Based On Supply, Oil Is Trading Much Higher Than One Would Expect

If you gave me the current supply/demand and storage positions and asked me to solve for price I'd come back with an answer somewhere in the $25-$30 range i.e. some 12% to 26% lower than the current $34.00, down 40 cents on Globex.

The fact that WTI is trading that much higher suggests something else is going on and frankly we aren't sure what it is and what has kept the futures coming back to the $34-$34+ handle we first posted about January 27.
Today the futures traded as high as $34.76 but once again didn't clear the Jan. 28 spike high of $34.82 which is another conundrum: why is it stalling under $35.

Possibly (probably?) related, last Thursday I sent this response to a friend regarding an email he had sent me:

Subject: Re: Deutsche Bank Chief Quant: "Our model ... more accurate than the arbitrage funds"

...And then there are exogenous events where one might actually have some expertise and you get your butt kicked anyway.

The oil vol. index has come down dramatically but it is still over 60.

And although we're flat in gold I have no explanation for the almost 20% up move.

I'll point out though, that the 1990 run began in June of that year, seven or so weeks before Saddam went into Kuwait:

On the long term charts that pop is just a blip and no one sees it but at the time it was a big deal and had folks spouting off all kinds of rationalizations.

None correct.

Compare/contrast the recent big dipper:

What I'm saying, in a much more oblique manner than usual is: We might be seeing a possibility-of-war premium priced into both oil and gold.

If that is the case it is probably worth noting that the Saudi's Northern Thunder military maneuvers have been extended from a targeted completion date of March 4 to March 10.

From ZeroHedge:

Following last week's builds overall and at Cushing, and Genscape's Cushing build warnings, expectations were for a 3.3m build overall (and 700k build at Cushing). API reported a massive 9.9mm build - the largest since April 2015; and a yuuge build at Cushing of 1.8mm (most in 3 months). Gasoline saw a draw but Distilates a notable build. Following today's v-shaped recovery in WTI, and NYMEX close ramp, the API data has sent crude reeling.
API:

• Crude +9.9mm (+3.3mm exp)
• Cushing +1.8mm (+700k exp)
• Gasoline -2.2mm (-1.1mm exp)
• Distillates +2.7

...MORE

Here's today's 30-minute chart showing the day's high and the reaction to the API numbers:
 

"Wheat market hits six-year low on US prospects"

From Agrimoney:

Wheat futures hit a new six-year low on Tuesday, after US government data showed winter wheat crops coming out of dormancy in good condition, while corn and soybean prices are still facing the prospect of strong South American exports.   

True, there was little support on the macro side either, as the Chinese purchasing managers index, an influential survey of industrial sentiment, came in negative for the seventh month in a row, indicating shrinking demand at the world's top commodity buyer. 

The dollar hit one-month highs against a basket of world currencies, bringing pressure to bear on dollar-denominated commodities, although it trimmed gains a little, trading up 0.2% in afternoon deals. 

Good condition
Data released by the US Department of Agriculture late on Monday showed condition in top-ranked winter wheat grower Kansas improving month-on-month. 

Conditions were also improved in Nebraska and South Dakota, while in Oklahoma, traditionally the second-ranked grower conditions were down, but still well above last year's level. 

US wheat futures extended losses on the news. 

Kansas, Chicago down
Front-month March wheat futures in Chicago were down 1.5%, at $4.38 ½ a bushel, their lowest level since 2010. 

And the May contract, which is the most widely traded, was down 1.5%, at a contract low of $4.46 a tonne....MORE

Recently:
Mar. 1
Intrepid Potash Gets A Going Concern Note, Stock Collapses (IPI)
Feb. 26
USDA Chief Economist Makes A Case For Farmland
Feb. 23
Wheat Futures Hit Six-year Low

Corn    356-6 down 1-2
Wheat 446-0 down 7-2

The Rise And Fall Of A Commodities Hedge Fund King

The fact that stands out about all the commodity fund failures is they didn't get to the short side, either in time or ever, which raises the question: Were they getting paid 2-and-20 on the way up for what was essentially leveraged beta?

For folks with a darkly realistic sense of humor the funny thing is, for the whole decline in the CRB from 370+ in 2011 to the Feb. 11 low around 155, the margin clerks were making the right trade with every sell-out and not charging a percentage to do it.
Tee-hee.

