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Carl Bernstein: “Cold Civil War” Has Taken Over Media; “Fact-Based Debate Is Becoming Impossible”

Carl Bernstein: “Cold Civil War” Has Taken Over Media; “Fact-Based Debate Is Becoming Impossible”

To say that the U.S. media has a developed a bit of a credibility issue of late would be an understatement.  Mass hysteria over Trump’s victory in November has clearly resulted in a staggering deterioration in reporting standards as dropping the latest “bombshell” and inflicting the latest wound on the Trump administration has been prioritized over truthful, fact-based reporting.  All of which, as we’ve noted frequently of late, has resulted in a number of embarrassing corrections from several major media outlets who have been forced to admit their reporting was just outright “fake news.”

And, in case you missed it, Carl Bernstein, who is best known for his investigative reporting for the Washington Post that shed light on the Watergate scandal, appeared on CNN, of all places, this weekend to discuss the media’s credibility issue which he argued has largely developed in the “cable news era” as media outlets have become increasingly politicized in their race for ratings.

Among other things, Bernstein said that media outlets in this country are engaged in a “cold civil war” and that, as a result, “fact-based debate is becoming impossible.”

“The difference between Watergate and now is that we are in the midst of a cold civil war in this country.  A political and cultural civil war and all of our reporting is taking place in the context of that cold civil war.  And nothing quite like existed at the time of Watergate.”

“And part of the cold civil war itself is the configuration of media with Fox News, with CNN, being perceived by different sets of viewers as representing different truths.  When, in fact, Fox has changed American politics as perhaps no institution has since its invention in 1996.”

…click on the above link to read the rest of the article…

US Shale Production Just Hit A New All Time High

US Shale Production Just Hit A New All Time High

One month ago, we reported that based on recent data, June oil output from shale producers would post the first double-digit production growth since July of 2015, when oil prices tumbled and a substantial portion of US production was briefly taken offline. While the final data has yet to be tabulated, it is safe to say that this is now the case.

Indicatively, while over the past year total U.S. production was up roughly 525kb/d, virtually all of it, or 98.5%, was the result of horizontal rig production in the Permian Basin, where output rose by just over half a million barrels per day.

The Permian basin has been leading the increase in horizontal oil rig count (+184%)

Also of note is that while US rig shows not signs of slowing yet, in its latest Weekly Oil Rig Monitor, Goldman predicted that $45/bbl is the price below which shale output would finally slow, although that price may also prove a substantial hurdle for many gulf budgets, whose all in cost of production – including mandatory and discretionary government outlays – is roughly the same if not higher.

Rig count (lhs), WTI spot prices (rhs, $/bbl, 3-mo lag)

But what is more notable, is that according to the June EIA Drilling Prodctivity Report forecast, in July total shale (note: not total) basin output would rise by 127kb/d from May’s 5.348mmb/d, and hit 5.475 mmb/d, surpassing the previous record of 5.46 mmb/d reached in March 2015. Today the EIA released its latest Drilling Productivity Report, and while the number is not official just yet, it is safe to say that as of July, the total US shale basin is producing a record amount of crude oil, which the EIA pegged at 5.472mmb/d, up almost exactly as predicted, and is expected to rise by a further 113kb/d in August to a new all time high of 5.585mmb/d.

…click on the above link to read the rest of the article…

Canadian Home Sales Crash In June

Canadian Home Sales Crash In June

The Canadian Real Estate Association says home sales in June posted their largest monthly drop since 2010, with the Greater Toronto market leading the decline.

This is the third monthly decline in a row…

Under the covers, it’s Toronto that is suffering the most…

Toronto existing home sales drop 37.7% y/y

  • Average Toronto existing home price fell 5.8% m/m
  • Average Toronto existing home price up 6.3% y/y

Vancouver existing home sales drop 12.2% y/y

  • Average Vancouver existing home price fell 3.2% m/m
  • Average Vancouver existing home price up 2.7% y/y

And as a reminder, there appears to be plenty of room for this to fall further…

When A “Black Swan” Will No Longer Do: China Warns Beware The “Gray Rhino”

When A “Black Swan” Will No Longer Do: China Warns Beware The “Gray Rhino”

Early this morning, we discussed the unexpected tumble in the Chinese small-cap stock index, the ChiNext, will plunged by over 5%…

… as a result of growing concerns that a new round of deleveraging is about to be imposed by Beijing following the conclusion of China’s 5th National Financial Work Conference (NFWC), which was attended by president Xi Jinping, and set the agenda for critical financial reforms over the coming years. As the People’s Daily noted on Monday:

The meeting, presided over by President Xi Jinping, was held against the backdrop of growing enterprise debt, an overheating real estate market, and overcapacity in such sectors as low-end manufacturing.

