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Germany expands COAL MINE……. GREENNIEES shitting all over themselves

Please observe in the video below the windmills under the coal field….. ill explain later

ERKELENZ, Germany (AP) — The fate of a tiny abandoned village has sparked heated debate in Germany over the country’s continued use of coal and whether tackling climate change justifies breaking the law. Environmental activists have been locked in a standoff with police who started eviction operations on Wednesday in the hamlet of Luetzerath, west of Cologne, that’s due to be bulldozed for the expansion of a nearby lignite (notice how they do not use the world coal) mine. Some stones and fireworks were thrown at officers in riot gear as they moved into the village, clearing roadblocks and removing protesters. Activists had refused to heed a court ruling Monday effectively banning them from the area. Some dug trenches, built barricades and perched atop giant tripods in an effort to stop heavy machines from reaching the village, before police pushed them back by force.

“People are putting all of their effort, all of their lives into this struggle to keep the coal in the ground,” said Dina Hamid, a spokesperson for the activist group Luetzerath Lives.

“If this coal is burned, we’re actually going to take down our climate goals,” she said. “So we’re trying to, with our bodies, protect the climate goals.” The debate flared up hours later at a townhall meeting in nearby Erkelenz, when one regional official accused activists of being willing to “spill human blood” to defend the now-abandoned village. Stephan Pusch, who heads the district administration, said that while he sympathized with the protesters’ aims, the time had come to give up Luetzerath. The village’s last resident left in 2022 after being forced to sell to utility company RWE. “You’ve achieved your goal. Now clear the pitch,” he said to jeers from the room. Many disagreed, arguing that the village is more than just a potent symbol for the need to stop global warming. Studies indicate that about 110 million metric tons of coal could be extracted from beneath Luetzerath. The government and RWE say this coal is needed to ensure Germany’s energy security — squeezed by the cut in supply of Russian gas due to the war in Ukraine. Critics counter that burning so much coal would make it much harder for Germany, and the world, to cap global warming at 1.5 degrees Celsius (2.7 Fahrenheit) as agreed in the 2015 Paris climate accord. “Nobody wants to be out there in the cold right now, defending a forest or a village,” said Maya Rollberg, a 26-year-old student who had traveled from southern Germany. “But I think that people have realized that they have to do that in order to (protect) future generations.” Pusch, the regional administration chief, warned protesters that intentionally breaking the law wouldn’t help their cause in a country where the violent seizure of power and the horrors of dictatorship are still within living memory. “I’ll tell you honestly that I’m scared my children will grow up in a world that isn’t worth living in anymore,” he said. “But I’m at least as scared of my children growing up in a country where everyone takes the law into their own hands.” “You won’t save the world’s climate on your own,” said Pusch. “(We’ll) only do so if we manage to take the majority of the population with us.” Similar debates over how far civil disobedience can go have taken place in Germany and elsewhere in recent months amid a wave of road blockades and other dramatic actions by protesters demanding tougher measures to combat climate change. Some climate activists say the law is ultimately on their side, citing a 2021 ruling by the country’s supreme court that forced the government to step up its effort to cut emissions. They also note the legally binding nature of Germany’s commitments under the Paris accord. Wissler criticized an agreement struck last year between the government and utility company RWE to permit mining beneath the village in return for an earlier end to coal use in Germany. Some experts say that, in sum, the deal will lead to higher emissions.

NN BlaskMask Blog:

Its Not An Abandoned Town.. But a failed Wind Farm

Here’s Gretta: On climate, racial and Social Justice….. Really! yes and Germany is the biggest polluter in the world? really really? How come i hear nothing about India and China?

 

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Fed is still seeing $2.2 trillion in daily demand for its overnight repo facility

The U.S. government needs to strike a debt-limit deal before surging demand for the Federal Reserve’s popular overnight reverse repo facility will ease, BofA Global’s rates team said Friday. While the Fed slowley cut its balance sheet to about $8.5 trillion from a near $9 trillion peak to battle high inflation, its popular overnight reverse repo facility has continued to see over $2 trillion in daily demand as investors keep cash tucked away at banks in the wake of last year’s bear market in stocks and bonds. The Fed’s repo program lets eligible firms, like banks and money-market mutual-funds, park large amounts of cash overnight, while lately earning 4.3%, up from 0.5% in March. Use of the Fed’s facility hit a record of about $2.5 trillion in late December (see chart), a time of year when liquidity in financial markets has been prone to run thin.

