Here Are The Three Possible Outcomes From Friday’s OPEC Meeting

Ahead of Friday’s OPEC meeting in which the oil producing cartel and Russia will most likely hike production for the first time in 2 years, various numbers are being thrown around, anywhere between 0 – which is how much additional oil Iran and Venezuela want to be produced – and 1.5 million barrels per day, which was the output increase goal of Russia as recently as Tuesday.

However, just like no production increase is impossible, especially with the pressure Trump is weighing on his new best friends, Saudi Arabia, so the upper end of the production range, or 1.5mmb/d. is also unlikely as Energy Aspects analyst Amrita Sen said says in interview on Bloomberg Television from Vienna. Predicting that Vienna’s session on Friday will be “one of the most political meetings we’ve seen in years, if not decades”

Sen also said that Russia’s proposal to increase output by 1.5mb/d is “non-starter,” “not even on the table for discussion” because crude prices would drop – sharply  – if OPEC+ agree to raise output more than 600kb/d.

As a result the London-based analyst – who was already assuming 500k b/d output increase in 2H from Gulf Arab producers and Russia, even before this week’s OPEC summit was floated – forecasts that producers will likely add 300k to 600k b/d as Saudi Arabia, Russia, Kuwait, U.A.E. all want to boost output.

Which brings us to the three possible outcomes from Friday’s meeting as laid out by energy consultancy Wood Mackenzie:

  • The most likely option to get wider support, is if OPEC agrees to boost production by 500kb/d, with Russia adding 100kb/d in 2H, for a total of 600kb/d.
  • The second possible option is for OPEC to keep current agreement to cut output, leading to a “small” implied draw in stockpiles in 3Q followed by a build in 4Q which would lead to lower prices heading into 2019 and oversupply for year.
  • The third option sees OPEC increasing output by 1m b/d, and Russia by 300k b/d, which would add 900k b/d on avg to inventories in 2H18 and 1.8m b/d in 2019, and likely much lower oil prices in the near-term.

The most likely option, one around 600,000 is also what the FT reported this afternoon saying that “a senior Opec figure suggested that Saudi Arabia was targeting a collective production increase of 600,000 to 800,00 barrels a day.” The range is a slight increase to the one floated earlier, and which called for a production increase of 300-600kb/d.

The target, which it proposes would be shared proportionally between all members of the so-called Opec+ group that are capable of raising output, has not yet been finalised but is forming the basis of discussions with other countries. The kingdom had earlier briefed that it was looking for a rise of between 300,000 and 600,000 barrels.

However, as reported previously, Iran – which continues to ignore the reality of a world in which it is sanctioned, and which will trim Iranian oil exports by up to 1mmb/d – is resisting the Saudi-led move which would send oil prices lower, putting the two Middle East rivals on a collision course ahead of Friday’s summit.

Bijan Zanganeh said he did not believe an agreement to relax production cuts — first agreed nearly two years ago amid a global supply glut — could be reached at the oil cartel’s meeting, insisting the group was not an “American organisation”.

“Opec is not an organisation to receive its instruction from President Trump,” Mr Zanganeh said on arriving in Vienna for the talks.

Or maybe it is. In a separate report from CNN, Zanganeh said that OPEC members were discussing going back to 100% compliance, and added that Iran may agree to a supply increase without the need for new agreement. Specifically Iran is envisioning a world in which there is no more “overdelivering on cuts” – largely as a result of the collapse of Venezuela’s oil infrastructure which has resulted in Caracas producing far less than even its production cut quota  – with analysts estimating that if those who have cut more than required scaled back to 100% compliance (instead of the 100%+ where it is now due to basket cases like Maduro) it would add a million-odd barrels a day to output.

Of course, at the end of the day, OPEC is really another name for Saudi Arabia, and whatever Riyadh wants, Riyadh gets. And on Wednesday, the Saudi energy minister, Khalid al-Falih, said that while they were still in consultations with other members, more countries were backing the idea that it was “time for us to change course”.

“The market demands more [oil] in the second half. The exact amount, the timing, the manner . . . we have a couple of days to discuss.

