Radio Show Newsletter
WORLD FINANCIAL REPORT ON RADIO November 22nd 2018
CHARTS OF THE WEEK-QUOTES-QUICK HITS
-CHART OF THE WEEK: Goldman Says It’s Time for Equity Investors to Boost Their Cash. Stock investors have had a great run in recent years, but with cash now offering positive inflation-adjusted returns, it may be wise to dial back on risk, according to Goldman Sachs Group Inc. “Mixed-asset investors should maintain equity exposure but lift cash allocations,” Goldman strategists led by David Kostin wrote in a Nov. 19 report. “Cash will represent a competitive asset class to stocks for the first time in many years.”
The call reflects the impact of Federal Reserve interest-rate hikes that have sent yields on money-market funds well over 2 percent surpassing the pace of inflation. With the Fed projected to raise its benchmark by another quarter percentage point next month, and further moves looming in 2019, cash may become all the more attractive. As for stocks, investors should tilt their portfolios toward defensive sectors including utilities, the Goldman strategists wrote. They forecast the S&P 500 will generate “a modest single-digit absolute return” next year as the “robust” profit and economic growth seen in 2018 slows. Bloomberg
-CHART OF THE WEEK: Insiders Bought the Last Crash. Will They Buy This One? Do corporate insiders buy stock market dips? It looked that way in October when the market rout made net buyers out of corporate insiders for the first time since February 2016, according to InsiderInsights.com. Among the companies were American Airlines Group Inc., Apollo Global Management LLC and Tesla Inc. But last week, as the market dropped again, 24 percent more companies had insiders selling stock in the open market than those with buyers. They included individuals at Charles Schwab Corp. and Procter & Gamble Co. As the market returns to its October lows, the question now is whether those in the know will signal that a near-term bounce is in the making or that this is the end of the great bull market. Bloomberg
-CHART OF THE WEEK: Buy-the-Dip Is Failing in S&P 500, Evoking Bear Market Memories. For the first time in more than a decade, buying the dip isn’t working in the stock market. As a way of measuring it, Morgan Stanley looked at rolling five-day declines in the S&P 500 Index this year and found that on average, the sixth day also generated a loss: of 0.05 percent. While the drop is small, it’s a big departure from the past 16 years, when dips gave way to gains. It happened again Monday as the S&P fell 0.9 percent as of 10:30 a.m. in New York following a decline last week.
The pattern reflects a subtle deterioration in investor psychology that may not be obvious when you gauge the market by the index’s price level, or through Wall Street forecasts. Despite two 10 percent corrections, the S&P 500 is still up for the year. And 18 out of the 25 strategists tracked by Bloomberg predict the S&P 500 will end 2018 above the record high of 2,930.75 reached in September. Yet investor sentiment by some measures has reached levels not seen during market crashes. Since 1980, the years when the buy-the-dip mentality was missing all involved bear markets: 1982, 1990, 2000 and 2002. To Mike Wilson, Morgan Stanley’s chief U.S. equity strategist, it’s a sign the market is sussing out troubles ahead, be it economic growth or corporate earnings. Bloomberg
-CHART OF THE WEEK: Mom and Pop Finally Join Pros in Dumping Stocks. Main street and Wall Street are finally seeing eye to eye when it comes to stock investing. After going all in on equities for most of the year, individual investors just bailed amid the October sell-off, raising cash at the fastest pace in three years, according to data from Charles Schwab Corp. Meanwhile, Goldman Sachs data showed hedge funds kept trimming stocks, with clients’ net exposure falling to the lowest level since November 2016. The concerted action highlights a broad deterioration in sentiment as stocks have erased about $3 trillion in value from the September peak, sending the S&P 500 toward one of its worst years since the bull market began in 2009. While concerns over global trade, interest rates and earnings are unlikely to go away soon, mounting pessimism strikes some as a necessary precursor to a recovery. Bloomberg
-CHART OF THE WEEK: The Stock Market Is Even Worse Than You Think It Is. The P/E ratio of the S&P 500, based on the next 12 months of earnings, is down 17 percent this year. The stock market is no longer not just not great it’s downright awful. In fact, after the 550-point plunge in the Dow Jones Industrial Average on Tuesday, 2018’s market meltdown, at least in terms of valuations, now ranks among the worst of the past few decades. The price-to-earnings multiple of the S&P 500 Index, based on the next 12 months of earnings, has fallen 17 percent in 2018.
That’s the third-biggest drop in valuations since 1991, which is as far back as Bloomberg data goes on that metric. That’s only 1 percentage point better than the 18 percent slide in valuations in 2008, during the financial crisis. The worst valuation drop was in 2002, when corporate profits and the economy, but not yet the stock market, were rebounding from the dot-com bust. The S&P 500 now trades at 15.4 times what those companies are expected to earn per share during the next four quarters, which includes the current one. That’s down from 18.7 at the start of the year. It is also the lowest point of Donald Trump’s presidency, down 8 percent from Election Day. Bloomberg
-CHART OF THE WEEK: European Trader Says Market’s $1 Trillion Loss Is ‘Killing Us.’ The sell-off in European stocks has been so violent that Guillermo Hernandez Sampere, head of trading at the German asset manager MPPM EK, now spends half his working day on the phone with fearful clients. “So much pain, the market is killing us,” he said by phone from Eppstein, Germany. “European equities have lost investor confidence due to Italy, Brexit. Liquidity is the place to be right now.”
