Federal government caught shipping hundreds of thousands of migrant kids around the U.S

 Federal government caught shipping hundreds of thousands of migrant kids around the U.S., like commodities

10/27/2024 // Lance D Johnson

Blogger's note:  Google failed to upload picture.

The corrupt Biden-Harris regime has created a crisis at the Southern U.S. border and facilitated a massive invasion into cities and towns across the country. A new investigation looks more closely at how the federal government uses taxpayer funds to contract out the resettlement of hundreds of thousands of children into cities across the nation. The children are used as pawns, and are subject to terrible conditions, as illegal aliens seek to take advantage of the corrupt system at the border, and as big money interests use the children for monetary and political gain.

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The renewed optimism about China

bodes well for commodities

Submitted by IWB, on August 20th, 2016

 

by Secular Investor

A lot of (virtual) ink has been used to discuss the economic situation in China at great lengths, and most opinions voiced concerns about the reduced growth rate in the country. Here at Secular Investor we were always a bit reluctant to accept that type of reasoning as what would make the Chinese economy crumble because after all, the GDP continues to grow at a 6-7% rate on an annual basis.

On top of that, you just know the Chinese government will try its best to save face and avoid any remarkable slowdown, and we feel the Chinese president and prime minister would also use Super-Mario Draghi’s catch phrase ‘whatever it takes’.

The market now seems to be catching up on that as well, as China has been removed from the forefront since it devalued its currency, almost exactly a year ago. Even though the impact of the devaluation initially remained very limited with a 3% difference in one week (from an USD/CNY exchange rate of 6.20 to 6.40), the Chinese Yuan continued to weaken and as of right now, you receive approximately 6.65 Yuan per American Dollar you’d convert. This means China’s currency has now become 7.26% cheaper (which is twice as much compared to the initial ‘official’ devaluation), and this doesn’t seem to upset the market as much as the initial 3% move.

Does this mean there’s no slowdown? No, not at all, as all data are still pointing in the direction of a lower growth rate. We will very likely never see the double-digit GDP growth (again), but we also shouldn’t overestimate the impact of the slowdown as everything seems to be very gradual. After a GDP growth of 7.7% in 2013, 7.3% in 2014 and 6.8% in 2015, the economy is expected to expand at a rate of 6.2-6.7% this year. Yes, that’s a lower growth rate, but if you can continue to grow your economy at a rate of in excess of 6% per year, you’re still putting in a very nice performance!

Cracking down on shadow banking has done the economy pretty well, but this also meant the base metals prices were hit pretty hard, as for instance copper played an important role in the shadow banking system.

Source: financial times

The system was pretty simple, and some sources estimated up to half of China’s copper warehouse inventory was used in the shadow banking system. As a lot of these trades were unwound (either voluntarily or being forced by margin calls), the copper price experienced some pressure on its price, as you can see in the next image.

Source: Stockcharts.com

Now the impact of the shadow banking system on the overall health of the Chinese economy has been reduced, we wouldn’t be surprised to see the ‘real’ demand for copper picking up again in the near future, as the end-users of the copper have been drawing down from their stockpiles in the past few quarters and years.

We saw the exact same thing happen with the iron ore price, where a sudden supply glut killed the prices (and the operating margins), but the situation now seems to have been stabilized, and the iron ore price is now trading in the low-60’s range once again (after having traded as low as $40/t just eight months ago).

Source: Vale website

If our theory proves to be right, we are expecting a higher copper price in the not so distant future on the back of an increased demand for seaborne copper from China. China isn’t dead at all, it just took a temporary pause.

World’s Most Hated Major Currency Hits 11-Year Low, Traders Are Uniformly Betting Against It, A Great Contrarian Sign. But Wait….

