Strong Crude Inventory Draws Keep Markets On Edge

After trying to grab ahold of the fifty dollar handle, WTI has lost its grip and is sliding lower in the forty dollardom once more. Even though U.S. inventories look set to descend through August, global oversupply concerns are overshadowing this supportive influence. Hark, here are some things to consider in oil markets today.In terms of U.S. oil inventories in August, it has been a mixed bag for movement in the last five years (build / build / draw / draw / draw). While record refinery runs and rising exports are helping to draw stocks this summer,…

Grace Mugabe turns self in to S. Africa police over alleged assault

Tue, 2017-08-15 14:05

JOHANNESBURG: Zimbabwe’s first lady Grace Mugabe handed herself over to South African police and was due in court Tuesday, officials said, after allegedly assaulting a model who was at a Johannesburg hotel with her two sons.
During the incident, which occurred on Sunday, Mugabe, 52, allegedly attacked Gabriella Engels, 20, with an extension cord, leaving her with wounds on her forehead and the back of her head.
“She’s not under arrest because she cooperated and handed herself over to the police,” South African Police Minister Fikile Mbalula told reporters.
“In terms of foreign citizens, they must understand they have responsibilities — especially those who hold diplomatic passports.
“I cannot just go to Zimbabwe and beat up people there and then the matter will disappear.
“From the police side, we have had to act in the interests of the victim, we have opened a case.”
Pictures on social media appeared to show Engels with a bleeding head injury after the alleged incident in Capital 20 West Hotel in the upmarket Johannesburg district of Sandton.
Mugabe allegedly arrived with bodyguards and accused Engels of partying with her sons Robert and Chatunga, both in their 20s, who are based in the South African city.
“We were chilling in a hotel room, and (the sons) were in the room next door. She came in and started hitting us,” Engels was quoted as saying by the TimesLIVE website on Monday.
“The front of my forehead is busted open. I’m a model and I make my money based on my looks.”
Mugabe, who is 41 years younger than her husband Robert, has two sons and one daughter with the Zimbabwean president.
“There was a criminal case opened in Sandton at Morningside (station) yesterday, but I can not release any name. Right now we have not arrested anybody,” national police spokesman Vish Naidoo told AFP.
Sizakele Nkosi-Malobane, a provincial minister in Gauteng province, told Jacaranda FM that the case should be pursued through the courts.
“We hope that it will send a strong message to all leaders who abuse their power and assault innocent people in our country,” she said.
Grace Mugabe regularly speaks at rallies in Zimbabwe and is seen as one potential successor to take over from her increasingly frail husband.
Last month she urged her 93-year-old husband to name his chosen successor, fueling renewed speculation about the race to take over from the world’s oldest national leader.
The Zimbabwe government made no immediate comment.

Main category: 
MP on trial for insulting Mugabe’s wife
Zimbabwe would even vote for Mugabe’s corpse: Wife
Grace Mugabe told to return property in diamond ring spat

The Fed Issues A Warning As Household Debt Hits New All Time High

After we first reported last week that US credit card debt hit a new all time high with both student and auto loans rising to fresh records with every new report…

… it won’t come as a surprise that according to the just released latest quarterly household debt and credit report by the NY Fed, Americans’ debt rose to a new record high in the second quarter on the back of an increase in every form of debt: from mortgage, to auto, student and credit card debt. Aggregate household debt increased for the 12th consecutive quarter, and are now $164 billion higher than the previous peak of $12.68 trillion set in Q3, 2008. As of June 30, 2017, total household indebtedness was $12.84 trillion, or 69% of US GDP: a $114 billion (0.9%) increase from the first quarter of 2017 and up $552 billion from a year ago. Overall household debt is now 15.1% above the Q2 2013 trough.

Mortgage balances, the largest component of household debt, increased again during the first quarter to $8.69 trillion, an increase of $64 billion from the first quarter of 2017. Balances on home equity lines of credit (HELOC) were roughly flat, and now stand at $452 billion. Non-housing balances were up in the second quarter. Auto loans grew by $23 billion and credit card balances increased by $20 billion, while student loan balances were roughly flat.