Although many investors had hoped for a relief rally after a slump in October, developed-market equities continued their sharp descent this month amid concerns ranging from rising Treasury yields to tariff wars. But even after the Nasdaq lost 3.3 percent on Monday because of a rout in technology shares, European stocks are still the bigger victims, erasing more than $1 trillion in market value since the end of September. And here traders also have to worry about the Italian budget as well as British politics. Bloomberg
-CHART OF THE WEEK: Historic Price Crash Plunges Canadian Oil Patch Into Crisis. While the U.S. oil industry has hit a speed bump with the recent $20 drop in oil prices in New York, producers in Canada are in a full-blown crisis. Heavy Canadian crude has been on a downward spiral since mid-May, with prices plummeting by more than 60 percent as an onslaught of new production from the oil-sands overwhelms the nation’s pipelines. In the past two months, the decline accelerated as many of the U.S. refineries that processed all that oil shut down for maintenance. The result is the worst pricing environment in the Canadian oil industry’s history and a disaster for a sector that accounts for about a 10th of the nation’s economy and a fifth of its exports. The crisis is threatening oil producers’ profits, causing deep divisions within the industry and putting pressure on Justin Trudeau’s government to act.
Adding to the gloom is the relatively positive outlook for the U.S. energy industry is enjoying. “In my 36 years in this business, I have never seen such a wide differential in sentiment between Canada and the U.S.,” Kevin Neveu, chief executive officer of oilfield-service company Precision Drilling Corp., said in an interview in Calgary. “I’ve never seen more frustration among our customers and our competitors and in our peer-group companies than right now.” Western Canada Select crude the main blend sold by the nation’s prolific oil sands closed at $13.46 a barrel on Thursday, the lowest in Bloomberg data stretching back to 2008. The blend’s discount to U.S. benchmark crude exploded to as much as $52.40 a barrel last month, also a record. Bloomberg
-CHART OF THE WEEK: Alberta Seeks Refineries, Could Cut Oil Output, Notley Says. Alberta will pursue building new refineries as the oil-rich Canadian province looks to weather a crude price crunch, while a forced production cut also remains an option, Premier Rachel Notley said. Notley said she’ll announce a plan to expand “made in Alberta” crude upgrading and refining in the coming days and has appointed three envoys to work with the industry and federal government to seek solutions for the dramatic discount earned for domestic oil. Asked if the province is considering mandating a production curtailment to help boost prices, she said no option has been discarded.
“At this point, all I will say is that there are a number of options in the suite of options and there is no option that has been taken off the table at this point,” Notley said at a news conference in Edmonton. Alberta is being treated as a “branch plant for the U.S.,” she said. Canadian crude is trading near record lows amid pipeline bottlenecks, rising inventories and a decline in global oil prices. The Western Canada Select benchmark fell to under $14 a barrel last week, the lowest in Bloomberg data stretching back a decade. The depressed prices has prompted some oil companies including Canadian Natural Resources Ltd. to cut production and some to suggest that Alberta’s government should require companies to cut output. Bloomberg
-CHART OF THE WEEK: Deep Divisions Hinder Canadian Oil Patch in Fight of Its Life. Amid the worst crude-price environment in its history, the Canadian oil industry is being hamstrung by internal divisions that are making it harder to rally around potential solutions. That draws a stark contrast to the U.S., where a less divided industry wields more clout. Most notable is the split between Canada’s pure producers, who are being devastated by plummeting local prices, and the large, integrated energy companies that have been mostly unscathed.
There’s also a rift between oil-sands producers a target of climate-change activists around the world and the frackers and conventional drillers that have been suffering from the pipeline bottlenecks brought on by those environmental opponents. Reflecting these divisions is the industry’s two main lobbying groups: the Canadian Association of Petroleum Producers, the larger organization, which is dominated by the giant oil-sands producers; and the Explorers & Producers Association of Canada, consisting mainly of smaller firms. That split is hampering the sector’s ability to lobby the government with a consistent message. Bloomberg
-CHART OF THE WEEK: Relief Is About to Roll Down the Tracks in Canada’s Oil Crisis. Relief for Canada’s oil patch is gradually rolling down the tracks, with producers aiming for big volumes of crude by rail to counter their worst glut ever. A tally of plans from five producers including Cenovus Energy Inc., Canadian Natural Resources Ltd. and Imperial Oil Ltd. shows they’re looking to add about 270,000 barrels a day of exports on tank cars to potentially surpass 400,000 by the middle of next year. Most of it is headed to the U.S. Gulf Coast. Bloomberg
-CHART OF THE WEEK: U.S. Homebuilder Index Drops by Most Since ’14 as Rates Rise. Confidence among U.S. homebuilders plummeted by the most since 2014 as the highest borrowing costs in eight years restrain demand, adding to signs of a cooling housing market that will weigh on the Federal Reserve’s debate over how far to raise interest rates. The National Association of Home Builders/Wells Fargo Housing Market Index dropped eight points in November to 60, the lowest level since August 2016, according to a report Monday. That compared with the median estimate of economists for a one-point drop to 67. Bloomberg
-CHART OF THE WEEK: Your Thanksgiving Feast Will Cost the Least Since 2010. For the third straight year, your Thanksgiving feast will be a bit cheaper. The average cost for 10 people is $48.90, or less than $5 per person, marking a 22-cent drop from a year ago and the lowest since 2010. Aside from less expensive turkeys, declines in a gallon of milk, a 3-pound bag of sweet potatoes, a 1-pound bag of green peas and a dozen bread rolls are helping ease the burden on consumer wallets, according to the American Farm Bureau Federation’s 33rd annual survey. After adjusting for inflation, the cost of the holiday meal is $19.37, the lowest since 2006. Bloomberg
-Phil Mickelson bet Tiger Woods $200,000 that he would birdie the first hole of their live pay-per-view match play event. CNN
