May’s Brexit deal prospects ebb as top ally rejects i

 

FILE PHOTO: Conservative politician Michael Fallon arrives at the BBC in central London, Britain, July 10, 2018. REUTERS/Hannah McKay

LONDON (Reuters) – One of British Prime Minister Theresa May’s most trusted lawmakers said on Tuesday he will not back her Brexit deal, further stacking the odds against it passing through parliament next month. Under the deal secured with EU leaders on Sunday, Britain would leave the bloc in March with continued close trade ties. But the agreement has attracted criticism from lawmakers of all parties, both from supporters of a cleaner break with the EU and from opponents of Brexit. Michael Fallon, May’s former defence secretary who resigned last year after a journalist accused him of sexual harassment, told BBC radio that British negotiators should head back to Brussels to secure a better divorce agreement. Asked whether he would vote against the current deal, Fallon said: “As it stands at the moment, yes. I don’t think this gives us the certainty that we need and it is therefore a gamble.” Some Brexit-supporting lawmakers in May’s Conservative Party could support her deal if she sets out when she will quit, The Times newspaper reported. May told lawmakers on Monday that no better deal was available and that no one could predict what would happen if they rejected it. May has 314 active Conservative lawmakers in the 650-seat House of Commons and would need around 320 votes to ratify the deal under current attendance projections, when it goes to lawmakers on Dec. 11. Falling business morale points to weak German growth Her de facto deputy prime minister, Cabinet Office Minister David Lidington, told the BBC on Tuesday that no other plan was on the table. “There’s no plan B because the European Union itself is saying the deal that is on the table is the one that we have had to compromise over,” Lidington said. Asked if Britain could delay Brexit to get a better deal, he said: “It’s not government policy and I don’t really see that gets us anywhere because the EU has made its position very clear.”

Palladium Prices Soar, & Russia Has Plenty of the Precious Metal

Palladium has enjoyed the best market performance among major metals in 2018, thanks in large part to tough new Chinese car pollution standards which have pushed automotive producers to install catalytic converters which contain the metal in their cars. Palladium prices have appreciated over 9 percent on the New York Stock Exchange year-to-date, hitting just short of $1,170 per ounce on Friday, with futures jumping 5.2 percent last week alone and market analysts telling Bloomberg that the bull run is just getting started.  The silvery-white precious metal, used in pollution control devices, electronics, jewellery, groundwater treatment equipment, chemical applications and dentistry, has enjoyed a steady upward climb in value over the last decade, starting off at a low of $235 per ounce in November 2008. Close to 70 percent of demand is driven by the automotive market, according to CPM Group, a New York-based commodities research firm. And with car sales remaining steady despite fears of a decline in many other industries, investors are expecting palladium’s climb to continue over the short to medium term. “The market has a very positive fundamental outlook,” Maxwell Gold, director of investment strategy at Scotland-based investment firm Aberdeen Standard Investments told Bloomberg. “We’ve been dealing with supply deficits going on eight years, and that’s expected to continue. Supply has certainly been an issue on the mining front as well as the draw-down of existing stockpiles,” he added. With palladium prices climbing above those of its sister-metal, platinum (which closed at $843 per ounce on Friday), investors say its possible that platinum may replace palladium in many automotive and industrial applications. However, Standard Chartered Bank precious metals analyst Suki Cooper said it would take at least 18-24 months for manufacturers to make the switch, not to mention the costs and headaches associated with doing so. Where does Russia come into all this? Well, the country is rich in both precious metals, and enjoys the status of being the world’s largest palladium producer, mining some 81 tonnes of the precious metal in 2017. Norilsk Nickel alone accounted for 41 percent of total global palladium production the same year. Norilsk Nickel, which also engages in the extraction and refining of platinum, cobalt, silver, gold, tellurium and selenium, increased its palladium output by 6 percent in 2017, and platinum output by 4 percent. It is looking to continue growing its output amid market concerns about the closure of mines in South Africa, the world’s second-largest palladium producer. Zimbabwe, Canada and the United States round out the top five global palladium producers, with their total output amounting to just 27 percent of combined Russian and South African output in 2015.

Oil plunges nearly 8 percent despite talk of output cut

BOSTON (Reuters) – Oil prices slumped up to nearly 8 percent to the lowest in more than a year on Friday, posting the seventh consecutive weekly loss, amid intensifying fears of a supply glut even as major producers consider cutting output. Oil supply, led by U.S. producers, is growing faster than demand and to prevent a build-up of unused fuel such as the one that emerged in 2015, the Organization of the Petroleum Exporting Countries is expected to start trimming output after a meeting on Dec. 6. But this has done little so far to prop up prices, which have dropped more than 20 percent so far in November, in a seven-week streak of losses. Prices were on course for their biggest one-month decline since late 2014. A trade war between the world’s two biggest economies and oil consumers, the United States and China, has weighed upon the market. “The market is pricing in an economic slowdown – they are anticipating that the Chinese trade talks are not going to go well,” said Phil Flynn, an analyst at Price Futures Group in Chicago, referring to expected talks next week between U.S. President Donald Trump and his Chinese counterpart Xi Jinping at the G20 summit in Buenos Aires. “The market doesn’t believe that OPEC is going to be able to act swiftly enough to offset the coming slowdown in demand,” Flynn said.

Brent crude futures settled down $3.80 a barrel, or 6.1 percent at $58.80. During the session, the benchmark dropped to $58.41, the lowest since October 2017.

U.S. West Texas Intermediate crude (WTI) lost $4.21, or 7.7 percent, to trade at $50.42, also the weakest since October 2017. In post-settlement trade, the contract continued to fall. For the week, Brent fell 11.3 percent and WTI posted a 10.8 percent decline, the largest one-week drop since January 2016. Market fears over weak demand intensified after China reported its lowest gasoline exports in more than a year amid a glut of the fuel in Asia and globally. Stockpiles of gasoline have surged across Asia, with inventories in Singapore, the regional refining hub, rising to a three-month high while Japanese stockpiles also climbed last week. Inventories in the United States are about 7 percent higher than a year ago. Crude production has soared as well this year. The International Energy Agency expects non-OPEC output alone to rise by 2.3 million barrels per day (bpd) this year while demand next year was expected to grow 1.3 million bpd.

Adjusting to lower demand, top crude exporter Saudi Arabia said on Thursday that it may reduce supply as it pushes OPEC to agree to a joint output cut of 1.4 million bpd.

However, Trump has made it clear that he does not want oil prices to rise and many analysts think Saudi Arabia is coming under U.S. pressure to resist calls from other OPEC members for lower crude output. If OPEC decides to cut production at its meeting next month, oil prices could recover, analysts say. “We expect that OPEC will manage the market in 2019 and assess the probability of an agreement to reduce production at around 2-in-3. In that scenario, Brent prices likely recover back into the $70s,” Morgan Stanley commodities strategists Martijn Rats and Amy Sergeant wrote in a note to clients. If OPEC does not trim production, prices could head much lower, potentially depreciating toward $50 a barrel, argues Lukman Otunuga, Research Analyst at FXTM.

Mark Connors, global head of portfolio and risk advisory at Credit Suisse, told Reuters this week that the action among macro and CTA funds reflects a risk-aversion trade, as net long positions have dropped from near five-year highs to roughly even exposure between longs and shorts. Hedge funds and other money managers cut their net long positions in Brent by 32,263 contracts to 182,569 in the week ended Nov. 20, according to data provided by the Intercontinental Exchange (ICE) on Friday. That’s the lowest net long position since December 2015. Volatility, a measure of investor demand for options, has spiked to its highest since late 2016, above 60 percent, as investors have rushed to buy protection against further steep price declines. The decline in oil prices pulled U.S. energy shares lower. Oil majors Exxon Mobil Corp and Chevron Corp fell more than 3 percent and were the leading decliners on the Dow Jones Industrial Average Oilfield service providers Schlumberger NV and Halliburton Co also fell nearly 3 percent.

Oil prices hit year low as OPEC considers output cut

LONDON (Reuters) – Oil prices fell to their lowest in more than a year on Friday, on course for their biggest one-month decline since late 2014, even as oil producers considered cutting production to try to stem a rising global surplus. Oil supply, led by U.S. producers, is growing more quickly than demand and to ward off a build-up of unused fuel such as the one that emerged in 2015, the Organization of the Petroleum Exporting Countries is expected to start trimming output after a meeting planned for Dec. 6. But this has done little so far to prop up prices. The value of a barrel of oil has dropped by around 20 percent so far in November, in a seven-week streak of losses. “Oil bears have re-asserted their authority,” said Tamas Varga, analyst at London brokerage PVM Oil. “The weakness is the continuation of the prevailing bearish sentiment aided a little bit by the stronger dollar.” Volatility has spiked to its highest since late 2016, as investors have rushed to buy protection against further steep price declines. Volatility, a measure of investor demand for a particular option, has jumped above 60 percent for very bearish near-term sell options, double what it was two weeks ago. Oil production has surged this year. The International Energy Agency expects non-OPEC output alone to rise by 2.3 million bpd this year. Oil demand next year, meanwhile, is expected to grow by 1.3 million bpd.

Adjusting to lower demand, top crude exporter Saudi Arabia said on Thursday that it may reduce supply as it pushes OPEC to agree to a joint output cut of 1.4 million bpd. If OPEC agrees to cut production at its meeting next month, oil prices could recover sharply, analysts say.

“We expect that OPEC will manage the market in 2019 and assess the probability of an agreement to reduce production at around 2-in-3. In that scenario, Brent prices likely recover back into the $70s,” Morgan Stanley commodities strategists Martijn Rats and Amy Sergeant wrote in a note to clients.

U.S. Durable Goods Orders Plunge 4.4% In October, Much More Than Expected

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A report released by the Commerce Department on Wednesday showed a much steeper than expected drop in new orders for U.S. durable goods in the month of October, with the sharp decline largely reflecting a substantial decrease in orders for transportation equipment.

The Commerce Department said durable goods orders plunged by 4.4 percent in October following a revised 0.1 percent dip in September.

Economists had expected orders to slump by 2.5 percent compared to the 0.7 percent increase that had been reported for the previous month. The steep drop in durable goods orders was primarily due to the sharp pullback in orders for transportation equipment, which tumbled by 12.2 percent in October after climbing by 0.9 percent in September. Orders for non-defense aircraft and parts plummeted by 21.4 percent in October after plunging by 19.3 percent in September, while orders for defense aircraft and parts nosedived by 59.3 percent after soaring by 117.1 percent. Excluding the substantial decrease in orders for transportation equipment, durable goods orders inched up by 0.1 percent in October after a revised 0.6 percent decrease in September. Ex-transportation orders had been expected to rise by 0.4 percent compared to the 0.1 percent uptick originally reported for the previous month.