From Bloomberg:

• Flagship fund has been down in four of the last five years
• Assets under management have fallen nearly 85% to $1.5 billion

Thirty miles west of Wall Street, in an anonymous office park set among rolling hills and shady streets, lurks a giant of the commodities world.

Behind the bland facade in Berkeley Heights, New Jersey, lies the headquarters of Willem Kooyker, one of the most powerful and enigmatic traders in the game.

For half a century, Kooyker has quietly ridden the ups and downs of oil, copper, cocoa and more, first in his native Holland and later at Commodities Corp., the legendary trading-company-cum-think-tank that served as a training ground for market wizards Paul Tudor Jones, Louis Bacon and Bruce Kovner.

Only now, at 73, Kooyker is struggling to contain the damage from a commodities collapse that even he never saw coming.

Before the worst hit -- $20-a-barrel oil no longer sounds so crazy -- Kooyker’s hedge-fund firm was already hemorrhaging billions in assets, people close to his operation say. With returns at Blenheim Capital Management LLC’s flagship fund down for four out of the past five years, some investors are heading for the exits.

The numbers tell the story. At its height in 2011, Blenheim was the world’s largest commodities-focused hedge fund, with $9.1 billion in assets, people familiar with the firm say. Today, its assets have fallen nearly 85 percent to $1.5 billion.

What went wrong? The short answer is that Kooyker didn’t think things would get this bad. He and his colleagues underestimated the economic troubles in China and never thought commodities prices would fall so far, so fast, the people said, speaking on the condition they not be named to avoid jeopardizing business relationships.

It’s a remarkable turnabout for Kooyker, whose tenure atop Commodities Corp. in the 1980s set the stage for two wildly lucrative decades at Blenheim. In 1999, for instance, as oil sank below $10 a barrel, Kooyker bet that commodities would bounce back -- and his hedge fund soared nearly 109 percent. Billions of investor dollars poured in.

Few outsiders had any idea what Kooyker was up to. Most still don’t. He’s long operated under the radar, arguing that any publicity, good or bad, only hurts investment returns.

Most Secretive 

“They are the most secretive I have ever met," Christoph Eibl, chief executive officer of the $800 million commodity investor Tiberius Asset Management AG, said of Blenheim.
Kooyker and others at Blenheim declined to comment on the fund’s recent performance, assets under management or trading strategy.

The question now is how Kooyker can recover from a rout that has shaken investors, corporations and entire economies. Already, Blenheim investors like the $21 billion New Zealand public pension fund have pulled money out, according to annual reports from the Kiwi fund and interviews with people familiar with the matter.

Commodities Pain 

Granted, many other commodities specialists are suffering too. Cargill Inc., the agricultural giant, has shut one of its funds. Trafigura Group Pte, the oil and metals trading house, has closed its flagship Galena Metals Fund. Trafigura estimates that the world’s 10 top commodities hedge funds now manage $10 billion altogether, a fifth of what they did in 2008.

No one would mistake Kooyker for one of the rough-and-tumble traders who used to rule commodities from the trading pits of New York and Chicago. Tall and stately, with a shock of gray hair, an aquiline nose and deep blue eyes behind rimless glasses, he cuts an elegant figure on the New York social and philanthropic circuits. He has donated millions to the Metropolitan Opera, where his wife, Judith-Ann Corrente, is president of the board, and is a leading donor to Democratic political candidates.

An admirer of Winston Churchill, he named his firm after Blenheim Palace, Churchill’s birthplace and ancestral home in Oxfordshire. Busts of the British statesman adorn Blenheim offices. Kooyker tends to work out of one on Fifth Avenue in Midtown Manhattan; his London offices overlook Her Majesty’s Treasury, beneath which lie Churchill’s famed Cabinet War Rooms....MUCH MORE

"Wall Street's nightmare stock is getting annihilated"

Following up on Friday's "SunEdison Has Doubled In Under 48 Hours (SUNE)":

...Good grief, it reads like a press release from an '80's Vancouver deal.There are higher quality ways to get exposure to the solars should one so desire.

Today's story is from Business Insider via Yahoo Finance:

SunEdison is crashing again after the company said that it would delay its 10-K filing so it can finalize its financial statements.  

The stock was last trading down more than 37% at around $1.44 per share. 

Shares of SunEdison have collapsed 80% since last summer. 

Here's the statement (emphasis ours):  

State below in reasonable detail the reasons why Forms 10-K, 20-F, 11-K, 10-Q, 10-D, N-SAR, N-CSR or the transition report or portion thereof, could not be filed within the prescribed time period. 

