Goldman Sachs CEO David Solomon stated on Tuesday that the United States Federal Reserve could raise interest rates beyond 4.5-4.75% if there are no ‘”real changes in behavior.” “If they don’t see real changes – labor is still very, very tight – they’re obviously just playing with the demand side by tightening. But if they don’t see real changes in behavior, my guess is they’ll go further,” Solomen said at Saudi Arabia’s leading investment conference, FII. He further stressed that it is hard for the economy to solve inflation without an economic slowdown. “There’s a lot of stuff on the horizon which is bad and could – not necessarily – but could put the US in recession,” he added. However, he also mentioned that “that’s not the most important thing,” but “the geopolitics in the world today.” NN: I belive rates will peek at 5% and the FED will fuck up. In fact I have never seen where they did not fuck up. Information overload. They got so much data its hard for they to decipher any of it. Until the house is in a 5 alarm fire they will ignore the smoke detectors
IEA: The World Needs Russian Oil To Flow Regardless Of The Price Cap
The Strategic release of oil are a sick joke.. But still they spin it:
The global oil market will still need Russian oil to flow even with the planned price cap, Fatih Birol, the Executive Director of the International Energy Agency (IEA), said on Tuesday. The price cap proposed and pushed by the G7 with the purpose of allowing Russian oil to continue flowing, but at lower than market prices, still has many details to be hashed out, Birol said at the Singapore International Energy Week, as carried by Reuters. Last month, the G7 group of the most industrialized nations agreed to finalize and implement a price cap on Russian oil, aiming to reduce Vladimir Putin’s oil revenues for his war chest. The G7 will ban maritime transportation services for Russian oil unless the products are purchased at or below a certain price cap. European Union ambassadors also endorsed the price cap after reaching an agreement earlier this month to impose a new package of sanctions on Russia, including banning maritime transportation for Russian oil to third-party countries unless the oil is sold below or at a certain price cap.
Many analysts and experts doubt that the price cap would serve its dual purpose of cutting revenues for Putin while keeping Russian oil flowing because top importers China and India haven’t signed onto the price cap, and because Putin could simply make good on his promise to halt all energy supply—including crude, fuels, natural gas, and coal—to the countries that sign up to cap the price of Russian oil.
Last week, a U.S. Treasury official and industry representatives admitted to Reuters that Russia could largely evade the price cap because it would likely have access to enough own tankers and transport and insurance services to ship its oil. There have been estimates that Russia could continue to ship 80-90% of its oil outside the price cap regime, and those estimates “are not unreasonable,” the unnamed U.S. official told Reuters. NN: I have no idea what these crazy fucks are doing. Their is no replacement for Russia oil. And in winter oil demand is highest….. And the sun in Norther Europe does not shine much…… This oil cap is the craziest shit i have ever seen. They are playing Russian roulette with all the chambers loaded. They are betting their will be no winter….. I wish them good luck. Global warming is not happening fast enough!
Fed Is Losing Billions, Wiping Out Profits That Funded Spending and make interest payments on the national debt governments biggest outlay!
https://youtu.be/GA0EOsU2l0U
(Bloomberg) — Profits and losses aren’t usually thought of as a consideration for central banks, but rapidly mounting red ink at the Federal Reserve and many peers risks becoming more than just an accounting oddity. The bond market is enduring its worst selloff in a generation, triggered by high inflation and the aggressive interest-rate hikes that central banks are implementing. Falling bond prices, in turn, mean paper losses on the massive holdings that the Fed and others accumulated during their rescue efforts in recent years. Rate hikes also involve central banks paying out more interest on the reserves that commercial banks park with them. That’s tipped the Fed into operating losses, creating a hole that may ultimately require the Treasury Department to fill via debt sales. The UK Treasury is already preparing to make up a loss at the Bank of England. Britain’s move highlights a dramatic shift in countries including the US, where central banks are no longer significant contributors to government revenues. The US Treasury will see a “stunning swing,” going from receiving about $100 billion last year from the Fed to a potential annual loss rate of $80 billion by year-end, according to Amherst Pierpont Securities LLC. The accounting losses threaten to fuel criticism of the asset purchase programs undertaken to rescue markets and economies, most recently when Covid-19 shuttered large swathes of the global economy in 2020. Coinciding with the current outbreak in inflation, that could spur calls to rein in monetary policy makers’ independence, or limit what steps they can take in the next crisis.