The uptick in ex-transportation orders came as notable increases in orders for electrical equipment, appliances and components and computers and electronic products were partly offset by a significant decline in orders for primary metals. The report also said orders for non-defense capital goods excluding aircraft, a key indicator of business spending, were nearly unchanged in October after falling by 0.5 percent in September. Shipments in that category rose by 0.3 percent in October, barely reversing the drop seen over the two previous months.”This report is another piece of evidence that suggests the sharp rise in interest rates is beginning to restrain economic growth,” said Michael Pearce, Senior U.S. Economist at Capital Economics. He added, “The weakness of business investment is particularly disappointing because it should have been boosted by the tax changes at the beginning of the year.” The Commerce Department also said shipments of durable goods fell by 0.6 percent in October after jumping by 1.0 percen

 

U.S. Consumer Sentiment Deteriorates More Than Initially Estimated November

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Consumer sentiment in the U.S. unexpectedly deteriorated by more than initially estimated in the month of November, according to a report released by the University of Michigan on Wednesday. The report said the consumer sentiment index for November was downwardly revised to 97.5 from the preliminary reading of 98.3. Economists had expected the consumer sentiment index to be unrevised at 98.3, which was still down slightly from 98.6 in October. “Although the data recorded a decline of 2.8 Index points following the election, the drop was related more to income than political party,” said Surveys of Consumers chief economist Richard Curtin. “Among those with incomes in the bottom third, the Sentiment Index rose by 10.4 points and fell by 6.6 points among those in the top third of the income distribution,” he added. “In contrast, the Sentiment Index remained unchanged among Democrats and Republicans.” The report said the current economic conditions index for November was downwardly revised to 112.3 from 113.2 and is now below the October reading of 113.1. The index of consumer expectations dipped to 88.1 from 89.3. On the inflation front, one-year inflation expectations slipped to 2.8 percent in November from 2.9 percent in October, while five-year inflation expectations rose to 2.6 percent from 2.4 percent.

Oil rebounds after previous session’s slide, but glut worries persist

NEW YORK (Reuters) – Oil prices rose more than 1 percent on Wednesday, recovering from the lowest levels in months, after U.S. government data showed strong demand for gasoline and diesel, but gains were limited by concern over rising global crude supply. U.S. crude stocks USOILC=ECI rose 4.9 million barrels last week, the Energy Information Administration said. More than expected. Crude inventories have risen for nine straight weeks, the longest streak of increases since March 2017. [EIA/S] Crude stocks at the Cushing, Oklahoma, delivery hub for WTI USOICC=ECI fell 116,000 barrels, the first drop in nine weeks, EIA said. Gasoline stocks USOILG=ECI fell 1.3 million barrels to the lowest level since December 2017, while distillate stockpiles USOILD=ECI dropped by 77,000 barrels, the EIA data showed. “The report was somewhat bearish due to the large crude oil inventory build, but the drawdown in refined product inventories and the big jump in refinery activity could signal the end of the recent string of mostly bearish reports,” said John Kilduff, a partner at Again Capital Management in New York. However, Wednesday’s gains did little to reverse overall market weakness. Crude fell more than 6 percent in the previous session, while world equities tumbled as investors grew concerned about economic growth prospects. Brent has fallen by more than 25 percent since reaching a 4-year high of $86.74 on Oct. 3, reflecting concern about forecasts of slowing demand in 2019 and ample supply from Saudi Arabia, Russia and the United States.

Worried by the prospect of a new supply glut, the Organization of the Petroleum Exporting Countries is talking about reducing output just months after increasing production.

OPEC, Russia and other non-OPEC producers are considering a supply cut of between 1 million barrels per day (bpd) and 1.4 million bpd at a Dec. 6 meeting, sources familiar with the issue have said. However, Saudi Arabia may find taking action to support prices harder, analysts said, with U.S. pressure to keep them low. U.S. President Donald Trump on Wednesday praised Saudi Arabia for helping to lower oil prices. Riyadh could feel more inclined to heed U.S. demands after Trump promised on Tuesday to be a “steadfast partner” of Saudi Arabia despite saying Crown Prince Mohammed bin Salman may have known about a plan to murder journalist Jamal Khashoggi. “It’s fair to say that the price of oil is going to continue to be pretty volatile between now and Dec. 6 when OPEC meets,” said Brian Kessens, managing director at Tortoise. “There’s going to be a lot of different rhetoric and anticipation of what will actually transpire.

Trump thanks Saudi Arabia for lower oil prices

US President Donald Trump sees Saudi Crown Prince Mohammed bin Salman as a key strategic partner in the Middle East (AFP Photo/MANDEL NGAN)

Washington (AFP) – US President Donald Trump on Wednesday ignored criticism that he gave Saudi Arabia a free pass on the murder of a dissident journalist, instead praising the Islamic kingdom for keeping oil prices low. Trump, on holiday at his Florida Mar-a-Lago Club, doubled down on an unusually worded statement from Tuesday that he was essentially ignoring the killing of Jamal Khashoggi because of what he said were more important US strategic and commercial interests.

“Oil prices getting lower. Great! Like a big Tax Cut for America and the World. Enjoy! $54, was just $82,” he tweeted. “Thank you to Saudi Arabia, but let’s go lower!”

The fulsome praise for Saudi Arabia’s help in maintaining cheap oil built on comments he made Tuesday at the White House, saying that “if we broke with them, I think your oil prices would go through the roof.””They’ve helped me keep them down,” he said.The focus on oil prices is one strand of Trump’s argument against punishing the US ally for Khashoggi’s death, even though the CIA reportedly found strong evidence that de facto Saudi leader, Crown Prince Mohammed bin Salman, was involved. Khashoggi, a US resident who wrote for The Washington Post and had been critical of Prince Mohammed, was lured to the Saudi consulate in Istanbul on October 2, killed and reportedly dismembered. After lengthy denials, Saudi authorities admitted responsibility and said 21 people had been taken into custody. However, a CIA analysis leaked to the US media went further, reportedly pointing the finger at Prince Mohammed, who has especially close contacts with the Trump White House. In a formal statement Tuesday — released just after nearly the entire White House press corps had left to cover the lighthearted annual ritual of the president sparing a turkey from the Thanksgiving table — Trump said the prince “could very well be” in on the crime. But he then went on to flatly reject any suggestion of punishing the Saudi leader, saying Washington “intends to remain a steadfast partner.” Trump’s reasoning was that Saudi Arabia and the United States are partners in opposing Iran and the Saudis have committed to $450 billion in weapons contracts and other investments, as well as being a major oil producer. “Very simply it is called America first!” Trump concluded. This was in contrast to previously stated positions where Trump promised a tough response, warning in an October interview with The Wall Street Journal, for example, that the US-Saudi relationship “would take a while to rebuild.” Trump’s posture has provoked rare dissension among the ranks of senior Republicans. Senator Lindsey Graham said on Fox News that Prince Mohammed is “crazy.” “It’s not too much to ask an ally not to butcher a guy in a consulate,” he said. And Senator Bob Corker, the Republican leader of the foreign relations committee, tweeted scathingly: “I never thought I’d see the day a White House would moonlight as a public relations firm for the Crown Prince of Saudi Arabia.” Corker and the senior Democrat on the committee, Bob Menendez, demanded that the Trump administration issue a clear statement on whether Prince Mohammed was involved. Another prominent Republican, Senator Rand Paul, added “Let’s put America first, not Saudi Arabia,” while Khashoggi’s old employer the Post said in an editorial that Trump’s position meant “a world where dictators know they can murder their critics and suffer no consequences.” Secretary of State Mike Pompeo pushed back in a radio interview Wednesday, saying: “We are going to make sure that America always stands for human rights. We’ve watched the Saudis actually move in that direction during our time in office as well. “It’s not an unblemished record, but there certainly have been steps forward.”

WTI Crude Oil Price Plunge

From its 2018 peak on October 3 to November 13, the price of a barrel of West Texas Intermediate crude oil fell by 27%. In the later stage of its decline, it closed at a lower price for 12 consecutive days, something it’s not done in at least 35 years. This of course has significant first order implications for the energy industry and for the economy at large. Perhaps less intuitive, however, is the effect that a falling oil price may have on Fed policy. As the price of oil has fallen, so too have inflation expectations. Over last six weeks, the 5-year breakeven inflation rate has fallen from 2.07% to 1.88%. Regressing the breakeven rate against the price of oil from the beginning of 2009 through November 13 generates this relationship:

5yr BE = 0.932+0.01*WTI, with an R square of nearly 40%.

This has had the effect of pushing one measure of the real fed funds rate (fed funds rate minus 5-year breakeven rate) up to its highest level since January 2009. While the market’s expectation of a December rate hike remains largely unchanged, its outlook on subsequent hikes in 2019 has become less clear. If oil continues to fall, and inflation expectations with it, the Fed’s efforts to normalize policy may involve an earlier-than-expected intermission.

Oil slumps 7 percent as equities slide fuels demand worries

NEW YORK (Reuters) – Oil prices tumbled about 7 percent on Tuesday, with U.S. crude plunging to its lowest level in more than a year, caught in a broader Wall Street selloff that was fed by rising concerns about slowing global economic growth. U.S. West Texas Intermediate (WTI) crude futures were down $3.90, or 6.8 percent, at $53.30 per barrel by 2:01 p.m. EST (1901 GMT). The contract fell as much as 7.7 percent earlier in the session to $52.77 a barrel, the lowest since October 2017. So far in the session, more than 868,000 front-month WTI contracts had changed hands, exceeding the daily average over the last 10 months. Brent crude futures fell $4.50, or 6.7 percent, to $62.29 a barrel. The international benchmark fell as much as 7.6 percent to $61.71, the lowest level since December 2017. Tuesday’s drop extended a slide that has been largely unimpeded since early October. WTI prices have fallen more than 30 percent from their near-four-year peaks in early October, weighed down by surging supply and the selloff in risk assets worldwide. “For the time being it’s more about risk,” said Jim Ritterbusch, president of Ritterbusch and Associates. “When the stock market comes off 8 or 9 percent, it tends to conjure up images of a weak global economy and that feeds into expectations of weaker-than-expected oil demand.”The S&P 500 index .SPX hit a three-week low on Tuesday as weak results and forecasts from big retailers fanned worries about holiday season sales, while tech stocks continued to slide on concerns about iPhone sales. Global stock markets have suffered a shakeout in the past two months, pressured by worries of a peak in corporate earnings growth, rising borrowing costs, slowing global economic momentum and international trade tensions. Amid the uncertainty, financial traders have become wary of oil markets, seeing further downside risk to prices from the growth in U.S. shale production as well as the deteriorating economic outlook. Prices ticked lower after U.S. President Donald Trump said the United States intends to remain a “steadfast partner” of Saudi Arabia even though “it could very well be” that Saudi Crown Prince Mohammed bin Salman had knowledge of the killing of journalist Jamal Khashoggi last month in Turkey. Oil markets have been concerned about potential supply disruptions amid heightened tensions between the United States and Saudi Arabia over the killing.But experts said any threat to supplies were limited to begin with. “I never really understood the premium behind some kind of friction between U.S. and Saudi Arabia from a policy standpoint … It really is a too-big-to-fail relationship,” said Joe McMonigle, senior energy policy analyst at Hedgeye Risk Management in Washington. Apple gives stocks the holiday blues “I think today what’s driving oil is the continued equity selloff, and oil is really collateral damage.” Meanwhile, the United States was considering adding Venezuela, one of its biggest crude suppliers, to Washington’s list of state sponsors of terrorism but no final decision has been made, a person familiar with the deliberations said late on Monday. Expectations for a ninth straight week of U.S. crude inventory increases also weighed on prices. Analysts polled ahead of weekly data forecast crude stocks rose about 2.9 million barrels last week. U.S. crude production has soared almost 25 percent this year, to a record 11.7 million barrels per day (bpd). The Organization of the Petroleum Exporting Countries is pushing for a supply cut of 1 million bpd to 1.4 million bpd when it meets on Dec. 6. The OPEC envoy for the United Arab Emirates said it was very likely that the group would reduce its output but the exact level had yet to be decided.