“I am confident that at the end of the day reason will prevail and we will do the right thing.”

In short, OPEC will most likely agree to boost production by around 800kb/d, with Iran kicking and screaming but ultimately agreeing, with significant risk that the final number could be above 1mm barrels per day.

And just in case the number ends up being “far higher”, Saudi Aramco, which would love a $100+ oil price ahead of its IPO, said that it has at least 2 million b/d in additional output capacity if required.

Texas Billboard: “Liberals, Please Continue Until You Have Left The State”

Authored by Mac Slavo via SHTFplan.com,

A billboard spotted in Texas is likely to send people running to safe spaces and cry rooms.  The billboard tells liberals to continue driving on I-40 until they have left the “great state of Texas.”

“Liberals,” the billboard reads. “Please continue on I-40 until you have left our GREAT STATE OF TEXAS.”

A photo of the sign was posted to Facebook by Kyle Mccallie, of Fritch, Texas. He wrote the billboard was six miles east of Vega, a city roughly 35 miles west of Amarillo, on the eastbound side of the highway. Mccallie’s post, which was uploaded earlier Tuesday, now has over 14,000 shares as of Tuesday night.

According to USA Today, the photo of the billboard shows a logo for “Burkett” below the content of the sign. A spokesperson for Burkett Media of Austin, Texas said that company is unaffiliated with the content on the billboard.

It’s actually pretty odd to see anti-liberal messages around.  Most often, we are bombarded with leftist propaganda and authoritarian brainwashing to accept a wholly tyrannical state.

Mccallie said he is supportive of the sign’s message which asks liberals to leave Texas. He said he doesn’t know who’s behind the billboard, which he said is located about an hour’s drive from his hometown.  However, not everyone agrees that the message is humorous or in good taste.  On social media, many have reacted negatively to the sign’s message. Mccallie said he has received numerous messages critical of both himself and the billboard, many of which have been overly obscene.

According to ABC7 Amarillo, the billboard’s image has now gone viral. This billboard’s viral status comes just after another sign popped up in Maryland gobbled up attention in May. The billboard stated, “hey liberals, better get your guns if you try to impeach President Trump.”

There are probably a lot of full safe spaces right now because of these two signs.

Canadian May Home Sales Plunge Most Since The Financial Crisis

  • Rising rates? Check.
  • Chinese capital controls and a slump in foreign buyers? Check.
  • Trade war with the US? Check.

Things are not looking good for Canada’s national housing market, which as VCG reports, continued its sluggish performance in the month of May. Despite the warmer weather and usually busy spring selling season, buying activity has been awfully quiet. New mortgage regulations which are now in full swing have stymied fringe buyers, particularly millennials. According to new data from credit bureau TransUnion, new mortgage originations among millennials in Canada fell by 19.5% between the last quarter of 2017 and the first three months of 2018.

That has also been showing up sales data. 

As shown in the chart below, national home sales in Canada plunged by 16% Y/Y for the month of May. This was the worst decline since the great financial crisis in 2008 when home sales dipped 17% that May. Furthermore, total home sales of 50,604 marked the lowest total since May 2011.

Seasonally adjusted home sales edged 0.1% lower on a month over month basis, and 15% on a year over year basis. Or, as Steve Saretsky put it, “either way you slice it not a great month for one of the worlds most resilient housing markets.”

And as sales continue to slide inventory is beginning to build. For sale inventory crept up by 4% year over year, increasing for the first time in three years, and the highest May increase since 2010.

In light of the above, it is not surprising that the average sales price dipped 6% year over year in May, which however was not nearly as bad as April when year over year declines registered a head turning 11% decline.

But more troubling is that when looking at the smoothed out index of the MLS HPI prices showed the smallest possible increase of just 1% year over year in May, the lowest since September 2009. Not only did this mark the 13th consecutive month of decelerating year over year gains per the Canadian Real Estate Association, but at the current rate of slowdown, next month Canada will record the first annual drop in home prices since the global financial crisis.

The silver lining: condos continue to hold up well as buyers tumble down the housing ladder; here prices posted a 13% increase from May 2017.

