Forget China: This Extremely "Developed" Country Just Suffered Its Biggest Money Outflow Ever

Submitted by Tyler Durden on 11/02/2015 15:44 -0500
http://www.zerohedge.com/news/2015-11-02/forget-china-extremely-developed-country-just-suffered-its-biggest-money-outflow-eve
While understandably all eyes have been fixed on every monthly capital outflow update from China (even the ones that the Politburo is clearly massaging), few have noticed that one of the biggest total outflows currently in the global developed economy is taking place right in America's own back yard.
According to BofA's Kamal Sharma, Canada’s basic balance - a combination of the capital and the current account: a measure of national accounts that spans everything from trade to financial-market flows - swung from a surplus of 4.2% of GDP to a deficit of 7.9% in the 12 months ending in June. That’s the fastest one-year deterioration among 10 major developed nations.


Citing Sharma's data Bloomberg writes that "money is flooding out of Canada at the fastest pace in the developed world as the nation’s decade-long oil boom comes to an end and little else looks ready to take the industry’s place as an economic driver." In fact, based on the chart below, the outflow is the fastest on record.

"This is Canadian investors that are pushing money abroad," said Alvise Marino, a foreign-exchange strategist at Credit Suisse Group AG in New York. "The policy in Canada the last 10 years has greatly favored investments in energy. Now the drop in oil prices made all that investment unprofitable."
The reasons for the accelerating otflows are familiar, or mostly one reason: the collapse in crude oil, among the nation’s biggest exports, has dropped to half of its 2014 peak. "The slump has derailed projects this year in Canada’s oil sands - one of the world’s most expensive crude-producing regions. Royal Dutch Shell Plc’s decision to put its Carmon Creek drilling project on ice last week lengthened that list to 18, according to ARC Financial Corp."
Worse, there does not appear to be any improvement, despite the recent stabilization in Brent prices:

More recent data on where companies and mutual-fund investors are putting their money show the trend extended into the second half of the year, suggesting demand for the Canadian dollar and the country’s assets is still ebbing. The currency is already down 11 percent this year, after touching an 11-year low against the U.S. dollar in September.

Where is all this capital going? Canadian companies have been looking abroad for acquisitions. Royal Bank of Canada is expected to close its $5.4 billion purchase of Los Angeles-based City National Corp. Monday, its biggest-ever takeover. It’s part of a net outflow of C$73 billion this year for mergers and acquisitions, both completed and announced, according to Credit Suisse data.
Canada's stock market confirms this trend: nine of the 10 best-performing companies on the country’s benchmark stock index in the past two years have favored buying growth abroad rather than expanding at home.
Individuals are following suit.

"While international appetite for Canadian financial securities has held steady this year, domestic mutual-fund investors have pulled money from Canada-focused funds and plowed it into global choices for six straight months, the longest streak in two years, according to Investment Funds Institute of Canada data compiled by Bank of Montreal."

Bloomberg calculates that more weakness for the CAD, and more capital outflows, are on deck as the Canadian dollar has to get cheaper to make Canadian businesses outside of the oil industry competitive enough with foreign peers to make them worth investing in, according to Benjamin Reitzes, an economist at Bank of Montreal.
Canada's economic weakness was recently confirmed when it reported two months ago that it had entered its first recession since the financial crisis.


Earlier today, Canada's manufacturing sector got even more bad news when the latest RBC Canadian Manufacturing PMI survey dropped to a record low in October, with output, new orders and employment all declining since the previous month. Moreover, new export sales dropped for the first time since April, with survey respondents noting that weaker global economic conditions had weighed on new business volumes.
In other words, not even the tumbling loonie is helping boost exports: a bedrock assumption of modern monetary policy.
Meanwhile, input costs rose at a sharp and accelerated pace in October, which placed pressure on operating margins and contributed to a further slight increase in factory gate charges.
Finally, the country is expected to post its 12th straight merchandise trade deficit this week, according to every economist in a Bloomberg survey.
Perhaps it is ironic: a year after we predicted the death of the petrodollar would cripple Emerging Markets around the globe (something which was confirmed in the China devaluation/EM debt crisis of 2015) the nation most impacted by the collapse in oil is neither China, nor - as many had expected - Russia, but what to many is a bedrock of economic stability: the AAA rated Canada.
How long until not Putin but Harper's successor is seen in the White House, begging Obama to put an end to QE so that the US shale sector, thanks to infinite junk bond refills courtesy of the Federal Reserve and "investors" allocating other people's money, will mercifully die and prevent Canada's economy from sliding from recession into an outright depression?

"Proxy" War No More: Qatar Threatens Military Intervention In Syria Alongside "Saudi, Turkish Brothers"

Submitted by Tyler Durden on 10/22/2015 14:37 -0400
http://www.zerohedge.com/news/2015-10-22/proxy-war-no-more-qatar-threatens-military-intervention-syria-alongside-saudi-turkis
Earlier this week, Saudi foreign minister Adel al-Jubeir had the following message for Tehran:

"We wish that Iran would change its policies and stop meddling in the affairs of other countries in the region, in Lebanon, Syria, Iraq and Yemen. We will make sure that we confront Iran's actions and shall use all our political, economic and military powers to defend our territory and people.”

In short, Riyadh and its allies in Doha and the UAE are uneasy about the fact that the P5+1 nuclear deal is set to effectively remove Iran from the pariah state list just as Tehran is expanding its regional influence via its Shiite militias in Iraq, the ground operation in Syria, and through the Houthis in Yemen.
Thanks to the fact that Tehran has more of an arm’s length relationship with the Houthis than it does with Hezbollah and its proxy armies in Iraq, the Saudis have been able to effectively counter anti-Hadi forces in Yemen without risking a direct conflict with Iran, but make no mistake, Sana’a is not the prize here. Yemen is a side show. The real fight is for the political future of Syria and for control of Iraq once the US finally packs up and leaves for good. Iran is winning on both of those fronts.
Over the last several weeks, we and others have suggested that one should not simply expect Washington, Riyadh, Ankara, and Doha to go gently into that good night in Syria after years of providing support for the various Sunni extremist groups fighting to destabilize the regime. There’s just too much at stake.
As noted on Tuesday, Assad's ouster would have removed a key Iranian ally and cut off Tehran from Hezbollah. Not only would that outcome pave the way for deals like the Qatar-Turkey natural gas line, it would also cement Sunni control over the region on the way to dissuading Tehran at a time when the lifting of crippling economic sanctions is set to allow the Iranians to shed the pariah state label and return to the international stage not only in terms of energy exports, but in terms of diplomacy as well. Just about the last thing Riyadh wants to see ahead of Iran's resurgence, is a powergrab on the doorstep of the Arabian peninsula.
Thanks to Washington’s schizophrenic foreign policy, there’s no effective way to counter Iran in Iraq but as Mustafa Alani, the Dubai-based director of National Security and Terrorism Studies at the Gulf Research Center told Bloomberg earlier this week, “The regional powers can give the Russians limited time to see if their intervention can lead to a political settlement -- if not, there is going to be a proxy war.”
That’s not entirely accurate. There’s already a proxy war and the dangerous thing about it is that thanks to the fact that Iran is now overtly orchestrating the ground operation, one side of the “SAA vs. rebels” proxy label has been removed. Now it’s “Iran-Russia vs. rebels” which means we’re just one degree of separation away from a direct confrontation between NATO’s regional allies in Riyadh and Doha and the Russia-Iran “nexus.” Here’s Bloomberg with more on the Saudi’s predicament:

Powerful Saudi clerics are calling for a response to the Russian move, even though the kingdom is already bogged down in another war in Yemen. Analysts say the Saudi government will probably speed up the flow of cash and weapons to its allies in the opposition fighting to topple President Bashar al-Assad, who’s also supported by Saudi Arabia’s main rival, Iran.