“The problem with central bank losses are not the losses per se — they can always be recapitalized — but the political backlash central banks are likely to increasingly face,” said Jerome Haegeli, chief economist at Swiss Re, who previously worked at Switzerland’s central bank.
Diesel Fuel supplies at lowest levels EVER
Data was reported last week by the federal government on diesel inventories that was historic in the magnitude of the change from the prior week. It could mark a shift in the weak diesel market that has benefited carriers and drivers for several months. Ultimately, the price of diesel will be set primarily by the price of crude. But the spread between crude and diesel is also an important factor in the final pump price. That spread has been trending near historic lows for months. The primary reason has been refiners making too much non-jet fuel distillate relative to demand. Diesel is a distillate; so is jet fuel. The result has been that distillate/diesel inventories in the U.S. and the world have been at historically high levels. (Other products besides diesel in the category would include heating oil.) That appears to have shifted. The most transparent and immediate numbers are the weekly Energy Information Administration statistics, released each Wednesday for the week that ended the prior Friday. And the numbers that came out last week (Thursday, actually, due to the Columbus Day holiday) were eye-popping when it comes to diesel. The most easily understood inventory number is “days cover.” That number is reached by taking daily consumption, dividing it into inventories and the result is the number of days of consumption that could be covered by existing stocks. For distillate inventories that don’t include jet fuel, that number tends to run in the range of 28-35 days. But earlier this year, as diesel inventories began to soar due to changes being made by refiners seeking survival — more on that later — the days cover figure broke above 50 days. In the history of the EIA series going back to 1991, the days cover figure broke above 50 only a handful of times. It was never sustained above that level.
This year, the days cover figure broke through 50 days in late May and stayed above it for nine out of the next 10 weeks. The growth in inventories was unprecedented. It dropped below 50 days in early August but stayed in the 47 to 49 days’ range all through September and into October. That was unprecedented.
But last week, that number plummeted to 42 days, a drop of 6.1 days. It was easily the biggest one-week decline in the history of the series. It meant that in one week, six days of distillate/diesel inventory cover disappeared. That had never happened before.
There were two major contributors to that decline.The first is that demand for distillate/diesel soared. The fact that it had been lagging was somewhat of a mystery, given the strong trucking market. The “product supplied” figure for distillate/diesel rose to 4.175 million barrels/day in the week ending Oct. 9, the first time it had been above 4 million b/d since the second week of March. A year ago at this time, it was 4.36 million b/d. Second, refiners made a lot less of it. Since the collapse in air travel, refiners have been doing everything they can to not make too much jet fuel. They’ve largely succeeded; days cover for jet fuel had gotten up to more than 70 days but now is less than 40, which is even lower than distillate/diesel. But to get to that level, refiners needed to shift their distillate output away from jet and toward other distillates.
Refiners have been trying through various means to not only reduce jet output but also to cut back distillate output as well. They succeeded in the first task. The second is harder. Put a barrel of crude through a refinery and you will get some level of distillate molecules. Cutting back on it can be a challenge. There was another fuel that refiners didn’t want to make during the pandemic: gasoline. As a result, even during the height of the pandemic, distillate output topped 5 million b/d as every effort was made to reduce gasoline output when people weren’t driving. That 5 million b/d figure for distillate is not a crazy high number normally but it is in the middle of a sharp economic contraction. However, the push to cut back on distillate output has succeeded. U.S. refiners in the week ended Oct. 9 produced 4.279 million b/d of distillates. That’s the lowest number since 2013. It wasn’t easy, but refiners took the steps to start making less distillate, as they already had done to make less jet fuel and less gasoline earlier. (With people driving again, refiners are back to making gasoline.) The end result: the six-day drop in U.S. days cover, created by a drop in inventories on the back of less output, and a decline in demand. But it is not just the U.S. In its latest monthly report, the International Energy Agency (IEA) said middle distillate inventories in Europe in September rose just 500,000 b/d. The five-year average is 9.3 million b/d. The result is a graph that showed that inventories are still above the five-year average but are no longer at historical highs. They’ve gotten down to levels closer to earlier highs, still excessive but not chart-busting.
