Will Oil Kill The Zombies?

Submitted by Raúl Ilargi Meijer  –  The Automatic Earth


Ben Shahn Quick lunch stand in Plain City, Ohio Aug 1938

Oil producer Russia hikes rates to 10.5% as the ruble continues to plunge, while fellow producer Norway does the opposite, and cuts its rates, but also sees its currency plummet. As Greek stocks lose another 7.35% after Tuesday’s 13% loss on rumors about what the left leaning Syriza party will or will not do if it wins upcoming elections, and virtually anonymous Dubai drops 7.42%. We all know the story of the chain and its weakest link, and beware, these really still ARE global markets.

Meanwhile someone somewhere saved WTO oil from falling through the big, BIG, $60 limit for most of the day Thursday, and then it went south anyway. And that brings to mind the warnings about what would, make that will, happen to high yield energy junk bonds. Of which there’s a lot out there, but not much is being added anymore, that market has been largely shut to companies, especially in the shale patch. So how are they going to finance their fracking wagers? Hard to see.

And something tells me this Bloomberg piece is still lowballing the debt issue, though I commend them for making the link between shale and Fed ‘stimulus’ policies, something all too rare in what passes for press in the US these days. Continue reading

The Signal is a Clear Indication but of What??

Submitted by Thad Beversdorf  –  The First Rebuttal Blog

I’ve had a few discussions lately about the economy and the markets.  And it amazes how the media moulds our thought processes.  And I don’t mean just throwing out facts and figures that are shady at best but about the actual way we think.  A while back I got irritated hearing about the bloody mortgage numbers every week and wrote on the matter because they are completely irrelevant today.  Once upon a time they had some relevance to a wealth effect but that simply isn’t the case today.  And certainly was never important enough to be moving markets a full percentage point one way or the other.  The reason being the number of new mortgages is so far removed from the actual cashflow that we are using it to signal, that it has very little impact.

You see the wealth effect used to create additional cashflow from increased consumption and thus equity valuations should rise on that news.  However, in today’s post housing apocalypse the wealth effect is a distant memory at best.  Nobody feels wealthier because of their home equity (where that may even exist) anymore because the memory of how quickly it all disappeared is far too fresh.  It’s the same reason millennials are not interested in home ownership.  And so if the wealth effect is dead then mortgage numbers simply do not matter.  So why is it we still hear about these damn figures all the time?  The reason is because it is one more ‘indicator’ that can be used to sell a story and that’s the media’s job today.  They are simply selling a story.  Today’s world is about what can be made to feel real as opposed to be proven real. Continue reading

Memo To Citigroup CEO Micheal Corbat: Does Your Crony Capitalist Plunder Know No Shame?

The times are few and far between that I am in agreement with Senator Elizabeth Warren’s brand of Big Government liberalism. But I do applaud her willingness to stand up to the Wall Street lobby machine; her capacity to recognize and call-out out the egregious gambling dens that have metastasized there; and her insistence that never again should the hard-pressed taxpayers of America be forced to bailout the crony capitalist plunder that is enabled by the Fed’s free money madness.

But now comes a naked Wall Street raid on the taxpayers that’s beyond the pale; and it would have sailed right through in the dead of night absent Elizabeth Warren’s intrepid opposition. Bravo, Senator!

I am referring to the Citigroup drafted sneak attack on Washington’s tepid effort to curtail the more egregious gambling habits of some of the big banks. These incorrigible larcenists have been trying to gut the “push out” provisions of Dodd-Frank for more than three years now, yet the latter boils down to a simple and urgently necessary injunction to the banks. Namely, you can’t roll the dice in the “derivatives” gambling arenas with taxpayer guaranteed deposits. Continue reading

Retail Sales Confirm Dark Black Friday

Submitted by Jeffrey Snider  –  Alhambra Investment Partners

The initial indications from private retail metrics on the Black Friday kickoff were not good, though numerous attempts to downplay those results were initiated. The monthly retail sales figures from the Census Bureau will make that much harder as they square with the downbeat Black Friday estimates. In other words, Black Friday wasn’t “off” because consumers were “pulled” to shop earlier or later than Thanksgiving, rather they still have yet to show up at all anywhere.

ABOOK Dec 2014 Retail Sales

Once again, November’s increase was below 3% nominal growth which is not a recovery but a danger-zone. For all the jobs that have supposedly been created this year, the amount of spending per job is at an extremely low point. That would suggest that either those jobs are there but aren’t paying much at all; the jobs are paying but consumers would rather save; or the jobs might simply be the statistical phantoms that tax receipts suggest. None of those three options are particularly appealing.