While the Saudis may seek to direct their aid to “moderate forces” in Syria, “the definition of this word is subject to much debate,” said Theodore Karasik, a Dubai-based political analyst. Sending arms “is dangerous in the medium term because of how easily weapons can fall into the wrong hands,” he said.

And let’s not kid ourselves, there are no “wrong hands” as far as Riyadh and Doha are concerned. Sure, they’d rather not have ISIS running around inside their borders blowing up mosques but then again, those bombings simply provide more political cover for justifying an air campaign in Syria. Back to Bloomberg:

Extremist groups already hold sway over large parts of the country. The Saudis joined U.S.-led operations against Islamic State last year, and since then jihadist attacks in the kingdom have increased, many of them targeting minority Shiite Muslims in the oil-rich eastern province. Meanwhile, Assad accuses the Saudis and other Gulf states of arming rebel groups with ties to al-Qaeda.

Some Saudi thinkers advocate direct military engagement in Syria, just as the kingdom has done in Yemen. Nawaf Obaid, a visiting fellow at Harvard University’s Belfer Center for Science and International Affairs, is one of them.

“The Saudis are going to be forced to lead a coalition of nations in an air campaign against the remnants of Syrian forces, Hezbollah and Iranian fighters to facilitate the collapse of the Assad regime and assist the entry of rebel forces into Damascus,” Obaid wrote in an opinion piece published by CNN on Oct. 4.

And while some still see that outcome as far fetched not only because the Saudis are stretched thin thanks to falling crude prices and the war in Yemen, but because it would be an extraordinarily dangerous escalation, it looks as though Qatar is leaning in a similar direction. Here’s Sputnik:

Qatar who has been a major sponsor of jihadist groups fighting in Syria for years, now is actively considering a direct military intervention in the country, according to its officials.

Throughout Syria’s bloody civil war, the government of Qatar has been an active supporter of anti-government militants, providing arms and financial backing to so called "rebels." Many of these, like the al-Nusra Front, were directly linked to al-Qaeda. That strategy has, of course, done little to put a dent in terrorist organizations in the region.

But as Russia enters its fourth week of anti-terror airstrikes, Qatar has indicated that it may launch a military campaign of its own.

"Anything that protects the Syrian people and Syria from partition, we will not spare any effort to carry it out with our Saudi and Turkish brothers, no matter what this is," Qatar’s Foreign Minister Khalid al-Attiyah told CNN on Wednesday, when asked if he supported Saudi Arabia’s position of not ruling out a military option.

"If a military intervention will protect the Syrian people from the brutality of the regime, we will do it," he added, according to Qatar’s state news agency QNA.

Syrian Deputy Foreign Minister Faisal Mekdad was fast to warn the Middle Eastern monarchy that such a move would be a disastrous mistake with serious consequences.

"If Qatar carries out its threat to militarily intervene in Syria, then we will consider this a direct aggression," he said, according to al-Mayadeen television. "Our response will be very harsh."

Let's just be clear. If Saudi Arabia and Qatar start bombing Iranian forces from the airspace near Russia's base at Latakia, this will spiral out of control.
Iran simply wouldn't stand for it and if you think for a second that Moscow is going to let Saudi Arabia fly around in Western Syria and bomb the Iranians, you'll be in for a big surprise. Of course the first time a Russian jet shoots down a Saudi warplane over Syria, Washington will have no choice but to go to war.
Finally, we'd be remiss if we didn't point out the absurdity in what's being suggested here. Qatar and Saudi Arabia are essentially saying that they may be willing to go to war with Russia and Iran on behalf of al-Qaeda if it means facilitating Assad's ouster. The Western world's conception of "good guys"/ "bad guys" has officially been turned on its head.
And meanwhile:

Russian President Vladimir Putin’s public approval rating has reached a record 89.9 percent since he ordered his military to begin air strikes in support of Syrian leader Bashar al-Assad, according to a state-run polling center.

Is The Oil And Gas Fire Sale About To Start?

Posted on October 16, 2015 by Oil Price

http://www.washingtonsblog.com/2015/10/is-the-oil-and-gas-fire-sale-about-to-start.html 

Much has been written about the mounting pile of debt for U.S. oil companies (not to mention the well-known Brazilian oil giant).
Not that long ago, many oil and gas companies secured at least a part of their revenue by hedging contracts. Bloomberg already reported in June that many of these companies saw their artificial safety nets vanishing as oil prices failed to recover. One month later, we heard such morale boosting terms as ‘frack now, pay later,’ which were merely a bold move by struggling oil services companies to encourage cash strapped oil and gas companies to continue operations.
Simultaneously, we witnessed the bankruptcies of companies such as Samson Resources, Hercules Offshore and Sabine Oil & Gas Corp. These bankruptcies put the industry on notice. The cash flow situation for the entire oil and gas sector looks outright grim. Credit rating agency Moody’s expects a sector wide negative cash flow of $80 billion and is expecting spending cuts to continue next year. See figure 1 below for an overview of industry income and spending.
Related: Tanker Companies Profiting From Low Oil Prices

Image source: Reuters
(Click to enlarge)
Summing it up, debt, negative cash flows and the outlook for oil prices have led weak companies with balance sheets to a divest in a big way.
Although we have witnessed a couple of noteworthy acquisitions in the last months, which put 2015 in the books as a year with high volume takeovers, we cannot yet speak about an absolute M&A boom.
One of the most important reasons holding back takeovers of entire companies is the oil price volatility we have seen in the last few weeks. Financially stronger oil and gas companies seem to have postponed takeover plans and are now focusing on the acquisition of promising land holdings. Nonetheless, it seems that both buyers and sellers are preparing themselves for what could turn out to be a fire sale.
According to Bloomberg, the shelves of the M&A supermarket are filled with over $200 billion worth of oil and gas assets for sale worldwide. When taking a closer look at the ‘market ware,’ it becomes clear that the vast majority of oil and gas assets for sale are located in North-America. As previously mentioned, debt pressure, but also the need for focus on core activities has increased the number of assets for sale in this part of the world.
CEO Doug Lawler of Chesapeake Energy Corp. denied that the offering of its Utica dry gas assets is a fire sale, telling investors that the company is not desperate. This might have been true for Chesapeake, but an increasing number of cash-strapped U.S shale drillers have less time to ponder potential asset sales as interest payments and debt maturation prompt companies to take immediate action. Figure 2 below gives a good insight on the debt pressure some of the U.S shale drillers are currently facing.
Related: China To Continue Expanding Its Influence In The Oil And Gas Sector