Furthermore, the commentary touched on the recent OECD finding that the debt of non-financial enterprises in China reached 170% of its GDP in 2016, and warned that “in its 2017 China Financial Stability Report released early this month, China’s central bank, People’s Bank of China, pointed to “the risk of bubbles” emerging in some parts of the country. The report notes that housing loans comprised a quarter of all loans, and accounted for 44.8% of all new lending since the start of this year.”

Perhaps the biggest outcome from the weekend Conference was the creation of a financial “super-regultor” meant to tackle the growing threat of a financial crisis, and among its broad conclusions were  i) To make finance better serve the real economy; ii) To contain financial risks; and iii) To deepen financial reforms. The proposed reforms are the result of the unprecedented increase in overall Chinese debt, which while promoting growth – in this case China’s latest 6.9% GDP print – is also leading to a relentless buildup of risks. And while until now Chinese regulators had homed in on financial-sector excesses, the latest probe – Bloomberg notes – is now widening to debt in the broader economy, “a shift that prompted a sell-off in domestic stocks.”

…click on the above link to read the rest of the article…

Visualizing The Dark Side Of The Web

Visualizing The Dark Side Of The Web

The term Dark Web is evocative. It conjures up images of hitmen, illegal drugs, and pedophilia. One imagines a place where the dark side of human nature flourishes away from the eyes – and laws – of society at large.

Today’s infographic, from Cartwright King Solicitors, cuts through the mystique and provides an entertaining and practical overview of the Deep Web and the Dark Web.

…click on the above link to read the rest of the article…

China Warns Japan: “Get Used To Our Warplanes”, Sends Spy Ship Near Alaska

China Warns Japan: “Get Used To Our Warplanes”, Sends Spy Ship Near Alaska 

In an unexpectedly brazen rattling of sabers, just days after China deployed troops to its first foreign base in Djibouti, a move which the Global Times clarified is “about protecting its own security, not about seeking to control the world, Beijing made a less than subtle reversal, when it told Japan on Friday to “get used to it” after it flew six warplanes over the Miyako Strait between two southern Japanese islands in a military exercise.

It all started late on Thursday night, when Japan’s defense ministry issued a token statement describing the flyover by the formation of Xian H-6 bombers, also known as China’s B-52, earlier that day as “unusual”, while noting that there had been no violation of Japanese airspace.

The flyover was hardly surprising: the Chinese navy and air force have been carrying out a series of exercises in the Western Pacific in recent month, both as they hone their ability to operate far from their home shores, as well as a trial balloon to gauge the reactions of their increasingly more nervous neighbors.

What made this flyover different, is that usually following a formal protest by the “offended” country, Beijing would take note and issue a token statement of its own, “neither admitting nor denying” guilt, but certainly without assurances of further transgressions. But not this time. On Friday the Chinese defense ministry said it was “legal and proper” for its military aircraft to operate in the airspace and that it would continue to organize regular training exercises according to “mission requirements.”

 

 

…click on the above link to read the rest of the article…

Rig Count Rises To April 2015 Highs As Analysts Warn “Oil Market Rebalancing Hasn’t Even Started Yet”

Rig Count Rises To April 2015 Highs As Analysts Warn “Oil Market Rebalancing Hasn’t Even Started Yet”

After falling for the first time this year two weeks ago, Baker Hughes reports US oil rig count rose once again (up 2 to 765) for the 24th week in the last 25, to the highest since April 2015.

“The so-called re-balancing is likely to happen later than earlier,” Michael Poulsen, an analyst at Global Risk Management Ltd, said on Friday.

It does appear we have reached an inflection point in the rig count numbers (if the historical relationship with crude holds)…

While EIA cut its 2018 production outlook, this week saw the effect of field maintenance in Alaska and Tropical Storm Cindy in the Gulf of Mexico fall away and production surged once again this week – to new cycle highs…

 

And the lagged rig count trend suggests crude production has further to rise yet…

Crude prices have been active today with macro headlines hurting and machines helping ramp any dip… the rig count create iunstant selling which was instantly bid back upo,,,

And while US crude production just jumped to cycle highs (and shale production we believe reached a record high), OilPrice.com’s Nick Cunningham notes the oil market rebalancing hasn’t even started yet

Global oil production surged in June “as producers opened the taps,” according to a new report from the International Energy Agency (IEA). OPEC was a major culprit, with Libya and Nigeria doing their best to scuttle the production cuts made by other members.