  • Confirming the slowdown in mortgage activity, mortgage originations in Q2 declined to $421 billion from $491 billion. Meanwhile, there were $148 billion in auto loan originations in the second quarter of 2017, an uptick from the first quarter and about the same as the very high level in the 2nd quarter of 2016.
  • Auto loan balances increased by $23 billion, continuing their 6-year trend. Auto loan delinquency rates increased slightly, with 3.9% of auto loan balances 90 or more days delinquent on June 30. The aggregate credit card limit rose for the 18h consecutive quarter, with a 1.6% increase.
  • Outstanding student loan balances rose modestly, and stood at $1.34 trillion as of June 30, 2017. The second quarter typically witnesses slow or no growth in student loan balances due to the academic cycle. As discussed previously, a perilously high 11.2% of aggregate student loan debt was 90+ days delinquent or in default in 2017 Q2.

In a troubling development, the report noted that the distribution of the credit scores of newly originating mortgage and auto loan borrowers shifted downward somewhat, as the median score for originating borrowers for auto loans dropped 8 points to 698, and the median origination score for mortgages declined to 754. For now this credit score decline has not impacted the credit market: about 85,000 individuals had a new foreclosure notation added to their credit reports in the second quarter as foreclosures remained low by historical standards.

And while much of the report was in line with recent trends, and the overall debt that was delinquent, at 4.8%, was on par with the previous quarters, the NY Fed did issue a red flag warning over the transitions of credit card balances into delinquency, which the New York Fed said “ticked up notably.”

Discussing the troubling deterioration in credit card defaults, first pointed out here in April, the New York Fed said that credit card balance flows into both early and serious delinquencies increased from a year ago, describing this as “a persistent upward movement not seen since 2009.” As shown in the chart below, the transition into 30 and 90-Day delinquencies has, over the past two quarters, surged to the highest rate since the first quarter of 2013, suggesting something drastically changed in the last three quarters when it comes to US consumer behavior.

“While relatively low, credit card delinquency flows climbed notably over the past year,” said Andrew Haughwout, senior vice president at the New York Fed. “This is occurring within the context of loosening lending standards, as borrowers with lower credit scores recover their ability to access credit cards. The current state of credit card delinquency flows can be an early indicator of future trends and we will closely monitor the degree to which this uptick is predictive of further consumer distress.

That bolded statement, is the first official warning by the Fed that the US consumer is sick, and the Fed has no way reasonable explanation for this troubling jump in delinquencies. Timestamp it, because this will certainly not the be the last time the Fed warns about the dangerous consequences of all-time high credit card debt.

As for the “further uptick in consumer distress”, we are just guessing but the fact that credit card defaults are jumping at a time when sales at fast food and other restaurants have declined for 17 consecutive quarters, and when $250 billion in US household savings was just “revised” away, may all be connected.

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Philippines says China has agreed no new expansion in South China Sea

Tue, 2017-08-15 12:34

MANILA: China has assured the Philippines it will not occupy new features or territory in the South China Sea, under a new status quo brokered by Manila as both sides try to strengthen their relations, the Philippine defense minister said.
The minister, Delfin Lorenzana, told a congressional hearing that the Philippines and China had reached a “modus vivendi,” or a way to get along, in the South China Sea that prohibits new occupation of islands.
“There is status quo now that is happening in the South China Sea brokered by the secretary of Foreign Affairs,” he told lawmakers late on Monday.
“According to him, the Chinese will not occupy new features in the South China Sea nor they are going to build structures in Scarborough Shoal,” he said, referring to a prime fishing ground close to the Philippines that China blockaded from 2012 to 2016.
“It would be a very serious thing if China will occupy any of the islands.”
Lorenzana did not comment when lawmakers, citing reports from the military, told him five Chinese ships had showed up almost 5 km off the Philippine-held Thitu Island in the Spratly archipelago on Saturday.
Congressman Gary Alejano told Reuters that Chinese fishing boats had blocked a Philippine marine surveillance ship in the area two days ago.
Thitu Island is the largest of nine reefs and shoals the Philippines occupies in the Spratlys.
The military’s public affairs chief, Col. Edgard Arevalo, declined to comment until the armed forces had the “whole picture on the current situation.”
Philippine President Rodrigo Duterte has berated traditional ally the United States over several issues since he took office just over a year ago, while courting China for its business and investment and avoiding the rows over maritime sovereignty that dogged his predecessors.
China claims almost the entire South China Sea, a waterway through which about $3 trillion worth of sea-borne trade passes every year. Brunei, Malaysia, the Philippines, Taiwan and Vietnam also have conflicting claims in the area.
China has built seven islands upon reefs in disputed areas, three of which, experts say, are capable of accommodating fighter jets. They have runways, radars and surface-to-air missiles which China says are for defense.
One of the manmade islands is Subi Reef, visible some 24 km away by the small community of Filipinos who since the 1970s have lived on Thitu.
Alejano, a former Marine Corps officer who led a failed coup against the government of Gloria Macapagal Arroyo in 2003, urged the government to lodge a diplomatic protest and tell China to leave Philippine territory in the Spratlys.