-The total debt shouldered by Americans has hit another record high, rising to $13.5 trillion in the last quarter, while an unusual jump in student-loan delinquencies could provide another signal that the nation’s economic expansion is growing old. Flows of student debt into serious delinquency of 90 or more days rose to 9.1 percent in the third quarter from 8.6 percent in the previous quarter, according to data from the Federal Reserve Bank of New York. NBCNews
–Societe Generale SA settled its longstanding sanctions violations case with U.S. authorities, entering a deferred prosecution agreement with federal prosecutors and paying $1.34 billion to regulators in New York and Washington. As part of the settlement announced on Monday, France’s third-largest bank acknowledged violations of U.S. sanctions laws against Cuba, Iran and Sudan starting as far back as 2003 and extending to 2013. Bloomberg
-California’s air exceeded world health standards by 60 times last week, and conditions on Monday continued to top safe thresholds with the deadliest blaze ever in the state is about 65 percent contained. Last week, particulates in the air reached as high as 1,500 micrograms per cubic meter. The threshold set by the World Health Organization is 25. Lower levels on Monday still exceeded the benchmark. “It is just insane,” said Rebecca Buchholz, a project scientist, who studies pollution from fires at the National Center for Atmospheric Research in Boulder, Colorado. “It is quite amazing how high these fine-particulate levels are.” Bloomberg
-Facebook, Amazon, Apple, Netflix and Google’s parent company Alphabet lost more than $1trillion in market value combined, wiping out all 2018 gains. Amazon CEO Jeff Bezos has lost $42billion since early September, according to the Bloomberg Billionaires Index. Facebook CEO Mark Zuckerberg’s net worth has dropped $34billion since July. Bill Gates and Warren Buffett have lost $5million and $4million respectively. DailyMail
-A $9 trillion corporate debt bomb is ‘bubbling’ in the US economy. Companies are carrying a $9 trillion debt load, posing a potential threat should rates continue to rise and the economy weaken. Most Wall Street bond experts think the issue is contained for the next 12 to 18 months, though one says the market’s “angst” is “not misplaced.” A principal worry is over companies teetering between investment grade and junk that could cause market trouble should their standing deteriorate. CNBC
-Dick Bove: The Fed is too tight and must reverse policy because this economy can’t handle it. The U.S. is going from decades of easy money at low- to no-interest rates to a period in which money is not freely available and it costs considerably more. The Fed is shrinking its balance sheet much too rapidly (over 6 percent this year) and it is raising interest rates much too quickly. The assumption that the United States economy can absorb higher rates with slower money supply growth represents a massive change in Fed thinking. The Fed must reverse policy and toss silly concepts like “neutral interest rates” back into the dustbin of PR hype where they belong. CNBC
-Ray Dalio Sees Parallels to 1930s in Today’s Markets. The Bridgewater Associates founder raises big questions about the world’s debt levels. The world today looks most analogous to the late 1930s, Ray Dalio, the founder of Bridgewater Associates, told my Bloomberg Opinion colleague Barry Ritholtz on Monday. That’s a bit foreboding, to say the least. Like 80 years ago, financial markets are in the late stages of this short-term business cycle, given that the Federal Reserve is tightening monetary policy as U.S. equity prices reach record highs, Dalio said during a live taping of the “Masters in Business” podcast. He also sees rising “political polarity” in the form of populist candidates.
On top of all that, the world is awash in debt, a longer-term problem without an easy solution given that interest rates in many developed-market economies remain near record lows and central banks have already purchased trillions of dollars worth of assets. Dalio, who has a new book, “Principles for Navigating Big Debt Crises,” somehow maintains a calm demeanor given the sort of conclusions he’s drawn. In September, I wrote about how Dalio effectively described America’s worst nightmare: the dollar losing its place as the world’s reserve currency. His concern shared by BlackRock Inc.’s Larry Fink, among others is that swelling U.S. budget deficits will eventually irk big buyers overseas. Dalio said two months ago that “You easily could have a 30 percent depreciation in the dollar” as the Fed has little choice but to monetize the national debt. Dalio has said that investors should consider placing 5 percent to 10 percent of their assets in gold as a hedge against political risks.
One of Dalio’s main points, backed up by the rise in global debt, is that the entire world is “leveraged long.” Low interest rates fueled buybacks, acquisitions and increasing stock prices. That can’t last forever. Broadly, “You need to prepare for lower expected returns in the future,” Dalio said. “You can expect lower returns and more taxes. That’s going to be the nature of the beast.” The only answer, he said, is to try to balance portfolios. Dalio says he’s transitioning into what he describes as the “third phase” of his life, where the joy comes from passing along what you’ve learned and to see others be successful. Based on his worldview, it sounds as if being a constant winner in the markets will be a difficult endeavor. Bloomberg
-Hedge fund titan Ray Dalio says the world is counting on stocks going up and that will mean trouble in a bear market. “The world by and large is leveraged long,” says Ray Dalio, who runs the globe’s largest hedge fund. “When there is a downturn, I don’t think there’s much to protect investors.” Dalio’s comments come amid heightened volatility in the U.S. stock market. The S&P 500 fell into a correction in October before rebounding. CNBC
-Billionaire investor Ray Dalio: Fed raised rates to a point where it’s hurting asset prices. Hedge fund billionaire Ray Dalio argues the Fed has raised rates to a point where they’re hurting asset prices. The central bank needs to start looking at monetary policy’s impact on asset prices before economic conditions, Dalio says. Dalio also laughs off the notion that the Fed needs to raise rates so it would have room to make cuts if the economy were to take a major downturn. CNBC
-Hedge-fund boss who predicted ‘87 crash says get ready for some ‘really scary moments.’ Paul Tudor Jones, a hedge-fund luminary, said he’s stress-testing his portfolio of corporate debt because he expects a tumultuous road ahead on the back of the Federal Reserve’s apparent commitment to normalizing interest rates and buttressed by corporate tax cuts from the Trump administration. Speaking at an economic forum in Greenwich, Conn., a hotbed for hedge funds, Jones said the Fed faces real challenges amid “the end of a 10-year run” of economic growth that many anticipate will soon come to a screeching, cyclical end.
