For Abyss, & More

Here's the Next Crisis "Nobody Saw Coming"

When borrowing become prohibitive (or impossible) and raising taxes no longer generates more revenues, state and local governments will have to cut expenditures.

"Strangely enough, every easily foreseeable financial crisis is presented in the mainstream media as one that "nobody saw coming."

 No doubt the crisis visible in these three charts will also fall into the "nobody saw it coming" category.

Take a look at this chart of state and local government debt. As we noted yesterday, nominal GDP rose about 77% since 2000. So state and local debt rose at double the rate of GDP. That is the definition of an unsustainable trend

Coming Out - As a Bear! 

Earlier this year, as the market kept marching upward, I decided that buying put options on equities wouldn’t give me the kind of protection I was looking for. So I liquidated most of my equity holdings. We also shut down our equity strategy for the firm.

Of late, I’ve taken it a step further, starting to build an outright short position on the market. In the long-run, this may be losing proposition, but right now, I am rather concerned about traditional asset allocation.

James Turk: Money Bubble About to Pop

This money bubble is going to pop. It has to because there is just too much debt in the world. That debt has to be reconciled and, ultimately, when you are reconciling debt, it gets back to the point about collateral on the balance sheets. There is just not enough good collateral to support all of this paper money circulating out there

The Economist: The TPP is Dead 

The coverage of the TPP in the media was schizophrenic, on the one hand describing it as part of Obama’s “pivot to Asia” (as in an effort to contain China’s growing hegemony), meaning it was clearly a political enterprise, an “everybody but China” deal, and on the other hand, saying that the reason Americans should support it was those miniscule trade benefits. And of course, there was nary a mention of the cost in terms of national sovereignity.

The Tale of an Anxious Economic Recovery, Told by a Revived Textile Mill 

“More people are finding jobs, but nobody feels optimistic about their income prospects,” he added. “That’s likely why it doesn’t feel like the economy has really recovered even though the statistics say it has.”

John Kerry on the Risk of Congress ‘Screwing’ the Ayatollah 

On a related matter—whether or not the nuclear agreement represents a bad deal for the people of Syria, who suffer under the Iran-supported Assad regime, which will presumably benefit financially from the lifting of sanctions on its primary sponsor—Kerry was somewhat dismissive. In response to my question, “Does it bother you that money will be going to Assad and Hezbollah?,” 

Kerry responded, “Yes, but it’s not dispositive. It’s not money that’s going to make a difference ultimately in what is happening.”

Canada Is On The Brink

 Of A‘Very Unusual

 Recession’

Canada is teetering on the edge of a recession.

The country's GDP has fallen for five straight months, the latest numbers coming in at a 0.2 percent contraction in May. And economists say Canada is about to hit its second-straight quarter of declining GDP, the technical definition of a recession.

Contributing to Canada's problems include plunging commodities prices, slowing exports and a falling Canadian dollar. The tumble in crude oil, which has fallen more than 15 percent year to date, has hit Canada hard as a commodities-heavy economy.

According to TD Bank's deputy chief economist, Derek Burleton, investor concerns about the Canadian economy date back to last year, when oil prices first began to fall.

"They're worried about Canada; they're still short Canada," Burleton said. "There's not a lot of upside to growth."

Learning Success: 

APPLY Tips From The Best

Warren Buffett, Berkshire Hathaway – He is a deeply conservative trader during the times that everyone around him is moving from one extreme to the other to the tune of huge losses and gains. Warren Buffett is a perfect example of patience, proving that slow and steady generally wins the business race. (Although I continue to press my own desire to spur Fishbowl’s inventory software business to race!)

Top Weekly Ideas and Insights

An Inconvenient Truth:

What Happens When Top Economists Realize Physical Growth Constraints?

 EXISTENTIAL REALITY 

"Humanity's Coming of Age"

 - The Last Days of Economic Growth -

China's Markets In Tailspin, A Tale of Two Deals, & More

China growth beats 

forecasts but stocks dive again

China's economy grew an annual 7 percent in the second quarter, beating analys' forecasts, though its volatile stock markets took a sharp dive in a reminder of the threats to Beijing's efforts to direct the economy out of a slowdown.