The International Energy Agency (IEA), however, warned OPEC and other producers of the “negative implications” of supply cuts, with many analysts fearing a spike in crude prices could erode consumption.

“We are entering an unprecedented period of uncertainty in oil markets,” IEA Executive Director Fatih Birol said on Monday.

Trump stands by Saudi Arabia despite Khashoggi murder

FILE PHOTO – U.S. President Donald Trump talks to the media on the South Lawn of the White House in Washington, U.S., before his departure to California, November 17, 2018. REUTERS/Yuri Gripas

WASHINGTON (Reuters) – President Donald Trump vowed on Tuesday to remain a “steadfast partner” of Saudi Arabia despite saying that Saudi Crown Prince Mohammed bin Salman may have known about the plan to murder dissident journalist Jamal Khashoggi last month. Defying pressure from U.S. lawmakers to impose tougher sanctions on Saudi Arabia, Trump also said he would not cancel military contracts with the kingdom. Such a “foolish” move would only benefit Russia and China, said the U.S. president, whom critics accuse of exaggerating the importance of those weapons sales to the American economy.

Subprime Rises: Credit Card Delinquencies Blow Through Financial-Crisis Peak at the 4,705 Smaller US Banks

In the third quarter, the “delinquency rate” on credit-card loan balances at commercial banks other than the largest 100 banks – so the delinquency rate at the 4,705 smaller banks in the US – spiked to 6.2%. This exceeds the peak during the Financial Crisis for these banks (5.9%). The credit-card “charge-off rate” at these banks, at 7.4% in the third quarter, has now been above 7% for five quarters in a row. During the peak of the Financial Crisis, the charge-off rate for these banks was above 7% four quarters, and not in a row, with a peak of 8.9% These numbers that the Federal Reserve Board of Governors reported Monday afternoon are like a cold shower in consumer land where debt levels are considered to be in good shape. But wait… it gets complicated. The credit-card delinquency rate at the largest 100 commercial banks was 2.48% (not seasonally adjusted). These 100 banks, due to their sheer size, carry the lion’s share of credit card loans, and this caused the overall credit-card delinquency rate for all commercial banks combined to tick up to a still soothing 2.54%. In other words, the overall banking system is not at risk, the megabanks are not at risk, and no bailouts are needed. But the most vulnerable consumers – we’ll get to why they may end up at smaller banks – are falling apart:

Credit card balances are deemed “delinquent” when they’re 30 days or more past due. Balances are removed from the delinquency basket when the customer cures the delinquency, or when the bank charges off the delinquent balance. The rate is figured as a percent of total credit card balances. In other words, among the smaller banks, at the end of Q3, 6.2% of the outstanding credit card balances were delinquent.The credit card business is immensely profitable, and so banks are willing to take some risks. It’s immensely profitable for three reasons:

  • The fee the bank extracts from every transaction undertaken with its credit cards (merchant pays), even if the credit-card holder pays off the balance every month and never incurs any interest expense.
  • The fees the bank extracts from credit card holders, such as annual fees, late fees, etc.
  • The huge spread between the banks’ cost of funding and the interest rates banks charge on credit cards.

So how low is the banks’ cost of funding? For example, in its third-quarter regulatory filing with the SEC (10-Q), Wells Fargo disclosed that it had $1.73 trillion in total “funding sources.” This amount was used to fund $1.73 trillion in “earning assets,” such as loans to its customers or securities it had invested in.

This $1.73 trillion in funding was provided mostly by deposits: $465 billion in non-interest-bearing deposits (free money), and $907 billion in interest bearing deposits; for a total of $1.37 billion of ultra-cheap funding from deposits.

In addition to its deposits, Wells Fargo lists $353 billion in other sources of funding – “short-term and long-term borrowing” – such as bonds it issued. For all sources of funding combined, so on the $1.73 trillion, the “total funding cost” was 0.87%. Nearly free money. Rate hikes no problem. In Q3, Wells Fargo had $36.8 billion in average credit-card balances outstanding (not including balances it had securitized and sold off), carrying an average interest rate of 12.77%! So, with its cost of funding at 0.87%, and the average interest rate of 12.77% on its credit card balances, Wells Fargo is making an interest margin on credit cards of 11.9 percentage points. In other words, this is an immensely profitable business – hence the incessant credit-card promos. The thousands of smaller banks cannot offer the same incentives and lack the marketing clout to attract this large pool of customers with good credit. So they market to customers with less stellar credit, or with subprime-rated credit — and charge higher interest rates. 30% sounds like a deal, even if the customer will eventually buckle under that interest rate and will have to default. That’s why banks take risks and don’t mind higher charge-offs: they’re getting paid for them! At some point, it gets expensive. And greed could pose a big problem for a little bank. In that case, the FDIC might swoop in on a Friday evening and shut down the bank over the weekend. No biggie. Happens routinely. The real problem with credit cards isn’t the banks – credit card debt is not big enough to topple the US banking system. It’s the consumers, and what it says about the health of consumers.The overall numbers give a falsely calming impression about how vulnerable a portion of consumers really are. Credit card debt and other revolving credit has reached $1.0 trillion (not seasonally adjusted). This is about flat with the prior peak a decade ago. So no problem?

Since the prior peak of credit-card debt in 2008, the US population has grown by 20 million people, and there has been a decade of inflation and nominal wage increases, and so the overall burden per capita is far lower today than it was in 2008 (though student loans and auto loans have shot through the roof). But this overall data hides the extent to which the most vulnerable consumers are getting into trouble with their credit cards, having borrowed too much at usurious rates. They’ll never be able to pay off or even just service those balances. For them, there is only one way out – to default. The fact that this process is now taking on real momentum shows that the group of consumers that are falling apart is expanding. And these are the good times, of low unemployment in a growing economy.

Home builder confidence tumbles the most since 2014 as housing headwinds catch up

Sentiment didn’t fall this sharply from one month to another even during the worst of the housing crisis

Bloomberg News/Landov Contractors work on a KB Home project.

The National Association of Home Builders’ monthly confidence index plunged eight points to 60 in November.

The many headwinds that have been dogging the industry finally showed up in this report. Labor is still expensive, lots are still scarce, lumber is at the mercy of tariff politics, and now, mortgage rates are rising and customers are holding back. NAHB, the building industry’s Washington lobby, noted in a press release that the reading of 60 is still “positive,” but that “customers are taking a pause.” The eight-point plunge is only reminiscent of the nine-point drop just after the 9/11 attacks and one other instance, a 10-point drop, in early 2014. The overall reading is the lowest since mid-2016. November’s results badly missed the Econoday consensus of a flat reading. In November, the sub-gauge of current conditions fell seven points to 67, the tracker of expected future conditions plunged 10 points to 65, and the gauge of buyer traffic was down eight points, to 45. Any reading over 50 signals improvement. The gauge of builder sentiment has long been considered an early read on the pace of construction, an important economic indicator considering how desperately more new homes have been needed. But such a sharp drop may presage something more sinister than a slower pace of building. Home builders were one of the first groups to feel the top of the market cycle just before the Great Recession. In June 2005, NAHB’s index hit 72, its cycle high. It started to tumble the next month, and by mid-2006 stood in contraction territory. To be sure, builders may not be the canary in the coal mine now as they were a decade ago. And many economists have called the top of the housing cycle already. Still, such a sharp drop can only seem ominous.  “Housing is performing at a moderately high level, but it also appears to be settling into a plateau,” Jefferies economists wrote after the NAHB release. “Moderation in housing activity is a blessing that delays what has previously been an inevitable development of excesses. While the pace of housing market activity has decelerated, there are no signs of threatening excesses such as inventory overhangs and a surge in delinquencies.” Moody’s Investors Service on Monday downgraded its outlook on the U.S. building materials industry, saying that “private residential construction growth is decelerating.”

Pence: US will hold those responsible for Khashoggi’s murder accountable

Pence: US will hold those responsible for Khashoggi's murder accountable
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Vice President Pence on Saturday vowed to hold those responsible for the murder of dissident journalist Jamal Khashoggi accountable after a CIA assessment found that the Saudi crown prince ordered his death. Pence told reporters while traveling in Papua New Guinea for events surrounding an Asia-Pacific summit that he “can’t comment on classified information” but said Khashoggi’s death last month was an “atrocity.” “It was also an affront to a free and independent press and the United States is determined to hold all of those accountable who are responsible for that murder,” he said, according to pool reports. Pence added that the U.S. is “going to follow the facts” on Khashoggi’s death while saying that the Trump administration wanted to find a way to preserve a “strong and historic partnership” with the Saudi kingdom. The vice president’s comments came after reports that the CIA had concluded that Saudi Crown Prince Mohammed bin Salman ordered the killing of Khashoggi inside the country’s consulate in Istanbul. The intelligence agency reportedly examined a phone call between the crown prince’s brother Khalid bin Salman, who is the Saudi ambassador to the U.S., and Khashoggi. Khalid allegedly insisted on the call that Khashoggi would be safe going to the Saudi consulate in Istanbul to get paperwork for his marriage to his Turkish fiancée. The Washington Post reported that it was unclear if Khalid knew Khashoggi was to be killed at the consulate, but said that he made the call at the direction of his brother. The call was reportedly intercepted by U.S. intelligence. Khashoggi was a Washington Post columnist living in Virginia who was critical of the Saudi government before he disappeared at the country’s consulate in Istanbul on Oct. 2. The Saudis insisted for weeks that Khashoggi left the consulate alive but later claimed he died during a physical altercation with officials who were acting without orders. The Saudi Embassy in Washington claimed Friday that Khalid never had any phone conversations with Khashoggi. “The claims in this purported assessment is false. We have and continue to hear various theories without seeing the primary basis for these speculations,” a spokesperson for the embassy said. The Trump administration on Thursday announced sanctions against 17 Saudis for their alleged roles in Khashoggi’s death.

