WTI Crude oil bounces off support – almost perfect technical trading

The low of November 14th, 2016 was $42.07. The low today was $42.03. This is as close to a perfect bounce off support. The price reached the lowest since August but by a mere 4 cents. Can oil prices still make the break? Sure. The fall is backed by fundamentals. Oil prices are falling as […]

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State Department Issues Statement On US-Russia Relations

Shortly after Russia’s deputy foreign minister Ryabkov snubbed the US, cancelling a meeting with the Under Secretary of State Thomas A. Shannon, Jr., in retaliation to the Trump administration’s announcement on Tuesday that it has imposed sanctions on 38 Russian individuals while a parallel bill of Russian sanctions is making its way through Congress, the US State Department issued a statement on US-Russian relations.

Shortly after the Russian snub, the US State Department responded that it regrets “that Russia has decided to turn away from an opportunity to discuss bilateral obstacles” and then adds: “Let’s remember that these sanctions didn’t just come out of nowhere. Our targeted sanctions were imposed in response to Russia’s ongoing violation of the sovereignty and territorial integrity of its neighbor, Ukraine. If the Russians seek an end to these sanctions, they know very well the U.S. position.”

Finally, for any reporters who are still confused how Russia could possibly slam the door of diplomacy in the US’ face after an American F-18 shot down a Syrian fighter jet flying over Syria, and proceeded with two separate sanctions, the State Department has some advice: “we would refer you to the Russian government to explain their decision to cancel this meeting. “

Full statement below:

Statement from the State Department on U.S.-Russia relations

 

We regret that Russia has decided to turn away from an opportunity to discuss bilateral obstacles that hinder U.S.-Russia relations.

 

During the Secretary’s April visit to Moscow, he and Foreign Minister Lavrov agreed to establish a senior-level working group to discuss bilateral issues of concern. Undersecretary Shannon had planned to travel to St. Petersburg this week to continue discussions which began in May when he met Deputy Foreign Minister Ryabkov in New York.

 

The maintenance package of sanctions issued yesterday by the Treasury Department, which only reinforced existing sanctions, was designed to counter attempts to circumvent our sanctions and to maintain alignment of U.S. measures with those of our international partners. We have regularly updated these sanctions twice a year since they were first imposed.

 

Let’s remember that these sanctions didn’t just come out of nowhere. Our targeted sanctions were imposed in response to Russia’s ongoing violation of the sovereignty and territorial integrity of its neighbor, Ukraine. If the Russians seek an end to these sanctions, they know very well the U.S. position: Our sanctions on Russia related Russia’s ongoing aggression against Ukraine will remain in place until Russia fully honors its obligations under the Minsk Agreements. Our sanctions related to Crimea will not be lifted until Russia ends its occupation of the peninsula.

 

We would refer you to the Russian government to explain their decision to cancel this meeting. From our perspective, and as Secretary Tillerson has made clear, there are many issues to be discussed. We remain open to future discussions.

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Clarity Or Confusion At The Fed

Authored by 720Global's Michael Lebowitz via RealInvestmentAdvice.com,

Are you kidding? Are you kidding? No one knows what you’re doing. 

 

– Economist John Taylor in response to William Dudley’s (President Federal Reserve Bank of New York, Vice Chairman of the Federal Open Market Committee) comment that the Federal Reserve (Fed) has been very clear in their discussions about monetary policy.

For the last few years the Fed has repeatedly emphasized that they want to be as open and transparent about monetary policy actions as possible. Amid those reassurances, amateur and professional Fed watchers continue to be flummoxed by the vagaries of language used in speeches, lack of adherence to implied actions and outright contradictions between their words and deeds. As evidenced by the opening quote, one wonders whether they are being intentionally delusory or whether their hubris makes them genuinely oblivious to their own obfuscations.