Jones is widely credited with predicting, and profiting, from the stock-market crash on Oct. 19, 1987, which saw the Dow Jones Industrial Average lose nearly 23% of its value, marking the largest one-day percentage decline for the blue-chip benchmark in its history. The 64-year-old investor founded Tudor in 1980 and became known for trading everything from currencies to commodities. However, his record has also featured middling returns and an exodus of billions from his hedge fund in more recent years. In the past and during his talk in Greenwich, Jones said he believes that bonds and stocks are overvalued in an environment that had been underpinned by easy-money policies from central banks across the global. Read more here-https://on.mktw.net/2BlDZWm
-Volatile stock market spooking some older workers, retirees. The recent turbulence in the U.S. stock markets is spooking some older workers and retirees, a group that was hit particularly hard during the most recent financial crisis. There’s no indication, though, that the recent volatility has brought about large-scale overhauls in retirement planning. “There’s a lot of fear that if you have another event like 2008 and you retire the year before or the year after, you’re screwed. I’m not taking that risk,” says Mark Patterson, a recently retired patent attorney from Nashville, Tennessee.
“There’s a huge fear of folks my age that they’re going to run out of money and they’re going to need to rely on the government for help.” By the time the market bottomed out during the financial crisis in 2009, an estimated $2.7 trillion had been wiped out of Americans’ retirement accounts, according to the Urban Institute. Older Americans, in particular, have had a tough time recovering their losses. The Pew Research Center estimates the net worth of the median Baby Boomer household in 2016 was still nearly 18 percent shy of where it sat in 2007.
In the two years since Donald Trump’s election, 62 percent of Americans and 76 percent of those 65 and over don’t believe their financial situation has improved despite the run-up in the stock markets, according to a recent Bankrate survey. Nearly 1 in 5 respondents said their finances have actually gotten worse. Paul Kelash, vice president of consumer insights at Allianz Life Insurance Co., says the market fluctuations throughout 2018 look less like the prelude to a retirement savings crisis and more like a return to normalcy after a remarkably steady market run. Read more here-http://bit.ly/2Bms6Q3
-The Dow may drop another 2,000 points before the stock market selling is done: CNBC CFO survey. The Dow will drop to 23,000 before it ever reaches above 27,000 again, according to just over half of CFOs on the CNBC Global CFO Council in a recent survey. That would represent an 8 percent decline in the Dow from its current level. The trade war with China is the No. 1 concern among CFOs in the fourth quarter. CNBC
-Tech’s ‘FAANG’ stocks have lost more than $1 trillion and counting from highs amid tech rout. The five “FAANG” stocks have collectively lost more than $1 trillion in value from recent highs. The FAANG stocks Facebook, Amazon, Apple, Netflix and Google-parent Alphabet all fell to begin Tuesday trading. CNBC
-Cramer: ‘You’ll wish you sold at these prices’ if the Fed hikes rates in December. Investors should sell their stocks now if they expect the Fed to hike interest rates next month, Jim Cramer says. Wall Street expects one more rate hike in December and so does Cramer. CNBC
-Cramer blasts the Fed: ‘I know more than they do’ they must do more homework on the economy. CNBC’s Jim Cramer says Fed officials need to swallow their pride and talk to more CEOs, like he does, to get a better picture of the weak pockets in the economy. Vowing not to make the same mistake, Cramer says he should have spoken out sooner in 2007 about the Fed being on the wrong track. CNBC
-Cramer says CEOs are telling him off the record the economy has quickly cooled. CNBC’s Jim Cramer outlines what he’s hearing from chief executives about the state of the U.S. economy. Offline, company leaders are worried that the Federal Reserve’s hawkish interest rate agenda could stifle economic growth, the “Mad Money” host says. CNBC
-As US recession chances increase, the Fed may deliver fewer rate hikes: Reuters poll. The Federal Reserve is expected to raise interest rates again next month and three times next year. A strong majority of economists polled by Reuters over the past week say the risk is it will slow that pace down, however. The probability of a U.S. recession in the next two years, while still low, also nudged up to a median 35 percent from 30 percent in the latest monthly Reuters survey of economists taken Nov 13-19. It held at 15 percent for the next 12 months. CNBC
-Goldman Sachs believes the US economy will slow to a crawl next year. Goldman predicts 2.5 percent and 2.2 percent growth in the first two quarters of 2019, respectively, but then just 1.8 percent and 1.6 percent real GDP growth in the final two quarters. “We expect tighter financial conditions and a fading fiscal stimulus to be the key drivers of the deceleration,” wrote the bank’s chief economist, Jan Hatzius. But Goldman believes the U.S. will skirt a recession next year. CNBC
-Larry Summers: 50 percent chance of a US recession by 2020. “The recession risk is nearly 50 percent over the next two years,” Summers says in London on Thursday. The former Treasury Secretary says it is “crazy” that the U.S. hasn’t fixed its airports and highways. CNBC
-The dollar will weaken next year as the economic boost from fiscal policy wanes and rising interest rates start to hurt, according to Citigroup Inc. The greenback will fall around 2 percent against the Group-of-10 peers over six to 12 months after climbing 1 percent in the next three months, analysts including London-based Jeremy Hale wrote in a note. Absolute growth and relative cyclical outperformance in the U.S. will slow and the yield advantage enjoyed by the dollar will be less sustainable, they said. “More medium term, our view is that the fiscal support to growth eventually fades in the U.S. and tighter monetary policy starts to bite,” the analysts wrote. “A lower dollar becomes the most likely source of equilibrium in portfolio balance terms.” Bloomberg
-‘Duped,’ ‘tricked’ and ‘snookered’: Oil analysts say Trump fooled Saudis into tanking crude prices. Oil markets analysts say it appears that the Trump administration tricked Saudi Arabia and other oil producers into slashing oil prices. President Donald Trump pressured the Saudis to orchestrate a production increase ahead of U.S. sanctions on Iran. The Trump administration threatened to cut Iran’s exports to zero, but ultimately allowed some of its biggest buyers to continue importing crude. CNBC
-One of the largest foreign holders of Canadian energy stocks says investors are turning away from the country, frustrated over Prime Minister Justin Trudeau’s failure to get pipelines built to ease a record discount for oil-sands crude. In a letter to the prime minister, Darren Peers, an analyst and investor at Los Angeles-based Capital Group Cos., warns investors and companies will continue to avoid the Canadian energy sector unless more is done to improve market access. “Capital Group’s energy investments are increasingly shifting to other jurisdictions and that is likely to continue without strong government action,” Peers wrote in a letter dated Oct. 19.
