Steve Bull's Blog, page 1191

February 15, 2018

Central Banks Will Let The Next Crash Happen

Central Banks Will Let The Next Crash Happen


If you have been following the public commentary from central banks around the world the past few months, you know that there has been a considerable change in tone compared to the last several years.


For example, officials at the European Central Bank are hinting at a taper of stimulus measures by September of this year and some EU economists are expecting a rate hike by December. The Bank of England has already started its own rate hike program and has warned of more hikes to come in the near term. The Bank of Canada is continuing with interest rate hikes and signaled more to come over the course of this year. The Bank of Japan has been cutting bond purchases, launching rumors that governor Haruhiko Kuroda will oversee the long overdue taper of Japan’s seemingly endless stimulus measures, which have now amounted to an official balance sheet of around $5 trillion.


This global trend of “fiscal tightening” is yet another piece of evidence indicating that central banks are NOT governed independently from one another, but that they act in concert with each other based on the same marching orders. That said, none of the trend reversals in other central banks compares to the vast shift in policy direction shown by the Federal Reserve.


First came the taper of QE, which almost no one thought would happen. Then came the interest rate hikes, which most analysts both mainstream and alternative said were impossible, and now the Fed is also unwinding its balance sheet of around $4 trillion, and it is unwinding faster than anyone expected.


Now, mainstream economists will say a number of things on this issue — they will point out that many investors simply do not believe the Fed will follow through with this tightening program.



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Published on February 15, 2018 04:33

February 14, 2018

Global Cooling Reducing Food Supply

Global Cooling Reducing Food Supply





What food is not hit by various Pandemic diseases, the weather seems to be wiping out the rest. In Germany, farmers have experienced 42% less crop in fruit in 2017 compared to 2016. According to the Federal Statistical Office, all crops are affected by drastic losses due to extreme cold. The reason is being attributed to the strong night frosts from the end of April in 2017. Everything from pears to cherries has been affected.


I myself had some Bird of Paradise plants in my front yard. It turned very cold here in Florida for a night or two. All four of my plants died.


Global Cooling is far more dangerous than Global Warming. It is amazing the propaganda machine they use seems bent on making sure we are not prepared.

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Published on February 14, 2018 05:01

Russian Deputy PM: Our Banks Are Ready To Turn Off SWIFT

Russian Deputy PM: Our Banks Are Ready To Turn Off SWIFT





Russian financial institutions are prepared to survive without access to SWIFT (The Society for Worldwide Interbank Financial Telecommunication) – the global dollar-based interbank payments network – should the US and European Union follow through with threats to cut it off, according to Deputy Prime Minister Arkady Dvorkovich.


“Certainly, it is unpleasant, as it will prove a stumbling block for companies and banks, and will slow down work. It will be inevitable to deploy some aged technologies for information transfer and calculations. However, the companies are technically and psychologically ready for the shutdown as this threat was repeatedly voiced,” Dvorkovich said, according to TASS and RT, adding that such a dramatic step would negatively corporations doing business in the US and Europe.


“In general, disconnecting Russia from SWIFT would be a crazy step on the part of our Western partners. It is obvious that for the companies which work in Europe and the US it would be harmful. And this applies not only to the shutdown of the service,” he said.


The US and European Union have been periodically threatening to disconnect Russia from SWIFT since 2014 (over SWIFT’s own objections), when the conflict in Ukraine flared up and the two powers introduced the first round of international penalties against Moscow for its alleged involvement.



As a reminder, at the time, the MasterCard payment system stopped serving clients of seven Russian banks without warning after Washington imposed its first set of sanctions on Moscow in 2014. In response, the Russian government ordered the creation of a national payment system. With the support of the country’s banking system, the Mir charge card was introduced in 2015, although there is no data on what its adoption rate has been in the following years.


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Published on February 14, 2018 04:59

Another Big British Bank Lands in Deep Trouble

Another Big British Bank Lands in Deep Trouble


Barclays faces a criminal trial in the UK. Last week it was RBS. 