(Click to enlarge)
This increased pressure and limited time to sell off assets has resulted in a steep price drop in oil and gas assets in predominantly North-America, but also in the U.K.
Whereas some of the more comfortably positioned drillers such as ConocoPhilips (over $1 billion in asset sales), Encana ($900 million) and even oil major Repsol ($6.2 billion) are selling off non-core assets in order to focus on core projects.
Some other drillers are letting valuable land positions in one of the highest yielding basins in the United States go for less money than they had hoped. Linn Energy sold high-yield Permian positions (worth $281 million). W&T Offshore had to sell off Permian assets for which, according to Bloomberg, it received ‘less than a fourth what was paid for similar land in another deal just months ago’ ($376 million) in order to reinforce its balance sheet. Debt-laden California Resources Corp., the state’s largest oil and gas producer is considering the sale of some of its major assets in order to ease its $6.5 billion debt burden.
Even copper miner Freeport McMoRan has put its oil and gas assets up for sale after its debt position got completely out of hand. According to Bloomberg, the company’s assets are now worth $1.8 billion less than they were a year ago.
And most likely, the amount of assets for sale is not likely to decrease any time soon. According to Moody’s Corp., one out of eight junk rated oil drillers was at risk of defaulting when oil fell below $40 per barrel last month. And more ‘drillers in distress’ can only mean more oil and gas assets up for sale.
Related: Can The Oil Industry Really Handle This Much Debt?
As dire as the situation might be for some drillers, some financially stronger companies and investors are looking at something which might be developing into a generational opportunity for consolidation and growth in the oil and gas sector.
As mentioned before, some major acquisitions have been made or are currently in the pipeline such as the Shell-BG takeover and the Halliburton-Baker Hughes merger. It may, however, be more interesting and rewarding for both oil and energy investors and financially strong oil and gas companies to watch vast amounts of assets being auctioned in what may soon turn out to be a fire sale of onshore and offshore positions in the best performing North-American oil and gas plays.
Tomorrow’s winners will undoubtedly be the companies which manage to secure promising positions without jeopardizing their balance sheets.
By Tom Kool of Oilprice.com

Russian state assets in Belgium ‘to be seized as Yukos compensation’

Published time: June 18, 2015 04:21
Edited time: June 18, 2015 12:58

http://rt.com/business/267964-yukos-belgium-state-assets/ 

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Belgian bailiffs have demanded that 47 organizations inside the country reveal if they own any Russian state assets, several reports claimed on Wednesday. The move allegedly paves the way for a seizure of Russian property over the $50 billion Yukos case.
The bailiffs were reportedly acting at the behest of the Isle of Man-based Yukos Universal Limited, a subsidiary of the Russian energy giant, dismantled in 2007. They have given the target companies a fortnight to comply.
READ MORE: Russian companies' accounts in VTB French subsidiary frozen - CEO Kostin

Russia will appeal the court’s arrest of Russian property, Russian presidential aide Andrey Belousov said. According to the official, “the situation with the arrest of the property is politicized, [and] Moscow hopes to avoid a new escalation in relations.”
The story was broken by Interfax news agency, and later confirmed by several other leading Moscow-based news media sources. RBC.ru has quoted Tim Osborne, the head of group of former Yukos shareholders that brought a case for compensation to The Hague, as confirming the intent to seize assets.

Read moreAmsterdam court says Yukos International has legitimate compensation claim against Rosneft

A letter accompanying the notice, reportedly drafted by the law firm Marc Sacré, Stefan Sacré & Piet De Smet, accused Moscow of a “systematic failure to voluntarily follow” international legal judgments.
The addressees included not just local offices of Russian companies, but international banks, a local branch of the Russian Orthodox Church, and even Eurocontrol, the European air traffic agency headquartered in Brussels. Only diplomatic assets, such as embassies, were exempt.
The situation was not unexpected, and Russia is considering a number of measures to deal with possible asset seizures both in Belgium and in other countries, said Andrey Belousov, an aide to Russian President Vladimir Putin.
“The situation is very politicized,” Belousov said. “Let’s hope that common sense prevails and we don’t sink deep in this story, that there won’t be a new round of retaliatory escalation.”

Mikhail Khodorkovsky (RIA Novosti / Ramil Sitdikov)

Yukos Universal Limited was awarded $1.8 billion in damages by the Permanent Court of Arbitration in The Hague in July 2014, as part of a total settlement for approximately $50 billion, owed to its former shareholders and management. The court concluded that the corporation, once headed by Mikhail Khodorkovsky, who spent more than a decade in prison for embezzlement and tax evasion from 2003 to 2013, “was the object of a series of politically motivated attacks.”

READ MORE: Russia finds $21.7bn mistake in Yukos case
Russia has not accepted the ruling, saying it disregards widespread tax fraud committed by Yukos, and constitutes a form of indirect retribution for Russia’s standoff with the West over Ukraine. Earlier this month, the Russian ministry of justice said it would take “preventative measures” to avoid property confiscation, and challenge each decision in national courts.

Read more​Russia appeals $50bn Yukos verdict

A separate ruling by the European Court of Human Rights (ECHR) last summer awarded Yukos shareholders €1.9 billion in compensation. Russia’s Dozhd channel quoted ECHR representatives as saying that the reported seizures are not related to its legal decision as several media reports have previously suggested.
Neither Belgium, nor Russia have yet released official statements about potential asset seizures.
Russia spent much of the 1990s embroiled in legal squabbles with several foreign creditors, who attempted to seize its property abroad, but each time the dispute was settled without asset confiscation.
READ MORE: Justice Ministry seeks probe into Khodorkovsky’s Open Russia movement - report

China To Build Military Base In Africa Next To Critical Oil Transit Choke Point

Submitted by Tyler Durden on 05/10/2015 19:09 -0400
http://www.zerohedge.com/news/2015-05-10/china-open-military-base-horn-africa-next-critical-oil-transit-choke-point
One year ago, we reported that while the west was scrambling to assure the world that it wasn't collapsing courtesy of record central bank debt monetization even as number of people not in the US labor force steadily approaches 100 million, while peripheral Europe is saddled with 25% unemployment and 50%+ youth unemployment (but... but.. the stock markets are at all time highs), China was busy colonizing a new continent not only infrastructurally.....


... but militarily, in this case in the southern African nation which recently had achieved the pinnacle of Keynesian economic dogma: hyperinflation through currency debasement. Recall what the Zimbabwean wrote in March of 2014:

China is planning to set up a modern high-tech military base in the diamond-rich Marange fields, says a German-based website, Telescope News.

The news of the agreement to set up the first Chinese military airbase in Africa comes amid increasing bilateral cooperation between Zimbabwe and China – notably in mining, agriculture and preferential trade. China is the only country exempted from the indigenisation laws which force all foreign investors to cede 51% of their shareholding to carefully selected indigenous Zimbabweans.

The Marange story quoted unnamed military officials and a diplomat admitting knowledge of the plan to set up the base. Efforts to get a comment from the Zimbabwe Defence Forces were fruitless, as spokesperson Lt Col Alphios Makotore was consistently unavailable and did not respond to emails by the time of going to press.

The website speculated that China could be positioning itself for future “gunboat diplomacy” where its military presence would give it bargaining power against superpowers like the US. It would also be safeguarding its significant economic interests in Zimbabwe and the rest of Africa.

And while this is not a story about Zimbabwe, we should remind readers that Zimbabwe's despotic ruler, a person widely loathed by the west (after being an object of "democratic" admiration in the 1980s and 1990s), Robert Mugabe has recently become a pawn of none other than China:

Confidential Central Intelligence Organisation documents leaked last year suggested that China had played a central role in retaining President Robert Mugabe in the July 31 elections, indicating that high level military officers had worked closely with the local army in poll strategies while Beijing bankrolled Zanu (PF).

China is Zimbabwe’s biggest trading partner after South Africa and has strategic economic interests in many African countries to guarantee raw materials, job sources and markets for its huge population. The new Chinese Ambassador to Zimbabwe, Lin Lin, recently said trade between the two countries last year exceeded the $1 billion mark. Yet Zimbabwe is only 26th on the list of China’s 58 biggest African trading partners.

The Asian country has supplied Zimbabwe with military hardware, including MIG jet fighters, tanks, armoured vehicles and rifles, since Independence.

