Coca-Cola FEMSA, a separate firm from Coca-Cola, announced it would suspend production in Venezuela due to a lack of sugar.
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Source: Venezuela is running out of sugar
Hillary Clinton is on board with the bi-partisan plan to rescue Puerto Rico, although she has ‘serious concerns’ about the bill. …read more
Source: Hillary Clinton backs Puerto Rico rescue bill
The TSA recently announced it’s hiring 768 full time screeners. Here’s what interested candidates need to know about the application process.
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Source: TSA is hiring: Here’s what you need to know
By Tyler Durden
It all started about three years ago when we first advised readers who were inclined to so gamble, that the only way to win in a rigged, maipulated market, one in which central bankers are now Chief Restructuring Officers and will not allow even a modest correction to asset prices, that the easiest way to generate “alpha” was to go long the most hated names.
Then, in mid-February, just as the market had bottomed and was about to unleash a historic short squeeze, we had a follow up article, in which we explained in very simple terms “how to outperform most hedge funds in 2016.”
The answer is simple: as we have said on many occasions in the past year, simply do the opposite of what hedge funds are doing. As the market rotated away from momentum and popular positions, the stocks least owned by hedge funds soared. Goldman’s Low Concentration Basket (GSTHHFSL) consists of the S&P 500 firms with the smallest share of market cap owned by hedge funds. This strategy has posted a mediocre historical performance record, outperforming the S&P 500 in 53% of quarters since 2001. This year, however, the basket has outperformed the S&P 500 by 541 bp (0% vs. -6%) and outperformed by nearly 9 pp during the past six months, equating to its strongest six-month return outside of 2008 and 2002. Investors who believe hedge funds are wrong and will remain directionally wrong and who wish to own equity risk but remain relatively insulated from the volatility caused by changes in hedge fund positioning should find this basket attractive. New constituents include ORCL, CVX, and UPS.
In other words, go long the Least Concentrated and/or Most Shorted by hedge funds, stocks. We also said to avoid (or simply short for those who prefer pair trades) hedge fund clustered positions, best represented by such indexes as Goldman’s Hedge Fund VIP List (GSTHHVIP): “clustering has become endemic for hedge funds, who having run out of alpha-generating ideas have all rushed into the same positions, and nowhere is this more visible than in the hedge fund exposure to FANGs, which has been the key reason for disappointing hedge fund performance.”
Here is a visual snapshot of how this trade has performed in the recent past:
As of this moment, the HF VIP basket – i.e., the most widely held stocks among the hedge fund world – is trading at 5 year lows, while the Low Concentration basket is at all time highs. In other words, anyone who had done as we suggested three months ago, would have indeed outperformed about 95% of all hedge funds in 2016. We bring attention to this out mostly to those who seems to be left with the erroneous impression that this website pushes some “short stocks” agenda and is bearish no matter what.
* * *
Which brings us to today when the always so insightful, if only in retrospect, explains why hedge funds have had such an abysmal …read more
Source: Goldman Explans Why Hedge Funds Got Crushed In 2016
By Tyler Durden
Having cashed out a few hundred million dollars worth of stock to some dliuted greater fools – with the help of Goldman Sachs – the ugly face of reality of descending on Elon Musk and his government-subsidized car maker. As Reuters reports, Tesla suppliers are loudly questioning Musk's production goals as he moved up the launch of high-volume production of its Model 3 to 2018, two years earlier than planned.
Rather shockingly, given the huge demand, automaking consultants and supply executives, who asked not to be identified, admitted that Tesla has still not finalized the Model 3 design and specifications, warning that Musk's goals were “implausible,” in part because Tesla's battery factory in Reno, Nevada, was unfinished; and furthermore, aluminum, lithium and other materials – already in short supply – “could be another limiting factor.”
Tesla Motors Inc has surprised parts makers with plans to move up the launch of high-volume production of its Model 3 to 2018, two years earlier than planned – an acceleration that supplier executives and industry consultants said would be difficult to achieve and potentially costly.