Confusion

In 2012, the Fed published a Statement on Longer-Run Goals and Monetary Policy Strategy (LINK). That statement has been updated each January since. The opening sentence of that statement contains an interesting modification to its “dual” mandate:

“The Federal Open Market Committee (FOMC) is firmly committed to fulfilling its statutory mandate from the Congress of promoting maximum employment, stable prices, and moderate long-term interest rates.

While maximizing employment and engineering stable prices are the official congressionally mandated objectives, the term “moderate long-term interest rates” has never been a part of the congressional mandate. Needless to say, this is confusing and erroneous.

Ironically, with regard to its intent to explain monetary policy decisions as clearly as possible, the statement continues:

“Such clarity facilitates well-informed decision-making by households and businesses, reduces economic and financial uncertainty, increases the effectiveness of monetary policy, and enhances transparency and accountability, which are essential in a democratic society.”

So following the erroneous statement in the opening regarding their mandate, they then provide a lecture on the importance of Fed clarity to our democratic society.

Furthermore, the document is mislabeled as it contains nothing on monetary strategy. The statement only discusses goals presented in an obtuse fashion based on their congressional mandate which they confounded in the first sentence. As for monetary policy strategy (and to emphasize the point) the document conveys nothing coherent about the reaction function of the policy-setting body under scenarios where deviations from the goals emerge.

The members of the Fed have gone to great lengths in countless speeches, congressional testimonies and press conferences to portray a decision-making body that is disciplined and rigorous. Further, they incessantly attempt to set the record straight about their positive contribution to prior periods of economic and financial instability. In their view, they have never been complicit in creating economic malaise and always play the role of the good physician coming to the aid of the country in troubling economic periods. As demonstrated via the confusion mentioned above, their perspective is inconsistent and deceptive.

To offer an illustration of such inconsistencies:

At the end of 1997, the 6-month average rate of inflation as measured by the Core PCE deflator (the Fed’s preferred inflation measure) was 1.43%, the average unemployment rate was 5.2% and the average Fed Funds rate was 5.50%.

 

At the end of 2003, the 6-month average rate of inflation (Core PCE) was 1.87%, the average unemployment rate was 5.98% and the average Fed Funds rate was 1.0%.

While there are a variety of other considerations for the economy when analyzing the two periods, data related to the two mandated objectives of the Fed were similar and trending in the “right” direction (inflation up, unemployment down). Despite those facts, the Fed Funds interest rate differential between the two periods, 4.50%, is enormous. Contrary to the insistence of the Fed, there is substantial evidence that the long period of low interest rate policy followed by well-telegraphed quarter-point interest rate hikes preceding the financial crisis of 2008 were major factors in generating the instabilities that almost bankrupted the financial sector.

Now, consider conditions today. The average rate of inflation (Core PCE) for the last 6-months is 1.82%, the average unemployment rate is 4.50% and the Fed Funds rate was just increased to 1.00% following 7 years at essentially 0.00%. Taking into account the size of the Fed’s balance sheet ($4.4 trillion) due to quantitative easing, the level of Fed-provided accommodation remains extraordinary even when compared to the aggressively easy monetary policy of the early 2000’s.

The argument for a more normal policy stance is stronger today than it was in either of the two prior instances, and yet the Fed’s stance is stubbornly and unjustifiably extreme.

In fairness, no two time periods are the same and policy responses are never identical. However, if the intent of monetary policy actions are aimed at ensuring the health of the economy, then it is also plausible and logical that policy, improperly applied may produce sick and unstable conditions. Interestingly, that fact is freely acknowledged by current Fed members with regard to monetary policy of the 1970’s and the Great Depression era. Why then, are the increasingly aggressive and interventionist policies of the last 20 years not a concern or even considered a factor in causing the recent boom-bust cycles by those very same Fed members? Even more importantly, why does the market acquiesce and encourage what are certain to be revealed as major policy errors? The good news is that a lot of money can be made by investors who properly identify central banker mistakes.