Saudi crown prince ordered Khashoggi’s assassination: CIA

CIA believes Saudi crown prince ordered Khashoggi killing: sources
CIA believes Saudi crown prince ordered Khashoggi killing: sources

Washington: The CIA has concluded that Saudi Crown Prince Mohammed bin Salman ordered the assassination of journalist Jamal Khashoggi in Istanbul last month, contradicting the Saudi government’s claims that he was not involved.

The CIA’s assessment, in which officials have said they have high confidence, is the most definitive to date linking Mohammed to the operation and complicates the Trump administration’s efforts to preserve its relationship with a close ally.

The CIA believes Saudi Crown Prince Mohammed bin Salman ordered the killing of journalist Jamal Khashoggi in Istanbul, according to sources familiar with the matter.

A team of 15 Saudi agents flew to Istanbul on government aircraft in October and killed Khashoggi inside the Saudi consulate, where he had come to pick up documents that he needed for his planned marriage to a Turkish woman. In reaching its conclusions, the CIA examined multiple sources of intelligence, including a phone call that the prince’s brother Khalid bin Salman, the Saudi ambassador to the United States, had with Khashoggi, according to the people familiar with the matter who spoke on the condition of anonymity. Khalid told Khashoggi, a contributing columnist to The Washington Post, that he should go to the Saudi consulate in Istanbul to retrieve the documents and gave him assurances that it would be safe to do so. It is not clear if Khalid knew that Khashoggi would be killed, but he made the call at his brother’s direction, according to the people familiar with the call, which was intercepted by US intelligence. Fatimah Baeshen, a spokeswoman for the Saudi embassy in Washington DC, said the ambassador and Khashoggi never discussed “anything related to going to Turkey.” She added that the claims in the CIA’s “purported assessment are false. We have and continue to hear various theories without seeing the primary basis for these speculations.” The CIA’s conclusion about Mohammed’s role was also based on the agency’s assessment of the prince as the country’s de facto ruler who oversees even minor affairs in the kingdom. “The accepted position is that there is no way this happened without him being aware or involved,” said a US official familiar with the CIA’s conclusions. The CIA sees Mohammed as a “good technocrat,” the US official said, but volatile and arrogant, someone who “goes from zero to 60, doesn’t seem to understand that there are some things you can’t do.” CIA analysts believe he has a firm grip on power and is not in danger of losing his status as heir to the throne despite the Khashoggi scandal. “The general agreement is that he is likely to survive,” the official said, adding that Mohammed’s role as the future Saudi king is “taken for granted.”

A spokesperson for the CIA declined to comment.

Over the past several weeks, the Saudis have offered multiple, contradictory explanations for what happened at the consulate. This week, the Saudi public prosecutor blamed the operation on a rogue band of operatives who were sent to Istanbul to return Khashoggi to Saudi Arabia, in an operation that veered off course when the journalist “was forcibly restrained and injected with a large amount of a drug resulting in an overdose that led to his death,” according to a report by the prosecutor.

The assassination of Khashoggi, a prominent critic of Mohammed’s policies, has sparked a foreign policy crisis for the White House and raised questions about the administration’s reliance on Saudi Arabia as a key ally in the Middle East and bulwark against Iran.

President Donald Trump has resisted pinning the blame for the killing on Mohammed, who enjoys a close relationship with Jared Kushner, the president’s son-in-law and senior adviser. Privately, aides said, Trump has been shown evidence of the prince’s involvement but remains skeptical that Mohammed ordered the killing. The audio shows that Khashoggi was killed within moments of entering the consulate, according to officials in multiple countries who have listened to it or been briefed on its contents. Khashoggi died in the office of the Saudi consul general, who can be heard expressing his displeasure that Khashoggi’s body now needed to be disposed of and the facility cleaned of any evidence, according to people familiar with the audio recording. The CIA also examined a call placed from inside the consulate after the killing by an alleged member of the Saudi hit team, Maher Mutreb, a security official who has often been seen at the crown prince’s side and who was photographed entering and leaving the consulate on the day of the killing.

Worried by oil slump, OPEC and partners discuss larger supply curbs: sources

DUBAI/LONDON (Reuters) – OPEC and its partners are discussing a proposal to cut oil output by 1.4 million barrels per day (bpd), three sources familiar with the issue said, although Russia may not be on board for such a large reduction. Worried by a drop in oil prices due to slowing demand and record supply from Saudi Arabia, Russia and the United States, the Organization of the Petroleum Exporting Countries is talking about a U-turn just months after increasing production. Such a shift could anger U.S. President Donald Trump, who urged OPEC on Monday not to cut supply. It also risks handing market share to the United States, while the sources said Russia might not be willing to back such a move. A steep slide in prices has surprised many oil market participants. Brent crude has fallen from a four-year high of $86 a barrel in early October to $66 on Wednesday. Just weeks ago, some trading firms were talking of $100 oil. The sources, who declined to be identified by name as the talks are confidential, said a cut of 1.4 million bpd – equal to 1.4 percent of world demand – was one option discussed by energy ministers from Saudi Arabia, non-OPEC Russia and other nations in Abu Dhabi on Sunday.

OPEC and a group of non-OPEC nations, led by Russia, have been cooperating to limit oil supply since the start of 2017. They partially unwound their reduction in June after pressure from Trump to lower prices. The OPEC-led deal got rid of a glut that built up in 2014 as supply from the United States and other countries outside the group soared. OPEC production rose too, after the then Saudi Oil Minister Ali al-Naimi blocked an OPEC curb on supplies to preserve market share.

This time, Saudi Energy Minister Khalid al-Falih has publicly spoken of a need to lower supplies by 1 million bpd, showing price support is trumping market share. OPEC meets on Dec. 6 to set policy for 2019.

A new round of OPEC-led supply cuts in 2019 would further support U.S. shale oil production, potentially repeating the cycle that played out in 2014. Oil prices LCOc1 rose on Wednesday, after Tuesday’s 6.6 percent drop, the largest one-day loss since July. With three weeks to go until the Dec. 6 meeting in Vienna, OPEC and its partners have not settled on a final figure for a new supply cut, the sources said. One of the three sources said a minimum cut of 1 million bpd was being considered and it could be larger than 1.4 million bpd. Another source, an OPEC delegate, agreed that a larger cut than 1.4 million bpd was possible, depending on the market. Nigeria and Libya, which are exempt from the current supply limiting accord, could be included in a new agreement, two of the sources familiar with the matter said. “We are talking about a cut from everyone, including Nigeria and Libya because their production has exceeded the cap in recent months,” one source said. While Nigeria and Libyan output has risen, another OPEC member Iran is facing lower exports due to U.S. sanctions that started this month. Tehran might not be called upon to deliver a voluntary cut, another of the three sources said. Iran, which was angered by higher Saudi and Russian production in response to pressure from Trump, will welcome supply cuts by those producers. OPEC officials were not sure whether Russia will join another round of supply cuts. Russian Energy Minister Alexander Novak said on Wednesday no emergency action was warranted to stem the decline in prices. “The market is quite volatile today. We remember that the oil price was sharply rising in the same way, now it is going down. We have to look into long-term development, into how the price will be stabilized,” he said in Singapore. But OPEC officials hope Moscow will come round eventually.

Pound falls sharply as risk of chaotic Brexit rises

London (CNN Business)The British pound dropped sharply on Thursday after two key UK government ministers resigned, plunging the Brexit process into deep uncertainty and hiking the risk of a chaotic rupture with the European Union. Brexit Secretary Dominic Raab said in a statement on Thursday that he “cannot in good conscience support the terms proposed for our deal” to leave the European Union. He is the second Brexit Secretary to resign this year. Work and Pensions Secretary Esther McVey resigned about an hour later, saying the draft deal does not honor the result of the Brexit referendum in 2016. There were more resignations at a junior level from May’s government, and an open call from one leading Brexit supporter for May to resign. The United Kingdom is due to leave the bloc — its biggest trading partner — on March 29, 2019. The pound fell as much as 1.8% against the dollar to below $1.28 following the resignations. Shares in UK banks declined sharply, with Lloyds (LYG) and Barclays (BCS) shedding roughly 5% and Royal Bank of Scotland dropping nearly 9%. The political upheaval could derail the Brexit deal that Prime Minister Theresa May has painstakingly negotiated with the European Union. May said Wednesday that she had secured the support of her cabinet for the deal, but its future is now in real doubt. She also warned that the alternatives to her plan were leaving the European Union without a deal, or Brexit not happening at all. Investors are most worried about a scenario in which Britain crashes out of the European Union without having negotiated an orderly departure. That would mean new trade barriers, disruption to supply chains for food, medicines and manufactured goods, and a shock to the broader economy. “The risk of very disorderly Brexit is increasing as we speak,” said John Wraith, head of UK rates strategy at UBS. The International Monetary Fund said in a report published Wednesday that a disorderly exit from the European Union would “lead to widespread disruptions in production and services,” and severe market consequences. “A sudden shift in investors’ preference for UK assets could lead to a sharp fall in asset prices and a hit to consumer and business confidence,” the IMF warned. Over the long run, the fund said the UK economy would be 5% to 8% smaller under a “no deal scenario” than if the country had remained in the European Union.

Trump takes aim at Mueller as speculation over Russia probe’s end grows

Washington (CNN)President Donald Trump is acting like he knows something about the Russia investigation that the rest of America has yet to learn.