Continue reading

Does QE Create “Deflation”?

Submitted by Pater Tenebrarum  –  The Acting Man Blog

Malinvestment vs. Overinvestment

Recently we have come across a very interesting article by Lee Adler, which discusses the connection between the Fed’s money printing activities and the shale oil boom. In this context the possibility is mentioned that QE may actually contribute to “creating deflation”.

Obviously, we agree with many, in fact with the vast majority of the points made by Lee Adler in his article. Money printing always diverts investment into lines that later on turn out to be unprofitable, precisely because it distorts relative prices in the economy. Lee Adler should also be commended for drawing attention to the fact that the money relation – i.e., the purchasing power of money – depends not only the money side of things, but also on the goods side.

In an unhampered market economy in which a market-chosen money is employed, it would be reasonable to expect that prices will tend to gently decline over time, as productivity increases will as a rule exceed whatever additions to the money supply occur (for instance, if gold were still used as money, its supply would increase by roughly 1.4% per year and it is a very good bet that economic productivity would be rising at a faster pace).

Thus, a mild, persistent decline in the prices of most or all goods and services is a hallmark of a progressing economy. Needless to say, anyone who has observed the computer industry in the wider sense over recent decades – the productivity growth of which has been so large it actually outpaced the effect of money printing on prices – will realize that no business needs rising consumer prices to thrive, and that consumers do not “postpone their purchases” due to falling prices. The entire idea that a “deflationary spiral” could somehow harm the economy is erroneous (however there is a reason why today’s policymakers are afraid of falling prices, which we will briefly discuss below). Continue reading

Should You Believe What They Tell You or What You See?

Submitted by Jim Quinn  –  The Burning Platform

Sometimes I wish I could just passively accept what my government monarchs and their mainstream media mouthpieces feed me on a daily basis. Why do I have to question everything I’m told? Life would be much simpler and I could concentrate on more important things like the size of Kim Kardashian’s ass, why the Honey Boo Boo show was canceled, the Victoria Secret Fashion Show, whether I’ll get a better deal on Chinese slave labor produced crap on Black Thanksgiving, Black Friday, or Cyber Monday, fantasy football league standings, the latest NFL player to knockout their woman and get reinstated, Obama’s latest racial healing plan, which Clinton or Bush will be our next figurehead president, or the latest fake rape story from Rolling Stone. The willfully ignorant masses, dumbed down by government education, lured into obesity by corporate toxic packaged sludge disguised as food products, manipulated, controlled and molded by an unseen governing class of rich men, and kept docile through never ending corporate media propaganda, are nothing but pawns to the arrogant sociopathic pricks pulling the wires in this corporate fascist empire of debt.

I’m sure my blood pressure would be lower and my mood better if I just accepted everything I was told by my wise, sagacious, Ivy League educated, obscenely wealthy rulers as the unequivocal truth. Why should I doubt these noble, well intentioned, champions of the common folk? They’ve never misled us before. They would never attempt to use two highly publicized deaths as a lever to keep black people and white people fighting each other and not realizing all races are now living in a militarized police surveillance state supported by the one Party. They would never use their complete control over the financial, political, judicial, and media organisms to convince the masses that voting for one of their hand selected red or blue options will ever actually change anything. They would never engineer the overthrow of a democratically elected government, cover up the shooting down of an airliner, and attempt to blame their crimes on the leader of a nuclear power in their efforts to retain a teetering global empire. They would never overthrow or wage economic warfare on countries that don’t toe the line regarding the continued dominance of the petrodollar in global commerce. Continue reading

The Daily Debt Rattle

Submitted by Raúl Ilargi Meijer  –  The Automatic Earth

Oil Plunge Rips Through Markets as Investors Seek Bottom (Bloomberg)
Bank Of America Sees $50 Oil As OPEC Dies (AEP)
Name That Chart! Oil Supply Or Demand Edition (Zero Hedge)
Dow Down Triple Digits As Oil Hits Multi-Year Lows (CNBC)
Steen Jakobsen: The US Could Bail Out Its Own Oil Sector (CNBC)
China’s Wild Market Swings: This Is Just The Start (CNBC)
PBOC, Traders Tussle Over Yuan (WSJ)
Yuan Has Real Shot at IMF Blessing on Reserve Status (Bloomberg)
How Wal-Mart Made Its Crumbling China Business Look So Good for So Long (BBG)
‘Known Unknown’ Dangers Are Lurking In The Stock Market (MarketWatch)
Britons Are Living Beyond Their Means, Says Government Watchdog (Telegraph)
Leaked EU Summit Conclusions: Draghi Left Hanging? (FT)
Greek Left Candidate Willing To Call European Leaders’ Bluff (AEP)
Superbugs To Kill 10 Million People A Year, Cost $100 Trillion By 2050 (BBC)
Generation Y Have Every Right To Be Angry At Baby Boomers’ Wealth (Guardian)
One-Fifth Of Americans Don’t Plan To Pay Off Their Debt (CNBC)
IMF Finds Another $15 Billion Black Hole In Ukraine’s Finances (CNBC)
Guantanamo Six ‘Will Enjoy Complete Freedom’ In Uruguay (BBC)
CIA Torture Report May Set Off Global Prosecutions (Bloomberg)
President George W. Bush ‘Knew Everything’ About CIA Interrogation (BBC)