Summary

Current Fed policy is grossly inconsistent with the actions they have taken in the past and the rules they themselves have discussed in post-crisis years. Evidence of that fact abounds. There is an acute lack of clarity about the strategy for policy normalization, specifics about what dictates their decision-making and how they will go about it. In the late 1970’s and early 1980’s, Paul Volcker was so clear about his policy objectives that he rarely needed to discuss them when he made public comments. Despite the difficulties associated with extracting the country from prior bad monetary policy, everyone knew his intent was to conquer run-away inflation and restore healthy economic growth.

Given the data comparison above and their mandate, there are sound reasons for the Fed to be much more aggressive in raising the Fed Funds rate and reducing the size of their balance sheet. The truth is they are concerned that such “hawkish” actions might greatly reduce the prices of many financial assets. Despite the short-term pain, acknowledging that current eye-watering valuations of many assets are predicated on Fed policy and not fundamentals would seem to be a prudent first step toward “normalization”.  Watching the Fed Chairman evade direct answers on the topics of bubbles and policy normalization leaves no doubt that confusion, not clarity, will continue to be the Fed’s tool of choice.

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Warning: the Oil Crash Is Just Days Away From Triggering a Debt Crisis

The Oil collapse is about to trigger a crisis in junk bonds.

Oil has been going straight down for weeks now. As we write this, black gold is below $43 a barrel, down 16% from its levels a month ago.

“So what?” you might ask, “Oil experiences similar drops all the time. Why is this important?”

This is important, because the high yield, or junk bond market is closely associated with Oil prices. And if Oil continues to collapse we’re going to start seeing some serious contagion risks in high yield credit.

And you know what asset class tracks High Yield Credit or Junk Bonds?

Stocks…

A Crash is coming…

And smart investors will use it to make literal fortunes from it.

We offer a FREE investment report outlining when the market will collapse as well as what investments will pay out massive returns to investors when this happens. It's called Stock Market Crash Survival Guide.

We made 1,000 copies to the general public.

As I write this, only 79 are left.

To pick up one of the last remaining copies…

CLICK HERE!

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

 

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Officer Stabbing At Flint Airport By “Allahu Akbar”-Shouting Canadian Investigated As Act Of Terrorism

Wednesday morning’s incident at Bishop airport in Flint, Michigan, in which an airport officer was stabbed in the neck is being investigated as a possible act of terrorism according to Federal investigators.

Lieutenant Jeff Neville, who retired from the Genesee County Sheriff’s Office, was stabbed in the neck and is listed in stable condition. Sources cited by ABC say Neville was at his post at the top of the escalators at Bishop when he was attacked from behind with a larger knife, similar to a Bowie knife.

The knife-yielding suspect is Canadian-born and shouted “Allahu Akbar” before stabbing the officer multiple law enforcement sources say. He was then taken into custody.

After the attack, Bishop International Airport was evacuated and is closed. The airport released the following statement:

“All passengers are safe and are being evacuated at this time. Please check with your airline for potential cancellations or delays.”

The FBI is leading the investigation. The Flint City Hall began operating under heightened security in an abundance of caution after the incident.

“Right now we are still awaiting more information about the situation at Bishop Airport this morning,” Flint Mayor Karen Weaver said. “My thoughts and prayers are with all of our law enforcement officers who work to service and protect us each and every day. I want the public to know that several agencies are involved and working to ensure the situation is under control. However, at this time we are taking extra precautions just to be safe.”

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When Doves Fly – Bond Market Turbulence Ahead – by Michael Carino

 

It is largely acknowledged that after a decade of unprecedented
monetary accommodation in the US and abroad, bond markets are extremely
overvalued.  Globally, central banks are
trying to slowly deflate this bubble but the beast created is not easily
broken.  A decade of manipulating bond
prices has created a small consortium of large balance sheet traders who trade
the most liquid Treasury market in a high volume fashion, thus setting global rates
much lower than historical norms. This manipulation reallocates billions in
interest payments from badly needed investors such as pensions to a few hedge funds
and banks. These practices end up costing the government much less in interest
costs so these gargantuan bad practices continue (Over a trillion of US
Treasuries trade daily in cash and futures markets and there are only 14
trillion Treasuries. Additionally, foreigners own half and the Fed owns 2.5
Trillion – clearly too high of volume compared to securities available).

