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OPEC Boosts Oil Output as Prices Slide to Four-Year Low

OPEC in ‘Price War’ as Iraq Says Members Fight for Market

No Guarantee Saudis to Repeat Price Cut That Drove Oil Lower

Petrobras Said to Skip Fuel Price Discussion at Board Meeting

U.S. Gasoline Price to Fall Below $3 for First Time Since 2010

Gasoline at $3 Even Has Store Managers Filling Up

Brent Caps Longest Run of Weekly Losses Since ’02 on Glut

U.S. Oil Rig Count Declines by 13, Baker Hughes Says

Oil Forecasters Diverge From Futures by Most This Year

October Horror Show Averted in Stocks as Oil Gets Spooky

Brent crude $85.86 and U.S. crude $80.54 A Barrel Now
Watsa Says Deflation in Air as Fairfax Bets on Cash, Treasuries
31 October 2014
, by Katia Dmitrieva (Bloomberg)

Prem Watsa is betting on U.S. government debt at his Fairfax Financial Holdings Ltd. (FFH) to guard against deflation amid stagnation in European economies and slumps in commodity prices and Chinese real estate.

Deflation is “in the air,” Watsa said in a conference call with analysts today.

“If you have deflation in the U.S., you’d gravitate towards the most secure bonds, which are U.S. Treasuries. We continue to like the Treasury position.

It can be significant in terms of making some money for us.”

U.S. government bonds maturing in 10 or more years have returned 18% this year, beating the Standard & Poor’s 500 Index.

The personal consumption expenditures price index has been below 2% for more than two years, resisting policy makers’ attempt to maintain a minimum level of inflation.

The threat of falling prices can cause businesses and consumers to be reluctant to spend.

Watsa, who founded Fairfax in 1985, steered the Toronto-based insurer through the financial crisis after correctly anticipating declines of the U.S. mortgage market, and he presided over a 21% share gain this year.

He said his economic view now is driven by a deflationary environment in at least six European countries.

At the start of the year, International Monetary Fund Managing Director Christine Lagarde warned policy makers in advanced economies to fight the “ogre” of deflation.

Fairfax has been increasing holdings of bonds with longer maturities in a fixed-income portfolio valued at more than $12 billion.

As of Sept. 30, about $4.9 billion of the securities, on an amortized-cost basis, were due after 10 years.

That compares with $4.2 billion at the end of last year. Holdings declined for bonds due in a year or less.

Europe, China

Fairfax, which invests in assets from Greek malls to life insurers, is prepared for disruption in markets, Watsa said.

About $5.9 billion of the company’s investment portfolio, or 23%, was in cash or short-term investments as of Sept. 30, according to a financial filing yesterday.

“We look at this whole time period as a one-in-a-100-year event,” Watsa said on the conference call.

“Core inflation continues to be at or below 1% in the U.S. and Europe, levels we have not seen since the 1950s.”

He also cited the prospect of worsening conditions in China, where property prices may decline as much as 10% this year, according to SouFun Holdings Ltd.

“China’s economy is weak,” he said. “No one knows how weak.”
Robertson Calls Monetary Policy Like Japan’s ‘Dangerous’
31 October 2014
, by Kelly Bit (Bloomberg)


Julian Robertson, the billionaire founder of Tiger Management LLC, called global monetary policy, such as Japan’s surprise expanded stimulus today, dangerous as central banks push bond yields down and create a bubble.

“The monetary authorities all over the world are trying to cheapen their own currencies -- it’s a race everywhere and I’m not sure it’s the best thing to do,” Robertson said today in an interview on Bloomberg Television with Tom Keene, Scarlet Fu and Brendan Greeley.

“We have a bubble developing because we have forced bonds to almost no yield and it’s really the thing that’s the most dangerous going on economically in the world.”

Bank of Japan Governor Haruhiko Kuroda led a divided board to expand what was already an unprecedentedly large monetary-stimulus program, boosting stocks and sending the yen tumbling.

Kuroda and four of his eight fellow board members voted to raise the BOJ’s annual target for enlarging the monetary base to 80 trillion yen ($724 billion), up from 60 to 70 trillion yen, the central bank said.