But it wasn’t just those two countries, who are exempted from the agreed upon reductions. OPEC’s de facto leader, Saudi Arabia, also boosted output by an estimated 120,000 bpd in June, from a month earlier. That put Saudi production above 10 million barrels per day (mb/d) for the first time in 2017.

…click on the above link to read the rest of the article…

OPEC Admits It Has A Problem: It Is Still Producing Too Much Oil

OPEC Admits It Has A Problem: It Is Still Producing Too Much Oil

In its just released lastest market report for the month of July, OPEC admitted it has a problem: more than six months after the Vienna deal that was supposed to bring supply and demand in balance, the oil cartel confirmed it is pumping too much, not only in 2017, but also in 2018, blaming shale production as the primary reason behind the oversupply.

First, looking at historical data, according to secondary sources, production among the 14 OPEC member states rose by a whopping +394k b/d in June to 32.611mb/d.  The biggest monthly increases took place in those nations that had previously been supply constrained and which are exempt from the output cut accord: Libya +127k b/d, and Nigeria +97k, although even Saudi Arabia saw a substantial pick up in production, which rose by +51k b/d m/m to 9.95m b/d, the highest since the start of the year. More ominously, in direct communications to OPEC, Saudi reported a monthly increase of +190k b/d m/m, up to 10.07m b/d, suggesting that as discussed yesterday, Saudi commitment to production cuts may be “waning.”

In total, OPEC admitted that output exceeded demand in 1H this year and was set for overproduction in 2018: the total output of 32.6m b/d in June was more than the 32.2m b/d it expects will be needed in 2018.

Just as striking was the report’s suggestion that OPEC and non-OPEC’s accord to cut production was not deep enough according to Bloomberg calculations: despite reducing production, the organization’s data show it oversupplied markets by ~700k b/d in 1H this yr.  Still, surplus oil stockpiles in developed nations fell in May to 234m bbl; if OPEC maintains June output levels, it will reduce global surplus by ~70m bbl in 2H, although as we reported previously much of this is due to US oil exports which artificially depressed US commercial inventory stocks.

…click on the above link to read the rest of the article…

Fed Chair Janet Yellen Warns Congress: US Debt Trajectory Is Unsustainable

Fed Chair Janet Yellen Warns Congress: US Debt Trajectory Is Unsustainable

During her tesimony this morning, Fed Chair Janet Yellen urged Congress to take into account the growth trajectory of the federal debt when making decisions about spending and taxation.

She said lawmakers need to work toward achieving “sustainability of this debt path over time,”

“Let me state in the strongest possible terms that I agree” the U.S. federal debt trend is unsustainable, may hurt productivity, and living standards of Americans.

Of course she is correct, but we do not remember her being so forthright during the last few years of President Obama’s reign as he doubled the national debt?

As a reminder, the Congressional Budget Office estimated last month the national debt could reach 91% of gross domestic product by 2027. Lawmakers are weighing major fiscal policy changes, including tax cuts, changes to health care and infrastructure spending, that could drive deficits higher in the coming years. Furthermore, at the cuirrent spending/taxation rates, debt/GDP expected to hit 150% by 2047 if the current government spending picture remains unchanged.

…click on the above link to read the rest of the article…

“Canada Is In Serious Trouble” Again, And This Time It’s For Real

“Canada Is In Serious Trouble” Again, And This Time It’s For Real

Some time ago, Deutsche Bank’s chief international economist, Torsten Slok, presented several charts which showed that Canada is in serious trouble” mostly as a result of its overreliance on its frothy, bubbly housing sector, but also due to the fact that unlike the US, the average household had failed to reduce its debt load in time.

Additionally, he demonstrated that it was not just the mortgage-linked dangers from the housing market (and this was before Vancouver and Toronto got slammed with billions in “hot” Chinese capital inflows) as credit card loans and personal lines of credit had both surged, even as multifamily construction was at already record highs and surging, while the labor market had become particularly reliant on the assumption that the housing sector would keep growing indefinitely, suggesting that if and when the housing market took a turn for the worse, or even slowed down as expected, a major source of employment in recent years would shrink.