Continue reading

Oil Plunge Rips Through Markets as Investors Seek Bottom (Bloomberg)

Bank Of America Sees $50 Oil As OPEC Dies (AEP)

Name That Chart! Oil Supply Or Demand Edition (Zero Hedge)

Dow Down Triple Digits As Oil Hits Multi-Year Lows (CNBC)

Steen Jakobsen: The US Could Bail Out Its Own Oil Sector (CNBC)

China’s Wild Market Swings: This Is Just The Start (CNBC)

PBOC, Traders Tussle Over Yuan (WSJ)

Yuan Has Real Shot at IMF Blessing on Reserve Status (Bloomberg)

How Wal-Mart Made Its Crumbling China Business Look So Good for So Long (BBG)

‘Known Unknown’ Dangers Are Lurking In The Stock Market (MarketWatch)

Britons Are Living Beyond Their Means, Says Government Watchdog (Telegraph)

Leaked EU Summit Conclusions: Draghi Left Hanging? (FT)

Greek Left Candidate Willing To Call European Leaders’ Bluff (AEP)

Superbugs To Kill 10 Million People A Year, Cost $100 Trillion By 2050 (BBC)

Generation Y Have Every Right To Be Angry At Baby Boomers’ Wealth (Guardian)

One-Fifth Of Americans Don’t Plan To Pay Off Their Debt (CNBC)

IMF Finds Another $15 Billion Black Hole In Ukraine’s Finances (CNBC)

Guantanamo Six ‘Will Enjoy Complete Freedom’ In Uruguay (BBC)

CIA Torture Report May Set Off Global Prosecutions (Bloomberg)

President George W. Bush ‘Knew Everything’ About CIA Interrogation (BBC)

Oil Plunge Rips Through Markets as Investors Seek Bottom (Bloomberg)

Bank Of America Sees $50 Oil As OPEC Dies (AEP)

Name That Chart! Oil Supply Or Demand Edition (Zero Hedge)

Dow Down Triple Digits As Oil Hits Multi-Year Lows (CNBC)

Steen Jakobsen: The US Could Bail Out Its Own Oil Sector (CNBC)

China’s Wild Market Swings: This Is Just The Start (CNBC)

PBOC, Traders Tussle Over Yuan (WSJ)

Yuan Has Real Shot at IMF Blessing on Reserve Status (Bloomberg)

How Wal-Mart Made Its Crumbling China Business Look So Good for So Long (BBG)

‘Known Unknown’ Dangers Are Lurking In The Stock Market (MarketWatch)

Britons Are Living Beyond Their Means, Says Government Watchdog (Telegraph)

Leaked EU Summit Conclusions: Draghi Left Hanging? (FT)

Greek Left Candidate Willing To Call European Leaders’ Bluff (AEP)

Superbugs To Kill 10 Million People A Year, Cost $100 Trillion By 2050 (BBC)

Generation Y Have Every Right To Be Angry At Baby Boomers’ Wealth (Guardian)

One-Fifth Of Americans Don’t Plan To Pay Off Their Debt (CNBC)

IMF Finds Another $15 Billion Black Hole In Ukraine’s Finances (CNBC)

Guantanamo Six ‘Will Enjoy Complete Freedom’ In Uruguay (BBC)

CIA Torture Report May Set Off Global Prosecutions (Bloomberg)

President George W. Bush ‘Knew Everything’ About CIA Interrogation (BBC)

Oil Plunge Rips Through Markets as Investors Seek Bottom (Bloomberg)

Bank Of America Sees $50 Oil As OPEC Dies (AEP)

Name That Chart! Oil Supply Or Demand Edition (Zero Hedge)

Dow Down Triple Digits As Oil Hits Multi-Year Lows (CNBC)

Steen Jakobsen: The US Could Bail Out Its Own Oil Sector (CNBC)

China’s Wild Market Swings: This Is Just The Start (CNBC)