Fed’s reverse repo facility continues to see $2 trillion in daily demand as financial conditions tighten.

New York Federal Reserve data

Now, the expectation is that it will take a breakthrough in Washington on government debt before the Treasury can resume selling Treasury bills to soak up demand from investors, and allow demand for the central bank’s overnight reverse repo facility to decline. Treasury Secretary Janet Yellen warned top U.S. lawmakers on Friday that the government is expected to hit its debt limit next week. The Treasury will need to start taking “extraordinary measures to prevent the United States from defaulting on its obligations,” she wrote in a letter. BofA Global’s Mark Cabana said in a Friday note that a common question his rates strategy team has been getting in 2023 has been how to make sense of the debt-limit fight as the Fed drains liquidity from the banking system as its balance sheet shrinks. His team’s “short answer” is that the Fed’s shift to a smaller balance sheet since May has been mostly reflected in a lower Treasury cash balance at the Fed. But his team also thinks reliance on the reverse repo facility “should drop sharply,” once the government agrees to a new borrowing limit, and a “wave” of Treasury bill supply follows. It currently has a $31.4 trillion borrowing limit. The Fed’s repo facility had nearly no customers for years until the pandemic hit. Demand began to pick up in April 2021, when short-term funding rates were next to nothing. Use has continued to rise even after the Fed in March began to dramatically raise rates and as assets roll off its balance sheet. Higher Treasury yields have been a result of the Fed raising its policy interest rate sharply since last year to combat inflation. The 2-year Treasury rate BX:TMUBMUSD02Y was at 4.19% on Friday, according to FactSet. The 10-year Treasury yield BX:TMUBMUSD10Y was at 3.49%, after falling as low as 0.54% in 2020.

 

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BofA Strategists Say US Stocks Set For 10% Drop Before Later Rally

US stocks are poised for a fresh slide before ultimately rallying in the second half of the year when economic conditions stabilize, according to Bank of America Corp. strategists. Investors are positioned for the S&P 500 to tumble nearly 10% to 3,600 points before rallying 17% to the 4,200 level, strategists led by Michael Hartnett wrote in a note. Trading during an economic and earnings recession “requires patience,” they said. The “pain trade” will last until a trough in Fed rate forecasts, yields and credit spreads signals “peak Goldilocks” — describing a steady economy that is not running too hot or too cold. Global stocks gained at the start of this year amid optimism fueled by China’s reopening, cooling inflation and expectations that central banks will take a less aggressive approach to tightening. Still, strategists are increasingly favoring European and Asian shares over US peers against the backdrop of higher rates. Hartnett said the outperformance of European stocks versus the US was the “start of an era” last week while Goldman Sachs Group Inc. peers said the Chinese stock rally has more room to run. “S&P 500 earnings revisions point to a hard landing” even though the market is pricing a soft landing, Goldman Sachs strategists led by David Kostin wrote in a note late Thursday. If there is no recession, as the team expects, S&P 500 earnings per share growth will be flat this year, they said.

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Yellen warns of U.S. default risk by early June, urges debt limit hike

WASHINGTON, Jan 13 (Reuters) – U.S. Treasury Secretary Janet Yellen said on Friday the United States will likely hit the $31.4 trillion statutory debt limit on Jan. 19, forcing the Treasury to launch extraordinary cash management measures that can likely prevent default until early June.

“Once the limit is reached, Treasury will need to start taking certain extraordinary measures to prevent the United States from defaulting on its obligations,” Yellen said in a letter to new Republican House of Representatives Speaker Kevin McCarthy and other congressional leaders.

