BIG Oil Stocks Good Long-term #Investments?

The Future of Oil Companies: A Slow Decline

Market watchers are announcing the demise of the oil majors. Not for the first time. According to Jilles van den Beukel, former geoscientist with Shell, the oil companies are indeed seeing their world shrinking. But they are not dead yet: their reason for being – the world’s demand for oil and gas – is still there.

NGO’s refer to the oil majors as slowly moving dinosaurs, sitting on stranded assets that cannot be (fully) produced. They maintain that their shares are massively overvalued and that the majors should rapidly change their business model or perish. Financial analysts are worried about high costs, future oil demand and low reserve replacement ratios. They point out that the companies should prepare for an oil price that stays lower for longer rather than to keep on repeating that the current low oil prices are not sustainable. Are things really that bad for the majors?

http://theenergycollective.com/energy-post/2323568/future-oil-companies-slow-decline

Moody's warns global slowdown could spark sovereign downgrades

Credit rating agency Moody's warned on Tuesday there could be another wave of sovereign and corporate downgrades if a wider global economic slowdown started to take place.

European Bonds Gain as Economic Growth Backs Case for ECB Easing

European government bonds extended gains from Monday while the region’s stocks declined as data confirmed economic growth slowed in the second half of 2015, underpinning the case for more stimulus from the European Central Bank.

OECD Leading Indicators Point to Slowing Global Growth

The Paris-based research body said its gauges of future economic activity—which are based on information available for January—continue to point to slowdowns in the U.S., the U.K., Canada and Russia, but now also suggest growth is set to ease in Germany and Brazil.

U.S. Government Bond Yields Fall as Japan Drops to Record Lows

 Government bond yields in Japan on Tuesday fell to record lows, and the ripple effect pushed down yields in the U.S., Germany and the U.K.

Strong auction demand for a 30-year Japanese government bond sent investors piling into bonds. The buying sent the yield on the benchmark U.S. 10-year note below 1.9% again and stalled the yield’s uptick momentum over the past month. As bond prices rise, yields fall. 

http://www.wsj.com/articles/government-bond-yields-in-u-s-europe-japan-drop-1457449179

www.firstfinancialinsights.blogspot.com

HSBC: YIKES - Arab States Going Broke!

How many businesses can withstand a drop in revenues of 50% or more and expect to survive? Few,  if any! With oil prices being down by that percentage, expect many of the resource based countries to start defaulting on their debt and thereby crashing the global banking system along with the stock markets. It will cascade!

It was all a house of cards built on an exuberant credit bonanza fueled by unprecedented low loan rates that was doomed from the start. Now here comes the payback - and it won't be pretty.

All things revert to the mean - that's the first  law of common sense, just ask Soros!

 

Arab States Face $94 Billion Debt Crunch on Oil Slump, HSBC Says

Gulf Cooperation Council countries may struggle to refinance $94 billion of debt in the next two years as the region faces slowing growth, rising rates and rating downgrades, according to HSBC Holdings Plc.

Oil-rich GCC states have to refinance $52 billion of bonds and $42 billion of syndicated loans, mostly in the United Arab Emirates and Qatar, HSBC said in an e-mailed report. The countries also face a fiscal and current account deficit of $395 billion over the period, it said.

Expectations that these funding gaps "will be part financed through the sale of sovereign U.S. dollar debt will complicate efforts to refinance existing paper that matures over 2016 and 2017," Simon Williams, HSBC’s chief economist for the Middle East, said in the report. "With the Gulf acting as a single credit market, the refinancing challenge will likely be much more broadly felt" and "compounded by tightening regional liquidity, rising rates and recent downgrades," he said.

READ MORE

http://www.bloomberg.com/news/articles/2016-02-28/hsbc-sees-94-billion-gulf-arab-debt-crunch-amid-oil-slump

The Game Changed in Venezuela  

http://caracaschronicles.com/2014/02/20/the-game-changed/

People continue to be arrested merely for protesting, and a long established local Human Rights NGO makes an urgent plea for an investigation into widespread reports of torture of detainees. There are now dozens of serious human right abuses: National Guardsmen shooting tear gas canisters directly into residential buildings. We have videos of soldiers shooting civilians on the street.

Washington warns top banks to stay away from Russian bonds   

https://www.rt.com/business/333579-russia-us-eurobonds-sanctions/

Russia’s dollar-denominated 2023 bond now has a yield of 4.53 percent, sliding from 4.9 percent in September 2013 when Moscow raised $7 billion, data from the Financial Times showed.

According to the WSJ, some bank officials, including those at Citigroup, said they won’t participate. Goldman Sachs and J.P. Morgan Chase say they are still weighing their options.

Moody's Downgrades Brazil Sovereign Rating 

http://www.bloomberg.com/news/articles/2016-02-26/brazilian-banks-downgraded-by-moody-s-after-sovereign-debt-cut

 Itau Unibanco Holding SA, Banco do Brasil SA and Banco Bradesco SA were among more than two dozen financial firms in Brazil that had credit ratings cut by Moody’s Investors Service after it stripped the nation of an investment grade this week.