 

These questionable trading practices have rallied long term
Treasuries over 50 basis points in just the past month – a substantial move.  Even more spectacularly, this happened when
the Fed raised the Fed Funds Rate 25 bps and said they expect 1.75% in further increases,
set out their path to trillions in future bond sales to reduce their balance
sheet and the government is planning on issuing ultra-long dated bonds.  Yes, it’s clear to see that the Fed’s
manipulative practices from the last decade has turned the bond market into
something resembling the wild west.  This
will end tragically with systemic issues in the bond market.  This has been the modus operandi of the Fed for
the last 20 or so years.  Over accommodate
the economy with easy monetary police, create systemic issues and resolve with
more accommodative policies. This time around, the blame will be placed
squarely on monetary policy and the Fed knows it.

 

To try to limit the calamity from the insanity in the bond
market, the most dovish of Fed officials have been trying to limit these
manipulative strategies and slowly steer rates out of the upper stratosphere and
on a path to normalization. We continue to get economic data showing the
economy is not only normal but poised to overheat with accelerating inflation.  GDP of 3% and inflation of 2% does not justify
depression era level of rates.  Home
prices just surged to a new record high! No.  History shows rates should be at least 2% to
3% higher.  Long term Treasuries could
have market losses of 50% if rates normalized and you could still argue they
are overpriced.  When markets are this
overpriced, the probability of a severe parabolic move to higher yields is
elevated.

 

The Fed knows this and wants to change this environment
before the forgetful public gets scorched again.  Recently, New York Federal Reserve President
William Dudley, a dovish member of the FOMC, stated that he is confident that
economic expansion has a way to run and strong labor markets will eventually
trigger a rebound in inflation. 
Tragically, the media barely touched on these comments and longer dated
bonds rallied on high volume.  Short dated
bond yields have not been moving lower.  There
are too many bonds available, they are priced right on top of current funding
costs and this part of the interest rate curve is difficult to manipulate. 

 

Even more obvious of the Fed in unison trying to deflate the
bond market bubble, uber-dovish Federal Reserve Bank of Boston President Eric
Rosengren said that the era of low interest rates in the United States and
elsewhere poses
financial stability
risks
and that central bankers must factor such concerns into their
decision making process.  This is as high
of an alarm that can be rung – and just rung by one of the most accommodative of
FOMC members.  Media – please report and
make the public aware of these risks that now even the Fed feels compelled to
highlight these issues.  How can there be
comments like this and the public still is invested in this investment class?  What’s the excuse going to be this time around
when there are significant losses in the bond market.  I missed those Fed speeches?

 

 

 

These Fed comments acknowledge there is a serious problem in
the bond market and they are trying to encourage a more rational pricing
function in rates – good luck. The only way to create normality in the bond
market after such buildup of risks from the most accommodative monetary policy
in the worlds history is a financial crisis that will put these manipulative trading
strategies out of business.  And that
leads to different issues that can leach into slower economic growth.  The Fed has to pick their poison. It appears
they want this mispricing of bonds to come to an end.  Unfortunately, it appears they are fine with a
slow end to these practices.  A slow end
means risks will continue to build and the end will be that much more painful
and destructive.  We all know the longer
you wait to take your medicine, the sicker and more painful the situation
becomes.  I just hope the patient isn’t
left in critical condition from the Fed’s medicine again.

 

 

 

by Michael Carino, 6/21/17

 

Michael Carino is the CEO of Greenwich Endeavors, a
financial service firm, and has been a fund manager and owner for more than 20
years.  He has positions that benefit
from a normalized bond market and higher yields.  Do you?