Now, it’s the UK’s second-largest bank Barclays’ turn to face the music. A week ago, it was the UK’s third-largest bank, state-owned Royal Bank of Scotland, that faced one of its biggest scandal yet after whistle-blowers accused the bank of systematically forging customer signatures. RBS also faces the prospect of a multi-billion dollar fine for the way it sold residential mortgage-backed securities during the lead up to the Financial Crisis.


On Monday, the UK’s Serious Fraud Office (SFO) announced that it was charging Barclays for a second time over a deeply suspicious £2.2 billion ($3 billion) loan it issued in 2008 to Qatar. To avoid a government bailout, Barclays took a £12 billion loan from Qatar Holdings, which is owned by the state of Qatar. Under that deal, Barclays loaned £2.3 billion back to Qatar Holdings, which allegedly was then used to buy shares in Barclays. If true, it would amount to “unlawful financial assistance,” the SFO says.


Barclays is the first British bank to face a criminal trial in the UK related to its conduct during the Financial Crisis. The fresh charge of “unlawful financial assistance” comes after charges were brought against Barclays’ holding company and four former executives last July.


Founded in 1690, Barclays is one of the world’s oldest banks. As the Financial Times notes, the original lender was established on a bedrock of honesty, integrity and plain dealing — a reflection of the sober values of the Quaker families that founded the bank. Today, things could not be more different. The bank now boasts one of the longest rap sheets of any bank in Europe, which — given the pedigree of the local competition, including Deutsche Bank, HSBC, RBS, UBS, BNP and Credit Suisse — is no mean feat.


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Published on February 14, 2018 04:54

West Virginia Democratic Candidate Hauled From Legislative Hearing for Listing Off Corporate Donors to Fossil Fuel-Friendly Lawmakers

A packed House Chamber takes in Acting Governor Earl Ray Tomblin's speech, Wednesday, Jan. 12, 2011, in Charleston, W.Va., during the State of the State address. (AP Photo/Howie McCormick)





Photo: Howie McCormick/AP


WEST VIRGINIA DEMOCRATIC CANDIDATE HAULED FROM LEGISLATIVE HEARING FOR LISTING OFF CORPORATE DONORS TO FOSSIL FUEL-FRIENDLY LAWMAKERS













LISSA LUCAS IS a Democrat running for a state House seat in West Virginia’s District 7. Part of her campaign’s goal is to challenge the stranglehold of the fossil fuel industry on the state’s politics.


So in the second week of February, when the legislature held public hearings on House Bill 4268 — which would allow for the drilling on properties with multiple owners if 75 percent, rather than all, of the owners enter into a lease — Lucas came to voice her opposition to the legislation, believing it to undermine the rights of property owners.


And to the chagrin of the West Virginia House of Delegates, she came bearing receipts.


She stood on the floor and read off corporate donors to the legislators moving the legislation — going through the gamut of fossil fuel companies dominant in West Virginia, from Dominion to FirstEnergy.


Republican Delegate John Shott, who was overseeing the hearing, took offense at Lucas’s reading of publicly available campaign finance data, equating it to a personal attack.


“Miss Lucas, we ask no personal comments be made,” he told her over his microphone.


“This is not personal comments,” she replied.


“It is a personal comment and I’m gonna call you out of order if you talk about individuals on the committee. So if you would just address the bill. If not, I’ll ask you to please step down,” he said to her.


She continued to list off donors, her microphone was cut off, and legislative security was called to remove her from the chamber. Watch it below:



In an interview with The Intercept, Lucas explained that she traveled to the capitol from the northern part of the state the day before the hearing to make sure she could say her piece.


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Published on February 14, 2018 04:52

Energy CEO Says Fracking Build-out in New York Not Over, Wants Regulators to ‘Lay Down and Approve Every Pipeline’

Energy CEO Says Fracking Build-out in New York Not Over, Wants Regulators to ‘Lay Down and Approve Every Pipeline’



Crestwood natural gas compressor sign in Seneca Lake, New York








At a pipeline industry conference in Pittsburgh on January 31, Robert G. Phillips, CEO and President of Crestwood Equity Partners, offered an unusually candid perspective on pipelines, fracking, environmental regulations, and how industry plans to fight back against public opposition and permitting problems.