PBOC, Traders Tussle Over Yuan (WSJ)

Yuan Has Real Shot at IMF Blessing on Reserve Status (Bloomberg)

How Wal-Mart Made Its Crumbling China Business Look So Good for So Long (BBG)

‘Known Unknown’ Dangers Are Lurking In The Stock Market (MarketWatch)

Britons Are Living Beyond Their Means, Says Government Watchdog (Telegraph)

Leaked EU Summit Conclusions: Draghi Left Hanging? (FT)

Greek Left Candidate Willing To Call European Leaders’ Bluff (AEP)

Superbugs To Kill 10 Million People A Year, Cost $100 Trillion By 2050 (BBC)

Generation Y Have Every Right To Be Angry At Baby Boomers’ Wealth (Guardian)

One-Fifth Of Americans Don’t Plan To Pay Off Their Debt (CNBC)

IMF Finds Another $15 Billion Black Hole In Ukraine’s Finances (CNBC)

Guantanamo Six ‘Will Enjoy Complete Freedom’ In Uruguay (BBC)

CIA Torture Report May Set Off Global Prosecutions (Bloomberg)

President George W. Bush ‘Knew Everything’ About CIA Interrogation (BBC)

Faber Favours Commodity Stocks In India, Asia … and Gold

Submitted by Mark O’Byrne  –  Founding Partner of  GoldCore

Respected economic historian and author of the “Gloom, Boom and Doom Report,” Dr Marc Faber has warned about the continuing and coming decline of western economic power.

He believes that the generation of young people starting to work today will be the first in two hundred years to have a lower standard of living than their parents had. He believes dividend paying Asian stocks will grow wealth in the coming years and remains an advocate of owning physical gold.

In a video interview with Barron’s, Dr Faber states,

“I meant that with respect to western societies and Japan where essentially the younger people – today’s generation – will earn less than their parents and they will have less wealth than their parents, inflation adjusted.”

“[This is] because we will have wealth taxes, we will have more estate taxes and we have essentially declining real median incomes in the western world and Japan.”

Faber has consistently warned since the late 1990’s that this dynamic would come to pass as the West and the U.S. in particular exported its industrial infrastructure and binged on consumer junk fuelled by easy credit while the emerging economies of east Asia used the proceeds to focus on production rather than consumption to become industrial powerhouses. Continue reading

Do Foreclosures Increase During a Housing Recovery?

Submitted by Jim Quinn  –  The Burning Platform

I’m told by my government keepers the economy is booming, jobs are being added by the millions, home prices are rising, and consumers are spending. Then why did foreclosures in the country jump by 6% over the prior year, marking the first increase in 26 months? This real data doesn’t match the government storyline. RealtyTrac reports the hard truth. And this is just the beginning. The next leg down in housing is upon us.

A total of 55,906 U.S. properties started the foreclosure process in November, a decrease of 1 percent from the previous month but a 6 percent increase from a year ago, the first year-over-year increase following 27 consecutive months of year-over-year decreases. 50,102 U.S. properties were scheduled for foreclosure auction during the month, down 16 percent from an 18-month high in the previous month but up 5 percent from a year ago.

“Foreclosure rates on 2014-originated loans are actually higher than 2013-originated loans nationwide and in many markets, indicating that lenders are open to a slightly higher level of risk than we’ve seen over the past five years of extremely tight lending standards,” Blomquist continued.

Scheduled foreclosure auctions increased from a year ago in 30 states, including Kentucky (up 163 percent), Tennessee (up 159 percent), North Carolina (up 157 percent), New Jersey (up 117 percent), Oregon (up 114 percent), New York (up 76 percent), Texas (up 34 percent), Pennsylvania (up 13 percent), Georgia (up 8 percent), and Washington (up 7 percent).

REOs increased from a year ago in 15 states, including Maryland (up 93 percent), North Carolina (up 66 percent), New York (up 64 percent), Kentucky (up 56 percent), New Jersey (up 54 percent), Iowa (up 29 percent), and Massachusetts (up 29 percent).

Five of the nation’s 20 largest metro areas posted year-over-year increases in foreclosure activity: New York (up 71 percent), Houston (up 70 percent), Philadelphia (up 43 percent), Boston (up 27 percent) and Baltimore (up 22 percent).

Among the nation’s 20 largest metros, those with the five highest foreclosure rates were Miami (one in every 394 housing units with a foreclosure filing), Tampa (one in every 432 housing units), Baltimore (one in every 576 housing units), Philadelphia (one in every 625 housing units), Chicago (one in every 716 housing units) and Riverside-San Bernardino-Ontario in Southern California (one in every 725 housing units).