“I hope that your government will be even more proactive in securing market access which will assure the competitiveness of Canadian energy companies.” Capital Group, which runs about $1.7 trillion in global assets, has a lot at stake in Canada’s oil patch. The firm holds more than $30 billion of investments in Canadian companies, and is the largest shareholder of Suncor Energy Inc., Enbridge Inc., Canadian Natural Resources Ltd., and Keyera Corp. The firm also has significant stakes in other names including TransCanada Corp., Cenovus Energy Inc. and Whitecap Resources Inc., according to data compiled by Bloomberg as of June 30. Peers, a Canadian, says he’s responsible for nearly $6 billion of investments in Canadian energy companies. He declined to comment beyond the letter. Bloomberg
-Texas Is About to Create OPEC’s Worst Nightmare. The map lays out OPEC’s nightmare in graphic form. An infestation of dots, thousands of them, represent oil wells in the Permian basin of West Texas and a slice of New Mexico. In less than a decade, U.S. companies have drilled 114,000. Many of them would turn a profit even with crude prices as low as $30 a barrel. OPEC’s bad dream only deepens next year, when Permian producers expect to iron out distribution snags that will add three pipelines and as much as 2 million barrels of oil a day.
“The Permian will continue to grow and OPEC needs to learn to live with it,” said Mike Loya, the top executive in the Americas for Vitol Group, the world’s largest independent oil-trading house. The U.S. energy surge presents OPEC with one of the biggest challenges of its 60-year history. If Saudi Arabia and its allies cut production when they gather Dec. 6 in Vienna, higher prices would allow shale to steal market share. But because the Saudis need higher crude prices to make money than U.S. producers, OPEC can’t afford to let prices fall. Even so, Saudi Arabia’s output swelled to a record this month, according to industry executives. That means the three biggest producers the U.S., Russia and Saudi Arabia are pumping at or near record levels.
A similar scenario unfurled in 2016, when Saudi output rocketed just before OPEC agreed to cuts. This time the cartel’s 15 members, and allies including Russia, Mexico and Kazakhstan, will discuss the possibility of their second retreat from booming American production in three years. OPEC helped create the monster that haunts its sleep. After it flooded the market in 2014, oil prices crashed, forcing surviving U.S. shale producers to get leaner so they could thrive even with lower oil prices. As prices recovered, so did drilling. Bloomberg
-Bitcoin bull Tom Lee stands by his reduced year-end $15,000 target despite nose-diving prices. Fundstrat’s Tom Lee told CNBC he remains bullish on bitcoin and bets on a recovery soon despite prices falling to more than one-year lows. “Days like this, it does make me wonder” about my prediction, says Lee. But he stands by his recently cut $15,000 year-end target. CNBC
-The No. 1 myth about renting a home that self-made millionaire Ramit Sethi says ‘needs to die.’ A lot of people will tell you you’re wasting your money if you rent, rather than buy, a home. That may be conventional wisdom but it’s just plain wrong, personal finance expert and author of “I Will Teach You to be Rich” Ramit Sethi tells CNBC Make It. The idea that you’re just throwing your money away by renting is the No. 1 myth that Sethi says he hears all the time, and it “really needs to die,” so renters can stop feeling guilty about doing what’s right for them. “When I pay rent, I have a roof over my head and a great view. That’s what rent gets you: shelter. It gets you a house,” Sethi says. Paying rent doesn’t mean you’re throwing your money away. It means you’re exchanging your money for something important. Read more here-https://cnb.cx/2PKShIK
-Amazon employees snapped up NYC real estate before headquarters announcement. Like the billions in public money destined for Amazon’s benefit and that of the world’s richest man, it’s all perfectly legal. The two employees decided to the buy units just before the first press reports surfaced that Amazon was likely to choose Long Island City for its new headquarters, Mr. Aguayo said. The buyers now live in New Jersey and Queens, he added. While employees aren’t permitted to buy and sell stocks based on nonpublic information, several real estate lawyers said they were aware of no such prohibition for real-estate transactions. The WSJ reports no “reliable figures” on sales in the area since Amazon’s announcement (and immediately before it, evidently) but it’s explosive. One brokerage says it sold 150 condos in the last four days, 15 times its normal volume. Boingboing.net
-Maybe Jamie Dimon was right after all. In September 2017, the JPMorgan Chase & Co. chief executive officer famously called Bitcoin a “fraud” and threatened to fire any employee caught trading it. While the cryptocurrency briefly fell on his remarks, it went on to rally more than fourfold in three months as crypto-mania swept the globe. Dimon became a favorite punching bag for Bitcoin bulls, even after saying later that he regretted the comments and that he believes in the digital asset’s underlying blockchain technology. These days, Dimon’s Bitcoin pessimism is looking more prescient. After tumbling as much as 78 percent from its peak, the cryptocurrency has returned to its level on the day the billionaire banker issued his warning last year. Many of Bitcoin’s peers have sunk even further, with the market value of all virtual currencies tracked by CoinMarketCap.com tumbling almost $700 billion from an all-time high in January. Bloomberg
-Beijing to Judge Every Resident Based on Behavior by End of 2020. China’s plan to judge each of its 1.3 billion people based on their social behavior is moving a step closer to reality, with Beijing set to adopt a lifelong points program by 2021 that assigns personalized ratings for each resident. The capital city will pool data from several departments to reward and punish some 22 million citizens based on their actions and reputations by the end of 2020, according to a plan posted on the Beijing municipal government’s website on Monday.