Bottom line: one year ago China was well on its way to marking its territory in southern Africa, with a core military presence near the all important for global trade Cape of Good Hope which is the transit point for about 10% of global seaborne-traded oil.
Fast forward to today when AFP reports that after securing Southen Africa, China is now in process of securing the second critical geopolitical area in Africa: the horn, which just happens to be right next to the infamous Bab el-Mandeb Strait located by the recently infamous country of Yemen, which in recent months has been overrun by US-armed Houthi Rebels.
According to AFP, China is negotiating a military base in the strategic port of Djibouti, the president said, raising the prospect of US and Chinese bases side-by-side in the tiny Horn of Africa nation. "Discussions are ongoing," President Ismail Omar Guelleh told AFP in an interview in Djibouti, saying Beijing's presence would be "welcome".
Why Djibouti? So China can have a bird's eye view of everything that happens at the Bab el-Mandeb Strait: one of the top 5 oil choke points in the world: "An estimated 3.8 million bbl/d of crude oil and refined petroleum products flowed through this waterway in 2013 toward Europe, the United States, and Asia, an increase from 2.9 million bbl/d in 2009. Oil shipped through the strait decreased by almost one-third in 2009 because of the global economic downturn and the decline in northbound oil shipments to Europe. Northbound oil shipments increased through Bab el-Mandeb Strait in 2013, and more than half of the traffic, about 2.1 million bbl/d, moved northbound to the Suez Canal and SUMED Pipeline."

Ironically, Djibouti is already home to Camp Lemonnier, the US military headquarters on the continent, used for covert, anti-terror and other operations in Yemen, Somalia and elsewhere across Africa.
The US is not alone: France and Japan also have bases in the port, a former French colony that guards the entrance to the Red Sea and the Suez Canal, and which has been used by European and other international navies as a base in the fight against piracy from neighbouring Somalia.

And now here comes China.

China is already financing several major infrastructure projects estimated to total more than $9 billion, including improved ports, airports and railway lines to landlocked Ethiopia, for whom Djibouti is a lifeline port.

"France's presence is old, and the Americans found that the position of Djibouti could help in the fight against terrorism in the region," Guelleh said.

"The Japanese want to protect themselves from piracy — and now the Chinese also want to protect their interests, and they are welcome," he said. 

Djibouti overseas the narrow Bab al-Mandeb straits, the channel separating Africa from Arabia and one of the busiest shipping lanes in the world, leading into the Red Sea and northwards to the Mediterranean.

The US will be very angry, especially since Washington was already angry when Djibouti and Beijing signed a military agreement allowing the Chinese navy to use Djibouti port in February 2014. Surely the US top diplomat will not be happy to learn that now China aims to install a permanent military base in Obock, Djibouti's northern port city.
Then again, John Kerry and the US State Department may have more than enough domestic scandals on their plate, now that everyone is demanding (or should be) to learn out why said Department will not investigate Hillary Clinton's breach of protocol and abuse of her foundation for personal financial gain offset by US diplomatic "favors."
Meanwhile, China's colonization - both peaceful and military - of Africa will continue, as will its increasing presence in determining who decides which way the world's oil flows.

Iran Forces Seize US Cargo Ship With 34 People On Board, Al Arabiya Reports

Breaking News!

Submitted by Tyler Durden on 04/28/2015 10:16 -0400
http://www.zerohedge.com/news/2015-04-28/iran-forces-seize-us-cargo-ship-34-people-board-al-arabiya-reports

Moments ago according to the native Twitter feed of al-Arabiya (which is owned by the Saudis), Iranian forces have seized a US cargo ship, which has some 34 American sailors, which they have taken to the port of Bandar Abbas.
It is unclear why Iran would do this and if this is merely yet another Saudi provocatin (expect a full denial by Iran), but the US kneejerk reaction may not only scuttle, so to say, any ongoing Iran nuclear negotiations, but led to a far more violent retaliation, which may explain the move in crude if not the move lower in stocks.
After all global war is bullish for risk.
Ironically, just a few hours earlier Iran has demanded that Israel give up its “nuclear weapons”, as it spoke on behalf of the 120-nation Non-Aligned Movement. Iran’s Foreign Minister, Mohammad Javad Zarif said the bloc also wants a nuclear free-zone in the Middle East.
According to RT, Mohammad Javad Zarif was speaking at the United Nations for the non-aligned group of countries. Israel has never admitted or denied the widespread assumption it has nuclear weapons. However, Zarif says Israel’s assumed nuclear arsenal was a threat to regional security.
The Iranian Foreign Minister said the non-aligned movement regards Israel’s nuclear program as, “a serious and continuing threat to the security of neighboring and other states, and condemned Israel for continuing to develop and stockpile nuclear arsenals,” according to Reuters.
Israel has not signed up to the nuclear Non-Proliferation Treaty (NPT), though it has sent an observer to the month long conference for the first time in 20 years.
Zarif added that the non-aligned bloc are looking to create a nuclear free-zone in the Middle East “as a matter of high priority,” which will only be possible, if Israel abandons its nuclear stockpile.
“Israel, [is] the only one in the region that has neither joined the NPT nor declared its intention to do so, (...) renounce possession of nuclear weapons,” AFP cited Zarif as saying.
* * *
More as we see it.
For now the reaction is evident in crude prices...

Average:

US biggest climate skeptic receives money from ‘eco-friendly’ BP – report

Published time: March 23, 2015 11:22

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Senator James Inhofe.(Reuters / Gary Cameron)

One of America’s most powerful opponents of climate change regulation, Senator Jim Inhofe, has been receiving campaign money traced back to oil giant BP, including chief executive Bob Dudley.
The Oklahoma Republican, Jim Inhofe received $10,000 from the BP political action committee (PAC), according to a Guardian exclusive.
PACs in the US are set up to assist US companies and trade unions that can’t give direct support to political candidates, who fit their values and business aspirations. Instead, they pool donations from the companies’ higher-ups and the money is then disbursed by a board.
BP has maintained in the past its “long-established” attitudes towards the problems of climate change, but it’s not uncommon for names of top oil executives to come up when tracing donations made to people who want to kill climate change legislation. Money from Exxon Mobil chief Rex Teillerson has also found its way to Inhofe and others like him on more than one occasion.
After re-election last year, Inhofe became chair of the Senate’s environment and public works committee in January – something that President Barack Obama found “disturbing” in an interview to VICE News later in March. He was criticizing the practice of financing climate change skeptics’ campaigns, saying “there is a lot of money involved.”
In February, Inhofe famously threw a snowball inside a hearing, proclaiming, “In case we have forgotten – because we keep hearing that 2014 is the warmest year on record – it is very, very cold outside. Very unseasonal!”
READ MORE: Environmental chair throws snowball on Senate floor to rail against global warming (VIDEO)

2014 was BP’s most expensive election cycle in more than a decade. Although the company insists it is non-partisan, some 69 percent of PAC money last year went to Republicans. According to data from the Center for Responsive Politics, that is more than any other energy PAC.
A total of $1 million was deposited into BP’s PACs by top executives between 2010 and 2014, $655,000 of which was spent on about 40 incumbent senators.
Inhofe’s campaign raised $4.84 million from 2009 to 2014, according to CRP. Slightly under half of this came from various PACs, a large portion of which support fossil fuel companies.
But it’s not clear what motivates an oil giant to spend money a certain way: both BP and Dudley, the CEO behind the Inhofe donation, have been vocal on climate change policy in the past. The company published its Energy Outlook 2025 report, in which it states: “To abate carbon emissions further will require additional significant steps by policymakers beyond the steps already assumed.”