Ratings affected in the latest shakeup included baseline credit assessments and bank deposit and debt ratings, New York-based Moody’s said Thursday in a statement.

While the moves were prompted by the change in the sovereign rating, Brazilian banks’ creditworthiness “may also face downward pressure if Brazil’s very challenging operating environment results in a deterioration of their financial fundamentals, particularly profitability, asset quality and capitalization,” Moody’s said.

Brazil was cut two steps below investment grade, to Ba2, with a negative outlook, a sign the rating might go lower. The downgrade came one week after Standard & Poor’s reduced Brazil’s rating to BB, also two steps below investment grade with a negative outlook. The moves reflect Brazil’s worst recession in more than a century, a nationwide corruption scandal and declining demand from China for Brazilian commodities.

Why Singapore's Economy Is Heading For An Iceland-Style Meltdown

It has been just five years since the Global Financial Crisis, and the world – in brazen defiance of the lessons of 2008 – is already back to blowing massive bubbles and naively praising the countries that are benefiting from these “fool’s gold” economic booms. The Southeast Asian island nation of Singapore is currently inflating one of the most egregious examples of these post-2009 bubbles, and is displaying parallels to Iceland’s bubble that are causing me to believe that its boom will end in a similar (but not necessarily identical) manner.

READ MORE

http://www.forbes.com/sites/jessecolombo/2014/01/13/why-singapores-economy-is-heading-for-an-iceland-style-meltdown/#346ffdb113cc

www.firstfinancialinsights.blogspot.com

#Forbes Gold and Silver Still Headed South? & More

How Low Can Gold And Silver Go?

On Sunday afternoon, I published a viral piece called “Did A Major Gold And Silver Breakdown Just Begin?” in which I explained that gold and silver may be on the verge of an imminent sell-off if key technical levels were broken. I showed that wedge patterns had formed in gold and silver for the past two years, and these patterns may indicate the resumption of the 2011 to 2013 bear market when broken. Amazingly, when gold and silver opened for trading on Sunday night, they experienced stunning flash crashes that caused them to slice clearly below the $1,130 and $15 technical levels I showed in the piece.

A $2.7 billion notional sell-order in gold futures caused the yellow metal to plunge 4.2 percent or $50 to nearly $1,086 per ounce in just a few minutes, dragging down other precious metals with it. The sell-off originated in the New York and Shanghai markets and was exacerbated by the lower-liquidity conditions due to Japan’s market holiday. 

The weekly gold chart below shows the wedge pattern that formed in the past two years. The key $1,130 level formed the bottom of the wedge, and is now a resistance level since gold fell beneath it on Sunday. The technical breakdown is valid as long as gold is under this level.

How artificial intelligence is changing economic theory 

Machina economicus might better fit the typical economic theories of rational behavior, but we don't believe that the AI will be fully rational or have unbounded abilities to solve problems. At some point you hit the intractability limit—things we know cannot be solved optimally—and at that point, there will be questions about the right way to model deviations from truly rational behavior.

Robots pass 'wise-men puzzle' to show

 a degree of self-awareness 

With the robots, instead of hats, the roboticists programmed the three humanoid robots to "believe" that two of them have been given a "dumbing pill" causing them to become mute, but they did not "know" which of them it was. In actuality, two of them were made mute by pressing a button on their head. The three robots were then asked which of them had not received the dumbing pill. All three robots attempted to respond with an answer of "I don't know" but only one was able to do so, which meant it was the one that had not been muted. Upon hearing itself audibilize a reply, it changed its answer, declaring that it was the one that had not received the dumbing pill.

Pension Shocker: Plans Face $2 Trillion Shortfall, Moody's Says 

In short: America is facing a fiscal crisis at the state and local government level and it appears as though at least one ratings agency is no longer willing to suspend disbelief by allowing officials to utilize profoundly unrealistic return assumptions in the calculation of liabilities.

China Ends Mystery of Gold Hoard to Top Russia’s Holdings 

Gold remains a large part of many central banks’ reserves, decades after they stopped using it to back paper money. Stockpiles of the metal help China to diversify its foreign-exchange holdings as the world’s second-largest economy seeks to raise the international profile of its own currency. The disclosure on gold reserves also assists in that goal.

“China is still pushing for a greater role for its currency globally by having full transparency,” Fu said.

Crushing pension obligations are pushing stressed governments 

What Money?

And the Quakertown Community School District said in June that it would go on a payment strike, of sorts, delaying its next $1.25 million quarterly contribution to the state school retirement system. The goal is to force the state to stop what the board president called an "unjust" rise in districts' pension payments. Pennsylvania school pension payments quadrupled from 2010 to 2014, and are scheduled to double again by 2019, under a law designed to make up for years of underpayment.

#Trumpisms Save The Day

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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.

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Methane Bomb 

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