An increase was foreseen by just three of 32 analysts surveyed by Bloomberg News.

Robertson, 82, said last month at the Bloomberg Markets Most Influential Summit in New York that governments are buying bonds to “keep their countries moving along economically.”

He said today that low bond yields are forcing investors who would otherwise be allocating to bonds to invest in stocks.

Stocks rose around the world today, with the Standard & Poor’s 500 Index surpassing a closing record, while the yen plunged to a six-year low.

Ponzi Scheme

In a separate radio interview, he gave a hypothetical example of a broker avoiding low-yielding debt.

“‘Oh, we can get bigger yields than that -- we’ll go to the real estate investment trusts,’” Robertson said. “And, of course, they are a legalized Ponzi scheme.”

The billionaire investor, who said he is “not that bullish,” pointed to some opportunities.

He called shares of Apple Inc. (APPL) “awfully cheap” and said that Alibaba Group Holding Ltd. (BABA) will “play well outside of China” and can grow organically and by acquiring other companies.

Robertson started New York-based Tiger Management in 1980, and by mid-1998 assets had soared to about $22 billion on the back of annual returns averaging 32%.

Losses and investor withdrawals over the following 18 months reduced Tiger’s assets to about $6 billion and in 2000, Robertson announced he would close the firm to outside investors.

Since then he has transformed it into a business financing startup hedge-fund managers and he runs a charitable foundation.
Fed Exit Could Spark Slump in All Markets, ATP CEO Says
31 October 2014
, by Peter Levring (Bloomberg)


The head of Denmark’s biggest pension fund says his main concern now is how to ride out what may turn into a simultaneous slump across asset classes as central bank liquidity is withdrawn.

“My concern is how the underlying assets perform,” Carsten Stendevad, who oversees $113 billion as chief executive officer of ATP, said yesterday in a phone interview.

“The historical risk diversification has to some extent been suspended because central bank liquidity has inflated asset prices.

That made all assets rise simultaneously. Now, they may all deflate simultaneously.”

The U.S. Federal Reserve confirmed this week it will end its asset-purchase program amid signs the economy is strengthening.

The news sent U.S. stocks and bonds lower while gold prices headed for the biggest drop in three weeks.

The main challenge for investors is working out how to hedge against losses as traditional risk models provide little help in navigating the Fed’s exit, Stendevad said.

“We need to be very cautious employing historical risk analyses as they may not apply under current circumstances,” he said.

“Usually buying oil is a hedge against geopolitical risks.” This year that “insurance policy failed. We’ve lost money on that.”
Financial Crisis Forum / Taiwan GDP Growth Misses Estimates
« Last post by Letsbereal on Today at 12:43:42 am »
Taiwan GDP Growth Misses Estimates After Food Safety Concerns
31 October 2014
, by Justina Lee and Argin Chang (Bloomberg)

GDP rose 3.78% from a year earlier in the three months through September, according to the statistics bureau’s preliminary data released today,

compared with the median 3.9% estimate in a Bloomberg survey of economists and 3.74% growth in the previous period.
Financial Crisis Forum / Canada Economy Unexpectedly Shrank in August
« Last post by Letsbereal on Today at 12:38:12 am »
Canada Economy Unexpectedly Shrank in August on Oil Drop
31 October 2014
, by Greg Quinn (Bloomberg)


Canada’s gross domestic product shrank in August, an unexpected decline led by oil and gas extractors.

Output shrank 0.1% to an annualized C$1.63 trillion ($1.45 trillion), Statistics Canada said today in Ottawa, while the median forecast in a Bloomberg economist survey with 20 responses was for output to be little changed from July.

Oil and gas extraction declined by 2.5% to C$96.9 billion, the second straight decrease, leading the broader drop across goods-producing industries.

Output among service producers rose 0.2%.

The economy remains hobbled by weak exports and business investment, which Bank of Canada Governor Stephen Poloz says are critical to building the recovery.