SunEdison, Inc. (the “Company”) is unable to timely file its Annual Report on Form 10-K for the fiscal year ended December 31, 2015 (the “Form 10-K”) without unreasonable effort or expense. The Company’s delay in filing the Form 10-K is due principally to:...

...MORE

The stock has recovered some, now down 18% at $1.62.

Intrepid Potash Gets A Going Concern Note, Stock Collapses (IPI)

The stock went deer nuts* yesterday. Today in late pre-market it's up a penny.
Attentive reader may have noticed we're posting more on agricultural commodities and less on hydrocarbons.
As a general framework we are betting lower for corn and wheat into late summer and then some weather related upside.
Corn 357-6 up 0-6; wheat 452-2 down 1-0.
You'll probably also be seeing more posts on the ancillary stuff as well: fertilizer, land, processors, grain merchants, equipment etc.

From Reuters, Feb. 29:

Intrepid Potash Inc (IPI.N) said on Monday its auditor has expressed doubts about its ability to stay in business, sending its shares plunging by more than half.
.
The U.S.-based miner, which reported its third straight quarterly loss on Monday, also said low potash prices could cause a breach in its loan covenants.
.
Prices of the crop fertilizer have tumbled due to soft grain prices, dropping U.S. farm incomes, bloated capacity and weak currency in importing countries such as Brazil.
.
North America's biggest producer, Potash Corp of Saskatchewan (POT.TO), has closed one Canadian mine and said Friday it will idle production temporarily at two others.
.
"This was an extremely volatile, chaotic quarter," Chief Executive Officer Bob Jornayvaz said on a conference call. "We believe we'll continue to survive and eventually prosper as a smaller but much more profitable company."
.
Intrepid is one of the world's highest-cost potash producers.
.
Due to falling prices, Jornayvaz said the company won't be able to comply with debt covenants that were revised in January, and is working with lenders on an updated agreement. Its auditors added going concern language to their opinion, meaning there are worries about Intrepid's ability to keep operating.
.
Intrepid ended 2015 with $60 million in cash and doesn't expect to drain its balance this year, the CEO said.
.
The company's stock plummeted 57 percent at 97 cents. Its 52-week range is $1.75 to $14.60....MORE

*Deer nuts = under a buck.

Disney Rumored To Be Securing The Set Of The Next Star Wars Episode With Anti-Drone Drones

From Naked Security:

Disney rumored to be using anti-drone drones to protect Star Wars filming

Disney production teams will soon be filming scenes for “Star Wars: Episode VIII” in Croatia, and the studio is rumored to be taking exceptional measures to keep any footage from leaking out.

The Croatian website Mos Croatia reports that Star Wars filming will take place from 9 to 16 March in the medieval city of Dubrovnik, and the website set off a storm of speculation after it claimed that Disney is hiring 600 security guards, including “a special team with drones” intended to secure the filming from “uninvited drones.”

Plenty of media outlets have run with the story, and the speculation appears to center on this snippet from Mos Croatia’s report:

there is a special team with drones that will remove the uninvited drones …

It sounds like a plausible story, but according to Re/code, a source “close to the production” said those rumors were “untrue.”

What is true is that fans have used drones to get a glimpse of Star Wars filming before, although we don’t really know what the film-makers are doing to stop it.

Back in 2014, fanboys flew drones above an outdoor set at Greenham Common, UK, where crews were filming scenes from “Star Wars: The Force Awakens,” the first movie in the series reboot that was released in December 2015.

Footage shot from a drone leaked out showing the set including a half-finished Millennium Falcon and an X-Wing fighter.

Motherboard reported that Pinewood Studios – where Star Wars was being filmed – had contracted with a US company called DroneShield to purchase anti-drone technology, but the deal fell through when the US State Department blocked the sale....MORE

We looked at DroneShield a couple years ago.
And a more visually impressive technology in January's "There's A Drone Spying On Your Daughter and Using A Shotgun Is Frowned On In Many Locales......What to Do?"
And the eagles the Dutch police were training.
And some urban design elements that confuse drones.
And....
I seem to be getting a bit obsessed.
I don't like bloody voyeurs, okay?
It might be time for a vacation.
Dubrovnik is nice and, coincidentally, just last week I was looking at some property.
Here's a drone's eye view:

The Artificial Intelligence Company With The Most Venture Capital Funding

From Forbes:

Interview With The CEO Of The World's Highest Funded AI Company

Peter High ,  Contributor

Sentient Technologies has patented evolutionary and perceptual capabilities that provide customers with highly sophisticated solutions, powered by the largest compute grid dedicated to distributed artificial intelligence. The company also has a war chest of $143 million in venture investment, the most of any artificial intelligence company. Antoine Blondeau founded Sentient Technologies nearly nine years ago, though it was in stealth mode for the majority of that period.