Those with better so-called social credit will get “green channel” benefits while those who violate laws will find life more difficult. The Beijing project will improve blacklist systems so that those deemed untrustworthy will be “unable to move even a single step,” according to the government’s plan. Xinhua reported on the proposal Tuesday, while the report posted on the municipal government’s website is dated July 18. China has long experimented with systems that grade its citizens, rewarding good behavior with streamlined services while punishing bad actions with restrictions and penalties. Critics say such moves are fraught with risks and could lead to systems that reduce humans to little more than a report card. Bloomberg
-Major League Baseball and Fox Sports have have signed a multiyear extension to their broadcast contract, keeping marquee properties like the World Series and All-Star Game with the company after its parent completes the $71 billion sale of assets to Walt Disney Co. Fox agreed to pay at least $5 billion over the seven-year extension, representing a 36 percent annual average increase over the existing contract, according to people familiar with the deal. Neither the league nor network disclosed financial terms in announcing the pact Thursday. Fox currently pays about $525 million a year. The accord will keep MLB on Fox for the next decade and helps the company build a programming slate that will hinge in large measure on live sports.
The media company will be focused on live sports, broadcasting and news after 21st Century Fox Inc., controlled by the Murdoch family, completes the sale to Disney next year. Fox said it will receive expanded streaming, social-media and highlight rights. Beginning in 2022, the amount of regular season and postseason games televised by Fox will increase, the network said without being specific. Ratings for conventional broadcast television, including live sports, are in decline. The World Series between the Los Angeles Dodgers and Boston Red Sox, for example, averaged 14.3 million viewers, down 23 percent from the year before. Overall ratings for Fox Saturday baseball were up 9 percent from the previous year, the network said. Bloomberg
–Millennials apparently want smaller turkeys for Thanksgiving dinner, and it’s driving down demand for larger birds, Bloomberg reported on Thursday. Industry experts say this is because millennials want to cut down on waste and be more socially responsible. The average US household has shrunk in the past few decades, which makes smaller birds a more suitable choice. Businessinsider
-3 pieces of priceless advice from Marvel Comics legend Stan Lee. Marvel Comics’ legendary writer and chairman emeritus Stan Lee passed away on Monday at the age of 95 after a decades-long career in which he had a hand in creating some of comic books’ most celebrated characters. From Spider-Man to the Incredible Hulk and the X-Men, Lee left behind a legacy filled with iconic superheroes who have thrilled readers and moviegoers for generations. Read more here-https://cnb.cx/2QeExWa
-David Hockney painting sells for $90M, smashing auction records. Money has never mattered that much to David Hockney, as long as he has enough to continue working. But equally, he’s also always had a good memory for figures for the pounds, shillings and pence. As a student at London’s Royal College of Art, he remembers selling a drawing to a friend and fellow student, the American painter Ron Kitaj, for a princely £5. It meant that he could buy cigarettes in packs of 20. He sold another early painting, “Adhesiveness” (1960), to photographer Cecil Beaton for £40. That meant he could begin planning to travel abroad. As it happens, Hockney also has a clear memory of what “Portrait of an Artist (Pool with Two Figures)” originally fetched shortly after he painted it.
On Thursday, at a Christie’s auction in New York, the painting was sold for $90.3 million, an auction record for a living artist. But back in 1972, his New York dealer sold it for just $18,000. For Hockney, the memory is still bittersweet. He felt ripped off. Last year, at his studio in the Hollywood Hills, he told CNN, “I thought it was a lot of money at the time, but within six months, it was sold again for $50,000.” After the sale, Hockney’s American dealer, Andre Emmerich, “realized the pictures (in the show) were underpriced. A lot had been underpriced.” But by then, it was too late. And so, as is often the case in the art market, someone other than the artist made a swift and substantial profit. Read more here-https://cnn.it/2S7ir5n
-Christie’s Magnificent Jewels Sale, Geneva, November 13 2018. Auction Results-http://bit.ly/2BqAePp
-Sotheby’s Magnificent Jewels and Noble Jewels Sale, Geneva November 15 2018. Auction Results-http://bit.ly/2FJP4oa
-Harry Winston Pays Record Price For 19-Carat Pink Diamond, Renames It The ‘Winston Pink Legacy.’ Luxury jewelry brand, Harry Winston, paid more than $50.3 million for an 18.96-carat pink diamond at Christie’s Geneva Magnificent Jewels Sale held Tuesday, setting a world auction record of more than $2.65 million per carat for a pink diamond sold at auction. The company renamed the fancy vivid pink diamond the “Winston Pink Legacy” immediately following the sale. The total price, which includes the buyers’ premium, met the $50 million high estimate for the gem, the largest and finest fancy vivid pink diamond ever offered at auction by Christie’s. Previously named the “Pink Legacy,” the diamond was once owned by the Oppenheimer family, the former owners of De Beers.
It was awarded the highest diamond color grading of “vivid” by the Gemological Institute of America. Vivid colored diamonds are the most strongly saturated gems, displaying the optimum hue of the stone. It is a classic rectangular cut diamond, a cut that is traditionally used for white stones. It is also internally very pure which is extremely rare in pink diamonds (particularly one of a such a large size) where the color is formed by pressure and slippage of the crystal lattice which typically causes imperfections in the stone. In addition, it is classified as a Type IIa diamond, which contains little if any nitrogen and accounts for less than two percent of all gem diamonds.
“This exceptional diamond captured the imagination of international collectors across the globe, with over 30,000 people visiting Christie’s sale previews to see this remarkable stone,” said Rahul Kadakia, Christie’s International head of Jewellery. “It has taken its rightful place among the world’s greatest diamonds.” The Harry Winston Legacy amounted for nearly half of the $110.2 million total sales of the Magnificent Jewels auction of 302 lots held at the Four Seasons Hotel des Bergues, with 86% sold by lot and 90% sold by value. Signed jewels performed particularly well, the auction house said, led by an Art Deco Egyptian revival sautoir, by Van Cleef & Arpels, 1924, which achieved $4.3 million, well above its $3 million high estimate; and a rare early 20th Century steel and diamond tiara by Cartier, that sold for $492,500. Read more here-http://bit.ly/2Kk4RZy
-10 jewels that made history and changed the market. To mark the record-breaking price for the Winston Pink Legacy diamond in Geneva, we look back at the historic auctions of the Oppenheimer Blue diamond, La Peregrina, the Hancock Red, the Blue Belle of Asia sapphire, the Rockefeller Emerald, and other magnificent jewels at Christie’s.