However, its priority in 2014 was Inhofe, who had two years earlier authored ‘The Greatest Hoax: How the Global Warming Conspiracy Threatens Your Future.’ Records from CRP indicate he was a priority with BP in 2014. And since 2011, Dudley has been funneling very close to the $5,000 per year maximum allowed by law. Figures also indicate Inhofe could easily have beaten his much less funded opponent last November, even without BP’s help.

When asked how its recognition of the seriousness of climate change goes hand in hand with its strong Republican bias in PACs, the company wrote in a statement: “Voluntary donations [by staff] to the BP employees’ political action committee in the US are used to support a variety of candidates across the political spectrum and in many US geographies [sic] where we operate.
“These candidates have one thing in common: they are important advocates for the energy industry in the broadest sense."
As for BP’s own position, it’s a “long-established” fact that the company views climate change as “an important long-term issue that justified global action.”
It declined to comment on how Dudley and Inhofe factor into the above.
The company has given money to other politicians as well, not necessarily all climate change policy opponents. But, according to CRP statistics, the bias seems to be overwhelmingly in their favor. Among the louder Republican voices on BP’s PAC list are people like House Speaker John Boehner, who said at a Republican Congressional retreat in January that he believes there are “changes in the climate,” but that any proposals voiced by the Obama administration on this matter amount to “killing American jobs.”

Reuters / Daniel Becerril

In his rejection of a White House climate change report, Boehner’s colleague and fellow Republican, Senator Mike Enzi of Wyoming, told local news in May that Obama’s policies aren’t geared toward fighting climate change, just making it harder for businesses to operate.
PACs aren’t the only thing keeping politicians going, nor are they the only thing at oil giants’ disposal to pursue their favorite candidates’ victories. BP has been spending millions on lobbying outside of PACs as well, according to CRP, who classifies it as a “heavy hitter” and ranks it in the top 140 of the biggest donors to federal elections since 1988.

If You Listen Carefully, The Bankers Are Actually Telling Us What Is Going To Happen Next

Posted on February 10, 2015 by WashingtonsBlog

By Michael Snyder.
Are we on the verge of a major worldwide economic downturn? Well, if recent warnings from prominent bankers all over the world are to be believed, that may be precisely what we are facing in the months ahead. As you will read about below, the big banks are warning that the price of oil could soon drop as low as 20 dollars a barrel, that a Greek exit from the eurozone could push the EUR/USD down to 0.90, and that the global economy could shrink by more than 2 trillion dollars in 2015. Most of the time, very few people ever actually read the things that the big banks write for their clients. But in recent months, a lot of these bankers are issuing such ominous warnings that you would think that they have started to write for The Economic Collapse Blog. Of course we have seen this happen before. Just before the financial crisis of 2008, a lot of people at the big banks started to get spooked, and now we are beginning to see an atmosphere of fear spread on Wall Street once again. Nobody is quite sure what is going to happen next, but an increasing number of experts are starting to agree that it won’t be good.

Let’s start with oil. Over the past couple of weeks, we have seen a nice rally for the price of oil. It has bounced back into the low 50s, which is still a catastrophically low level, but it has many hoping for a rebound to a range that will be healthy for the global economy.

Unfortunately, many of the experts at the big banks are now anticipating that the exact opposite will happen instead. For example, Citibank says that we could see the price of oil go as low as 20 dollars this year…

The recent rally in crude prices looks more like a head-fake than a sustainable turning point — The drop in US rig count, continuing cuts in upstream capex, the reading of technical charts, and investor short position-covering sustained the end-January 8.1% jump in Brent and 5.8% jump in WTI into the first week of February.

Short-term market factors are more bearish, pointing to more price pressure for the next couple of months and beyond — Not only is the market oversupplied, but the consequent inventory build looks likely to continue toward storage tank tops. As on-land storage fills and covers the carry of the monthly spreads at ~$0.75/bbl, the forward curve has to steepen to accommodate a monthly carry closer to $1.20, putting downward pressure on prompt prices. As floating storage reaches its limits, there should be downward price pressure to shut in production.

The oil market should bottom sometime between the end of Q1 and beginning of Q2 at a significantly lower price level in the $40 range — after which markets should start to balance, first with an end to inventory builds and later on with a period of sustained inventory draws. It’s impossible to call a bottom point, which could, as a result of oversupply and the economics of storage, fall well below $40 a barrel for WTI, perhaps as low as the $20 range for a while.

Even though rigs are shutting down at a pace that we have not seen since the last recession, overall global supply still significantly exceeds overall global demand. Barclays analyst Michael Cohen recently told CNBC that at this point the total amount of excess supply is still in the neighborhood of a million barrels per day…

“What we saw in the last couple weeks is rig count falling pretty precipitously by about 80 or 90 rigs per week, but we think there are more important things to be focused on and that rig count doesn’t tell the whole story.”

He expects to see some weakness going into the shoulder season for demand. In addition, there is an excess supply of about a million barrels of oil a day, he said.

And the truth is that many firms simply cannot afford to shut down their rigs. Many are leveraged to the hilt and are really struggling just to service their debt payments. They have to keep pumping so that they can have revenue to meet their financial obligations. The following comes directly from the Bank for International Settlements…

“Against this background of high debt, a fall in the price of oil weakens the balance sheets of producers and tightens credit conditions, potentially exacerbating the price drop as a result of sales of oil assets, for example, more production is sold forward,” BIS said.

“Second, in flow terms, a lower price of oil reduces cash flows and increases the risk of liquidity shortfalls in which firms are unable to meet interest payments. Debt service requirements may induce continued physical production of oil to maintain cash flows, delaying the reduction in supply in the market.”

In the end, a lot of these energy companies are going to go belly up if the price of oil does not rise significantly this year. And any financial institutions that are exposed to the debt of these companies or to energy derivatives will likely be in a great deal of distress as well.

Meanwhile, the overall global economy continues to slow down.

On Monday, we learned that the Baltic Dry Index has dropped to the lowest level ever. Not even during the darkest depths of the last recession did it drop this low.

And there are some at the big banks that are warning that this might just be the beginning. For instance, David Kostin of Goldman Sachs is projecting that sales growth for S&P 500 companies will be zero percent for all of 2015…

“Consensus now forecasts 0% S&P 500 sales growth in 2015 following a 5% cut in revenue forecasts since October. Low oil prices along with FX headwinds and pension charges have weighed on 4Q EPS results and expectations for 2015.”

Others are even more pessimistic than that. According to Bank of America, the global economy will actually shrink by 2.3 trillion dollars in 2015.

One thing that could greatly accelerate our economic problems is the crisis in Greece. If there is no compromise and a new Greek debt deal is not reached, there is a very real possibility that Greece could leave the eurozone.

If Greece does leave the eurozone, the continued existence of the monetary union will be thrown into doubt and the euro will utterly collapse.

Of course I am not the only one saying these things. Analysts at Morgan Stanley are even projecting that the EUR/USD could plummet to 0.90 if there is a “Grexit”…

The Greek Prime Minister has reaffirmed his government’s rejection of the country’s international bailout programme two days before an emergency meeting with the euro area’s finance ministers on Wednesday. His declaration suggested increasing minimum wages, restoring the income tax-free threshold and halting infrastructure privatisations. Should Greece stay firm on its current anti-bailout course and with the ECB not accepting Greek T-bills as collateral, the position of ex-Fed Chairman Greenspan will gain increasing credibility. He forecast the eurozone to break as private investors will withdraw from providing short-term funding to Greece. Greece leaving the currency union would convert the union into a club of fixed exchange rates, a type of ERM III, leading to further fragmentation. Greek Fin Min Varoufakis said the euro will collapse if Greece exits, calling Italian debt unsustainable. Markets may gain the impression that Greece may not opt for a compromise, instead opting for an all or nothing approach when negotiating on Wednesday. It seems the risk premium of Greece leaving EMU is rising. Our scenario analysis suggests a Greek exit taking EURUSD down to 0.90.