Submitted by IWB, on August 14th, 2015

 

Wolf Richter wolfstreet.com, www.amazon.com/author/wolfrichter
Years of near universal easy money policies led to an investment boom in commodities, which led to overproduction that coincided with languid demand, which led to a crash in prices, which led to a rout in commodity currencies. Then the Fed started its cacophony about raising rates; it pulled hot money into dollar assets, pushed up the dollar further, and left commodity currencies twisting in the wind.
Among them, one stands out: the Canadian dollar.
The rout in commodities has ravaged Canada’s oil patch and its mining sector. For example, home sales in Calgary, the epicenter of the oil patch, have plunged 25% year-to-date. Canada is in one of the most magnificent housing bubbles the world as ever seen, and when it pops in Toronto or Vancouver, there will be fireworks. But not yet.
The economy shrank for the first five months of the year, after already shrinking in November last year, and is likely in a technical recession (two quarters in a row of GDP shrinkage). And the problems are spreading.
Krishen Rangasamy, a Senior Economist at Economics and Strategy, National Bank Financial, pointed today at the business investment quagmire:

Business investment spending seems to have dried up in Canada. Trade data shows real imports of both industrial machinery and electronic equipment fell in Q2 at the fastest pace since the 2008/09 recession. The bad news doesn’t end there unfortunately because a further contraction in investment is highly likely in the second half of 2015.
Even low interest rates may not be enough to entice firms to increase investment outlays especially when profits are declining and the growth outlook is weakening due to persistence of depressed oil prices. The investment decline won’t be isolated to the energy sector. Thanks to the sinking Canadian dollar, it’s now more expensive for everybody to import capital goods.

The report saw “plenty of downside for investment spending from here.” And that “investment slump” would drag down economic growth this year and “for 2016 and beyond.”
But some intrepid souls see a glimmer of hope for the loonie. Commodities have plunged so far that these intrepid souls think they won’t plunge much more. And the loonie being a commodities currency, well, you get the idea.
One of these intrepid souls is Steve Sjuggerud. In his article, “The World’s Most Hated Major Currency Hits an 11-Year Low,” he offers a two-part conclusion: Part A makes total sense to me, and if I had the time, I’d do it instantly, regardless of what I think might happen to commodities and the loonie….
By Steve Sjuggerud, Daily Wealth:
Crashing oil prices, crashing commodity prices, and a super-strong U.S. dollar – these three have been the trifecta of pain for the Canadian dollar in recent years. All three of these together have pushed the Canadian dollar to an 11-year low.
In today’s essay, I’ll show you why the Canadian dollar could bottom out soon and start a solid rally.
Right now, “real money” traders have a massive bet against the Canadian dollar. We can see by looking at the Commitment of Traders (COT) report – which tracks the “real money” bets of futures traders. Today, the COT shows traders are uniformly betting against the Canadian dollar.
This is a great contrarian sign. It shows that everyone who wants to sell the Canadian dollar has already sold. There’s nobody left to sell.
“Real money” traders have only had a significantly larger bet than today’s one time in the past – in early 2007. The Canadian dollar absolutely soared right after that – from $0.85 to $1.08 in about eight months. That’s a 27% move, a huge move in a currency!
Today, sentiment on the Canadian dollar is at the worst level in history (according to Jason Goepfert of SentimenTrader.com, whose data go back a few decades). That also tells me the bottom should be near.
So what’s going on? And when could the rally in the Canadian dollar start?
The Canadian dollar is known as a “commodity currency.” Its currency tends to rise and fall with commodity prices. The problem is, everywhere you look, commodities are crashing. The Bloomberg Commodity Index, which currently tracks futures prices for 20 commodities, is down 62% since peaking in July 2008.
Take a look at the chart below. It shows the Canadian dollar versus commodity prices over the past 15 years…
image: http://files.dailywealth.com/images/rk-83293761_AZLC58K8NQ.png

