Economic and financial collapse - 08/19/2015

Oil just tanked below $41 a barrel — and now plunge to $32 is a ‘conceivable reality’

Oil plunged to the lowest level in more than six years in New York as a government report showed that U.S. crude stockpiles unexpectedly increased.

West Texas Intermediate slipped more than 3.4 per cent after the Energy Information Administration said crude supplies rose 2.62 million barrels last week. 

An 820,000 barrel stockpile decline was projected by analysts surveyed by Bloomberg. Crude imports surged to the highest level since April as refineries reduced operating rates.

WTI for September delivery, which expires Thursday, dropped US$2.05, or 4.8 per cent, to US$40.57 a barrel at 1:37 p.m. on the New York Mercantile Exchange. Prices touched US$40.46, the lowest since March 2009. The more-active October contract slipped US$2.10 to US$41.02.

Oil’s drop today

Brent for October settlement fell US$1.89, or 3.9 per cent, to $US46.92 a barrel on the London-based ICE Futures Europe exchange. It touched US$46.81, the lowest since January. The European benchmark crude traded at a US$5.90 premium to October WTI.

Oil could fall to lows last seen during the financial crisis of 2008 amid a persistent supply surplus, Citigroup Inc. said Wednesday.

“Balances point to further oversupply throughout 2015 begging the question how low can oil go,” Citigroup analysts led by Seth Kleinman said in an e-mailed report. The price of $32.40 a barrel for U.S. crude futures reached in 2008 “is a conceivable reality.”

Oil plunged Wednesday after a report showed U.S. crude stockpiles were higher than traders expected

Banks have treated our housing market like a Ponzi scheme, and it's about to bust

Australia’s housing market is looking a lot like the US, Ireland and Spain before the global financial crisis. Why aren’t politicians more concerned?

PRINT Emerging markets rocked by $US1tn capital flight as confidence slumps.

The flood of capital gushing out of emerging markets has risen towards $US1 trillion over the past 13 months, roughly double the amount that left during the financial crisis, amid slumping confidence in developing economies.

The sustained exodus reinforces concerns that emerging market economies, suffering slowing growth and weakening currencies, are relinquishing their longstanding role as engines for global growth to become a drag on demand.

Analysts say the flow may accelerate following China's currency devaluation this month and nervousness over an expected US Federal Reserve rate rise.

China Strengthens Yuan By Most In 2 Months Following Another Massive Liquidity Injection

The PBOC set the Yuan fix 0.08% stronger - the biggest 'strengthening in 2 months, which is interesting because following The IMF's confirmation of a delay to Yuan inclusion in the SDR basket to Oct 2016 (pending a year-end decision and asking for more flexibility), Offshore Yuan forwards notably devalued (shifting 350pips higher to 6.65, the highest/weakest Yuan in a week) pricing a 20 handle (or 3%) devaluation by August 2016. Overnight saw another CNY110bn liquidity injection rescue from The PPT in the afternoon session (saving SHCOMP from a close below the 200DMA) and tonight we see promise to recap Ag Bank along with another CNY 120bn reverse repo injection.Shanghai margin debt declined for a 2nd day in a row and Chinese stocks look set to open weaker.

Offshore Yuan forwards point to further devaluation to come...

Copper Breaches $5000, Breaks Below 15-Year Trendline

While the PBOC was literally everything in its power to keep the Shanghai Composite above its 200-day moving average as some sign of 'stability', it forgot about that other proxy of overall Chinese economic health: copper. And just as we warned previously, ever since the CCFD crackdown in 2012, copper has been tumbling and more crucially has just broken a 15-year trendline.

Climate philanthropist George Soros invests millions in coal

Billionaire has previously funded renewable energy and low-carbon initiatives and has called coal a ‘lethal bullet’ for climate change