In the past three months, Tesla has told suppliers the company was doubling its original production projections to 100,000 Model 3s in 2017 and 400,000 in 2018, several supplier industry executives familiar with the plans told Reuters.
Tesla has taken 373,000 orders for the Model 3 – which has a starting price of $35,000, about half its Model S – and has said it would begin customer deliveries in late 2017. But it has made no promises, and, on earlier models, customers waited months for delivery.
Citing “tremendous demand,” Chief Executive Elon Musk told analysts on an April call that the company planned to boost total production, including the existing Model S and Model X crossover, to 500,000 in 2018 – two years earlier than its original target and a 10-fold increase over the 50,000 vehicles it made in 2015.
Musk said the Model 3's simpler design, new production hires and enthusiastic suppliers would help the company make its goals. He said Tesla would drop suppliers that could not meet deadlines and would bring more parts production in-house than traditional automakers typically do. He did not specify how much or which parts.
Industry experts said Tesla's new goals were extraordinary and raised doubts it could meet them… “They're aiming to be up and running in 2018, so they have two years – and suppliers are wondering if they'll make that deadline.”
One complication is that Tesla has not finalized the Model 3 design and specifications, said automaking consultants and supply executives who asked not to be identified because Tesla prohibits them from disclosing contract details.
Musk has said the Model 3 design and engineering would be complete in June, 13 months ahead of the planned production startup.
Under ideal conditions, automakers have launched new assembly lines in 18 months, but they typically take two to three years after the first tooling and supply contracts are signed, several manufacturing consultants said.
The handful of North …read more
Source: Telsa Suppliers Warn Musk Expansion Goals Are "Implausible"
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By Tyler Durden
For 20 of the last 21 weeks, US oil rig count has declined as it tracked the lagged oil price lower. That changed today as oil rigs were unchanged week-over-week perfectly syncing with the lagged lows in oil. Total rigs dropped 2 (thanks to gas rigs) to a new record low but even that pace has slowed dramatically. Oil prices are fading modestly on the news…
And oil prices are giving up earlier gains…
Source: Oil Price Slips After Rig Count Decline Stalls
By Tyler Durden
“I’ve been coming to Singapore once a year for the last 15 years, and flying in I have never seen the waters so full of idle tankers,”
– Senior European oil trader a day after arriving in the city-state.
Back in November, when the world-record crude inventory glut was still in its early innings, we showed what we then thought was a disturbing image of dozens of oil tankers on anchor near the US oil hub of Galveston, TX, unwilling to unload their cargo at what the owners of the oil thought was too low prices.
* * *
Little did we know that just a few months later this seemingly unprecedented sight of clustered VLCCs would be a daily occurrence as oil producers, concerned by Cushing hitting its operating capacity, would take advantage of oil curve contango to store their oil offshore indefinitely.
However, while the “parking lot” off Galveston has since normalized, something shocking has emerged and continued to grow half way around the world, just off the coat of Singapore. This.
The red dots show ships either at anchor or barely moving, either oil tankers or cargo, which have made the Straits of Malacca, one of the world’s most important shipping lanes which carries about a quarter of all seaborne oil primarily from the Persian Gulf headed to China, into a “bumper to bumper” parking lots of ships with tens of millions of barrels in combustible cargo.
it is also the topic of the latest Reuters expose on the historic physical crude oil glut which continues to build behind the scenes, and which so far has proven totally immune to dissipation as a result of the sharp increase in oil prices over the past three months.
Indeed, as Reuters notes, prices for oil futures have jumped by almost a quarter since April, lifted by severe supply disruptions caused by triggers such as Canadian wildfires, acts of sabotage in Nigeria, and civil war in Libya. And yet flying into Singapore, the oil trading hub for the world’s biggest consumer region, Asia, reveals another picture: that a global glut that pulled down prices by over 70 percent between 2014 and early 2016 is nowhere near over, and that financial traders betting on higher crude oil futures may be in for a surprise from the physical market.
“I’ve been coming to Singapore once a year for the last 15 years, and flying in I have never seen the waters so full of idle tankers,” said a senior European oil trader a day after arriving in the city-state.