She urged the lawmakers to act quickly to raise the debt ceiling to “protect the full faith and credit” of the United States. “While Treasury is not currently able to provide an estimate of how long extraordinary measures will enable us to continue to pay the government’s obligations, it is unlikely that cash and extraordinary measures will be exhausted before early June,” the letter said. Republicans now in control of the House have threatened to use the debt ceiling as leverage to demand spending cuts from Democrats and the Biden administration. This has raised concerns in Washington and on Wall Street about a bruising fight over the debt ceiling this year that could be at least as disruptive as the protracted battle of 2011, which prompted a brief downgrade of the U.S. credit rating and years of forced domestic and military spending cuts. The White House said on Friday after Yellen’s letter that it will not negotiate over raising the debt ceiling. “This should be done without conditions,” White House spokesperson Karine Jean-Pierre told reporters. “There’s going to be no negotiation over it.” House Republicans are planning to move a “debt prioritization” measure by the end of March that would call on the U.S. Treasury to continue making certain payments once it reaches the debt ceiling, but details have not been finalized, a person familiar with the plan told Reuters. The proposal was first reported by the Washington Post. Republican lawmakers in the United States House of Representatives are preparing a contingency plan that would be put into place if a deal on raising the debt ceiling fails, the Washington Post reported. According to six unnamed sources, the plan is part of a deal conservative Republicans reached with Kevin McCarthy during his campaign for speaker of the House. The report claimed that, if the debt ceiling is breached, Republicans “would call on the Biden administration to make only the most critical federal payments,” including debt payments, social security and Medicare, and military funding. Two people familiar with the discussions said that “it could take weeks for Republicans to decide which federal spending programs must be protected.” NN: I normally do not comment on the debt ceiling charade. But with the new Republicans that have blown into town and the weak speaker this could blow into a big deal!

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1 Billion people infected with COVID in China….. Critical to our BINARY trade in oil

A study by Peking University, Beijing, China says about 900 million Chinese people have been infected with coronavirus as of Wednesday, 11th January, 2023. According to BBC, the report estimated that 64% of China’s population has the virus. It ranked Gansu province, where 91% of the people are reported to be infected, at the top, followed by Yunnan, (84%) and Qinghai (80%). The BBC report disclosed that a top Chinese epidemiologist has also warned that cases will increase in rural China over the lunar new year.

It also said the peak of China’s Covid wave is expected to last two to three months, added Zeng Guang, ex-head of the Chinese Center for Disease Control. Hundreds of millions of Chinese are travelling to their hometowns – many for the first time since the pandemic began – ahead of the lunar new year on 23 January.

China has halted offering daily Covid statistics since abandoning zero-Covid.

But hospitals in big cities – where healthcare facilities are better and more easily accessible – have become crowded with Covid patients as the virus has spread through the country. Speaking at an event earlier this month, Mr Zeng said it was “time to focus on the rural areas”, in remarks reported in the Caixin news outlet. Many elderly, sick and disabled in the rural areas were already being left behind in terms of Covid treatment, he added. China’s central Henan province is the only province to have given details of infection rates –

earlier this month a health official there said nearly 90% of the population had had Covid, with similar rates seen in urban and rural areas.

However, government officials have said many provinces and cities have passed the peak of infections. The Lunar New Year holidays in China, which officially start on 21 January, involve the world’s largest annual migration of people. About two billion trips are expected to be made in total and tens of millions of people have already travelled.

NN BlackMask Blog: Killing The Old Folks:

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Cooler Inflation Mixed With Strong Labor Data Leaves Traders Puzzled

Inflation data slowed in December, as widely expected, but labor market data remained strong, with both initial and continuing claims coming in lower than expected. Wall Street struggled to weigh how each would affect future rate hike decisions for the Federal Reserve.  In premarket trading and then at the open, the S&P 500 Index struggled for direction, while two-year Treasury yields fell.  “Even though everything is coming in line with expectations, equities are still disappointed because people were expecting a below-expectations CPI report, and that didn’t happen,” said Zhiwei Ren, portfolio manager at Penn Mutual Asset Management. “The easy part of the decline in inflation may be underway — goods inflation is declining, commodity prices are falling,” Priya Misra, global head of rates strategy at TD Securities told Bloomberg TV. “The much harder part is getting that service inflation down consistent to 2%.”