Main category: 
Beijing welcomes ASEAN summit declaration on South China Sea
Beijing holds live-fire drills in S. China Sea
China presses Philippines, Vietnam to keep South China Sea issues bilateral

Silicon Valley Tightens Its Grip On Free Speech

Authored by Edmund Kozak via,

Alliance between progressives and tech is killing the unfettered exchange of ideas…

Political totalitarianism is coming to America, and it is being ushered in not by government thugs in jackboots but by progressive activists and their allies in Silicon Valley.

In a chilling oped published in The New York Times on July 14, Lisa Feldman Barrett, a professor of psychology at Northeastern University, argued that so-called “hate speech” is the same thing as physical violence because it may possibly cause emotionally fragile individuals stress — and should be made illegal.

Thankfully, the First Amendment prohibits the federal government from following such advice, but online companies are taking it upon themselves to stamp-out so-called “hate speech,” strangling free speech and the free exchange of ideas in the process.

A number of troubling actions by internet companies — Google most prominent among them — are making it increasingly clear that some in Silicon Valley have proclaimed themselves defenders of the progressive, politically correct faith, and that those firms will silence any and all heretics who challenge those beliefs.

“Silicon Valley lives in a politically regressive, exclusive bubble. They are not aware of their own biases in how they talk, have a limited understanding of the philosophy behind free speech, and find it difficult empathizing with other points of view,” said Aaron Ginn, co-founder of the Lincoln Network, a think tank that seeks to promote libertarian ideas in the tech industry.

But Google not only has difficulty empathizing with other points of view — it is also actively trying to suppress them. Google recently made the controversial decision to fire engineer James Damore for authoring an internal memo questioning the company’s ideologically motivated diversity practices and highlighting sound scientific research suggesting that possible biological differences between men and women, not discrimination, could be a factor in the tech field’s high percentage of men.

In the aftermath of Damore’s firing, a number of anonymous current and former Google employees have come forward to reveal the full extent of the company’s efforts to silence right-wing voices. One anonymous employee identified as “Hal” told Breitbart News last week that some employees in Google’s ad sales department are “openly encouraging Adwords customers to pull their ads from Breitbart and Rebel Media.”

Another anonymous employee under the alias “Emmet” confirmed this with Breitbart News, and also revealed the existence of “efforts to demote anything non-PC, anti-Communist, and anti-Islamic terror from search results.”

“Emmett says he personally witnessed efforts from leftists within Google to bias YouTube’s algorithms to push anti-PC content off the platform’s ‘related videos’ recommendations,” Breitbart reported. “The software could just ‘astroturf’ your Related Videos section [an effort to hurt overall ratings], and you would be none the wiser,” said Emmet.


“Sure, if you know what to look for, perhaps you’d notice,” he continued. “But the vast majority of the viewership would never ever know. That’s the whole point of such a disinformation program, right? If you can tell it’s disinformation, you would never, ever believe it.”

People familiar with the process have told reporters recently that YouTube, a subsidiary of Google, is also laboring to cleanse its platform of alternative voices that challenge the mainstream liberal narrative. The social media video-sharing site has in the past few months systematically demonetized videos of right-wing commenters and journalists, such as Infowars editor-at-large Paul Joseph Watson and former Rebel Media reporter Lauren Southern.