CREA’s chief economist Gregory Klump shouldered much of the blame on tighter borrowing conditions, “This year’s new stress-test became even more restrictive in May, since the interest rate used to qualify mortgage applications rose early in the month. Movements in the stress test interest rate are beyond the control of policy makers. Further increases in the rate could weigh on home sales activity at a time when Canadian economic growth is facing headwinds from U.S. trade policy frictions.”

Klump’s theory stacks up well with recent data which suggests fringe borrowers are being pushed towards the private lending space, particularly in Ontario. Mortgage originations at private lenders in the Q1 2018 rose to $2.09 billion in Ontario, a 2.95% increase from last year. The market share of private lending went from 5.71% of originations in Q1 2017, to 7.87% in Q1 2018, despite originations at other channels dropping.

In other words, there is a surge in unregulated, non-bank lending, just as the housing bubble pops, precisely what happened the last time there was a full-blown financial crisis.

Melania Calls Secret Service On Peter Fonda After Pedo Rape-Cage Tweet

The office of the First Lady called the Secret Service on Peter Fonda after the Hollywood actor called for kidnapping 11-year-old Barron Trump and throwing him in a cage with pedophiles. In a now-deleted series of vulgar tweets, Fonda wrote “WE SHOULD RIP HIM FROM HIS MOTHER’S ARMS AND PUT HIM IN A CAGE WITH PEDOPHILES AND SEE IF MOTHER WILL STAND UP AGAINST THE GIANT ASSHOLE SHE IS MARRIED TO.”

Spokesperson for the first lady Stephanie Grisham told The Daily Caller that the Secret Service has been “notified” of the threat.

“The tweet is sick and irresponsible and USSS has been notified,” Grisham said. –Daily Caller

Fonda then went on a tirade against White House officials, including Department of Homeland Security Secretary Kristjen Nielsen and Press Secretary Sarah Sanders.

“Maybe we should take her children away and deport her to Arkansas, and giving her children to Stephen Goebbels Miller for safe keeping,” Fonda tweeted, referring to White House aide Stephen Miller – largely credited for the Trump administration’s “zero tolerance” policy. 

The actor later apologized, saying in a statement later that he was distraught over children at the border separated from their families (though not so much when Obama did it), and that he “went too far.” 

Fonda’s vulgar tweets drew heavy criticism over Twitter, with Donald Trump Jr. tweeting “You’re clearly a sick individual and everyone is an internet badass but rather than attack an 11 year old like a bully and a coward why don’t you pick on someone a bit bigger.”

You’re clearly a sick individual and everyone is an internet badass but rather than attack an 11 year old like a bully and a coward why don’t you pick on someone a bit bigger. LMK. https://t.co/8OhiQ0aZmO

— Donald Trump Jr. (@DonaldJTrumpJr) June 20, 2018

Others shared similar sentiments, with some calling for a boycott of Fonda’s new movie Boundaries, which comes out on Friday:

BOYCOTT ALERT

‘Boundaries’ by @sonyclassics

Starring @iamfonda @VeraFarmiga

Opens in Theaters June 22

Fonda advocated for 12 year old Barron Trump to be put in a cage with pedophiles

Fonda said Hollywood Director Roman Polanski “wasn’t a criminal” in 2009. pic.twitter.com/K3HM6hEWzE

— An Open Secret (@AnOpenSecret) June 20, 2018

As an FYI @SonyPictures has a movie with him dropping in a few days. I wonder if they will apply the same rules to @iamfonda that they did to @therealroseanne. I have a strange suspicion that they wont do anything. Please RT, we deserve an answer! https://t.co/j38NnlJKn7

— Donald Trump Jr. (@DonaldJTrumpJr) June 20, 2018

It’s been 10 hours

How long does it take @SonyPictures to decided if they support child rape or not?