The central bank extended the longest interest-rate pause since the 1950s this month and said it will take two years to restore full output in the world’s 11th-largest economy.

“Disappointing,” Jimmy Jean, a strategist in the fixed-income group at Desjardins Capital Markets in Montreal, wrote in a research note, noting most of the declines came in goods-producing industries.

“The export recovery seems to have hit a stumbling block in the third quarter after a promising first half.”

Canada’s dollar weakened 0.8% to C$1.1268 per U.S. dollar at 9:11 a.m. Toronto time.

Canada’s Dollar Falls Most Since 2011 as Economy Shrinks
31 October 2014
, by Ari Altstedter (Bloomberg)
Falling Chinese Bank Deposits Add to Warning Signs on Economy
31 October 2014
, (Bloomberg News)


Chinese bank deposits dropped following a crackdown on lenders manipulating their numbers and “illicit” means of attracting money, threatening to weigh on credit growth and hinder efforts to reignite the economy.

Four of the five biggest banks, led by Industrial & Commercial Bank of China Ltd. (601398), posted a drop in deposits as they reported third-quarter earnings this week.

Central bank data showed it was the first quarterly decline for the nation’s banking industry since at least 1999.

The lower deposit levels are likely to curtail credit as banks are prohibited from lending more than 75% of their quarter-end holdings, while a sustained drop could hamper government efforts to rejuvenate an economy forecast to expand this year at the weakest pace since 1990.

The lenders may also come under pressure to tap more expensive financing.

“With banks now less able to window-dress their deposit figures, some will be forced to scale back lending to meet loan-to-deposit requirements,” Julian Evans-Pritchard, a Singapore-based China economist for Capital Economics Ltd., said by phone today.

“Regulatory controls are getting harder for banks and that’s weighing on credit growth.”

ICBC, the world’s largest lender by assets, posted the biggest decline in funds during the third quarter, with its deposits dropping by 388 billion yuan ($63 billion) from June to 15.3 trillion yuan.

Bank of China Ltd. (3988), Agricultural Bank of China Ltd., and Bank of Communications Co. also reported declines. Only China Construction Bank Corp., the nation’s second-largest, had an increase.
China Manufacturing Slowed Last Month as Growth Pressure Deepens
31 October 2014
, (Bloomberg News)


China’s manufacturing slowed further last month, as a property slump and slowdown in investment growth put the world’s second-largest economy on course for the slowest full-year growth since 1990.

The government’s Purchasing Managers’ Index (CPMINDX) was at 50.8 in October, trailing the 51.2 median estimate of analysts in a Bloomberg News survey and compared with September’s 51.1. Readings above 50 indicate expansion.

A pullback in manufacturing will test the government’s determination to refrain from broad stimulus.

The economy expanded 7.3% in the third quarter from a year earlier, the weakest pace in more than five years.

“The biggest drivers of growth such as fixed-asset investment are still slowing,” Shen Jianguang, chief Asia economist at Mizuho Securities Asia Ltd., said by phone from Hong Kong after the data.

“Heavy industries like steel and coal are contracting on lower prices, and the negative impact of the weak property market is becoming more pronounced.”

Growth slowed from September for output, new orders, new export orders, stockpiles and expectations, according to the statement.

The economy “still faces some headwinds” although a downward trend is unlikely after the government implemented policies to stabilize growth in the third quarter, the statement said.
Bankers Take Drug Tests at Jefferies Amid Divorce Scandal
31 October 2014
, by Stephanie Ruhle and Zeke Faux (Bloomberg)

Richard Handler, chief executive officer of Jefferies Group LLC, said he and some investment bankers took drug tests to refute claims by the estranged wife of another banker that narcotics use is widespread at the firm.

Wouldn’t it be better they take a psychological test to check their sanity.

Blade Runner – Voight-Kampff Test

There should be a Voight-Kampff test for politicians and people in leader positions.
Activism / Live Show chat room Alex Jones Show
« Last post by Markiss on Today at 12:14:34 am »
Please visit and express yourself in real time during the show 11-2pm CST or listen to the rebroadcast 24/7 with stream link
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