 

 

    

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WTI Tumbles To $42, Brent Below $45 As Credit Crashes

High yield energy credit markets are in trouble again, with risk now at its highest level in 7 months.

Despite this morning’s Iran-hyped OPEC bullshit and a small draw in Gasoline, it appears the reality of surging US shale production and lagging demand is weighing down oil (and gasoline) markets…

Since OPEC announced its production cut extension, the crude curve has crashed at the front-end…

Macquarie’s head ofoil & gas research warns…

  • ‘A WHILE’ BEFORE OPEC TAKES BACK CONTROL OF MARKET
  • ‘HUGE WAVE’ OF U.S. SHALE OFFSETTING OPEC CUTS

Brent crude extends drop falling below $45/bbl for the first time since November 15.

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Mayor Bloomberg: Democrats Will Lose In 2020 Because “Party Is Going To Be Torn Apart”

Last night, in CNN and Anderson Cooper’s effort to desperately avoid discussing the Democratic debacle unfolding in Georgia, Cooper decided to pivot his discussion with former New York City Mayor Michael Bloomberg to focus on the 2020 election cycle.  We can only imagine the thought process: ‘ignore Georgia, surely there must be some silver lining for Democrats if we just look far enough out on the horizon, right Mike?’

Unfortunately, Bloomberg didn’t offer up the reassurances that Cooper, and his employer, were so desperately seeking.  Instead, he pegged Trump’s re-election odds at 55% and predicted the entire Democratic party would be in complete disarray by the time the next election cycle rolls around.

Cooper:  “I think recently you gave the chance that Trump would be re-elected of 55%.”

 

Bloomberg:  “Yeah, sure.  The incumbent always has an advantage.”

 

“And the Democratic Party is going to be torn apart by the left and the centralists.”

Of course, after Wikileaks’ DNC leaks exposed the complete corruption of the DNC, which went to great lengths to undermine the candidacy of Bernie Sanders, the real question isn’t whether the Democratic party will suffer the consequences of a deeply divided electorate, but rather why that division hasn’t already manifested itself in the form of a deep party restructuring.

But the trainwreck, at least for CNN, didn’t end there.  Asked why Hillary lost, Bloomberg seemingly had two explanations: 1) Republicans are dumb and got duped by a catchy slogan and 2) the media, “given that it is mostly Democratic” should have done even more to help Hillary.

“Hillary never got a real message out.”

 

“Whereas Donald had a great saying: ‘Make America Great Again.’ I don’t know what ‘Again’ means, but ‘America’, that’s patriotic and great…that’s a good word.”

 

“Slogans matter.  You don’t think that’s what your decision’s based on but it predisposes you to really want to do something.”

 

“And I never understood, given that most of the media is Democratic, why Hillary couldn’t find someone to give her a good tag line.”

Guess Mayor Bloomberg is done pretending that the mainstream media bias is a ‘right-wing myth.’

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69 Percent Of Americans Do Not Have An Adequate Emergency Fund

Authored by Michael Snyder via The Economic Collapse blog,

Do you have an emergency fund?  If you even have one penny in emergency savings, you are already ahead of about one-fourth of the country.

I write about this stuff all the time, but it always astounds me how many Americans are literally living on the edge financially.  Back in 2008 when the economy tanked and millions of people lost their jobs, large numbers of Americans suddenly couldn’t pay their bills because they were living paycheck to paycheck.  Now the stage is set for it to happen again.  Another major recession is going to happen at some point, and when it does millions of people are going to get blindsided by it.

Despite all of our emphasis on education, we never seem to teach our young people how to handle money.  But this is one of the most basic skills that everyone needs.  Personally, I went through high school, college and law school without ever being taught about the dangers of going into debt or the importance of saving money.