— Jack Posobiec🇺🇸 (@JackPosobiec) June 20, 2018

What are you going to do Sony Pictures? Do you have ANY standards? https://t.co/stj5LQF0um

— Dan Bongino (@dbongino) June 20, 2018

Wonder if he’ll get the same treatment as Rosanne and if @SonyPictures will stop the release of his film for the most vile of comments. How sickening…what kind of person says these things about a child or anyone for that matter https://t.co/fSNI2BhRar

— Sara A. Carter (@SaraCarterDC) June 20, 2018

So actor Peter Fonda (@IAmFonda) calls for Trump’s 12 year old son to be raped by pedophiles and @SonyPictures is still releasing his new movie, but Roseanne makes a joke about someone and her show is canceled within hours. That’s Hollywood.

— Mark Dice (@MarkDice) June 20, 2018

The Fed’s “Inflation Target” Is Impoverishing American Workers

Authored by Antonius Aquinas via AntoniusAquinas.com,

Fed Chair Jerome Powell apparently doesn’t see the pernicious effects of inflation

At one time, the Federal Reserve’s sole mandate was to maintain stable prices and to “fight inflation.”  To the Fed, the financial press, and most everyone else “inflation” means rising prices instead of its original and true definition as an increase in the money supply.  Rising prices are a consequence – a very painful consequence – of money printing.

Naturally, the Fed and all other central bankers prefer the definition of inflation as a rise in prices which insidiously hides the fact that they, being the issuers of currency, are the real culprit for increased prices.

Be that as it may, the common understanding of inflation as rising prices has always been seen as pernicious and destructive to an economy and living standards.  In the perverted world of modern economics, however, the idea of inflation as an intrinsic evil has been turned on its head and monetary authorities the world over now have “inflation targets” which they hope to attain.

America’s central bank is right in line with this lunacy, as it has been reported that at the Fed’s “May minutes” it wants “a temporary period of inflation modestly above 2 percent [which] would be consistent with the Committee’s symmetric inflation objective.” Translated into understandable verbiage, the Fed wants everyone to pay at least 2% higher prices for the goods they buy.

Yes, by some crazed thinking US monetary officials believe that consumers paying higher prices is somehow good for economic activity and standards of living!  Of course, anyone with a modicum of sense can see that this is absurd and that those who espouse such policy should be laughed at and summarily locked up in an asylum!  Yet, this is now standard policy, not just with the Fed, but with the ECU and other central banks.

The baneful consequence of this economic quackery is being felt by American workers as admitted by the Labor Department.  Instead of spurring expansion, inflation is eating into and depressing wages:

For workers in ‘production and nonsupervisory” positions, the value of the average paycheck has actually declined in the past year.  For those workers, average ‘real wages’ – a measure of pay that takes inflation into account fell – from $22.62 in May 2017 to $22.59 in May of 2018.*

While the decline in nominal wages is not significant, the manner in which the government now calculates inflation has been skewed to understate its impact.  Under the previous calculation, the current US inflation rate is probably closer to 5%.

Wage stagnation is not new.  Average real wages peaked more than 40 years ago and have fallen in real terms ever since.  Not surprisingly, the drop in wages in real terms began soon after the US went off the last vestiges of the gold standard in 1971.

As sound theory has long ago demonstrated, the idea of economic growth through money printing is absurd.  Increases in living standards and real wages can only come about through savings, investment, and capital accumulation.  Workers who have superior tools and equipment are obviously more productive than those that do not. Yet, capital goods have to be produced and production takes place over time.  Savings allow for the production process.

The level of wages are also closely linked to savings.  The greater savings an economy has enables entrepreneurs to bid for workers and increase wage rates.  This is how wages rise – competition for labor among businessmen pushes up wage rates.  The more savings entrepreneurs have, the higher they can bid for employees.

How and why wage rates rise and how employment is created had been understood by economists of yesteryear.  Today, however, the profession is dominated by “inflationists” and monetary cranks who believe that nearly every economic problem can be solved by the printing press.  Anyone who holds such ideas cannot be taken seriously.

While the Federal Reserve may think an inflation target will create prosperity, the reality for real wages is quite the opposite.  The laws of economic science have not been repealed.  An inflation target will lead to the impoverishment of not just workers, but lower living standards for all.

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