If that happens, we could see a massive implosion of the 26 trillion dollars in derivatives that are directly tied to the value of the euro.

We are moving into a time of great peril for global financial markets, and there are a whole host of signs that we are slowly heading into another major global economic crisis.
So don’t be fooled by all of the happy talk in the mainstream media. They did not see the last crisis coming either.

Russia Just Pulled Itself Out Of The Petrodollar

Submitted by Tyler Durden on 01/14/2015
http://www.zerohedge.com/news/2015-01-14/russia-just-pulled-itself-out-petrodollar 
Back in November, before most grasped just how serious the collapse in crude was (and would become, as well as its massive implications), we wrote "How The Petrodollar Quietly Died, And Nobody Noticed", because for the first time in almost two decades, energy-exporting countries would pull their "petrodollars" out of world markets in 2015. 
This empirical death of Petrodollar followed years of windfalls for oil exporters such as Russia, Angola, Saudi Arabia and Nigeria. Much of that money found its way into financial markets, helping to boost asset prices and keep the cost of borrowing down, through so-called petrodollar recycling.
We added that in 2014 "the oil producers will effectively import capital amounting to $7.6 billion. By comparison, they exported $60 billion in 2013 and $248 billion in 2012, according to the following graphic based on BNP Paribas calculations."

The problem was compounded by its own positive feedback loop: as the last few weeks vividly demonstrated, plunging oil would lead to a further liquidation in foreign  reserves for the oil exporters who rushed to preserve their currencies, leading to even greater drops in oil as the viable producers rushed to pump out as much crude out of the ground as possible in a scramble to put the weakest producers out of business, and to crush marginal production. Call it Game Theory gone mad and on steroids.
Ironically, when the price of crude started its self-reinforcing plunge, such a death would happen whether the petrodollar participants wanted it, or, as the case may be, were dragged into the abattoir kicking and screaming.
It is the latter that seems to have taken place with the one country that many though initially would do everything in its power to have an amicable departure from the Petrodollar and yet whose divorce from the USD has quickly become a very messy affair, with lots of screaming and the occasional artillery shell.
As Bloomberg reports Russia "may unseal its $88 billion Reserve Fund and convert some of its foreign-currency holdings into rubles, the latest government effort to prop up an economy veering into its worst slump since 2009."
These are dollars which Russia would have otherwise recycled into US denominated assets. Instead, Russia will purchase even more Rubles and use the proceeds for FX and economic stabilization purposes. 
"Together with the central bank, we are selling a part of our foreign-currency reserves,” Finance Minister Anton Siluanov said in Moscow today. “We’ll get rubles and place them in deposits for banks, giving liquidity to the economy."
Call it less than amicable divorce, call it what you will: what it is, is Russia violently leaving the ranks of countries that exchange crude for US paper.
More:

Russia may convert as much as 500 billion rubles from one of the government’s two sovereign wealth funds to support the national currency, Siluanov said, calling the ruble “undervalued.” The Finance Ministry last month started selling foreign currency remaining on the Treasury’s accounts.

The entire 500 billion rubles or part of the amount will be converted in January-February through the central bank, according to Deputy Finance Minister Alexey Moiseev. The Bank of Russia will determine the timing and method of the operation.

The ruble, the world’s second-worst performing currency last year, weakened for a fourth day, losing 1.3 percent to 66.0775 against the dollar by 3:21 p.m. in Moscow. It trimmed a drop of as much as 2 percent after Siluanov’s comments. The ruble’s continued slump this year underscores the fragility of coordinated measures by Russia’s government and central bank that steered the ruble’s rebound from a record-low intraday level of 80.10 on Dec. 16. OAO Gazprom and four other state-controlled exporters were ordered last month to cut foreign-currency holdings by March 1 to levels no higher than they were on Oct. 1. The central bank sought to make it easier for banks to access dollars and euros while raising its key rate to 17 percent, the emergency level it introduced last month to arrest the ruble collapse.

Today’s announcement “looks ruble-supportive, as together with state-driven selling from exporters it would support FX supply on the market,” Dmitry Polevoy, chief economist for Russia and the Commonwealth of Independent States at ING Groep NV in Moscow, said by e-mail. “Also, it will be helpful for banks, while there might be some negative effects related to extra money supply and risks of using some of the money on the FX market for short-term speculations.

Bloomberg's dready summary of the US economy is generally spot on, and is to be expected when any nation finally leaves, voluntarily or otherwise, the stranglehold of a global reserve currency. What Bloomberg failed to account for is what happens to the remainder of the Petrodollar world. Here is what we said last time:

Outside from the domestic economic impact within EMs due to the downward oil price shock, we believe that the implications for financial market liquidity via the reduced recycling of petrodollars should not be underestimated. Because energy exporters do not fully invest their export receipts and effectively ‘save’ a considerable portion of their income, these surplus funds find their way back into bank deposits (fuelling the loan market) as well as into financial markets and other assets. This capital has helped fund debt among importers, helping to boost overall growth as well as other financial markets liquidity conditions.
...
[T]his year, we expect that incremental liquidity typically provided by such recycled flows will be markedly reduced, estimating that direct and other capital outflows from energy exporters will have declined by USD253bn YoY. Of course, these economies also receive inward capital, so on a net basis, the additional capital provided externally is much lower. This year, we expect that net capital flows will be negative for EM, representing the first net inflow of capital (USD8bn) for the first time in eighteen years. This compares with USD60bn last year, which itself was down from USD248bn in 2012. At its peak, recycled EM petro dollars amounted to USD511bn back in 2006. The declines seen since 2006 not only reflect the changed global environment, but also the propensity of underlying exporters to begin investing the money domestically rather than save. The implications for financial markets liquidity - not to mention related downward pressure on US Treasury yields – is negative.

Considering the wildly violent moves we have seen so far in the market confirming just how little liquidity is left in the market, and of course, the absolutely collapse in Treasury yields, with the 30 Year just hitting a record low, this prediction has been borne out precisely as expected.
And now, we await to see which other country will follow Russia out of the Petrodollar next, and what impact that will have not only on the world's reserve currency, on US Treasury rates, and on the most financialized commodity as this chart demonstrates...

... but on what is most important to developed world central planners everywhere: asset prices levels, and specifically what happens when the sellers emerge into what is rapidly shaping up as the most illiquid market in history.

What Is the Gold-Oil Ratio Telling Us?

Posted on December 18, 2014 by Charles Hugh Smith

http://www.washingtonsblog.com/2014/12/gold-oil-ratio-telling-us.html 

 

Based on historical gold-oil ratios, oil appears extraordinarily cheap right now.