Policymakers had already unleashed a series of measures to pull stocks out of a 30 percent nosedive and appeared to have succeeded last week, but Wednesday's tumble could reawaken concerns over the government's ability to manage the economy.

The day began on a positive note with the growth figures and monthly activity data that also beat expectations across the board, with factory output hitting a five-month high, following reports of increased bank lending on Tuesday.

As the National Bureau of Statistics released the upbeat figures, it described the stock markets as key to economic stability. As if on cue, the key indexes, already down in morning trade, fell more than 4 percent in the afternoon.

The CSI300 index eventually ended down 3.5 percent, while the Shanghai Composite Index lost 3 percent.

"Investors liquidated their positions as the GDP data failed to impress," said Steven Leung, a director at UOB Kay Hian in Hong Kong.

Greek MPs pass austerity bill as Athens police clash with protesters

Alexis Tsipras drives through tax increases and pensions shakeup amid angry splits in his Syriza party

Five years into the worst crisis to hit their country in decades, Greek MPs voted by a large majority in the early hours of Thursday morning to accept draconian austerity as the price of further bailout funds but at great personal cost to prime minister Alexis Tsipras. 

In a vote that saw tensions soar in and outside parliament, the embattled leader’s radical leftist Syriza party suffered huge losses as 40 MPs revolted against the measures. A total of 229 lawmakers voted in favour of the internationally mandated measures, 64 against and six abstained.

Iranians take to Tehran streets to hail nuclear deal

Iranians poured onto the streets of capital Tehran after the Ramadan fast ended at sundown on Tuesday.

Iranians poured onto the streets of the capital Tehran, after the Ramadan fast ended at sundown on Tuesday to celebrate the historic nuclear deal agreed with world powers in Vienna.

Supporters of President Hassan Rouhani and his top negotiator, Foreign Minister Javad Zarif, waved Iranian flags from their cars, while drivers honked their car horns.

At least three thousand people also gathered along Valiasr Street near the Tajrish district of northern Tehran, singing celebratory songs while dancing and flashing victory signs.  

With the signing of the agreement, people who attended the celebration said they are hopeful that the country's economy and the lives of ordinary citizens would improve. 

Once sanctions are lifted in the coming months, Tehran will gain access to $100-bn in frozen assets, while opening the country for trade.

On Wednesday, Rouhani hailed the agreement as a political victory for his country, saying the agreement meant that Iran would no longer be regarded as an international threat.

Too Much Debt + Too Little Cash = Most Distressed Pain Since ’08

The pool of distressed U.S. corporate bonds, typically those yielding more than 10 percentage points above benchmarks, has swelled to $127 billion, from the low last year of $43.7 billion, Bank of America Merrill Lynch index data show. This month alone, Peabody Energy’s $4.8 billion of bonds have fallen 14.9 percent, while Cliffs Natural Resources’s $2.5 billion of notes have declined 14.6 percent.

Italy's public debt reaches new record high

Italy's public debt has risen to a new record of 2.2 trillion euros ($2.4 trillion), up by 23.4 billion euros in May. The figure published by the central bank on Tuesday brought recriminations by opposition politicians against Finance Minister Pier Carlo Padoan for not bringing down the debt load, which had even at lower levels threatened a sovereign debt crisis.

China May Tip World Into Recession: Morgan Stanley

That is the prediction from Ruchir Sharma, head of emerging markets at Morgan Stanley Investment Management, who says a continuation of China’s slowdown in the next years may drag global economic growth below 2 percent, a threshold he views as equivalent to a world recession.

More Leading Headlines

1. Japan's Central Bank Trims Growth Forecast

1. White House Cuts Growth Forecast for 2015, 2016

1. Russian Industry Drops for Fifth Month, Longest Slump Since 2009

1. Moody's: UK consumer debt boom leaves borrowers vulnerable to economic shocks\

1. Chinese economic growth based on 'money created from thin air'

1. Bank of Canada cuts main interest rate to 0.50%

Top Weekly Ideas and Insights

An Inconvenient Truth:

What Happens If Global Warming Continues?

 EXISTENTIAL REALITY 

Methane Bomb 

or Archaic 

Fabrications?