In Asia, the IEA reported that middle distillate inventories rose with historic norms. (Autumn tends to be a time in oil markets of inventory building as the world prepares for winter.) Although the decline in distillate inventories in the U.S. may have been historic, it hasn’t yet resulted in a significant price reaction. The price of crude has bounced around in the last weeks but ultimately gone nowhere. Brent crude, the world’s benchmark and the more relevant marker for comparison with diesel, was $43.15/barrel on Sept. 17. Last Friday, it settled at $43.32./b During that time, the front-month price of ultra low sulfur diesel on CME rose to $1.1791/gallon from $1.1598/g. That increased the spread of ULSD over Brent to 14.09 cts/ga from 12.8 cts g on Sept. 17. But by point of comparison, to show how much all that diesel inventory had held down prices relative to crude, the spread a year ago was about 53 cts/gallon. The current diesel to Brent spreads aren’t sustainable. Diesel has not entered a permanent, long-term realignment against crude. If the move toward normalcy is going to start anytime soon, it could be that last week’s numbers were the signal that it has begun.
SEE how they SPIN:
US inflation not embedded in economy, Yellen insists
4 Months ago Janet says inflation is a crises.. Now she says its not that bad. Oh i forgot she is a political hack and following the latest political line
United States Treasury Secretary Janet Yellen asserted on Friday that soaring inflation wasn’t “embedded” in the economy yet, noting research and investments into the chip industry would boost the expansion of US production capacities. Yellen told reporters at a technology business forum that she believes there are no signs medium-term inflation expectations are integrated into wages and consumer prices. However, she stressed the Biden administration needs to work more on bringing inflation down. Commenting on the $52 billion CHIPS and Science Act, Yellen argued that it would support the development of a US semiconductor ecosystem which will in turn prevent chip shortages and improve the country’s long-term economic outlook. NN: besides her asinine statement on inflation she forgot mention it will take 5 years to get the new semiconductor foundries built and in operation… Where do they find these idiots.
Oil Could Surge Well Above $100 After Midterms
- Analysts are becoming increasingly concerned about where oil prices might head following the midterms.
- The looming EU embargo on Russian oil could send prices significantly higher.
- The White House’s newly released policy aiming to “strengthen energy security, encourage production, and bring down costs,” fails to address one key issue; underinvestment.
“In the event that a vessel under the flag of a third country has transported Russian crude oil or petroleum products purchased at a price above the price cap, it should be prohibited to provide technical assistance, brokering services, financing or financial assistance, including insurance, related to any transport in the future by that vessel of crude oil or petroleum products” That will certainly spark a profound chilling effect across the entire industry. But what about Biden’s SPR drain – is it really that useless, and won’t it help at least a little? Well, according to Sen, limits on how low stocks can be drawn mean sales won’t be as large as some expect (analysts are expecting a release of as much as 100m bbl; with 26m bbl to be released between December and February). But the clearest explanation why Biden’s last-ditch SPR release won’t do jack, comes from Goldman’s commodity strategists led by Jeff Currie who published a note late on Thursday which they write the following: Following OPEC+’s surprise 2mb/d cut on October 5, the Biden administration was quick to imply a policy response, concerned about rising gasoline prices fact sheet into November 8 midterms. On October 18, the White House released an energy policy. The speech highlights various ahead of President Biden’s speech concerns and actions taken by the administration to “strengthen energy security, encourage production, and bring down costs.” The 15 mb SPR drawdown (the final tranche of the 180 mb Spring announcement) drew headlines, but of more interest was the plans to refill the SPR at fixed prices for future delivery “at or below about $67-72/bbl”, offering some support to crude prices below the ‘shale band’. This truncation of the price distribution should encourage investment in growing production – if only marginally. We find marketing and refining margins in the US to be elevated, but the latter is a function of exorbitant international energy prices as well as structurally tight refining markets. Additional headlines since the OPEC+ meeting have highlighted other policy options available to the Administration. We find incremental SPR sales as the most likely action (16mb is available from FY2023 Congressionally mandated sales), although this remains price dependent: requiring higher prices than present, and likely closer to $125/bbl following the midterms. Such a release is likely to have only a modest influence (<$5/bbl) on oil prices however. All options have trade-offs. Product export bans, in particular, could send wholesale global distillate/gasoline prices up $150/$50/bbl respectively (to $300/150/bbl) and still risk shortages and higher prices domestically – especially in coastal regions. All responses leave the ultimate cause of energy underinvestment unaddressed. We continue to expect headlines into next month’s midterm elections as the US administration attempts to exert downward pressure on retail prices. However, we think action at current price levels remains unlikely. This policy reflexivity is reflected in our current forecasts ($115/bbl Brent in 1Q23 ), as the deficits we expect, following OPEC+’s decision to cut, look unsustainably bullish given scarce inventories and our balance outlook. The risk of inventory depletion and price spikes requiring demand destruction as a rebalancing of last resort could yet move prices $30+/bbl higher. There is more in the full Goldman reports, including an analysis of why a product export ban will exacerbate the global shortage of refining capacity, why a gasoline federal tax holiday would be modest in impact, why easing sanctions on Venezuela is not a quick fix, and why the “NOPEC” bill has only very limited upside.