Number 2-The Hancock Red A record-breaking wonder of nature. In April 1987 Christie’s offered a very small diamond, weighing 0.95 carats, as its top lot in New York. What made this diamond special was its colour: Fancy Purple-Red. Only one in 100,000 diamonds qualifies as a ‘Fancy’ colour. These odds lengthen exponentially for red diamonds, which are so rare that experienced diamond dealers would consider themselves extremely lucky to handle more than three in the course of a lifetime. This 0.95 carat (only 0.19 grams) wonder of nature was part of the collection of Mr. Hancock, a farmer from Montana, who was rumoured to have purchased the diamond for $13,500 in 1956. The Hancock Red was offered for sale in 1987 with an estimate of $100,000-150,000. It sold for a remarkable $880,000, or $926,000 per carat, and broke all records in the process.
Number 4-The Oppenheimer Blue The most expensive blue diamond in auction history. On 18 May 2016, the Oppenheimer Blue, lot 242 in Christie’s Magnificent Jewels auction in Geneva, was bought for CHF 56,837,000 ($57,973,000), making it, at the time, the most expensive jewel in auction history. That season, it was also the most expensive work of art sold at auction.The diamond was named in honour of its previous owner, the connoisseur Sir Philip Oppenheimer. The Oppenheimers have been leaders in the diamond industry for generations and Sir Philip had the pick of any diamond he wanted. He chose this one for its perfect hue, impeccable proportions and fabulous rectangular shape.
In recent years blue diamonds have gained a wider following, not only because they are stunning, but because there are so few of them available. The Oppenheimer Blue is classified as ‘Fancy Vivid Blue’ by the Gemological Institute of America, the highest colour grade and colour intensity for blue diamonds. At 14.62 carats, it is the largest Fancy Vivid Blue diamond to have ever appeared at auction. ‘The Oppenheimer Blue can only be described as one of the rarest gems in the world,’ said Francois Curiel, who has experienced many superlative jewels being offered during his long service at Christie’s. ‘It is the gem of gems.’
Number 10-The Winston Pink Legacy An extraordinary 18.96-carat Fancy Vivid Pink diamond. ‘To find a diamond of this size with this colour is pretty much unreal,’ said Rahul Kadakia, International Head of Jewellery at Christie’s, before the sale of the Pink Legacy in Geneva in November 2018. ‘You may see this colour in a pink diamond of less than one carat. But this is almost 19 carats and it’s as pink as can be. It’s unbelievable.’ Scientists classify diamonds into two main ‘types’ Type I and Type II. In the latter, the diamond has a particularly rare, almost homogenous colour.
‘Pink diamonds fall under the rare Type IIa category,’ explains the specialist. ‘These are stones that have little if any trace of nitrogen, and make up less than two per cent of all gem diamonds. Type IIa stones are some of the most chemically pure diamonds, often with exceptional transparency and brilliance.’ Its even colour distribution, combined with a balanced saturation, tone and straight pink hue, qualify the 18.96 carat diamond for the coveted ‘Fancy Vivid’ colour grading from the Gemological Institute of America (GIA).
Only one in 100,000 diamonds possesses a colour deep enough to qualify as ‘Fancy Vivid’. Bidding for The Pink Legacy, which had descended from the Oppenheimer family, was fierce. Fancy Vivid Pink diamonds over 10 carats are virtually unheard of in the saleroom in more than 250 years of auction history at Christie’s, only four such stones have ever appeared for sale. Such scarcity was reflected in the final price, CHF 50,375,000 a new world auction record per carat for a pink diamond. After the sale the diamond’s new owners, Harry Winston, promptly renamed the stone The Winston Pink Legacy. Read more here-http://bit.ly/2r0dU9c
-One in a million: Bidding heats up at Rio Tinto’s 2018 Argyle pink diamond tender. Every year one of Australia’s most renowned jewellers, John Calleija, prepares to go into a bidding war for the world’s rarest and most valuable diamonds from the remote Kimberley. The Gold Coast-based jeweller who has stores in Australia and London, is one of the privileged few invited to attend the Argyle pink diamond tender, where collectors from around the globe bid on the top pink, red and violet stones. These are diamonds so rare they never reach the open market. For every one million carats of rough diamonds produced at the East Kimberley mine, only one polished carat makes the tender collection. And you need to have deep pockets to afford these rare gems.
“This year we bid on 10 diamonds and we were very lucky to have gotten three,” Mr. Calleija said. A lot of mystery surrounds the tender process; potential buyers place a sealed bid, with the highest bidder notified of their win at the tender deadline.Mr. Calleija said it was always a nervous wait to find out if a bid was successful. And with fewer than two years of production remaining at the Argyle diamond mine, he said the tender process was getting more competitive than ever. “This was certainly one of the best tenders ever; each one gets more and more special because it’s getting closer and closer to the end,” he said. “We’ve had the joy of it for more than 30 years but as they say all good things must come to an end and I don’t know what we’re going to do afterwards, so that’s why they’re so precious.”
Although Rio Tinto has not disclosed the total figure reached by this year’s 55-carat collection, it did reveal the tender reached double digit price growth. Among the record-breaking diamonds sold in the 2018 collection was the Argyle Muse, a 2.28-carat fancy purplish-red diamond, the most valuable diamond in the tender’s 34-year history sold to an anonymous buyer. Previously there have only been four red diamonds over one carat offered in the tender. Mr. Calleija estimated the top stone went for between $US10–15 million. “It’s an amazing diamond; it’s big to have a 2.28-carat like that,” he said. “It’s the big brother of the 31-point oval red that I got.” Over the past 18 years the value of Argyle pink diamonds sold at tender have appreciated more than 400 per cent, outperforming all major equity markets.