This past May, Crestwood announced that it was halting plans for a natural gas storage facility in the Finger Lakes region of New York following a three-year civil disobedience campaign by grassroots activists and environmentalists who feared contamination of Seneca Lake, which supplies drinking water to roughly 100,000 New Yorkers. But as Phillips told the conference, the company isn’t backing off for good.


“Now, this is hand-to-hand combat in this region,” Phillips told the crowd of oil and gas company representatives at the pipeline conference, dubbed Marcellus Midstream 2018.


“We have to be ninja-like,” Phillips said, in recommendation to his industry colleagues. “The owners and the contractors have to work together not just to get it done on-budget, on-time, but to get it done quietly, softly, as least-disruptively as possible.”


Crestwood certainly encountered a different type of disruption in New York. There, over 400 people, including Ithaca College scholar Sandra Steingraber, local business owners, and religious leaders, were arrested for trespass or disorderly conduct outside Crestwood’s Gallery 2 Expansion project, where the company still hopes to store up to 2.1 million barrels of liquid fossil fuels in salt caverns under Seneca Lake, according to the grassroots campaign We Are Seneca Lake.


Crestwood Equity Partners, a master limited partnership which merged with Inergy in 2013, currently uses truck and rail to transport propane and other liquid fossil fuels, but, Phillips explained, the company would rather be able to ship by pipeline. Some of the company’s plans in New York state, however, hit strong public opposition.


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Published on February 14, 2018 04:44

The Strategy of Maximal Extraction

The Strategy of Maximal Extraction

How Donald Trump Plans to Enlist Fossil Fuels in the Struggle for Global Dominance


The new U.S. energy policy of the Trump era is, in some ways, the oldest energy policy on Earth. Every great power has sought to mobilize the energy resources at its command, whether those be slaves, wind-power, coal, or oil, to further its hegemonic ambitions. What makes the Trumpian variant — the unfettered exploitation of America’s fossil-fuel reserves — unique lies only in the moment it’s being applied and the likely devastation that will result, thanks not only to the 1950s-style polluting of America’s air, waters, and urban environment, but to the devastating hand it will lend to a globally warming world.


Last month, if you listened to the chatter among elite power brokers at the World Economic Forum in Davos, Switzerland, you would have heard a lot of bragging about the immense progress being made in renewable energy.  “My government has planned a major campaign,” said Indian Prime Minister Narendra Modi in his address to the group.  “By 2022, we want to generate 175 gigawatts of renewable energy; in the last three years, we have already achieved 60 gigawatts, or around one-third of this target.”  Other world leaders also boasted of their achievements in speeding the installation of wind and solar energy.  Even the energy minister of oil-rich Saudi Arabia, Khalid Al-Falih, announced plans for a $30 billion to $50 billion investment in solar power.  Only one major figure defied this trend: U.S. Secretary of Energy Rick Perry.  The United States, he insisted, is “blessed” with “a substantial ability to deliver the people of the globe a better quality of life through fossil fuels.”


A better quality of life through fossil fuels? On this, he and his Trump administration colleagues now stand essentially alone on planet Earth.


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Published on February 14, 2018 04:28

Is History Repeating Itself In Oil Markets?

Is History Repeating Itself In Oil Markets?
Oil Industry

Back in 2014, U.S. shale production was growing so fast that it ended up crashing the market. Now, history could be repeating itself.


That was the warning from the International Energy Agency, which said in its latest Oil Market Report that a “second wave” of shale supply threatens another downturn.


Total global oil supply is expected to grow faster than demand this year, which could lead to another downturn. It’s a conclusion that the IEA tried to emphasize in previous reports, but the message finally seems to be sinking in.


The extraordinary run up in benchmark prices in December and January came to a startling end two weeks ago. Part of the reason was because of the broader market turmoil in equities, and part of it was because hedge funds and other money managers had overbought oil futures, exposing the market to a price correction.


But as the IEA notes, the real worry is rising oil supply, which means that “the underlying oil market fundamentals in the early part of 2018 look less supportive for prices.”