Americans Are Concerned About High Gasoline And Energy Prices
A total of 83% of likely U.S. voters are concerned about the high gasoline and home heating fuel prices, according to the latest Rasmussen Reports nationwide survey. “With the midterm elections less than three weeks away, most voters are still worried about high gasoline prices and give President Joe Biden low marks for his energy policy,” Rasmussen Reports said, commenting on the poll, which was conducted before the U.S. Administration’s announcement of more releases from the Strategic Petroleum Reserve (SPR). The Department of Energy will release another 15 million barrels from the SPR, extending the previously announced release through the month of December, President Biden said on Wednesday. The Rasmussen Reports survey also found that 82% of likely voters believe that President Biden’s energy policy would be important in the November 8 mid-term election. According to the poll, 46% say President Biden has done a poor job in energy policy, and 38% deem the policy good or excellent. Among likely Republican voters, 72% say Biden has done a poor job of handling energy policy, compared to 20% who rate his job in the sector as excellent or good. As the mid-term elections approach, the Biden Administration is desperate to bring gasoline prices further down, but it has been blindsided by the massive oil production cut from November the OPEC+ group announced early this month, which could send fuel prices rising again. But U.S. gasoline prices have been down this week compared to last week. As of October 20, the national average price of a gallon of regular gasoline was $3.836, down from a week ago, but up from $3.674/gal from a month ago, per AAA data. Still, gasoline prices are well below the $5.016 a gallon national record from June this year. According to Patrick De Haan, head of petroleum analysis at GasBuddy, gasoline prices in all U.S. regions are expected to drop over the next 14 days. The West Coast and the Great Lakes will continue to see the most relief, while others are expected to see slight downward trends, for now, De Haan said on Thursday. NN: Its incredible to me… Stop all this fucking about. Simply unleash the US oil industry. The Greenieewinnieees are in control.
US stocks end best week since June, Dow closes 750 pts higher as Hopes on Slowing Hikes Emerge
The Dow rallied Friday, to close out its best week since June as hopes that the Federal Reserve could slow the pace of rate hikes helped cool the surge in Treasury yields and bolstered growth sectors of the market including tech. The Dow Jones Industrial Average gained 2.5% or 748 points, the Nasdaq was up 2.31%, and the S&P 500 rose 2%. Growth sectors of the market rebounded following a slump a day earlier as Treasury yields eased from session highs on bets that the Fed may consider slowing the pace of rate hikes. “[I]nvestors are now considering a December hike of 50-75 bps,” Janney Montgomery Scott said. “Prior to today, sentiment was closer to a 75-100bps potential hike at the next meeting. This recalibration of expectations is what’s helping stocks today.” Apple (NASDAQ:AAPL) and Microsoft Corporation (NASDAQ:MSFT) rose, with the latter up more than 2% ahead of earnings from big tech next week. Microsoft’s cloud business Azure is likely to take on added investor attention amid concerns the weakening macroeconomic backdrop is weighing on global enterprise and cloud spending. Snap is likely to be “range bound” amid ongoing macro headwinds, Goldman Sachs said in a note. Consumer discretionary stocks were driven higher by a rise in Amazon (NASDAQ:AMZN) and a rebound in Tesla Inc (NASDAQ:TSLA) following a slump a day earlier. Energy was also among the biggest sector gainers, led by a more than 10% rise in Schlumberger NV (NYSE:SLB) after the oil field services firm reported better-than-expected quarterly results. NN: What can i say. we were very very clear the bottom was in, The FED will have to back off to save the Government bond market. Of course the massive deflationary wipe out will come soon enough. But this is a very tradable bear market rally. When we see capitulation of the shorts hopefully we can take some nice fat juicy profits.