After stints at Salesforce.com and Good Technology was looking for the next challenge. He had been involved in artificial intelligence for 15 years, making him an early pioneer in the field, and already had hit a home run by being involved in developing the technology that would become Siri, of iPhone fame.

Blondeau claims we are still in the very early days of artificial intelligence’s evolution, but his vision is to create technology that will mimic the human interaction. One of the first uses of the technology is in retail, replicating the experience of having a sophisticated advisory helping to curate your shopping experience. In this interview, Blondeau provides his vision for the company, his thoughts about the future of AI, the balance between AI innovation and AI safety, as well as a variety of other topics.

(To listen to an unabridged audio version of this interview, please click this link. This is the fourth article in a series on leaders in artificial intelligence, which includes interviews with Mike Rhodin of IBM Watson and Sebastian Thrun of Udacity. To read future articles in the series, please click the “Follow” link above.)

High: Artificial intelligence seems to be gaining tremendous momentum, whether it is venture capital, media coverage, or simply progress that is obvious in the world.  There are clearly a couple of trends that have made this possible in recent years: the emergence of relatively low-cost available computing power and the vast, growing abundance of data that companies in every industry are collecting. I think I have heard you say that we are in the first inning here of the game, as so much innovation is ahead of us. As somebody who got into this 15 to 20 years ago, long before this boom, where do you see things now, and how do you think things are evolving?

Blondeau: You are right on the money when you talk about what has happened over the past five or seven years that is making this possible. Some of the team members and I worked on the precursor to what became Siri. At the time, we were thinking of an algorithm running on one machine or a few machines. What has happened over the past few years is that you have the data, it is broadly available, and one of the things that we foresaw was not only that data would explode but the dimensionality of data would explode. It will connect a lot of types of data that had not been connected before. That is a big help.

The second thing is that we have moved from thinking of the machine being the compute to the network being the compute, which means that we can harness an enormous amount of compute cycles. In our case, that means running our system on up to two million CPU cores. We also have a few thousand GPU cores. It is a massive system. When we thought of this company seven years ago, we had the vision forward, but could not quite imagine how we could get there. I think now we can.

The last thing is that when you begin to think about the scale, you can begin to address problems that you had not thought were solvable previously. The ambitious nature of what you do can go up significantly. You can tackle dimensionality, you can tackle complex decision making. Effectively, you are looking at comprehensively including every step of decision making in the machine, or in this giant network machine, which previously was not something thought of as possible. That is the high level.

High: I would like to dive a bit further into the details of how this becomes reality, and how that has impacted the way in which you have thought about entering different markets. I have heard you speak about the applications in some of the primary industries where there are tremendous amounts of data and where there are particularly big problems to solve, like financial services and healthcare. I found it interesting that one of your first areas to apply Sentient Technologies is in retail and online shopping. I would love to understand further how you have chosen where to focus.

Blondeau: One of the things we did was building a powerful platform, but you never succeed by building a platform. You need to apply it to know that it is working and scales to multiple industries. So, we decided to monetize it to address trading, aspects of e-commerce, and the online content discovery experience, as well as, at the research level, institutions like MIT, University of Toronto, and Oxford to work on less immediately monetizable problems, but world problems nonetheless. I am talking here about genomics and patients in an ICU context.

In each case, the common denominator is a few things. One, can you try to solve a problem that has not been solved before? The complexity of the decision making process is key here. The second thing is can you encapsulate the whole decision making process within the machine?

Continued from page 1

Let me give you an example. In e-commerce, our product which was released more than a quarter ago, we are looking at effectively providing the user with a shopping assistant, just as if he or she were to walk into a store and be interacting with a real physical shopping assistant. That involves that feedback loop from entering the shop, virtually in this case, to getting an instantly curated version of the catalog. That is something that in the real world takes a human a lot of processing to achieve. It is immediately, in the moment, understanding what the user’s intent is, and reacting quickly to that. That means, effectively, understanding how the user is interested or looks at the array of choices that he or she sees in the shop. We are taking that paradigm and putting it into the online world. In our case, we are building this giant dynamic matrix of the shop’s inventory.