Stocks Waver | S&P 500 futures gain after falling in immediate aftermath of CPI report

Here’s what others on Wall Street said:

Danni Hewson, financial analyst at AJ Bell:

“The trouble with US inflation numbers coming in bang on target is that markets had been surfing a wave of optimism that the numbers might just come in even cooler. And when you poke under the hood a little more, it’s clear a lot of the movement is down to falling prices at the pump.”

“Markets are likely to have a hard time figuring out how to react to today’s numbers, because although the headline is a good one there are still big issues to contend with, not least continued rises in the cost of food and shelter but also the fact that services are running hot. And when you mix in the latest jobs data, there’s plenty to befuddle.”

Cliff Hodge, chief investment officer for Cornerstone Wealth:

“The CPI report was bang-on this morning, and while the initial reaction in risk assets was weak, futures are moving higher.”

“The labor market is still very tight, though the claims data should be taken with a grain of salt due to the noise in holiday adjustments.”

Maria Vassalou, co-chief investment officer of multi-asset solutions at Goldman Sachs Asset Management:

“The market has priced in a very optimistic scenario about CPI in the previous days. The numbers came in at exactly the expectations level. That means that some of the optimism in the markets may get unwound both in equities and fixed income.”

“While a 25bps hike in the next Fed meeting is still in play, the strength of housing in the core CPI and the benign jobless claims support the scenario of a 50bps hike in the next meeting. However, what matters most for the markets is the terminal Fed rate, not so much the pace of hikes. As we get closer to the terminal rate, the pace of hikes needs to slow down.”

Mike Bailey, director of research at FBB Capital Partners:

“This is the number one pain point for Jay Powell, and we now have two big data sets suggesting that wages are fading. In some ways, today’s CPI is scratching that itch, and Powell may decide to gradually pull back on tightening.”

Guillermo Hernandez Sampere, head of trading at asset manager MPPM GmbH:

“The CPI data could motivate the Fed to make smaller amendments to their path and go toward a slower tightening. Anyway, the market will give another name to the monster in the closet, talks about possible recession will take over.”

Dennis DeBusschere, founder of 22V Research:

“Rents went up month over month. And new lease turnover is crashing. Rents will fall. We know that. So the OER will be faded. Bottom line: internals or the things the Fed are focused on are better than the headline CPI reading.”

Lindsay Rosner, multisector portfolio manager at PGIM Fixed Income:

“Shelter still remained high, but forward probabilities of hikes haven’t budged. This was a number that worked for market expectations.”

Timothy Graf, head of macro strategy for EMEA at State Street Bank & Trust:

“This is continued decent news in terms of the broader inflation trend, but that the stickiness in shelter-related inflation and services inflation means inflation here isn’t coming down fast enough for the Fed’s liking.”

“The Fed should have reason to step down to 25bps at some future meeting and then pause shortly thereafter. I think what this number does is probably extend that time horizon a bit.”

John McClain, portfolio manager at Brandywine Global:

“The risk-reward was highly skewed going into the print, with the market heavily leaning toward a weaker print. While we are moving in the right direction, the markets euphoria will take a pause for a cup a coffee. The data gives the Fed another point of reference and probably won’t dissuade them from their current thinking.”

Ipek Ozkardeskaya, senior analyst at Swissquote:

“Moving forward, inflation will  probably not ease steadily, and smoothly throughout this year, as the Chinese reopening, and the rebound in energy and commodity prices as a result of it, hint at a bumpy ride. If the Fed officials don’t want to call victory prematurely, they could be tempted to hike by another 50bp in February.”

Andrea Tueni, head of sales trading at Saxo Banque France:

“Now the market will need some kind of fuel if it wants to continue to go higher.”

NN: the drop in the inflation rate to 6.5% is still a titty twister. An what everyone is forgetting in the coming months as Chin reopens inflation will INCREASE. China’s insatiable demand for oil and commoties like cooper,  aluminum and the like will breath new life into commodities inflation….