Next crises soaring interest rates US debt payments Costs crushing economy
U.S. Treasury yields from two to 30-years surged to new cycle highs on Friday as futures markets priced the Federal Reserve’s peak ‘terminal rate’ next year at over 5% for the first time. With the Fed entering a silent period from next week ahead of its November policy meeting, the hawkish message was unchanged from Philadelphia Fed chief Patrick Harker and he said the central bank was not done with raising rates amid very high levels of inflation. read more But scale of the Treasury yield surge is being fed variously by concerns about liquidity in the market to the risk that Japan and China may soon sell some of their holdings as they sell dollars against the sliding yen and yuan, extreme moves fueled largely by rising U.S. yields.
Some banks blame the accelerated rundown of the Fed’s balance sheet of bonds for the move and suspect this so-called ‘quantitative tightening’ may have to be slowed next year.
Japan’s core consumer inflation rate accelerated to a fresh eight-year high of 3.0% in September, meantime, challenging the central bank’s resolve to retain its ultra-easy policy stance as the yen’s slump to 32-year lows continue to push up import costs. Dollar/yen surged close to 151 on Friday, up almost 32% over the past 12 months. China’s onshore yuan fell to another 14-year low despite major state-owned banks selling dollars on Friday. Xi Jinping, poised to clinch a third five-year term as China’s leader, will on Sunday preside over the most dramatic moment of the Communist Party’s twice-a-decade congress and reveal the members of its elite Politburo Standing Committee. Britain’s pound also resumed its slide against the dollar and euro as a fresh political vacuum opened up following the resignation of Prime Minister Liz Truss on Thursday after just six weeks. The prospect of previously ousted Prime Minister Boris Johnson joining former finance minister Rishi Sunak in the race to succeed her did little to improve souring market sentiment. The economic backdrop darkened. British shoppers reined in their spending more sharply than expected in September as they felt the hit from rising prices, and a one-off bank holiday to mark the funeral of Queen Elizabeth also weighed on retail sales figures for the month. Britain’s borrowing also grew by more than expected
NN:
British PM Liz Truss resigns…. good riddance.
Britain will have a new prime minister by next Friday as Liz Truss announced her resignation after just 44 days in office. Ms Truss, who will become Britain’s shortest-serving prime minister ever, said the “situation” no longer allowed her to command the confidence of her Conservative MPs. Her speech came after a chaotic six weeks saw Ms Truss sack her chancellor, lose her home secretary and U-turn on the majority of the economic policies at the heart of her successful Tory leadership campaign. Sir Graham Brady, the chairman of the influential 1922 Committee of backbenchers, explained the leadership ballot would be over by October 28, allowing for a new prime minister by the time of the Medium-Term Fiscal Plan on October 31. Speaking outside Downing Street, Ms Truss said: “I was elected by the Conservative Party with a mandate to change this. We delivered on energy bills, and on cutting National Insurance. “And we set out a vision for a low-tax, high-growth economy that would take advantage of the freedoms of Brexit. I recognise, though, given the situation, I cannot deliver the mandate on which I was elected by the Conservative Party. “I have therefore spoken to His Majesty the King, to notify him that I am resigning as leader of the Conservative Party. “This will ensure that we remain on a path to deliver our fiscal plans and maintain our country’s economic stability and national security. I will remain as Prime Minister until a successor has been chosen.” Ms Truss experienced a rapid fall in her political popularity amid turmoil in the financial markets following her and Kwasi Kwarteng’s mini-Budget on September 23. She would eventually sack Mr Kwarteng and replace him with Jeremy Hunt, widely seen as a “moderate” Tory who confirmed most of Ms Truss’s fiscal commitments, including cuts to corporation tax and income tax, would be reversed. Opinion polls suggested as few as nine per cent of the British public had a favourable opinion of the outgoing prime minister, while some surveys had Labour as many as 36 percentage points ahead of the Conservatives. Dozens of Tory MPs would then defy Ms Truss by abstaining on a Labour motion which sought to ban fracking. She had hoped to bring back fracking where it had community consent, which went against the 2019 Conservative manifesto pledge to maintain a moratorium unless there was new evidence on the risk of earthquakes. Sir Graham told reporters outside the Commons it was his “expectation” party members would be involved in the process of selecting a new leader.Asked whether he accepted the situation resembled a “complete dog’s dinner”, Sir Graham said it was “certainly not a circumstance I would want to see.”
NN: I did a report on Radio Free WallStreet on this insanity as it occurred. See that video below