His Twitter explosion on Thursday targeting special counsel Robert Mueller — his “thugs” and his “witch hunt” investigation — came without an apparent immediate cause. But Trump’s temper apparently boiled over after meetings on three successive days between the President and his lawyers as they work out written answers for Mueller about alleged collusion between his campaign and Russia in the 2016 campaign. The Washington Post reported on Thursday that there are at least two dozen questions about events that took place before the 2016 election. “There are some that create more issues for us legally than others,” Trump’s lawyer Rudolph Giuliani told the paper. Some questions were “unnecessary” and others were “possible traps” or might be irrelevant, he said. For Trump, there’s no easy way out of his funk Giuliani’s striking complaint about a perjury trap appears to raise the question of why he might be worried about such an issue — if the President were simply to tell the truth, in answers that will be scrubbed by his legal advisers. The questions resulted from a tortuous negotiation between Trump’s lawyers and the White House over the President’s testimony. They only relate to the collusion part of the investigation and do not concern allegations that the President obstructed justice in the firing of former FBI Chief James Comey.
Trump’s huddles with his lawyers coincided with intense activity around the Mueller investigation, which largely went quiet in the days leading up to the midterm elections earlier this month.
The comings and goings have left Washington on tenterhooks amid mounting speculation that significant action by the special counsel could be imminent. In the past, the President’s tirades about Mueller have sometimes coincided with developments in the special counsel probe. There are expectations that Mueller, who has not unveiled any indictments since July, could be preparing more. CNN has reported that he has also started writing a final report on his investigation. Whitaker backlash prompts concern at the White House
The President’s fury sparked questions over whether he has any advance knowledge of any indictments Mueller may be preparing, or has gleaned other insight about the case from his new acting-Attorney General Matthew Whitaker. Much of Mueller’s work is taking place behind closed doors, but the evident bustle suggests plenty of reasons for Trump’s dark mood. Those events included a visit by Trump’s former personal lawyer, Michael Cohen, who is facing jail time on tax and fraud charges, to the special counsel’s office on Monday. Attorneys for Trump’s former campaign chief Paul Manafort, who is cooperating with Mueller after his own conviction, were seen at Mueller’s office this week. Jerome Corsi, an associate of former Trump political adviser Roger Stone said on Monday he expects to be indicted for giving false information to Mueller or the grand jury. Corsi later suggested in an interview with Reuters that he’s in plea talks with Mueller’s team.
Stone, who also appears to be in Mueller’s sights, released text messages with an alleged Wikileaks back channel about “big news” about Hillary Clinton’s campaign six days before the site released hacked emails. Trump’s son, Donald Trump Jr. has reportedly told friends that he could he could be indicted, possibly over a meeting he and other Trump campaign officials held with a Russian lawyer promising “dirt” on Clinton. With all that in mind, Trump’s Thursday morning tweetstorm appears to reveal a President fuming with resentment about the probe and possibly deeply concerned about what it might reveal. Mueller’s questions likely offered Trump his most explicit sense yet as to where the investigation may be going and could perhaps offer him some hints about what witnesses have told Mueller. And the task of answering the questions, under the risk of perjury, may be a deeply unpleasant experience for him. “The inner workings of the Mueller investigation are a total mess. They have found no collusion and have gone absolutely nuts,” Trump tweeted. “They are screaming and shouting at people, horribly threatening them to come up with the answers they want,” the President said, in a comment that could be interpreted as evidence that he has inside knowledge of the investigation. “These are Angry People, including the highly conflicted Bob Mueller, who worked for Obama for 8 years. They won’t even look at all of the bad acts and crimes on the other side. A TOTAL WITCH HUNT LIKE NO OTHER IN AMERICAN HISTORY!” Trump wrote in one of his most furious attacks on Mueller. Mueller was actually appointed to head the FBI in 2001 by President George W. Bush, and stayed for the rest of his administration and three years into President Barack Obama’s term. Obama later extended his 10-year term for another two years.  Speaking on CNN’s “The Situation Room” Democratic Rep. Mike Quigley defended Mueller and his team, adding “if they are going to do something, I suspect it will be rather soon.” “Obviously, the President had a bad week and he doesn’t like these questions, so he is lashing out because he is afraid to take responsibility, frankly for anything,” Quigley said. The President also revealed his anger about the Russia probe in an interview with The Daily Caller on Wednesday, which to some observers seemed like an tacit admission that he had appointed Whitaker after firing Attorney General Jeff Sessions in order to rein in the special counsel.
“Matthew Whitaker is a very respected man. He’s — and he’s, very importantly, he’s respected within DOJ,” Trump told the conservative website. “You know, look, as far as I’m concerned this is an investigation that should have never been brought. It should have never been had,” he said. “It’s something that should have never been brought. It’s an illegal investigation.”
Democrats have warned that Whitaker, who is on record with fierce criticisms of the Mueller probe, and now oversees it, is nothing but a political henchman inserted into the top Justice Department job to rein in Mueller. His appointment has added fresh urgency to an effort on Capitol Hill to protect Mueller. Republican Sen. Jeff Flake warned he would not vote to advance judicial nominees unless a bill shielding the special counsel got a floor vote. Senate Republican Majority Leader Mitch McConnell blocked a vote on Wednesday on the measure, which would allow any decision by Trump to fire the special counsel to be challenged in court.

Oil rebounds from steep selloff as OPEC, partners discuss supply cut

NEW YORK (Reuters) – Oil rose nearly 2 percent on Wednesday, recouping some of the previous session’s heavy selloff, on growing prospects that the Organization of the Petroleum Exporting Countries and allied producers would cut output at a meeting next month to prop up prices. After a record 12 straight days of losses and the steepest one-day loss in more than three years, the oil market reversed course after Reuters reported that OPEC and its partners were discussing a proposal to cut output by up to 1.4 million barrels per day (bpd), more than officials had mentioned previously. Oil markets are being pressured by surging supply from OPEC, Russia, the Unites States and other producers and worries that a global economic slowdown could cut into energy demand. This has pushed the price of global benchmark Brent down more than 20 percent since early October, one of the biggest declines since a price collapse in 2014. “The market has cratered over the last few weeks and the pop today is related to the chatter that producers could cut up to 1.4 million bpd in 2019,” said Gene McGillian, vice president of market research for Tradition Energy in Stamford, Connecticut. “Maybe some of the fears of extra supplies and reduced demand have finally been priced into the market, but I wouldn’t say that a bottom has set in yet.” As oil has crashed from its October high, natural gas futures NGc1 soared as much as 56 percent during that time to a 4-1/2 year high. Oil’s latest selloff was exacerbated as traders unwound long oil-short natural gas trade, market participants said. The relative strength index (RSI) for both Brent and U.S. crude remained below 30, a technical level often regarded as signaling a market that has fallen too far. Financial firms hedging the risk incurred by selling put options to oil producers generated added downward pressure when prices fall toward option strikes, Goldman Sachs said in a note. “This market is attempting to find a price bottom following an unprecedented 12 consecutive days of decline,” Jim Ritterbusch, president of Ritterbusch and Associates, said in a note.

“Although the supply surplus is still relatively modest, the market is focusing on the dynamic of expansion in the overhang that will need to show signs of reversal before a price bottom can be established.”

In its monthly report, the Paris-based International Energy Agency (IEA) said the implied stock build for the first half of 2019 is 2 million bpd. The IEA left its forecast for global demand growth for 2018 and 2019 unchanged from last month, but cut its forecast for non-OECD demand growth, the engine of expansion in world consumption. U.S. crude output from its seven major shale basins was expected to hit a record 7.94 million bpd in December, the U.S. Energy Information Administration (EIA) said on Tuesday. Oil prices plummet on fears of weak global demand The surge in onshore output has helped overall U.S. crude production C-OUT-T-EIA hit a record 11.6 million bpd, making the United States the world’s biggest oil producer ahead of Russia and Saudi Arabia. Most analysts expect U.S. output to climb above 12 million bpd in the first half of 2019. The rise in U.S. production is contributing to higher stockpiles. Ahead of industry storage data on Wednesday and the government’s report on Thursday, analysts forecast a 3.2 million-barrel rise in crude inventories, the eighth straight weekly build. [EIA/S]

Sterling, euro stocks scuttled as Brexit deal hits the rocks

LONDON (Reuters) – Sterling tumbled and the rest of Europe’s share markets groaned on Thursday, after a long-awaited Brexit agreement was thrown into chaos as Britain’s chief negotiator for the deal quit just 12 hours after it had been unveiled. Up until that point markets had looked relatively calm. Asia had cheered news that China and the United States were back in contact about their bitter trade dispute and oil was holding steady again having snapped out of a record losing streak.

But then came the hammer blow. London’s Brexit minister Dominic Raab quit in protest at Prime Minister Theresa May’s deal for leaving the European Union.

“No democratic nation has ever signed up to be bound by such an extensive regime, imposed externally without any democratic control over the laws to be applied, nor the ability to decide to exit the arrangement,” he said in his resignation letter. Cue a sterling meltdown. The currency slumped a full cent to $1.2830 GBP= and though that made the FTSE stronger — a weaker pound makes life easier for exporters on the index — the rest of Europe sank swiftly into the red. [.EU] “The reaction is sterling shows that the chance of no Brexit deal has spiked,” said Tim Graf, Head of Macro Strategy for EMEA at State Street Global Markets. Nick Note: as you know we have a trade for this… don’t let them shit you over and over again. their will be no deal.. this will be the nastiest divorce ever

Saudi prosecutor seeks death penalty in Khashoggi murder case

Death penalty sought for five out of 11 suspects charged with the journalist’s murder
Jamal Khashoggi
Jamal Khashoggi was killed in Saudi Arabia’s Istanbul consulate on 2 October. Photograph: Johnny Green/PA

Saudi Arabia’s top prosecutor is recommending the death penalty for five suspects charged with ordering and carrying out the killing of Saudi writer Jamal Khashoggi. Saudi Al-Mojeb told journalists in a rare press conference in Riyadh on Thursday that Khashoggi’s killers had set in motion plans for the killing on 29 September, three days before he was killed inside the kingdom’s consulate in Istanbul. The prosecutor says the highest-level official behind the killing is Saudi former deputy intelligence chief Ahmad al-Assiri, who has been fired for ordering Khashoggi’s forced return. The prosecutor says 21 people are now in custody, with 11 indicted and referred to trial. Turkey has blamed the highest ranks of power in Saudi Arabia for Khashoggi’s brutal death, saying the kingdom sent an assassination squad for him.

Saudi Arabia is reducing oil supply and OPEC may cut too

Abu Dhabi, UAE (CNN Business)Saudi Arabia will reduce oil supply next month in response to lower demand, and more cuts could follow next year. Speaking at a conference in Abu Dhabi, Saudi energy minister Khalid Al Falih said the kingdom’s oil output would fall by 500,000 barrels per day in December. Members of the Organization of Petroleum Exporting Countries (OPEC) and its allies could reduce supply further next year if needed, he added. “The consensus among all members is that we need to do whatever it takes to balance the market,” Al Falih said. “If that means trimming supply by a million [barrels per day], we will do it.” Global oil prices tumbled into a bear market last week, down more than 20% from their recent peak. Fear of a global economic slowdown and a decision by the United States to allow some countries to keep buying Iranian crude oil following the reintroduction of sanctions have hit market sentiment.