Fast forward to today, when the trends shown by Slok two years ago have only grown more acute, with Canada’s household debt continuing to rise, its divergence with the US never been greater…

… making the debt-service ratio disturbingly sticky.

Making matters worse, recent trends in average hourly earnings show that if the US Federal Reserve is concerned with US wages, then the Bank of Canada should be positively terrified.

…click on the above link to read the rest of the article…

“We Are Forced To Strike Back”: Russia Set To Expel 30 US Diplomats, Seize US Assets

“We Are Forced To Strike Back”: Russia Set To Expel 30 US Diplomats, Seize US Assets

When Obama announced the expulsion of 35 Russian diplomats and the seizure of Russian diplomatic compounds in Maryland last December, in response to alleged Russian interference in the election, Putin just smiled and said Russia would not retaliate, expecting that relations between Russia and the US would normalize under president Trump. Six months later, relations have not only not normalized but have deteriorated further following the latest round of sanctions against Russia despite daily allegations that Trump colluded with the Kremlin to convince several million Americans to vote against Hillary.

And, as a result, Putin’s patience appears to have run out, and according to Russian newspaper Izvestiya, the Kremlin is set to expel around 30 US diplomats and freeze some US assets in a retaliatory move against Washington.


Moscow may expel about 30 US diplomats, freeze some US assets in Russia https://sptnkne.ws/eSg6 


Quoting a Foreign Ministry source, the Izvestiya newspaper says the move is due to the failure to reach an agreement on two Russian diplomatic compounds in the US seized by the outgoing Obama administration in December last year.

“There is a preliminary agreement on holding a meeting between Russian Deputy Prime Minister Sergey Ryabkov and US Under Secretary of State Thomas Shannon in St. Petersburg. If the compromise is not found there, we will have to take such measures,” a source in the Russian Foreign Ministry told the Izvestiya newspaper.

Izvestiya also cited Andrey Klimov, a senator in the upper house of Russia’s parliament, who said that “Russia had already waited more than six months for the Trump administration to improve the relationship between the two countries” and was now forced to strike back.

…click on the above link to read the rest of the article…

Connecticut Capital Hartford Downgraded To Junk By S&P

Connecticut Capital Hartford Downgraded To Junk By S&P

One week ago, Illinois passed its three year-overdue budget in hopes of avoiding a downgrade to junk status, however in an unexpected twist, Moody’s said that it may still downgrade the near-insolvent state, regardless of the so-called budget “deal.” In fact, a downgrade of Illinois may come at any moment, making it the first U.S. state whose bond ratings tip into junk, although as of yesterday, credit rating agencies said they were still reviewing the state’s newly enacted budget and tax package. The most likely outcome is, unfortunately for Illinois, adverse: “I think Moody’s has been pretty clear that they view the state’s political dysfunction combined with continued unaddressed long-term liabilities, and unfavorable baseline revenue performance as casting some degree of skepticism on the state’s ability to manage out of the very fragile financial situation they are in,” said John Humphrey, co-head of credit research at Gurtin Municipal Bond Management.

And yet, while Illinois squirms in the agony of the unknown, another municipality that as recently as a month ago was rumored to be looking at a bankruptcy filing, the state capital of Connecticut, Hartford, no longer has to dread the unknown: on Tuesday afternoon, S&P pulled off the band-aid, and downgraded the city’s bond rating by two notches to BB from BBB-, also known as junk, citing “growing liquidity pressures” and “weaker market access prospects”, while keeping the city’s General Obligation bonds on Creditwatch negative meaning more downgrades are likely imminent.

The downgrade to ‘BB’ reflects our opinion of very weak diminished liquidity, including uncertain access to external liquidity and very weak management conditions as multiple city officials have publicly indicated they are actively considering bankruptcy,” said S&P Global Ratings credit analyst Victor Medeiros. Hartford has engaged an outside law firm with expertise in financial restructuring. 

…click on the above link to read the rest of the article…

Eric Peters: “We Are About To Reach The Top Of The Wall Of Worry… And Then Look Down”

Eric Peters: “We Are About To Reach The Top Of The Wall Of Worry… And Then Look Down”

Following up on Eric Peters’ contrarian comments about “technological disruption”, in which he said that “we should be careful not to overlook the possibility that today’s disruptive technology companies may be not much more than mechanisms to drive wages down to subsistence levels”, in the One River CIO’s latest letter, Peters reverts back to his familiar, macro self with the following brief allegory on recent events, which as always cuts through the noise to highlight what is important, in this case that “the chasm between policy and reality has never been wider” which he says “matters little, until you arrive at the top of the wall of worry. And then look down.”