Rio Tinto copper and diamonds chief executive Arnaud Soirat said these results were a reflection of the supply of these extremely rare diamonds becoming even more scarce. Current estimates indicate sufficient economic reserves at the mine to support production through to the end of 2020. With almost the entire world’s supply of rare pink, red and violet diamonds coming from Argyle, speculation has risen on how the closure of the mine will ultimately impact the industry. There are a small quantity of pink diamonds mined in Brazil and in South Africa, including the almost 19-carat Pink Legacy, which last week set a new world record price per carat for a pink diamond, when it was sold for a whopping $60 million.
But so far nowhere else in the world has produced diamonds as vivid as the pinks from the Kimberley. Mr. Calleija said after decades of association with the pink diamond industry, it would be an emotional time for long-time collectors when the tender called its last bids. “You know from when Argyle first made that discovery back in the 1980s to where it is now is just phenomenal, it has gained so much momentum over the years,” he said. “Luciano Pavarotti bought a magnificent pink diamond off me some years ago when he was touring; he wanted to take a little piece of Australia home with him. “These diamonds become family heirlooms, it is like a piece of history in your hand and it’s something truly to be treasured.” Read more here-https://ab.co/2DTC3qL
-Sotheby’s Bourbon Parma Family Jewels Auction Yields $53.1 Million Thanks to Marie-Antoinette Jewels. The White Glove Sale took place on Wednesday with 100 percent of the 100 lots, including pieces owned by Marie-Antoinette, selling. Additionally, one piece, a special pearl owned by Queen Marie-Antoinette, broke the world record for a natural pearl sold at auction going for $36.2 million.
The biggest-ticket item, the 18th century natural pearl pendant that sold for $36.2 million, was originally estimated to sell for about $1 to $2 million. In fact, the entire auction was initially expected to draw about $7 million in sales, but set a world record, for being the largest royal jewelry sale ever. Heretofore, the record was $50.3 million garnered at the Duchess of Windsor auction nearly three decades ago in 1987. Of the final total auction sales of $53.1 million, 10 pieces owned by the famous queen comprised the majority, at $42.7 million.
The second largest sale was that of an important three-strand pearl and diamond necklace owned by the queen, which sold for $2.278 million. It is said that before she was taken captive and later beheaded, Marie Antoinette had wrapped her jewelry pearls, diamonds and rubies in cotton and sent them along with some clothes in a trunk to Brussels. They then traveled to Vienna where the Austrian emperor was Marie-Antoinette’s nephew. He returned them to the queen’s daughter Madame Royale in 1795 and then passed in into the Bourbon Parma family, which put these pieces up for auction at Sotheby’s. Read more here-http://bit.ly/2S94LH9
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Gold to silver ratio at 80 to 1 with gold at $2,000 the silver price would be $25.00
Gold to silver ratio at 70 to 1 with gold at $2,000 the silver price would be $28.57
Gold to silver ratio at 60 to 1 with gold at $2,000 the silver price would be $33.33
Gold to silver ratio at 50 to 1 with gold at $2,000 the silver price would be $40.00
Gold to silver ratio at 40 to 1 with gold at $2,000 the silver price would be $50.00
Gold to silver ratio at 30 to 1 with gold at $2,000 the silver price would be $66.67
Gold to silver ratio at 20 to 1 with gold at $2,000 the silver price would be $100.00
Gold to silver ratio at 15 to 1 with gold at $2,000 the silver price would be $133.33
-Ted Butler Interview: JP Morgan Silver Manipulation Confirmation. Listen here-http://bit.ly/2FzJbdt
-London Gold Market Comes Clean: It’s Not as Big as Thought. London’s gold market owned up to the biggest secret in bullion: it’s not as big as some thought and, for last week at least, smaller than New York’s. An average of $36.9 billion of gold and $5.2 billion of silver changed hands each day in the city’s over-the-counter market, including metal for delivery in Zurich, according to figures released for the first time on Tuesday by the London Bullion Market Association. Previous World Gold Council estimates, based on 2016 data, were between three and six times higher.
While the data was only for a single week, it shows the Comex futures market in New York is a slightly bigger venue for gold than London, LBMA Chief Executive Officer Ruth Crowell said in an interview with Bloomberg Television. That upends conventional wisdom, but a longer trading period may tell a different story as volatility in both centers is smoothed out. “This is just a week’s snapshot,” said Crowell, who said the LBMA will start reporting daily once it has three months of data. “In 12 months time, it will be very interesting to look at the figures again.”
The earlier over-estimates for the size of the London market arise from volume projections in a member survey carried out by the LBMA in 2011. Still, its size is comparable to the gilts market and the data will provide clarity, according to Matthew Turner, an analyst at Macquarie Group Ltd. “For the first time in the long history of the London gold market, its size is not guesswork, but a reliable measurement ” Turner said. “The real benefit of the data is seeing how it moves over time.”
Gold futures for December delivery declined 0.3 percent to settle at $1,221.20 an ounce Tuesday on the Comex in New York, falling for the first time in five sessions. Comex, owned by the CME Group, has seen rising volume in recent years. “As customers seek to hedge a variety of macro factors impacting gold prices, including uncertainty around trade policies, and emerging market events, we have seen double-digit growth across our Comex gold futures and options markets, ” according to Young-Jin Chang, global head of metals at CME Group.
The London gold market, which traces its roots back to 1676, has sought to increase transparency and rebuild confidence after some members faced allegations of price manipulation and of accepting metal from illegal mines. Those measures included publishing vault holdings and modernizing auctions that once took place by phone, while seeking to convince regulators that gold is a highly liquid asset. Today’s data release is a breakthrough for the LBMA, which struggled to get members to sign up last year, and as one of the firms tasked with delivering the data collapsed. The association is also seeking ways to attest to the provenance of gold and has sought proposals on ways to track the precious metal throughout the supply chain. It closed a request for proposals on ways to achieve that earlier this year, but has yet to implement any measures. Bloomberg