If you look at a shop that may have five, ten, or twenty thousand pairs of shoes in its catalog, it is virtually impossible for you, the user, to discover that in a meaningful way. You can do selective discovery, perhaps, by browsing through rows and rows of images, but effectively, you are going to quickly get lost and go away or make a sub-optimal choice. What we are saying is that there is no reason why this catalog cannot behave like a shopping assistant would, which means intelligently responding to how you browse and walk through it. If you click on an image that describes a particular shoe, this is meaningful. It means you are interested in it. What is it that you are interested in? Well, it may be something that you or I would be able to describe in meaningful words, like a color, texture, shape, or something more subtle that even you or I would not be able to describe but may be meaningful to that user.

We say a picture is worth a thousand words. That is what we are trying to achieve. We are trying to show you articles and items that are relevant to you, and will mean a lot to you, just like a shopping assistant would in real life, because he or she understands your intent....MUCH MORE

FT Alphaville On Argentina's Pari Passu Saga: Is This The End?

With news that Argentina has reached an agreement on its defaulted bonds with Singer and other bondholders the question naturally arises: What of Alphaville's 86-part (!) Pari-passu saga series? Is this it?
Will there be any more installments in the series?
I think we know the answer.

In the words of Ted Kennedy:

"...The work goes on, the cause endures, the hope still lives, and the dream shall never die."

Or something.
From FT Alphaville:

It’s been emotional
 Joseph Cotterill

It gives me greatest pleasure to announce that the 15-year pitched battle between the Republic of Argentina and Elliott Management, led by Paul E. Singer, is now well on its way to being resolved…
– Daniel Pollack, Special Master in the pari passu deal negotiations 

Could it be? Is it over? 

The $4.6bn deal (in principle) announced on Monday involves four big pari passu holdouts, including Elliott’s NML. 

They have reached agreement days after Judge Thomas Griesa said he would lift his injunction on Argentina to pay holdouts alongside restructured bondholders, which had set off this saga and (along the way) an Argentine sovereign default. 

The holdouts would get 75 per cent of their claims on Argentina. Its offer this month, made both to holdouts with judgments on defautled bonds and those building up hefty post-dated interest on pre-judgment debts, had been 70 per cent. (It also paid another holdout 100 per cent of his claim to settle, of course.) 

The difference is likely to be more than 5 per cent as Argentina’s specific treatment of that post-dated interest had been a big issue. Argentina will also be paying the holdouts back certain legal fees which, in a litigation which has taken the best part of a quarter of a century, may not be minuscule. Under a deal, Argentina would have to repeal a law against paying holdouts, and issue bonds to raise cash for payment. 

According to Mr Pollack (who gets quite emotional in his statement about “nothing short of heroic” President Macri of Argentina and Elliott’s Paul Singer, “a tough but fair negotiator”): 

No party to a settlement gets everything it seeks. A settlement is, by definition, a compromise and, fortunately, both sides to this epic dispute finally saw the need to compromise, and have done so.
We’ll be analysing the deal, where we go from here, and whether this saga will bloody end at last later this week. 

But for now — some questions to consider:...

...MUCH MORE

For folks under 30, the Ted Kennedy quote was from his concession speech at the Democratic National Convention, 12Aug1980.

For Investment Banks, Blockchain Is A Zero Sum Game

From Breakingviews:

Blockchain is a zero-sum game for investment banks

For investment banks, blockchain technology looks as much foe as friend. The use of multi-computer databases like that used by the cryptocurrency Bitcoin could cut costs, by automating labour-intensive tasks and stripping out other capital market intermediaries. But it may also eat into revenue. 

At its essence, a blockchain is an immutable record of exchanges of data, money, goods or services that sits on a network of computers. This shared ledger is stored simultaneously on the computers involved, which must first validate and then agree to any changes. This makes fraud acutely hard to perpetrate without majority control of the network. And data security and privacy are enhanced through the use of two types of cryptographic keys: a public one that can be accessed by the computers identifying the transactions, and private ones that belong solely to the buyers and sellers involved.

Capital markets banks see this as a big opportunity. In theory, blockchains could do away with much of the business performed by fee-charging third-party overseers like clearers and custodian banks. The former vouch for counterparties’ credit positions, while the latter transfer cash from one account to another.