BP (BP) CEO Bob Dudley said the Saudi cut represented “quite a bit of oil.” “That probably would adjust sentiment and get [prices] back into a corridor with less volatility,” he told CNN Business.
A senior OPEC source said the cartel and other major producers are discussing cutting production by as much as 1.2 million barrels per day. A decision could be taken at the next OPEC meeting in Vienna on December 6. A cut of that magnitude would reverse a decision in June by OPEC and Russia to pump over a million barrels per day more to make up for the expected loss of Iranian exports.
“The size of any potential cut will depend on how much oil demand growth slows down, how much Iranian supply falls due to US sanctions, and how fast US supply rises,” said Giovanni Staunovo, an analyst at UBS. Russia appears to need more convincing that it should be cutting production.
Russia’s energy minister Alexander Novak said in Abu Dhabi on Sunday it was too early to make a decision to reverse course and cut supply.
“We’re going to do everything we can to keep supply and demand inventories within a reasonably narrow band, ” Al Falih said on Monday, during a debate moderated by CNN Business’ Emerging Markets Editor John Defterios. “We hope that markets will calm down.” Crude prices jumped by as much as 2% on the prospects of reduced supply from OPEC. US crude oil futures were trading around $60.80 per barrel, $1.50 higher than on Friday. The United States last week said eight jurisdictions — China, India, Italy, Greece, Japan, South Korea, Taiwan and Turkey — would be able to continue buying Iranian oil for six months without fear of US penalties under sanctions on trading with Iran. “The sanctions on Iran have turned out to be a damp squib for the time being with the Trump administration granting exemptions,” said Devesh Mamtani, head of investments and advisory at Century Financial, a brokerage firm in Dubai. “The exemptions have even surprised Saudi Arabia as oil supplies from Iran are likely to spike in the coming days,” he added. UAE energy minister Suhail Al Mazrouei, who is also OPEC president, said the cartel wouldn’t allow the market to become oversupplied. “We will assure you that when we meet in December we will go to the market with the solution that will ensure market stability,” he said.

Oil struggles to find footing after 7 percent slump, sentiment stays weak

SINGAPORE (Reuters) – Oil markets struggled to find their footing on Wednesday after plunging by 7 percent the previous session, with surging supply and the specter of faltering demand keeping investors on edge. U.S. West Texas Intermediate (WTI) crude oil futures were at $55.54 per barrel at 0159 GMT, down 15 cents from their last settlement. International benchmark Brent crude oil futures LCOc1 were up 4 cents at $65.51 per barrel. Markets fell by more than 7 percent the previous day. Crude oil has lost over a quarter of its value since early October in what has become one of the biggest declines since prices collapsed in 2014. The slump in spot prices has turned the entire forward curve for crude oil upside down. Spot prices in September were significantly higher than those for later delivery, a structure known as backwardation that implies a tight market as it is unattractive to put oil into storage. By mid-November, the curve had flipped into contango, when crude prices for immediate delivery are cheaper than those for later dispatch. That implies an oversupplied market as it makes it attractive to store oil for later sale. Oil markets are being pressured from two sides: a surge in supply and increasing concerns about an economic slowdown. U.S. crude oil output from its seven major shale basins is expected to hit a record of 7.94 million barrels per day (bpd) in December, the U.S. Department of Energy’s Energy Information Administration (EIA) said on Tuesday. That surge in onshore output has helped overall U.S. crude production C-OUT-T-EIA hit a record 11.6 million bpd, making the United States the world’s biggest oil producer ahead of Russia and Saudi Arabia. Most analysts expect U.S. output to climb above 12 million bpd within the first half of 2019.

“This will, in our view, cap any upside above $85 per barrel (for oil prices),” said Jon Andersson, head of commodities at Vontobel Asset Management.

The surge in U.S. production is contributing to rising stockpiles. U.S. crude stocks climbed by 7.8 million barrels in the week ending Nov. 2 to 432 million as refineries cut output, data from industry group the American Petroleum Institute showed on Tuesday. The producer cartel of the Organization of the Petroleum Exporting Countries (OPEC) has been watching the jump in supply and price slump with concern. OPEC has been making increasingly frequent public statements that it would start withholding crude in 2019 to tighten supply and prop up prices.

Saudi Arabia says need for 1 mln bpd cut in oil

“OPEC and Russia are under pressure to reduce current production levels, which is a decision that we expect to be taken at the next OPEC meeting on Dec. 6,” said Andersson.

That puts OPEC on a collision course with U.S. President Donald Trump, who publicly supports low oil prices and who has called on OPEC not to cut production.

Saudi energy minister Khalid Al Falih said the kingdom’s oil output would fall by 500,000 barrels per day in December.

Saudi Aramco's Ras Tanura oil refinery and oil terminal.
Saudi Aramco’s Ras Tanura oil refinery and oil terminal.

Abu Dhabi, UAE (CNN Business)Saudi Arabia will reduce oil supply next month in response to lower demand, and more cuts could follow next year. Speaking at a conference in Abu Dhabi, Saudi energy minister Khalid Al Falih said the kingdom’s oil output would fall by 500,000 barrels per day in December. Members of the Organization of Petroleum Exporting Countries (OPEC) and its allies could reduce supply further next year if needed, he added. “The consensus among all members is that we need to do whatever it takes to balance the market,”

Al Falih said. “If that means trimming supply by a million [barrels per day], we will do it.”

Global oil prices tumbled into a bear market last week, down more than 20% from their recent peak. Fear of a global economic slowdown and a decision by the United States to allow some countries to keep buying Iranian crude oil following the reintroduction of sanctions have hit market sentiment. Iran is still exporting oil as sanctions deadline passes BP (BP) CEO Bob Dudley said the Saudi cut represented “quite a bit of oil.”
“That probably would adjust sentiment and get [prices] back into a corridor with less volatility,” he told CNN Business. A senior OPEC source said the cartel and other major producers are discussing cutting production by as much as 1.2 million barrels per day. A decision could be taken at the next OPEC meeting in Vienna on December 6.
A cut of that magnitude would reverse a decision in June by OPEC and Russia to pump over a million barrels per day more to make up for the expected loss of Iranian exports. “The size of any potential cut will depend on how much oil demand growth slows down, how much Iranian supply falls due to US sanctions, and how fast US supply rises,” said Giovanni Staunovo, an analyst at UBS. Russia appears to need more convincing that it should be cutting production. Russia’s energy minister Alexander Novak said in Abu Dhabi on Sunday it was too early to make a decision to reverse course and cut supply. “We’re going to do everything we can to keep supply and demand inventories within a reasonably narrow band, ” Al Falih said on Monday, during a debate moderated by CNN Business’ Emerging Markets Editor John Defterios. “We hope that markets will calm down.”
Crude prices jumped by as much as 2% on the prospects of reduced supply from OPEC. US crude oil futures were trading around $60.80 per barrel, $1.50 higher than on Friday. The United States last week said eight jurisdictions — China, India, Italy, Greece, Japan, South Korea, Taiwan and Turkey — would be able to continue buying Iranian oil for six months without fear of US penalties under sanctions on trading with Iran. “The sanctions on Iran have turned out to be a damp squib for the time being with the Trump administration granting exemptions,” said Devesh Mamtani, head of investments and advisory at Century Financial, a brokerage firm in Dubai. “The exemptions have even surprised Saudi Arabia as oil supplies from Iran are likely to spike in the coming days,” he added. UAE energy minister Suhail Al Mazrouei, who is also OPEC president, said the cartel wouldn’t allow the market to become oversupplied.
“We will assure you that when we meet in December we will go to the market with the solution that will ensure market stability,” he said.

OPEC mulls oil output cuts as risk of global glut grows

AFP/Getty Images Officials at the Joint Ministerial Monitoring Committee meeting on Nov. 11 discussed potential crude production cuts.

Major oil producers discussed potential reductions to crude production at their latest meeting, as concerns over growth in output combined with expectations for a slowdown in demand, prompting prices to post their largest monthly loss in more than two years. The meeting, held in Abu Dhabi over the weekend, came ahead of the latest updates on supply and demand due out this week from the Energy Information Administration (EIA), OPEC and the International Energy Agency (IEA). The Joint OPEC-non-OPEC Ministerial Monitoring Committee debated over whether an output reduction next year of about one million barrels a day would be necessary to avoid a glut of global supplies, according to The Wall Street Journal. JMMC officials, which include Organization of Petroleum Exporting Countries member Saudi Arabia as well as non-member Russia, monitor implementation of the crude output-cut agreement that began on Jan. 1, 2017, between members and nonmembers. The EIA recently reported that U.S. crude-oil production reached 11.3 million barrels a day in August, surpassing 11 million barrels a day for the first time on a monthly basis and making the nation the leading crude-oil producer in the world. Oil prices logged hefty October declines, with U.S. benchmark West Texas Intermediate crude CLZ8, -1.89%  posting a loss of nearly 10.8% and global benchmark Brent crude LCOF9, -1.72%  down 8.8% for the month—their largest monthly percentage losses since July 2016. Saudi Arabia and other major oil producers had raised production as global supplies tightened ahead of U.S. sanctions on Iran’s energy sector but as the sanctions kicked in earlier this month, the U.S. granted waivers to eight nations, allowing them to temporarily continue to import Iranian crude. They included China, which is among the largest importers of Iran’s crude.

A decision on production is expected at the next OPEC meeting, which will be held on Dec. 6 in Vienna.

In a press release dated Sunday, the JMMC said that prospects in 2019 point to “higher supply growth than global requirements,” and also noted th at the “dampening of global economic growth prospects … could have repercussions for global oil demand in 2019—and could lead to widening the gap between supply and demand.” “Comments from this weekend’s meeting between OPEC and other major producers suggest that policymakers are increasingly concerned by the recent fall in oil prices,” said Jason Tuvey, senior emerging markets economist at Capital Economics, in a note Monday. “OPEC’s de facto leader, Saudi Arabia, floated the idea of fresh oil output cuts. Oil Minister Khalid al-Falih said that the “Kingdom would lower its supply by 500,000 [barrels per day] in December.” “Algos don’t sleep and have a built-in advantage to pounce on all opportunities to violently shove a market,” said Michael Bertuccio, founder and chief executive officer of Houston-based HB2 Inc., a private oil and gas company, referring to a type of automated trading done with mathematic formulas. There’s “no better time” for that to happen “than a quiet Friday [after Thanksgiving] when all the humans are in food comas fueled by turkey.”