If you are ever going to build any wealth, you have got to spend less than you earn.  That is just basic common sense.  Unfortunately, nearly one out of every four Americans does not have even a single penny in emergency savings…

Bankrate’s newly released June Financial Security Index survey indicates that 24 percent of Americans have not saved any money at all for their emergency funds.

 

This is despite experts recommending that people strive for a savings cushion equivalent to the amount needed to cover three to six months’ worth of expenses.

For years, I have been telling my readers that at a minimum they need to have an emergency fund that can cover at least six months of expenses.  It is great to have more than that, but everyone should strive to have at least a six month cushion.

Unfortunately, that same Bankrate survey found that only 31 percent of Americans actually have such a cushion

The June survey also found that 31 percent of Americans have what Bankrate considers an ‘adequate’ savings cushion — six or more months’ worth of money to pay expenses — which means that nearly two-thirds of the country isn’t saving enough money.

That means that a whopping 69 percent of all Americans do not have an adequate emergency fund.

So what is going to happen if another great crisis arrives and millions of people suddenly lose their jobs?

Just like last time, mortgage defaults will start soaring and countless numbers of families will lose their homes.

If you do not have anything to fall back on, you can lose your spot in the middle class really fast.  And in the case of a truly catastrophic national crisis, trying to operate without any money at all is going to be exceedingly challenging.

Just recently, the Federal Reserve conducted a survey that discovered that 44 percent of all Americans do not even have enough money “to cover an unexpected $400 expense”.

That is almost half the country.

And a different survey by CareerBuilder found that 75 percent of all Americans have lived paycheck to paycheck “at least some of the time”.

Unfortunately, in a desperate attempt to make ends meet many of us continue to pile up more and more debt.  According to Moneyish, Americans have now accumulated more than a trillion dollars of credit card debt, more than a trillion dollars of student loan debt, and more than a trillion dollars of auto loan debt.

We’ve racked up $1 trillion in credit card debt — and that’s just a fraction of what we owe. That’s according to data released this year from the Federal Reserve, which found that U.S. consumers owe $1.0004 trillion on their cards, up 6.2% from a year ago; this is the highest amount owed since January 2009. What’s more, this isn’t the only consumer debt to top $1 trillion. We now also owe more than $1 trillion for our cars, and for our student loans, the data showed.

Overall, U.S. consumers are now more than 12 trillion dollars in debt.

We often criticize the federal government for being nearly 20 trillion dollars in debt.  And that criticism is definitely valid.  What we are doing to future generations of Americans is beyond criminal.

But are we not doing something similar to ourselves?

When you divide the total amount of consumer debt by the size of the U.S. population, it breaks down to roughly $40,000 for every man, woman and child in our country.

When someone lends you money, you have to pay back more than you originally borrow.  And in the case of high interest debt, you can end up paying back several times what you originally borrowed.

If you carry a balance from month to month on a high interest credit card, it is absolutely crippling you financially.  But many Americans don’t understand this.  Instead, they just keep sending off the “minimum payment” every month because that is the easiest thing to do.

If you ever want to achieve financial freedom, you have got to get rid of your toxic debts.  There are some forms of low interest debt, such as mortgage debt, that are not going to financially cripple you.  But anything with a high rate of interest you will want to pay off as soon as possible.

And everyone needs a financial cushion.  Unless you can guarantee that your life is always going to go super smoothly and you are never going to have any problems, you need an emergency fund to fall back on.

Yes, you may need to make some sacrifices in order to make that happen.  Nobody ever said that it would be easy.  But just about everyone has somewhere that a little “belt tightening” can be done, and in the long-term it will be worth it.

When you don’t have to constantly worry about how you are going to pay the bills next month, it will help you sleep a lot easier at night.  Many of us have put a lot of unnecessary stress on ourselves by spending money that we didn’t have for things that we really didn’t need.

And now is the time to get your financial house in order, because it appears that another major economic downturn is not too far away.

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