You can see that the Canadian dollar crashed the last two times commodity prices peaked and began a bear market. It fell 22% from July 2008 to March 2009. And since peaking in mid-2011, the Canadian dollar is down 27%, a huge decline for any major currency.
Canada’s currency can bottom out here, simply because there’s nobody left to sell. However, the legitimate bottom will happen when commodity prices finally bottom.
Since commodity prices have continued lower, the Canadian dollar has continued lower. In short, we don’t have an uptrend in the Canadian dollar – yet. So I’m not buying today… but the Canadian dollar will be a fantastic opportunity when commodities rebound.
The best way to take advantage of it now is to get yourself up to beautiful Vancouver, my favorite city in the world. I was just there for more than a week, and I can confirm that – except for real estate – prices in U.S. dollar terms were cheap!
So take advantage by visiting Canada while its currency is at a record low. Then buy the Canadian dollar when the uptrend finally appears. By Steve Sjuggerud, Daily Wealth
At first, there was hope that only Canada’s oil patch would be headed into a recession. Now the oil patch is already there. Despite months of assurances that the oil bust and the broader commodities rout won’t spread into the rest of the Canadian economy, they’re now beautifully spreading into it. Read… It Gets Ugly in Canada

Read more at http://investmentwatchblog.com/worlds-most-hated-major-currency-hits-11-year-low-traders-are-uniformly-betting-against-it-a-great-contrarian-sign-but-wait/#YkWaXz1AIpiaQ8Vj.99

Plummeting Oil Prices Could Destroy The Banks That Are Holding Trillions In Commodity Derivatives

By Michael Snyder, on December 3rd, 2014

Could rapidly falling oil prices trigger a nightmare scenario for the commodity derivatives market? The big Wall Street banks did not expect plunging home prices to cause a mortgage-backed securities implosion back in 2008, and their models did not anticipate a decline in the price of oil by more than 40 dollars in less than six months this time either. If the price of oil stays at this level or goes down even more, someone out there is going to have to absorb some absolutely massive losses. In some cases, the losses will be absorbed by oil producers, but many of the big players in the industry have already locked in high prices for their oil next year through derivatives contracts. The companies enter into these derivatives contracts for a couple of reasons. Number one, many lenders do not want to give them any money unless they can show that they have locked in a price for their oil that is higher than the cost of production. Secondly, derivatives contracts protect the profits of oil producers from dramatic swings in the marketplace. These dramatic swings rarely happen, but when they do they can be absolutely crippling. So the oil companies that have locked in high prices for their oil in 2015 and 2016 are feeling pretty good right about now. But who is on the other end of those contracts? In many cases, it is the big Wall Street banks, and if the price of oil does not rebound substantially they could be facing absolutely colossal losses.

It has been estimated that the six largest “too big to fail” banks control $3.9 trillion in commodity derivatives contracts. And a very large chunk of that amount is made up of oil derivatives.

By the middle of next year, we could be facing a situation where many of these oil producers have locked in a price of 90 or 100 dollars a barrel on their oil but the price has fallen to about 50 dollars a barrel.

In such a case, the losses for those on the wrong end of the derivatives contracts would be astronomical.

At this point, some of the biggest players in the shale oil industry have already locked in high prices for most of their oil for the coming year. The following is an excerpt from a recent article by Ambrose Evans-Pritchard…

US producers have locked in higher prices through derivatives contracts. Noble Energy and Devon Energy have both hedged over three-quarters of their output for 2015.

Pioneer Natural Resources said it has options through 2016 covering two- thirds of its likely production.

So they are protected to a very large degree. It is those that are on the losing end of those contracts that are going to get burned.

Of course not all shale oil producers protected themselves. Those that didn’t are in danger of going under.

For example, Continental Resources cashed out approximately 4 billion dollars in hedges about a month ago in a gamble that oil prices would go back up. Instead, they just kept falling, so now this company is likely headed for some rough financial times…

Continental Resources (CLR.N), the pioneering U.S. driller that bet big on North Dakota’s Bakken shale patch when its rivals were looking abroad, is once again flying in the face of convention: cashing out some $4 billion worth of hedges in a huge gamble that oil prices will rebound.