Exclusive – Russia clashes with Western oil buyers over new deals as sanctions loom

FILE PHOTO: The Rosneft logo is pictured on a safety helmet in Vung Tau, Vietnam April 27, 2018. REUTERS/Maxim Shemetov/File Photo

MOSCOW (Reuters) – Russian energy majors are putting pressure on Western oil buyers to use euros instead of dollars for payments and introducing penalty clauses in contracts as Moscow seeks protection against possible new U.S. sanctions. Seven industry sources told Reuters that Western oil majors and trading houses have clashed with Russia’s third and fourth biggest producers, Gazprom Neft and Surgutneftegaz, over 2019 oil sales contract terms during unusually tough annual renegotiation in recent weeks. The development mirrors a similar stand-off between Western buyers and Russia’s top oil producer, Rosneft (ROSN.MM). Earlier this week, trading sources told Reuters that Rosneft wants Western oil buyers to pay penalties from 2019 if they fail to pay for supplies in the event that new U.S. sanctions disrupt sales. Now sources have told Reuters that Surgutneftegaz and Gazprom Neft have also clashed with their buyers over penalties and the use of euros and other currencies to replace the dollar in contracts. “It is part of the same trend – the Russian oil industry is working on mitigating new sanctions risks. The buyers in turn argue they cannot carry those risks so we are trying to find compromises,” said one source with a Western buyer involved in negotiations, asking not to be named as the talks are confidential. Russia has been under U.S. and EU sanctions since 2014 when it invaded Ukraine’s Crimean peninsula. The sanctions have been repeatedly widened to include new companies and sectors, making it tough for Russian oil firms to borrow money abroad, raise new capital or develop Arctic and unconventional deposits. President Vladimir Putin’s administration has been hoping for a thaw in relations with the United States since President Donald Trump came to power but Washington has imposed new sanctions instead, including on some of Russia’s richest people. Russian businesses are preparing for a new wave of sanctions expected in the coming weeks. The firms are trying to diversify away from dollar payments and tapping Asia for more of their financing and technology needs. According to four industry sources, Surgutneftegaz asked buyers to be prepared to switch from dollar to euro payments in contracts, and insisted on buyers being effectively responsible for any losses arising from sanctions.

“They basically said – sanctions don’t matter. Buyers have to find a way to pay, or to return purchased goods, or pay penalties,” a source with a big trading house said.

Gazprom Neft has also asked buyers to use euros in payments and bear financial responsibility for contract breaches in the case of new sanctions, according to three sources. Russia supplies over 10 percent of global oil, so drastic sanctions against it could lead to a steep spike in oil prices. All global oil majors rely on Russia to feed their refineries, especially in Europe and Asia, and hence they cannot just walk away from annual contract negotiations if they are unhappy with terms. Talks with both Gazprom Neft and Surgutneftegaz have been progressing slowly and painfully, according to trading sources. Several Western buyers have managed to agreed compromises with Surgutneftegaz and Gazprom Neft, but others are still in tough talks with the producers, the sources said. Russia clashes with Western oil buyers over new deals as sanctions loom All Surgutneftegaz’s contracts are bespoke and are negotiated individually in the Siberian town of Surgut by the firm’s management and visiting Western trading bosses. The sources declined to name companies that have already reached compromise deals. In one such compromise, a large European buyer agreed to the use of euros in payments in exchange for Surgutneftegaz dropping its demand for penalties from buyers who fail to pay for cargoes. “We have been arguing that if sanctions make it impossible to pay for an oil cargo, how on earth are we supposed to pay penalties,” one trading source said. “So we have agreed that the payment remains suspended for the entire duration of sanctions – just like it works with Iran,” he added.

U.S. to impose new duties on Chinese aluminium sheet products

FILE PHOTO: A worker checks aluminium rolls at a warehouse inside an industrial park in Binzhou, Shandong province, China April 7, 2018. China Daily via REUTERS

WASHINGTON (Reuters) – The U.S. Commerce Department on Wednesday said it would impose final anti-dumping and anti-subsidy duties on Chinese common alloy aluminium sheet products of 96.3 percent to 176.2 percent. The decision marks the first time that final duties were issued in a trade remedy case initiated by the U.S. government since 1985. The Trump administration has promised a more aggressive approach to trade enforcement by having the Commerce Department launch more anti-dumping and anti-subsidy duties on behalf of private industry. “We will continue to do everything in our power under U.S. law to restrict the flow of dumped or subsidized goods into U.S. markets,” said Commerce Secretary Wilbur Ross in a statement. The final aluminium sheet duties, however, were reduced from those first imposed in April and July. The initial combined range was 198.4 percent to 280.46 percent. In 2017, imports of common alloy aluminium sheet from China were valued at an estimated $900 million, the Commerce Department said. The flat-rolled product is used in transportation, building and construction, infrastructure, electrical and marine applications. The U.S. International Trade Commission (USITC) is scheduled to make its final injury determinations on Dec. 20 after it voted 4-0 in January to authorise the investigation. U.S. aluminium industry firms including Aleris Corp (ALSD.PK), Arconic Inc (ARNC.N), Constellium NV (CSTM.N), Jupiter Aluminium Corp, JW Aluminium Company and Novelis Corp [NVLXC.UL] testified in December 2017 about what they termed a surge “in low-priced, unfairly traded imports of common alloy sheet from China.” The firms said the volume of aluminium sheet product imports had increased by nearly 750 percent over the last decade and by more than 91 percent between 2014 and 2017. This resulted in “significant market share gains by Chinese imports at the direct expense of the U.S. industry.” Heidi Brock, president and CEO of the Virginia-based Aluminium Association, said in a statement the body and its members were “extremely pleased” with the decision. Wen Xianjun, vice president of the China Nonferrous Metals Industry Association, whose department leads aluminium anti-dumping negotiations with the United States, told Reuters on Thursday even the reduced final U.S. duties made common alloy sheet exports to the country impossible. “We think we are causing no harm to the United States. We are just waiting for the USITC to judge,” Wen said. China’s aluminium exports fell by 3.6 percent from September to 482,000 tonnes in October, the lowest since May, according to customs data released on Thursday.

China October exports surprisingly strong in race to beat higher U.S. tariffs

BEIJING (Reuters) – China reported much stronger-than-expected exports for October as shippers rushed goods to the United States, its biggest trading partner, racing to beat higher tariff rates due to kick in at the start of next year. Import growth also defied forecasts for a slowdown, suggesting Beijing’s growth-boosting measures to support the cooling economy may be slowly starting to make themselves felt. The upbeat trade readings from China offer good news for both those worried about global demand and for the country’s policymakers after the economy logged its weakest growth since the global financial crisis in the third quarter. October was the first full month after the latest U.S. tariffs on Chinese goods went into effect on Sept. 24, in a significant escalation in the tit-for-tat trade battle. But analysts continue to warn of the risk of a sharp drop in U.S. demand for Chinese goods early in 2019, with all eyes now on whether presidents Donald Trump and Xi Jinping can make any breakthroughs on trade when they meet later this month. China’s exports rose 15.6 percent last month from a year earlier, customs data showed on Thursday, picking up from September’s 14.5 percent and beating analysts’ forecasts for a modest slowdown to 11 percent. “The strong export growth in October was buoyed by front-loading activities by exporters…,” said Iris Pang, Greater China Economist at ING in Hong Kong, noting the month is traditionally quieter due to long holidays. “We expect exports to remain strong towards the end of the year as businesses are afraid of a failure in the Trump-Xi meeting, which could lead to broader tariffs on more Chinese goods from the U.S.” Pang said. Washington has vowed to hike the tariff from 10 percent to 25 percent at the turn of the year, while Trump has warned that if talks with Xi are not productive, he could quickly slap tariffs on another $267 billion in Chinese imports. Despite several rounds of U.S. duties this year, China’s exports have been surprisingly resilient as firms ramped up shipments before even tougher measures went into effect. Container ship rates from China to the U.S. West Coast remain near record highs, suggesting shipments will remain solid well into November and possibly early December. China’s exports to the U.S. rose 13.2 percent from a year earlier in October. In another positive sign, China’s exports by volume also showed solid growth, according to Oxford Economics, which estimated they rose “an impressive” 9.9 percent. But analysts say robust export readings won’t last much longer, noting Chinese factory surveys have been showing contracting export orders for months. U.S. orders for Chinese goods at the latest Canton fair dropped 30.3 percent from a year earlier by value, as higher U.S. tariffs made goods from batteries to farm tractors more expensive.

Manchin: We’re ‘on the verge’ of a constitutional crisis due to Sessions’s firing

Sen. Joe Manchin (D-W.Va.) said Thursday that the U.S. is on the “verge” of a constitutional crisis because of the forced resignation of Attorney General Jeff Sessions.  “I think it’s a big mistake to let Sessions go,” Manchin, who was the only Democratic senator to vote to confirm the former attorney general, said on “CBS This Morning.”

Manchin pointed to the potential ramifications Sessions’s ouster could have on special counsel Robert Mueller‘s investigation into Russia’s election interference to back up his claim.  His comments came just a day after Sessions formally resigned from his role at the Department of Justice at President Trump‘s request. Trump announced on Twitter on Wednesday that Matthew Whitaker, Sessions’s chief of staff, will serve as acting attorney general.  Whitaker, who has publicly criticized certain elements of the Mueller investigation, will now oversee it. Deputy Attorney General Rod Rosenstein had been overseeing the probe since Sessions recused himself in early 2017.  Democratic lawmakers, including Manchin, have criticized Whitaker’s oversight of the Mueller probe. “What raises my concerns is a person that’s been so vocal against the investigation that was going on is [put] in charge a day after the [midterm] election,” Manchin told CBS. “I think that gives concern to every senator, Democrat and Republican. We are a country — the rule of law is everything. “Looking like it’s been tilted one way or the other is wrong.”

Trump has repeatedly called the Russia investigation a “witch hunt,” and on Wednesday said that he could fire everyone in Mueller’s office if he wanted. He said he would not take that step for political reasons, however.

Trump faces a blitz of investigations from Democratic-run House

FILE PHOTO: U.S. President Donald Trump walks on stage at a campaign rally on the eve of the U.S. mid-term elections at the Show Me Center in Cape Girardeau, Missouri, U.S., November 5, 2018. REUTERS/Carlos Barri

WASHINGTON (Reuters) – Armed with subpoenas and a long list of grievances, a small group of lawmakers will lead the investigations poised to make President Donald Trump’s life a lot tougher now that Democrats have won a majority in the U.S. House of Representatives. Using their control of House committees, Democrats can demand to see Trump’s long-hidden tax returns, probe possible conflicts of interest from his business empire and dig into any evidence of collusion between Russia and Trump’s campaign team in the 2016 election. Trump said early on Wednesday that House investigations would be countered by investigations of Democrats by the Senate, which remains in Republican hands after Tuesday’s congressional elections. “If the Democrats think they are going to waste Taxpayer Money investigating us at the House level, then we will likewise be forced to consider investigating them for all of the leaks of Classified Information, and much else, at the Senate level. Two can play that game!” the president said on Twitter. Senate Republican Leader Mitch McConnell’s office was not immediately available for comment on Trump’s tweet. Democrats said Republican lawmakers will no longer be able to protect Trump from a watchful Congress. “The American people have demanded accountability from their government and sent a clear message of what they want from Congress,” Representative Jerrold Nadler, the New York Democrat poised to become chairman of the House Judiciary Committee, said in a tweet after Democrats claimed the majority.