Here are the choice excerpts from his latest letter:

“Absolutely,” answered Trump, as sure as sure can be. You see, the reporter had asked if Mexico would pay. She couldn’t help herself, we’re fixated by walls. We need them; to build, to topple, to scale.

They define us, give us purpose. Walls surround us, they’re everywhere, literally, metaphorically.

“We are showing that the world doesn’t have to go 100 years back in time,” announced Tusk, symbolically isolating America, while breaking down the wall that separates Europe and Japan.

“The deal is the birth of the world’s largest, free industrialized economic zone,” said Abe, shaking hands, the barrier surrounding his little island crumbling.

But of course, the most formidable walls exist in our delicate minds. Steel and stone structures all succumb to determined efforts to overcome them; the Iron Curtain, Berlin Wall, Great Wall.

But self-doubt is another matter entirely, a barrier towering above all others, the greatest obstacle ever created. In its shadow stands worry. But this wall can be climbed. And eight years into a historic bull market, we’re approaching the top.

…click on the above link to read the rest of the article…

National Geographic’s Guide To The Yellowstone Supervolcano

National Geographic’s Guide To The Yellowstone Supervolcano

Amid a growing ‘swarm’ of over earthquakes (now over 1000), and Montana’s largest quake ever, scientists are growing increasingly concerned that the so-called ‘super-volcano’ at the heart of Yellowstone National Park could be building towards a Category 7 eruption.So what is a ‘super-volcano’ and what does its explosion mean for life on earth? NatGeo explains…

As National Geographic details…

Think of Yellowstone as a gigantic pressure cooker, fueled by a massive supervolcano. Water from rain and snowmelt, much of it centuries-old, percolates through cracks in the Earth’s crust until heated by molten rock reservoirs deep below. The water then filters upward, eventually finding release in the thousands of geysers, hot springs, and other hydrothermal wonders.

The plume of hot rock has been calculated at more than 600 miles deep. But scientists suspect it actually descends as far as 1,800 miles, all the way to what’s known as the Earth’s outer core-mantle boundary.

The reservoirs and plume are superheated, spongelike rock holding pockets of molten material called magma. The reservoirs’ heat, which originates in the plume, is what keeps the area’s geysers boiling.

Ancient rain and snowmelt seep down to just above the volcano’s magma reservoirs, until they are superheated and rise again through the fractures. Volcanic heat and gases help propel steam and water toward the surface, where they escape through hot springs or geysers.

…click on the above link to read the rest of the article…

Kyle Bass Warns Of “Tectonic Shift” In US-China Relationship

Kyle Bass Warns Of “Tectonic Shift” In US-China Relationship

Hayman Capital’s Kyle Bass ventured on to CNBC this morning to drop some painful truth bombs about Trump’s “drastically changed Chinese diplomacy” and China’s looming “come-uppance.”

Bass began by highlighting what he calls a “tectonic shift” in US-China relations in the last few days, pointing to two crucial events…

1. Things changed drastically when US launched unilateral sanctions on China over North Korea

“Xi is a control freak and he absolutely doesn’t appreciate the United States acting unilaterally”

2. Things escalated when Trump sold $1.4bn in weapons to Taiwan, angering Beijing more as Bass notes:

“Taiwan was the one area which Beijing has asked Trump to stay away from during his meeting at Mar-a-Lago.”

“Since the death of Otto Warmbier, any chance of meetings with North Korea are now off.. and our diplomatic relationship with China took a major step for the worse yesterday.

Bass notes that “China is trying to make marginal changes in its balance of trade with US – buying beef once again and importing a lot more crude oil from the US.”

But then Bass shifts to the potentially even more precarious situation under the hood of China’s economy. As Reuters reports, China’s leaders want the restructuring of their massive non-performing loans problem to address financial risks while avoiding big employee lay-offs, and have instigated ‘cure by committee’..

“The solution for zombie firms isn’t just bankruptcy,” a Shandong-based banking official told Reuters. “The impact of bankruptcy is just too big. Just think about the thousands of workers. Social stability is key.”

Stability is always uppermost in the minds of Chinese leaders, and even more so this year, ahead of the five-yearly party congress this autumn, when a new generation of senior leaders will be selected.

…click on the above link to read the rest of the article…

Olduvai II: Exodus
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Olduvai
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Olduvai II: Exodus
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Olduvai III: Cataclysm
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