As Asia’s main physical oil trading hub, the number of parked tankers sitting off Singapore’s coast or in nearby Malaysian waters is seen by many as a gauge of the industry’s health. Judging by this, oil markets are still sickly: a fleet of 40 supertankers is currently anchored in the region’s coastal waters for use as floating storage facilities.
The glut is not …read more
Source: Something Stunning Is Taking Place Off The Coast Of Singapore
By Tyler Durden
“I’ve been coming to Singapore once a year for the last 15 years, and flying in I have never seen the waters so full of idle tankers,”
– Senior European oil trader a day after arriving in the city-state.
Back in November, when the world-record crude inventory glut was still in its early innings, we showed what we then thought was a disturbing image of dozens of oil tankers on anchor near the US oil hub of Galveston, TX, unwilling to unload their cargo at what the owners of the oil thought was too low prices.
* * *
Little did we know that just a few months later this seemingly unprecedented sight of clustered VLCCs would be a daily occurrence as oil producers, concerned by Cushing hitting its operating capacity, would take advantage of oil curve contango to store their oil offshore indefinitely.
However, while the “parking lot” off Galveston has since normalized, something shocking has emerged and continued to grow half way around the world, just off the coat of Singapore. This.
The red dots show ships either at anchor or barely moving, either oil tankers or cargo, which have made the Straits of Malacca, one of the world’s most important shipping lanes which carries about a quarter of all seaborne oil primarily from the Persian Gulf headed to China, into a “bumper to bumper” parking lots of ships with tens of millions of barrels in combustible cargo.
it is also the topic of the latest Reuters expose on the historic physical crude oil glut which continues to build behind the scenes, and which so far has proven totally immune to dissipation as a result of the sharp increase in oil prices over the past three months.
Indeed, as Reuters notes, prices for oil futures have jumped by almost a quarter since April, lifted by severe supply disruptions caused by triggers such as Canadian wildfires, acts of sabotage in Nigeria, and civil war in Libya. And yet flying into Singapore, the oil trading hub for the world’s biggest consumer region, Asia, reveals another picture: that a global glut that pulled down prices by over 70 percent between 2014 and early 2016 is nowhere near over, and that financial traders betting on higher crude oil futures may be in for a surprise from the physical market.
“I’ve been coming to Singapore once a year for the last 15 years, and flying in I have never seen the waters so full of idle tankers,” said a senior European oil trader a day after arriving in the city-state.
As Asia’s main physical oil trading hub, the number of parked tankers sitting off Singapore’s coast or in nearby Malaysian waters is seen by many as a gauge of the industry’s health. Judging by this, oil markets are still sickly: a fleet of 40 supertankers is currently anchored in the region’s coastal waters for use as floating storage facilities.
The glut is not …read more
Source: Something Stunning Is Taking Place Off The Coast Of Singapore
By Tyler Durden
Submitted by Eugen von Bohm-Bawerk via Bawerk.net,
The Federal Reserve really wants to raise rates, but they do not dare as the consequence of interrupting an unprecedented level of capital misallocation is too grave to face head on. So our money masters continue their low interest rate policy; pulling society further and further into a capital structure that cannot be sustained long term. In other words, scare capital is consumed in order to feed the present structure of production. Low rates thus cement what cannot be upheld and the suppression of volatility entailed by such policies simply mean internal inconsistencies accumulate without any functioning correction mechanism. Think of it as two continental plates pushing against each other; it is obviously better with thousands unremarkable earthquakes spread over time than a sudden burst of centuries with built up tension. Soviet Union did not have any functioning price system and they manage to run their economy for decades without recessions, until 1989 that is…
Our economic system should optimally experience a recession daily so unremarkable that no one even notice as these tiny corrections will help keep the system sustainable and balanced. Weeding out imbalances before they can do harm. World central bankers on the other hand suppress these corrections and consequently create conditions for massive disruptions. Controlling short term volatility inevitably leads financial dislocations large enough to bring down the whole system.