Trump “may not like it, but he and his administration will be held accountable to our laws and to the American people.”

Nadler, once described by Trump as “one of the most egregious hacks in contemporary politics,” is one of three prominent Democrats who have clashed with the president and who will take over key House committees when the new Congress convenes in January. The others are Elijah Cummings, who will almost certainly head the House Oversight Committee, and Adam Schiff of the Intelligence Committee, slammed by the president as “sleazy.” Control of the committees – where they are currently the highest-ranking Democrats – will give them the power to demand documents and testimony from White House officials and important figures in Trump’s campaign team and businesses, and to issue subpoenas if needed. They will also have more money and staff for investigations that could delay or derail Trump’s agenda. “I plan to shine a light on waste, fraud, and abuse in the Trump administration,” Cummings said on Wednesday. “I want to probe senior administration officials across the government who have abused their positions of power and wasted taxpayer money, as well as President Trump’s decisions to act in his own financial self-interest,” he said in a statement. The White House could respond to committee demands by citing executive privilege, but that would likely result in court battles. A first salvo in the battle is expected to come from Representative Richard Neal, who is the likely Democratic chairman of the tax-writing House Ways and Means Committee and who has said he will demand Trump’s tax returns from Treasury Secretary Steven Mnuchin. Such a move could set in motion a cascade of probes into any disclosures the documents might hold. Women candidates make history at the polls Even before the election, Schiff said his committee would look at allegations that Russian money may have been laundered though Trump’s businesses and that Moscow might have financial leverage over the president. Nadler’s panel would handle any effort to impeach Trump, depending on the outcome of Special Counsel Robert Mueller’s federal probe into Russian meddling in the 2016 U.S. elections and possible Trump campaign collusion with Moscow. The panel is expected to look for ways to protect Mueller and his probe from any Trump effort to torpedo the investigation or suppress its findings. Trump denies any collusion by his campaign and has long denounced Mueller’s investigation as a witch hunt. Moscow has denied meddling in the 2016 election. Nadler’s committee is unlikely, however, to move quickly toward impeachment. He has said that any impeachment effort must be based on evidence of action to subvert the Constitution that is so overwhelming it would trouble even some Trump supporters. Nadler, Cummings and Schiff are expected to coordinate their efforts and seek bipartisan cooperation to avoid the appearance of unbridled partisanship ahead of the 2020 presidential election. Still, Republicans accuse Democrats of preparing to abuse their authority with political attacks on Trump and his allies. They predict a partisan drive that could backfire on Democrats, like the Republican effort to impeach former President Bill Clinton did in the 1990s. “There will be irresistible pressure to overreach in their investigations and ultimately impeach the president,” said Republican strategist Michael Steel. Cummings’ team says his Oversight Committee will also focus on public issues including skyrocketing prescription drug costs, the opioid epidemic, voting rights, the Census and the U.S. Postal Service. Reporting by David Morgan and Susan Cornwell; Additional reporting by Patricia Zengerle, Amanda Becker, Susan Heavey and Mark Hosenball; Editing by Peter Cooney and Frances Kerry

Oil falls as rising production feeds concerns of an oversupply

Natural-gas futures decline after larger-than-expected rise in U.S. supplies
Getty Images

Oil futures edged lower Thursday, as recent data showing sizable increases in crude output from major producers fed oversupply concerns. Crude output in Saudi Arabia, Russia and the U.S. had climbed ahead of U.S. sanctions on the Iranian energy sector, which were expected to contribute to tighter global oil supplies. The sanctions began earlier this week, but the U.S. granted eight countries temporary waivers—allowing them to continue buying Iranian oil.

Meanwhile, data showing strong crude imports by China in October helped to limit losses in oil prices.

U.S. production climbed by 400,000 barrels a day to 11.6 million barrels a day for the week ended Nov. 2, the Energy Information Administration said in its weekly petroleum supply report issued Wednesday. That marked a record high, and the “pace of the increase was the highest since October of last year when Hurricane Nate caused [1 million barrels a day] of Gulf production to come offline and then quickly return,” said Tyler Richey, co-editor of the Sevens Report. “But unlike last October, there are no extenuating circumstances for this sizeable production spike.” The EIA report also revealed a seventh straight weekly rise in U.S. crude supplies, up 5.8 million barrels last week. The weekly output data followed an updated forecast from the EIA released Tuesday, which raised the 2018 and 2019 outlooks on domestic crude production. For 2019, the government expects a production average of 12.06 million barrels a day. While worries about the Iran sanctions had previously served to boost oil prices, an October swoon in part reflected expectations that increased output by Saudi Arabia and Russia would largely offset the lost barrels. Saudi Arabia’s production rose to 10.67 million barrels a day in October, according to an S&P Global Platts survey Wednesday. That was the most in the 30-year history of the survey, which also showed that the Organization of the Petroleum Exporting Countries’ October output edged down by 30,000 barrels to 33.04 million barrels a day.

Russia’s crude production rose to a post-Soviet record of 11.4 million barrels a day in October, according to Bloomberg.

“While the focus was on the embargo against Iran and Venezuela’s output struggles over the past months, i.e. the risks of too little supply, the market increasingly looks concerned about the prospects of too much supply,” said Norbert Ruecker, head of macro and commodity research at Julius Baer, in a note. “The petro-nations under the lead of Saudi Arabia and Russia have opened their taps, civil-war-torn Libya surprised with strong exports as of late, and the pipeline bottlenecks no longer seem to be too much of a temporary constraint for the U.S. shale boom,” he said. Meanwhile, Chinese government data showed the country imported 9.61 million barrels a day of crude in October, noted analysts at Commerzbank, after refinery processing had climbed to a record in September, pointing to increased demand for crude. The selloff in crude last month may have been used by Chinese refineries to stock up on Iranian oil before U.S. sanctions began to bite, they said, noting Bloomberg data that showed Iranian oil shipments to China rose to 741,000 barrels a day last month—the second-highest level of the year. Natural-gas futures declined after the EIA reported on Thursday a larger-than-expected rise of 65 billion cubic feet for the week ended Nov. 2.

Trump moves to deny asylum to most migrants who cross border illegally

Proclamation to require asylum-seekers to apply only at border crossings
Getty Images President Donald Trump speaks at the White House on Wednesday.

The Trump administration is moving ahead with a plan to limit when and where foreign nationals can apply for asylum at the U.S. border with Mexico. The administration will publish a new rule aimed at pushing asylum seekers to already crowded  border crossings and deny the opportunity to apply for asylum to nearly all immigrants caught crossing the border illegally. In a call with reporters Thursday, senior administration officials said President Donald Trump is expected to sign a presidential proclamation that blocks illegal border crossers from the asylum process. The administration officials said the president has the authority to limit asylum for some foreigners under the Immigration and Nationality Act. The rule change and expected proclamation — which could be signed as early as Friday and effectively changes U.S. immigration law — is aimed at reducing the volume of immigrants crossing the border illegally to seek asylum in the U.S. It comes as part of a focus by the president on a group of thousands of mostly Central American migrants making their way to the U.S. in multiple caravans traveling through Mexico. The groups are several hundred miles away from the nearest stretch of U.S. border in Texas’ Rio Grande Valley.

Trump says ‘I think we’ll make a deal with China’ on trade

WASHINGTON (Reuters) – U.S. President Donald Trump said on Friday that he will likely make a deal with China on trade, adding that a lot of progress had been made to resolve the two countries’ differences but warning that he still may impose more tariffs on Chinese goods. “China very much wants to make a deal,” Trump told reporters in Washington just hours after his top economic adviser expressed caution about talk of a possible U.S.-China trade agreement. “We’ve had a very good discussions with China, we’re getting much closer to doing something,” Trump said before departing the White House for a campaign event. “I spoke with President Xi (Jinping) yesterday. They very much want to make a deal,” Trump said. “I think we’ll make a deal with China, and I think it will be a very fair deal for everybody, but it will be a good deal for the United States.” Trump said he will discuss trade with Xi when the two meet for dinner on the sidelines of the G20 leaders’ summit at the end of November in Buenos Aires, Argentina. His administration has demanded that Beijing make sweeping changes to its policies on intellectual property protections, technology transfers, industrial subsidies and domestic market access, along with steps to reduce a $375 billion U.S. good strade deficit with China.Trump said a deal with China would also be good for Beijing. “If we can open up China and make it fair, for the first time ever — this should have done years ago by other presidents but it wasn’t — I am very much willing to do it. But China very much wants to make a deal,” he said.

Trump’s comments came a day after a phone call with Xi that he described as “very good.”.

U.S. President Donald Trump holds a campaign rally at Huntington Tri-State Airport in Huntington, West Virginia, U.S., November 2, 2018. REUTERS/Carlos Barria

The president’s remarks helped U.S. stocks to trim their losses on a day that started with market optimism over a Bloomberg report quoting unnamed sources as saying that Trump had ordered his cabinet to draw up terms for a China trade deal.

But by midday, shares had turned negative, weighed down by Apple Inc.’s (AAPL.O) disappointing earnings forecast and comments from White House economic adviser Larry Kudlow that he was less optimistic than previously about a deal betweenWashington and Beijing.

Kudlow, speaking on CNBC, contradicted the Bloomberg report and added: “There’s no mass movement, there’s no huge thing. We’re not on the cusp of a deal.”

Stocks soar on jobs reports, hopes of U.S.-China trade deal

One of China’s vice commerce ministers Wang Bingnan said on Saturday the country is willing to resolve trade issues with the United States through mutually respectful talks and on an equal footing, similar to past comments from Beijing.

Trump administration officials have said U.S.-China trade talks cannot resume until Beijing outlines specific actions it would take to meet U.S. demands for sweeping changes to policies on technology transfers, industrial subsidies and market access.

Trump said that if a deal is not made with China, he could impose tariffs on another $267 billion in Chinese imports into the United States, adding that China’s economy had “been hit very hard” by previous U.S. tariffs.

The United States has imposed tariffs on $250 billion (192.74 billion pounds)worth of Chinese goods so far, while China has retaliated with $110billion worth of tariffs on U.S. goods.

The Trump administration also has taken action to hit the Chinese semiconductor industry, indicting two companies accused of stealing trade secrets and banning U.S. software and equipment exports to one of them

Reporting by Roberta Rampton, Susan Heavey and David Lawder in Washington; Additional reporting by Li Zheng and Engen Tham in Shanghai; Writing by David Lawder; Editing by Steve Orlofsky and Chizu Nomiyama & Kim Coghill