One way to establish if a commodity or asset is relatively expensive or inexpensive is to price it in something other than a fiat currency–for example, gold. Gold goes up and down in value relative to other commodities and fiat currencies, so it is itself a volatile yardstick. Nonetheless, it provides a useful measure of the relative value of gold and whatever is being measured in gold–in this case, oil.
The prices listed are approximate, i.e. rounded to averages in the time frame listed. Of the various measures of oil, I am using WTIC.
According to SRSrocco REPORT, the average gold-oil ratio in the period 2000-2014 is 12. That is, on average, one ounce of gold bought about 12 barrels of oil.
For historical context, in 1976, following the first oil-shock in 1973, oil was $12.80/barrel and gold was around $124, for a ratio of 9.7.
In 1986, the average price of gold was around $368 while oil fell to $14/barrel, for a ratio of 26.3.
At gold’s peak above $1,800/ounce in 2011, oil was around $90/brl, for a ratio of 20.
At oil’s peak above $140/barrel in 2008, gold was around $950/ounce, for a ratio of 6.8.
As a rule of thumb, oil is relatively expensive (and gold is relatively inexpensive) when the ratio is below 9, and oil is relatively inexpensive (and gold is relatively expensive) when the ratio is above 20.
When oil fell below $55/barrel a few days ago, the ratio reached 22. By historical standards, oil is cheap.
Here is a listing of various highs and lows in gold and oil:
Oil priced in gold: how many barrels of oil can be purchased with one ounce of gold?
2000: Oil $30/brl, gold $275
Ratio: 9.2
2006: Oil $70/brl, gold $600
Ratio: 8.6
2008: Oil $140/brl (at the peak), gold $950
Ratio: 6.8
2011: Oil $90/brl, gold $1,800 (at the peak)
(note that oil traded above $100/brl earlier in 2011, but at gold’s peak was around $90/brl)
Ratio: 20.0
2014 (1st quarter): Oil $105/brl, gold $1,300
Ratio: 12.3
2014 (current): Oil $55/brl, gold $1,200
Ratio: 21.8
Here is a chart of gold from 2012 to the present:

Here is a chart of oil (WTIC) from 2012 to the present:

And here is a chart of the gold-oil ratio from 2012 to the present:

While the gold-oil ratio exceeded 25 three decades ago, in the era of rising demand from the emerging markets of China, India and other nations, the ratio has only touched 20 when gold was trading above $1,800/ounce.
Based on historical gold-oil ratios, oil appears extraordinarily cheap right now. Could oil fall further? Of course. Could gold go up or down? Of course. There are a great many factors that influence the ratio, which is simply a short-hand method of measuring the relative value of two important commodities.

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Oil's Crash Is the Canary In the Coal-Mine for a $9 TRILLION CRISIS

Submitted by Phoenix Capital Research on 12/14/2014
http://www.zerohedge.com/news/2014-12-14/oils-crash-canary-coal-mine-9-trillion-crisis

The Oil story is being misinterpreted by many investors.

When it comes to Oil, OPEC matters, as does Oil Shale, production cuts, geopolitical risk, etc. However, the reality is that all of these are minor issues against the MAIN STORY: the $9 TRILLION US Dollar carry trade.

Drilling for Oil, producing Oil, transporting Oil… all of these are extremely expensive processes. Which means… unless you have hundreds of millions (if not billions) of Dollars in cash lying around… you’re going to have to borrow money.

Borrowing US Dollars is the equivalent of shorting the US DOLLAR. If the US Dollar rallies, then your debt becomes more and more expensive to finance on a relative basis.

There is a lot of talk of the “Death of the Petrodollar,” but for now, Oil is priced in US Dollars. In this scheme, a US Dollar rally is Oil negative.

Here’s the US Dollar:



Here’s a chart showing an inverted US Dollar (meaning when the Dollar strengthens, the black line falls) and Oil (blue line):



Oil’s collapse is predicated by one major event: the explosion of the US Dollar carry trade. Worldwide, there is over $9 TRILLION in borrowed US Dollars that has been ploughed into risk assets.

Energy projects, particularly Oil Shale in the US, are one of the prime spots for this. But it is not the only one. Emerging markets are another.


Just about everything will be hit as well. Most of the “recovery” of the last five years been fueled by cheap borrowed Dollars. Now that the US Dollar has broken out of a multi-year range, you’re going to see more and more “risk assets” (read: projects or investments fueled by borrowed Dollars) blow up. Oil is just the beginning, not a  standalone story.

If things really pick up steam, there’s over $9 TRILLION worth of potential explosions waiting in the wings. Imagine if the entire economies of both Germany and Japan exploded and you’ve got a decent idea of the size of the potential impact on the financial system

And that’s assuming NO increased leverage from derivative usage.

The story here is not Oil; it’s about a massive bubble in risk assets fueled by borrowed Dollars blowing up. The last time around it was a housing bubble. This time it’s an EVERYTHING bubble. And Oil is just the canary in the coalmine.

If you’ve yet to take action to prepare for the second round of the financial crisis, we offer a FREE investment report Financial Crisis "Round Two" Survival Guide that outlines easy, simple to follow strategies you can use to not only protect your portfolio from a market downturn, but actually produce profits.

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Best Regards
Phoenix Capital Research

The Financialized-Oil Dominoes Are Toppling

Posted on December 12, 2014 by Charles Hugh Smith

The drop in oil revenues has triggered a self-reinforcing feedback dynamic.

Oil is not just something that is refined into fuel–it is capital, collateral, debt and risk. In other words, it is intrinsically financial. As I noted in The Oil-Drenched Black Swan, Part 2: The Financialization of Oil, oil has been financialized to the point that few outside the industry understand the dominoes that are currently toppling.
Let’s start with the obvious fact that the impact of lower oil is financial, political and geopolitical. Lower oil revenues are negatively impacting:
1. Oil-exporters’ revenues
2. Monetary policy of central banks
3. Trade flows
4. Global financial markets
Lower revenues are pressuring oil-dependent governments such as Russia, Venezuela and Iran, and destabilizing the geopolitical order as weakened oil exporters sink into recession and political turmoil.
Lower revenues are also kicking the financial supports out from under the debt-dependent, enormously capital-intensive oil exploration and development projects in North America.
Simply put, the sharp drop in oil revenues has knocked over a line of financial dominoes whose end is not yet in sight. These issues have been addressed by a number of analysts; here is a small selection of recent stories:
Why US Shale May Fizzle Rather Than Boom (research by Mason Inman)
It’s Different This Time… Rig-Count Edition
Profit Recession On Deck Due To Surging Dollar And Plunging Crude, Deutsche Warns
Bank of America sees $50 oil as Opec dies
Fossil fuels: are we on the edge of the Seneca cliff?
This Time Is The Same: Like The Housing Bubble, The Fed Is Ignoring The Shale Bubble In Plain Sight
Ten Reasons Why a Severe Drop in Oil Prices is a Problem
The drop in oil revenues has triggered a self-reinforcing feedback dynamic. As the financial dominoes fall, there is less capital available to maintain production, so oil output falls, further reducing income. As the collateral,income and impaired debt dominoes topple, risky debt in sectors completely unrelated to oil start falling as institutions trim risk throughout their holdings.
Gordon T. Long and I discuss the highlights of this complex set of issues in this video program, The Oil-Drenched Black Swan (28 minutes):
Go here for direct links and video - http://www.washingtonsblog.com/2014/12/financialized-oil-dominoes-toppling.html

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Author

Neda Smith, All Things Healing

A lot of us seem to think anything labeled as "VEGETABLE OIL" is good for us, but it is NOT.
The vegetable oil found in most grocery stores is highly processed soybean oil (can also be highly refined cottonseed, safflower, corn or grapeseed). They are processed under high heat, pressure, industrial solvents (such as hexane).