Late on Tuesday, the company run by Harold Hamm, the Oklahoma wildcatter who once sued OPEC, said it had opted to take profits on more than 31 million barrels worth of U.S. and Brent crude oil hedges for 2015 and 2016, plus as much as 8 million barrels’ worth of outstanding positions over the rest of 2014, netting a $433 million extra profit for the fourth quarter. Based on its third quarter production of about 128,000 barrels per day (bpd) of crude, its hedges for next year would have covered nearly two-thirds of its oil production.

Oops.

When things are nice and stable, the derivatives marketplace works quite well most of the time.

But when there is a “black swan event” such as a dramatic swing in the price of oil, it can create really big winners and really big losers.

And no matter how complicated these derivatives become, and no matter how many times you transfer risk, you can never make these bets truly safe. The following is from a recent article by Charles Hugh Smith…

Financialization is always based on the presumption that risk can be cancelled out by hedging bets made with counterparties. This sounds appealing, but as I have noted many times, risk cannot be disappeared, it can only be masked or transferred to others.

Relying on counterparties to pay out cannot make risk vanish; it only masks the risk of default by transferring the risk to counterparties, who then transfer it to still other counterparties, and so on.

This illusory vanishing act hasn’t made risk disappear: rather, it has set up a line of dominoes waiting for one domino to topple. This one domino will proceed to take down the entire line of financial dominoes.

The 35% drop in the price of oil is the first domino. All the supposedly safe, low-risk loans and bets placed on oil, made with the supreme confidence that oil would continue to trade in a band around $100/barrel, are now revealed as high-risk.

In recent years, Wall Street has been transformed into the largest casino in the history of the world.

Most of the time the big banks are very careful to make sure that they come out on top, but this time their house of cards may come toppling down on top of them.

If you think that this is good news, you should keep in mind that if they collapse it virtually guarantees a full-blown economic meltdown. The following is an extended excerpt from one of my previous articles…

—–

For those looking forward to the day when these mammoth banks will collapse, you need to keep in mind that when they do go down the entire system is going to utterly fall apart.

At this point our economic system is so completely dependent on these banks that there is no way that it can function without them.

It is like a patient with an extremely advanced case of cancer.

Doctors can try to kill the cancer, but it is almost inevitable that the patient will die in the process.

The same thing could be said about our relationship with the “too big to fail” banks. If they fail, so do the rest of us.

We were told that something would be done about the “too big to fail” problem after the last crisis, but it never happened.

In fact, as I have written about previously, the “too big to fail” banks have collectively gotten 37 percent larger since the last recession.

At this point, the five largest banks in the country account for 42 percent of all loans in the United States, and the six largest banks control 67 percent of all banking assets.

If those banks were to disappear tomorrow, we would not have much of an economy left.

—-

Our entire economy is based on the flow of credit. And all of that debt comes from the banks. That is why it has been so dangerous for us to become so deeply dependent on them. Without their loans, the entire country could soon resemble White Flint Mall near Washington D.C….

It was once a hubbub of activity, where shoppers would snap up seasonal steals and teens would hang out to ‘look cool’.

But now White Flint Mall in Bethesda, Maryland – which opened its doors in March 1977 – looks like a modern-day mausoleum with just two tenants remaining.

Photographs taken inside the 874,000-square-foot complex show spotless faux marble floors, empty escalators and stationary elevators.

Only a couple of cars can be seen in the parking lot, where well-tended shrubbery appears to be the only thing alive.

I keep on saying it, and I will keep on saying it until it happens. We are heading for a derivatives crisis unlike anything that we have ever seen. It is going to make the financial meltdown of 2008 look like a walk in the park.

Our politicians promised that they would do something about the “too big to fail” banks and the out of control gambling on Wall Street, but they didn’t.

Now a day of reckoning is rapidly approaching, and it is going to horrify the entire planet.