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China’s rapid reopening brings joy and woe for world markets

  • Investors hope reopening will counter Western recession risks
  • But commodities rally may keep inflation high
  • Thai baht, Chilean peso, European luxury goods tipped to win

Jan 13 (Reuters) – The rapid reopening of China’s economy from COVID lockdowns is brightening the outlook for global investors keen to leave behind one of their worst years on record, but may also fuel the inflationary pressures policymakers hope are abating. The impact of the reopening of the world’s second largest economy on financial markets, hit by double-digit losses last year as inflation and interest rates jumped, is critical. Being touted among the top buying bets on recovery hopes are emerging markets, commodity currencies, oil, travel and European luxury companies. No doubt, it will be a bumpy ride. COVID cases, deaths, and the economic hit to China from rampant infections are yet to play out and commodity prices are already rising, adding to inflation risks. For now investors are focused on the positives, anticipating more stimulus measures by Beijing and that the health crisis and economic hit to China will peak in the first quarter. “The reopening story is looking quite good and … there is a lot of credit and fiscal stimulus that China is putting into the system,” said Edward Al Hussainy, senior interest rate and currency analyst at Columbia Threadneedle, which manages $546 billion of assets. “That stimulus is finding its way into global asset prices.” China’s reopening also takes the sting out of recession risks. Goldman Sachs expects the euro zone economy to grow by 0.6% this year, versus a contraction forecast previously. Chinese demand “will offset that story in the West…” that consumer demand and business spending have been slowing down as interest rates have gone up, said Chris Iggo, chief investment officer for core investments at AXA Investment Managers. But a boost from China’s reopening raises some concerns about inflation. China is the world’s leading importer of oil and many other commodities — oil prices have risen 10% since mid-December to almost $84 . “One thing that we need to be sensitive to is whether the recovery in China adds to global inflationary pressures,” AXA’s Iggo said. He added that the reopening could prompt the European Central Bank to raise rates for longer since euro area inflation is largely energy driven. The hope is that economic slowdown outside China will offset its rising demand for commodities, dampening the inflationary impact. Goldman Sachs estimates a return to normal travel and transportation behaviour in China could boost oil consumption by 1.5-2 million barrels per day.

Oil, copper surge as China reopens

NN: The above chart says it all. The fire breathing dragon is coming back an he will reignite the inflation fires.

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Free market in oil is over…. G7 Oil Price Cap EXPANDED TO DISTILLATES

  • Capping Russian oil product prices is likely to prove a much more onerous task than capping its crude.
  • The effectiveness of the price cap on Russian crude oil is still being gauged.
  • A Finnish research agency estimates that the different price caps could reduce Russia’s energy income by $300 million per day.

About a month ago, the group of Seven (G7) coalition imposed a price cap on Russian oil with the objective of reducing Russia’s oil revenue which goes to fund its war machine. G7–which consists of the United States, the 27-nation European Union, Canada, Australia and Japan– set at a maximum price of 60 USD per barrel for Russian crude oil with the provision that the cap can be adjusted in the future in order to respond to market developments. This cap is to be implemented by all members of the Price Cap Coalition via their domestic legal processes. But things are about to get murkier as the G7 contemplates tightening the noose further on Russia’s energy revenue. Beginning on February 5, the G7 will impose price caps on Russian products, such as diesel, kerosene and fuel oil in a bid to further cut Moscow’s revenue from energy exports and its ability to finance its war on Ukraine. Furthermore, the Group now plans to set two price caps on Russian refined products in February; one for Russian oil products trading at a discount to crude, and a second for Russian crude trading at a premium.  That said, capping Russian oil product prices is likely to prove a much more onerous task than capping its crude, for the simple reason that there are many more oil products and their prices depend more on where they are purchased, not produced. For instance, diesel and kerosene tend to trade at a premium to crude, while fuel oil typically sells at a discount. The Kremlin came out on Wednesday and claimed it had not yet seen any cases of price caps on Russian oil.

 “As far as the losses are concerned, no one has especially seen the caps yet,” Kremlin spokesman Dmitry Peskov told Reuters in a daily briefing.