Note- In the case of soybean oil, the overwhelming majority is grown using genetically modified (GMO) crops that have been heavily sprayed with RoundUp weed killer.
The problem with these oils they are mostly composed of polyunsaturated fats, which leaves them prone to oxidization and free radical production when exposed to heat and light. (read more)
These oils are the most inflammatory inside of our bodies because of their high reactivity to heat and light.
This inflammation is what causes many of our problems such as heart disease, diabetes and other degenerative diseases.

Read what Dr. Lundell has to say about the myths of saturated fats and heart disease

What are the healthy fats to cook with?

SATURATED FATS!
Why?
Because they are much more stable in cooking conditions and less inflammatory than polyunsaturated oils with cooking.
This is why tropical oils such as palm and coconut oils (and even animal fats such as lard and butter) are best for cooking... they have very little polyunsaturates and are mostly composed of natural saturated fats which are the least reactive to heat/light and therefore the least inflammatory in your body from cooking use.

My Top 3 Choices for Cooking are:

 1. Virgin Coconut Oil
 2. Olive Oil (for low temperature cooking)
 3. Butter (Definitely organic; Grass-fed if possible)

Remember, polyunsaturated fats, aka PUFA, can cause inflammation.

What about Nuts and Seeds?

Nuts and Seeds are high in polyunsaturated fats. It's okay to consume this type of fat as long as it is not processed and kept in its whole food form, such as nuts and seeds. The key to this is to find ones that have not been exposed to high heat. Eat your nuts and seeds in their raw form, so you can avoid the oxidation of polyunsaturated fats that happens through the roasting process. An exception to this is macadamia nuts which can be consumed roasted as they are mostly a monounsaturated fat.
Remember, the light and heat on PUFA's cause inflammation in our bodies.

Fats that are the most stable under heat and light (in order):

(source: Weston A Price: Know your Fats)

1. Saturated: A fatty acid is saturated when all available carbon bonds are occupied by a hydrogen atom. They are highly stable, because all the carbon-atom linkages are filled—or saturated—with hydrogen. This means that they do not normally go rancid, even when heated for cooking purposes. They are straight in form and hence pack together easily, so that they form a solid or semisolid fat at room temperature. Your body makes saturated fatty acids from carbohydrates and they are found in animal fats and tropical oils.

2. Monounsaturated: Monounsaturated fatty acids have one double bond in the form of two carbon atoms double-bonded to each other and, therefore, lack two hydrogen atoms. Your body makes monounsaturated fatty acids from saturated fatty acids and uses them in a number of ways. Monounsaturated fats have a kink or bend at the position of the double bond so that they do not pack together as easily as saturated fats and, therefore, tend to be liquid at room temperature. Like saturated fats, they are relatively stable. They do not go rancid easily and hence can be used in cooking. The monounsaturated fatty acid most commonly found in our food is oleic acid, the main component of olive oil as well as the oils from almonds, pecans, cashews, peanuts and avocados.

3. Polyunsaturated: Polyunsaturated fatty acids have two or more pairs of double bonds and, therefore, lack four or more hydrogen atoms. The two polyunsaturated fatty acids found most frequently in our foods are double unsaturated linoleic acid, with two double bonds—also called omega-6; and triple unsaturated linolenic acid, with three double bonds—also called omega-3. (The omega number indicates the position of the first double bond.) Your body cannot make these fatty acids and hence they are called "essential." We must obtain our essential fatty acids or EFA's from the foods we eat. The polyunsaturated fatty acids have kinks or turns at the position of the double bond and hence do not pack together easily. They are liquid, even when refrigerated. The unpaired electrons at the double bonds makes these oils highly reactive. They go rancid easily, particularly omega-3 linolenic acid, and must be treated with care. Polyunsaturated oils should never be heated or used in cooking. In nature, the polyunsaturated fatty acids are usually found in the cis form, which means that both hydrogen atoms at the double bond are on the same side.

http://eatlocalgrown.com/article/11435-top-3-healthy-cooking-oils.html?c=cure

U.S. Oil Supplies in Storage Set to Pass the 400 Million Threshold

Submitted by EconMatters on 11/29/2013 11:15 -0500

By EconMatters  

Trend is to Store more Oil 

A year ago oil in storage stood at 274 million barrels, and with another robust year of domestic production, and despite curtailed imports, the US Oil Inventory stands at 391 million barrels and climbing.

We are still technically in the building season for oil supplies which peaked in late May just shy of 400 Million Barrels, before the drawing season kicked off with the exporting of gasoline through increased refinery utilization led by the gulf coast refiners with their increased capacity to take advantage of the spread differential and cheaper operational energy in natural gas to export refined products more competitively than peer nations.

New Records Coming Soon

The domestic need for refined products was stagnant at best, the real demand was in the export market, without a robust export market for refined products, oil supplies would have crushed the 400 Million Barrier this summer, and prices at the pump would have been much cheaper here stateside.

So the drawing season accounted for roughly a 40 million barrel retracement in US supplies, and we are not even close to the  middle of the building season, which even by conservative estimates should continue until mid-March of 2014. 

We might have some year-end selling of US inventories due to tax reasons, especially in Texas, but after all is said and done, if we go by the recent historical barometer of last year where we added roughly 25 million barrels of oil supplies to inventories, this puts supplies around the 416 Million Barrels of Oil level in the heart of the building season.

If domestic production continues ahead of pace and imports are not properly managed then maybe 425 Million Barrels in storage is possible, all modern records at this point in the data.

Fundamentals & Price: A Path Less Traveled in Recent Years

What effect this has on Oil prices is an entirely different matter as the Oil market is one of the most manipulated markets in the trading world, just look at the Brent-WTI Spread Trade this year for proof of that, and over the last 4 years for that matter.  

All markets are pretty bad these days when it comes to market shenanigans, and when the Federal Reserve has basically gotten into the business of artificially created wealth through artificially pushing up asset prices all bets are off when it comes to predicting price adhering to fundamentals in the marketplace. 

Fundamentals have become irrelevant in most markets these days. But some of us analyst types like to do fundamental analysis just for old time`s sake, who knows it might become a useful tool again sometime in the future once markets lose this unprecedented liquidity injection phenomenon.  

Domestic Production

In looking at Domestic production, the US produces over 8 million barrels per day compared with 6.8 million this time last year, quite a significant jump year on year, and ahead of where my most optimistic forecast was for this metric earlier in the year in March of 2013. This increase in Domestic production is being offset by a reduction in Oil imports with the US importing 7.7 Million barrels per day versus over 8.1 million barrels this time last year.

Managing Imports

So the goal is to control supplies through managing imports to align with the substantial increases in Domestic production over the last several years, and this trend continues to play out at present. How far this strategy can go before world oil prices start reacting with considerable downward pressure is anybody`s guess but definitely something to keep track of in 2014.

Reading: U.S. Oil Imports Hit 13-year Lows

But the last several months have had several weeks where Domestic production is more than Imports, and this milestone is quite an achievement for an ‘Outsourcer’ Nation with its core economic strategy of the last 30 years for goods and services. 

2014 & Oil Metrics

Thus if we go by recent historical trends is the 9 million barrels per day of Domestic Oil production really possible for 2014? Can the US hit the 9.5 Million Barrel per day mark? And if so what does this mean for Global Oil prices? 

All these dynamics will be worth watching in 2014, to be sure there are other factors revolving around China, Iran and Venezuela not to mention Saudi Arabia`s strategy in regard to Oil production, but nonetheless 2014 ought to be an interesting one for the Oil Market.

http://www.zerohedge.com/contributed/2013-11-29/oil-supplies-storage-passing-400-million-threshold-soon