But the latest commentators to fall victim to this practice are far less controversial: YouTube celebrities and vocal Trump supporters Diamond and Silk. The duo discovered last week that a number of their videos — including one that is two years old — were suddenly demonetized. They have vowed to fight YouTube’s efforts to suppress conservative voices and have even raised the possibility of legal action.

“The same video that is being demonetized has been monetized for two years, so how was it suitable for our advertisers for two years and now all of a sudden there’s an issue?” Silk told LifeZette in an exclusive interview.

The pair say the demonetization is a transparent attempt at censorship. “How can [YouTube] oust us and say [we’re] not suitable for all advertisers?” said Diamond. “Have you spoken to each and every one of you hundreds of thousand of advertisers and said, ‘Hey do you want to advertise around Diamond or Silk, yes or no?’ or are you as YouTube making this decision for your advertisers?”

YouTube is “a social media platform, and a social media platform is a platform for ideas, for all ideas,” said Diamond. It’s a place “for people to be able to come together and collaborate with those ideas.”

“So even though people want to call YouTube private, it’s open to the public, so when it’s open to the public, you cannot discriminate against conservative voices or against people that chose to support the president,” she argued.


“We’re being discriminated against because first of all, we’re two black people, we don’t fit the norm — we’re black, Republican conservatives, and we support our president,” said Diamond. “What they want to do is control the narrative.”


“They’re putting our videos in a category now as being extremist or ‘hate speech,'” said Silk.


“And that’s not fair because now that’s defamation,” Diamond added.

The duo, which gained even more recognition for their consistent support of Trump during the presidential race, wants YouTube to remonetize not just their videos, but also those of other right-wingers who have had their livelihoods altered in a similar fashion.

“We want to give YouTube the opportunity to make this right, to be inclusive instead of exclusive. We want them to include people and not leave out conservative voices,” Diamond said.

But “if YouTube does not make this right, then we have to take this a step further,” said Diamond. On Thursday the two tweeted, “We Smell A Class Action Lawsuit,” and confirmed with LifeZette that they are prepared to follow through on the threat.

“Listen, they can regulate, but you can’t discriminate while you regulate,” she said.


“Because what they’re trying to do is dominate, and that’s unfair,” Diamond said. “It’s unfair that we allow Google and YouTube to team up together and really monopolize a sector of the internet.”

Unfortunately it’s not just Google. On Thursday, Watson of InfoWars posted a YouTube video titled “I Won’t Be Around Much Longer,” in which he revealed that “they banned me on Facebook because of a video I posted 18 months ago,” and went on to posit that if digital platforms continue at the current rate, Silicon Valley will have soon entirely purged all right-wing voices from mainstream social media.

But although social media sites such as Facebook and Twitter are already known among conservatives for suppressing even mainstream right-wing voices, despite allowing controversial content from the far Left and even radical Islamists to remain online unmolested — non-social-media sites have also begun to target right-wing dissidents.

A number of online right-wing commentators — including Southern and former Students for Trump director and independent journalist James Allsup — have even had their Paypal, GoFundMe, or Patreon accounts canceled because of their perceived “support” for “hate speech.”

These attacks, not just on people’s free speech, but also on their livelihoods, represent a fundamental and chilling acceleration of the progressive Left’s attempts to control thought and debate within society.

“Liberals can’t have this one-sided. This works both ways,” said Diamond.


“We have a conservative voice, we support our president, we support our country, and we want our voices heard, and if we have fans we want our fans to hear our voices,” she said.

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How to Get Saudi Women Rights, and Make Your Neighbor Paint his House

Via The Daily Bell

If you get government wrong, you get everything wrong.

New York City has a lot of wealth. There is infrastructure, skyscrapers, smart people, transportation, and so on.

But what would happen if North Korea took over the city tomorrow? Would all that wealth simply remain in place? Would everyone just go on with their lives?

Of course not. People would flee in droves, the city would crumble.

Tom Bell says that 44% of the wealth in the world is the rule of law. Clearly, there are plenty of gripes to be had with the governments of New York City, New York State, and the United States. But even governments which mix statutory and common law can provide a decent arena where businesses and individuals can flourish.

Of course, we should always want to improve our circumstances. Since 44% of the wealth of the world comes down to how good the government is, this is the most important area to improve.