Hordes of analysts have contradicted the Kremlin’s stance, saying that the oil price cap is definitely hurting the country.  Currently, Russian flagship Urals crude blend is trading below the price cap level of $60 per barrel. A Finnish researcher recently told Bloomberg that the price cap on Russian oil is already costing the Kremlin €160 million ($172 million) a day, and could rise to $280 million a day when the cap is extended to refined products from Feb. 5. Last month, even Russian Finance Minister Anton Siluanov said that the country’s budget deficit in 2023 might exceed the expected 2% of GDP as the oil price cap takes a hit on export income. This marked the first time a Russian official acknowledged that the $60 per barrel price cap imposed on Russia by Europe and G7 nations will negatively impact its economy. Siluanov said that the country would tap debt markets to bridge the deficit. Russia expects to use just over 2 trillion roubles ($29 billion) from the National Wealth Fund (NWF) in 2022 as total spending exceeds 30 trillion roubles, above the initial budget. In the same month, Russia’s Central Bank governor Elvira Nabiullina said that the country’s economy was expected to contract three percent in 2022, a sharp turnaround from its growth in 2021 citing “worsening trade conditions.” She added that Russia’s cash flows were expected to weaken considerably in 2023 as oil and gas sales to Europe plunge.  Meanwhile, Ukraine says it expects that the EU embargo on Russian oil and petroleum products should cut Russia’s profits by at least 50%.

“We expect the collapse of profits from oil and gas exports to be at more than 50%, precisely because of the introduction of the EU embargo on oil and petroleum products and the introduction of price restrictions. Oil and gas account for 60% and 40% of federal budget revenues. We expect that Russia’s revenues will fall below the critical level of $40 billion per quarter,” Yuliya Svyrydenko, First Deputy Prime Minister and Minister of Economy of Ukraine has said. She has expressed hope that plunging profits will make it more difficult for Russia to continue waging an expansive war.

Last month, leading shipping journal Lloyd’s List reported that seven loaded Suezmax vessels that are fully compliant with the $60 per barrel price cap and its requirements had sailed from Russian waters. According to the journal, checks  revealed that all seven vessels had secured insurance with International Group P&I clubs, which requires proof of compliance with the G7 cap of $60 per barrel before marine insurance can be provided. NN: They are going to fiddle fuck around until they create a needless oil crises. Does this make any sense at all?

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Fed policymakers signal rate-hike slowdown coming, but no easing

Jan 12 (Reuters) – Federal Reserve policymakers on Thursday expressed relief that inflation continued easing in December, paving the way for a possible step down to a quarter point interest rate increase when the U.S. central bank meets in just under three weeks. U.S. consumer prices fell in December in the first month-to-month decline in more than 2-1/2 years, and underlying inflation slowed, government data showed on Thursday. In the 12 months through December, the so-called core CPI increased 5.7%, the smallest gain since December 2021 and fresh evidence the Fed’s aggressive rate increases are having the desired effect. “We are in fact constraining the economy and presumably in the process constraining inflation. That means for me I can be a little more nuanced,” in deciding the size of upcoming rate increases, Richmond Federal Reserve president Tom Barkin said in comments to reporters in Richmond. After raising rates by half a point at its December meeting, Barkin said he was “in concept supportive of a path that is slower but longer and potentially higher” depending on how inflation behaves. “Hikes of 25 basis points will be appropriate going forward,” Philadelphia Fed president Patrick Harker said in a speech to a local group in Malvern, Pennsylvania, adding that once rates get just above 5%, “I expect that…will be restrictive enough that we will hold rates in place to let monetary policy do its work.” NN: Stupidity. Inflation has not “moderate” its still zooming ahead at 6.5% year over year. An the FED is not Not NOT done raising interest rates. Its going to raise them slower for longer. This is notNotNot good news for the markets or the economy. Because this means a longer sharper recession… Let them have their WallStreet circle jerk… Next stop for starters is a 25% plunge in the stock market. Then things will really get going. The street wants you to believe that the stock market will have a big rally. As they baton down the hatches, preparing for the coming depression… Look at the chart below titled.  US inflation shows signs of slowing… its rate of growth…..The Critical core PCE and core CPI have leveled off…… they are flat lining at above 5%. They have to drop to 2% before the Fed is done….. And that my friend is a long way to go!

Reuters Graphics Reuters Graphics