Today we will show how this may manifest itself for the US federal government as the Federal Reserve is eventually forced to raise rates, possible faster than anyone today imagine possible. In one scenario it is entirely possible that central bank credibility falls among the general public, leading to lower demand for cash and inversely increases demand for goods. In this particular scenario, prices, measured in currency units, spirals out of control and the only thing the central bank can do at this stage is to create the gut wrenching recession needed to tame price inflation. Volcker was forced to do it in the early 1980s from a far better starting point than todays. The latest consumer price inflation report issued by the Bureau of Labor Statistics does indeed show some price pressure in the dollar system with the “core” rate running ahead of target for the fifth month in a row as of April.
For now, assume the FOMC will follow its latest dot-plot, lifting rates to 0.875 per cent by year-end 2016, 1.875 by December 2017, 3.00 in 2018 and 3.25 from there on. Further assume a stable yield curve with longer dated rates following the Fed funds rate smoothly upwards. Needless to say, if the FOMC does lift rates it is highly likely the yield curve will invert as the US economy, on the brink of recession, cannot cope with higher interest rates. However, for the sake of argument assume the future will look like the chart below
The Fed Funds rate is at 3.25 per cent by 2019 while the 10-year is assumed to be a mere …read more
Source: "Ugly Outcomes" Loom As Fed Suppression Forces Long Term Economic Repression
By Tyler Durden
Earlier this week, Goldman unleashed the latest oil rally when it admitted that while the oil market will take far longer to rebalance due to rising low-cost oil production, it said that material supply disruptions are providing a boost to near-term prices. Goldman provided the following visualization of unplanned ongoing outages …
… where it highlighted the recent stoppages in Canada, Nigeria and Libya as the most prominent.
In a surprising twist, it appears that virtually all three of the main disruptions choke points are being resolved far quicker than expected.
First on Canada and its ongoing wildfire, the WSJ reported that the threat from forest fires in northern Alberta receded further on Thursday with the blazes moving away from oil-sands production facilities and a nearby evacuated town as cooler, wetter weather aided firefighting efforts, provincial officials said. The out-of-control wildfire spread to more than 1.25 million acres, up from just over one million acres on Wednesday, but the front line moved away from critical infrastructure to a remote area on the border of neighboring Saskatchewan province, the officials said.
Firefighters kept blazes away from two major oil-sands production complexes threatened earlier in the week, helped by lower temperatures and trace amounts of rain, said Chad Morrison, the Alberta forest ministry’s chief wildfire official.
“The threat definitely has diminished around the communities and the oil-sands facilities,” Mr. Morrison said at a news conference in Edmonton. “We held the fire yesterday in all critical areas.”
This means that oilsands production is gradually coming back online and full capacity will likely be fully restored in the coming days:
No production facilities have been damaged by wildfires, but the threat has forced several large oil sands producers to shut down mining and well sites for more than two weeks, reducing Canadian oil production by at least one million barrels a day, or about 40% of the country’s total oil-sands output. The spread of fires forced some operators to abandon plans laid last week to restart. Late Thursday, Exxon Mobil Corp.’s Canadian unit Imperial Oil Ltd. said it had partially restarted operations at its Kearl oil sands mine about 47 miles northeast of Fort McMurray.
Just as important is that the long-running export crisis in Libya also appears to be on the verge of a solution. According to Bloomberg, oil exports are set to resume Thursday from the port of Hariga in eastern Libya, easing a bottleneck and allowing for crude production to increase after competing administrations of the state-run National Oil Corp. reached an agreement in the divided country.
The tanker Seachance is loading 650,000 barrels of crude at Hariga for the U.K., Omran al-Zwai, a spokesman for NOC unit Arabian Gulf Oil Co. known as Agoco, said by phone on Thursday. The cargo would be the first international shipment from Hariga since the United Nations blacklisted a tanker last month following complaints from authorities in the west of the country. NOC’s competing leaderships reached an agreement to resume exports from Hariga earlier this …read more
Source: Oil Supply Disruptions Quickly Fading As Canada, Libya, And Nigeria Resume Production
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