We could continue voting, volunteering on political campaigns, and calling our representatives. But speaking from personal experience, this doesn’t seem to make much difference.

But we have another choice right under our noses. It is already in practice in homeowners associations. Some people choose to voluntarily submit to a neighborhood wide private governing structure.

Maybe you can’t bear the thought of living next to a neighbor with chipping paint on his house. You, therefore, agree that you will keep your home’s paint fresh, knowing that your neighbor signed the same agreement. The consequences for failing to hold up your side of the bargain are clearly stated in the contract you sign.

This same privatized rule of law is expanding beyond neighborhoods.

Improving Terrible Governments

Tom Bell is a law professor who spoke at the Startup Societies and D10e conference this past weekend in San Francisco.

Tom has a book coming out called Your Next Government? From the Nation State to Stateless NationsHere’s what he has said in the past about what your next government might look like:

Your next government might thus resemble a city-sized corporation, with you and other residents buying shares, electing the board of directors, and so forth. Think of it as residential co-op, upgraded for the big leagues…

In double democracy, owners manage the community on a one share/vote basis while residents enjoy the power to veto select laws or officers on a one person/vote basis. Owners construct; residents correct. Double democracy provides a structural safeguard against offensive governments without opening the door to mob rule. Both shareholders’ property rights and residents’ individual rights get represented in double democracy.

By privatizing the rule of law, you can get a much better product. Remember that the rule of law accounts for 44% of the wealth of the world, according to Bell.

Even places as repressive as Saudi Arabia, therefore, have some incentive to let go, in order to create more wealth in their jurisdictions. The country set up a special economic zone called KAEC City (King Abdullah Economic City). The city is administered by a publicly traded private company called Emaar Economic City.

And if you are a woman in Saudi Arabia, this is where you want to be. The oppressive police forces of the Saudi government are not present.

The city was designed with tourists and young Saudi’s in mind. The majority of the hundreds of thousands of Saudi’s studying abroad are women. Neither they nor tourists have an appetite for the oppressive laws against women which stain the rest of the country.

So there is a continuum here on what can be accomplished by neighborhood associations and private cities. Some people want to make sure their neighbor cuts his grass, and some people want to not be whipped for driving cars and showing their face.

When governing is done by consent, this is all possible, and everything in between.

Why Would Governments Allow it?

You would think governments would feel vulnerable at the thought of private governing structures competing with their power. And surely many do. But there are also incentives to letting go of control.

Cash strapped governments are happy to let private companies pay for the infrastructure which would otherwise have to come out of the public coffer. So a government can preside over a beautiful new city or neighborhood, reap the economic benefits, and not have to pay a dime.

And then there is the proper strategy for anyone attempting to start a special economic zone or private city. To get a law passed–or repealed–across an entire country, you need to appeal to countless politicians, bureaucrats, and special interest groups.

It sounds less scary to politicians and voters when you can say, “Look, we don’t want to change things everywhere. We just want this one little piece of land to have different rules.”

From my perspective, this is the camel’s nose under the tent strategy. Before governments know what hit them, the whole world will be privatized. People will see the success of private governance, special economic zones, and government by consent. Then they will clamor to create their own mini society, or move to their favorite one.

That 44% of the Earth’s wealth, the rule of law, cannot be stolen. But it can be created. And under those conditions, a new world is forming.

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This Is The Most Equity-Bullish Chart We’ve Seen Yet

How expensive are US equities versus their peers around the world? Compared to bonds? Commodities? Are there fundamental risks we can identify?

In the following presentation, Cantillon Consulting’s Sean Corrigan answers all of the above and details what opportunities for better asset allocation might lie ahead…


Howver, deep in the presentation is an intriguing little chart.

As Sean Corrigan explains, if we superimpose the pattern of US Stock-to-Corporate Bond relative value from World War I to the end of World War II on the post-Berlin Wall data, we get a near-perfect overlap with the Crash of ’29 corresponding to the Tech bust and the ’37 slump to the Great Financial Crisis.

Were the somewhat spooky parallels to continue, 2020 would usher in a two-decade, 13% CAR stock outperformance over corporate bonds as enjoyed during the 50s and 60s.

Which, as Corrigan concludes, would be something to behold… and is probably the most bullish equity market analog we have seen yet.

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