It isn’t all bad news for benchmark prices. The IEA noted that due to the OPEC production cuts and strong demand, inventories fell at a remarkable rate last year. The oil inventory surplus currently stands at about 52 million barrels above the five-year average, down sharply from 264 million barrels a year ago. Importantly, while crude oil inventories are closing in on the five-year average, total stocks of gasoline and other refined products have already fallen well below that threshold. “With the surplus having shrunk so dramatically, the success of the output agreement might be close to hand,” the IEA wrote.



(Click to enlarge)


But even as the elusive “balance” in the oil market is within reach, the IEA says things might quickly reverse.


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Published on February 14, 2018 04:25

The Ghosts of 1968

The Ghosts of 1968

The hope of 1968 that public demonstrations can actually change the power structure has been lost.


1968 was a tumultuous year globally and domestically. The Prague Spring in Czechoslovakia–a very mild form of political and cultural liberalization within the Soviet bloc–was brutally crushed by the military forces of the Soviet Union.


The general strikes and student protests of May 1968 brought France to a standstill as demands for social and political change called the entire status quo into question.


On the other side of the planet, the Cultural Revolution was remaking China’s still-youthful revolution, to the detriment of the political status quo, the intelligentsia and the common people.


The U.S.was convulsed with assassinations, civil unrest and mass demonstrations against the war in Vietnam and the political status quo (the Democratic Party convention in Chicago).


Ironically, much of the world was benefiting from two decades of rising prosperity and the demise of colonialism. When expectations exceed actual opportunities, discontent is the result. When the power structure is deaf to the discontent, a cycle of repression and disorder feed on each other.


Fifty years on, the ghosts of 1968 are still with us. With the advantage of hindsight, 1968 was the culmination of the belief that it was still possible for the common people to change the political and social order in a positive fashion– to remake the status quo power structure into something more humane, accessible, just and fair.


The Western status quo bent but did not break. Nothing in the developed-world power structures actually changed. The status quo did break down in China, but the breakdown was not liberating; it was a catastrophe of injustice and destruction without precedent.


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Published on February 14, 2018 04:18

Interbank Loan Series Update: Message From “Fred”

Interbank Loan Series Update: Message From “Fred”


















Lots of people, including me, were wondering what happened with interbank loans. The series is now discontinued.








This post is in reference to my previous article Plunge in Interbank Lending: The Straw that Broke the Fed’s Back.








Here is an email a reader Andy sent from the Fred team.








Dear user,

There have been some structural changes to that data in addition to the corrections.

More information can be found at https://www.federalreserve.gov/feeds/h8.html

The Interbank Loans have been discontinued and we are confirming the validity of the last value in that series.


Sincerely,

FRED Team








FRB: DDP: Assets and Liabilities of Commercial Banks in the United States (Weekly) (H.8)
The Federal Reserve, the central bank of the United States, provides the nation with a safe, flexible, and stable monetary and financial system.
www.federalreserve.gov



FRB: DDP: Assets and Liabilities of Commercial Banks in the United States (Weekly) (H.8)







The chart has been updated one last time, removing the plunge.








Reverse Repo Adjustment








Reader Parker commented:








Through the end of 2017, the Fed tracked “interbank loans” which included “Fed Funds and reverse repos with banks” and “loans to commercial banks”; starting in 2018, the Fed is now tracking “Federal Funds and Reverse Repo” for bank and non-banks together (one number) and breaking out “Loans to commercial banks separately”; as a consequence, it looks like the chart you showed basically had the Feds data feed of Fed Funds and Reverse repo with banks + loans to commercial banks through 12/31/17 and subsequently it is only picking up “loans to commercial banks” because “Reverse repo with banks” is no longer reported as a standalone. I track the Fed H8 report every week which is why I noticed the change in reporting classifications across years.


Fed Funds and Reverse Repo is getting tighter which is still news worth but it didn’t suddenly drop by 90% in a week.


Please let me know any questions – best, Parker








Tightening Analysis








My analysis stands as to what is happening even though the previous chart is inaccurate. Note the lead-in chart for this article. Securities in bank lending took a sudden dive.








My overall message stands as previously delivered, just not the chart itself.








Apologies for the error.

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Published on February 14, 2018 04:15