With investment bank-run blockchains, these credit-checking, margin-call and settlement processes could conceivably happen automatically as part of the transaction itself. Instead of needing intermediaries to give it their blessing, the computers at the participating broker-dealers would be the sole signatories required. The main function of custody banks BNY Mellon and State Street would thus become redundant. Private sector clearing houses like LCH.Clearnet, CME Clearing Europe and the Depository Trust & Clearing Corporation could also conceivably lose business, though they might still be needed to sanction complex derivatives or multi-asset class transactions.

Banks could benefit in other ways too. There would be less need for the thousands of middle and back-office staff that the typical broker-dealer employs. Deutsche Bank as of December employed as many as two-thirds of its 28,280 investment bank staff in such roles.

All of that implies big cost savings. Separate studies by consultancy Accenture and Spain’s Santander each reckon blockchain technology could save $20 billion in annual costs, although the management consultancy sees that total as applying for the whole securities industry and the Spanish lender views it as applying to just banks. Accenture also says that those cost savings could be as much as a fifth of banks’ IT expenses.

Even so, the potential savings may not be all that material. Investment banks typically spend about a third of their total cost base on IT, including technologists’ salaries. That means blockchain-related savings could have pushed up the industry’s 2015 return on equity, excluding exceptionals, to 10.4 percent, according to Breakingviews’ calculations based on Coalition data. A handy bump, but only just above a cost of equity most analysts put at about 10 percent....MORE

China Will Not Intervene Or Supply Aid Should Texas Decide To Secede

File under: Things I had not thought about.

Not the first few paragraphs, we've thought about plan B quite a bit, including a couple posts-in-waiting should the U.S. try to go that route. Rather, the question of whether China would recognize a breakaway Texas had not occurred to me.

From Asia Times:

On Texas secession, Syrian partition and imploding nation-states

The house of international law could be shaken to its foundations if Secretary of State John Kerry removes a critical cornerstone that holds it together.

Kerry says that if the Syrian ceasefire breaks down, he has a plan B to partition Syria along ethnic and religious lines. If this happens, will it signal the end of the Westphalian concept of sovereignty? That is, the legal concept that establishes the rule of nation states over their own territories and domestic affairs as a guiding principle of international law?

If so, would the UN then need to adjust its charter to foster new norms of sovereignty based on ethno-religious lines rather than territorial integrity? That is, rather than exercising fixed sovereignty within a bounded territorial space, would the new concept of flexible sovereignty now be able to expand or contract in territories with similar or dissimilar ethnic and religious groups?

In this case, would large countries with multi-ethnic and multi-cultural identities such as China, Russia, India and other nations adhere to this new norm?

These are some questions that would have to be addressed if Kerry’s Plan B is implemented.

As Jacob Zenn from the Jamestown Foundation pointed out, China is concerned by “the prospect of re-shaping the borders in the Middle East that could lead to new conceptions of sovereignty and statehood — not only in that region but elsewhere throughout the Islamic world, including Central Asia and Xinjiang.”[1]

In a Russia already lamenting over the disintegration of the former Soviet Union, Putin is likewise concerned by the possibility of a further break up of the North Caucasus under jihadist pressure.

India’s partition debacle

India, for one, has already experienced partition based on religion. In 1947, colonial India was separated into a Muslim majority Pakistan and a Hindu majority India, with East Pakistan further splitting into Bangladesh.

However, partition didn’t douse their enmity — which eventually prompted both countries to become nuclear weapons states.

Moreover, if sovereignty were no longer based on the norm of territorial integrity (in addition to ethnicity and religious belief), would other differences such as political beliefs or preference for different forms of governance be legal grounds for annexation or secession of territories?

Will Texas secede?

In the US, the state of Texas has been trying to secede from the union.

Lacking confidence in the long-term economic viability of the federal government and perceiving an increasingly left-leaning, Marxist-driven management in Washington, the Texas State Legislature announced in June 2015 that approximately $1 billion worth of state-owned gold bars currently held in the Federal Reserve’s Manhattan vault, will be kept within its own borders.[2]

Edwin Truman, a senior fellow at the Washington-based Peterson Institute for International Economics observed that “Just moving it [the gold] would be pretty expensive and, unless Texas is anticipating withdrawing from the Union, which I suspect is (what) some (people) want, I don’t see what advantage it is.”

On the flip side, an attempt to put a non-binding proposal on a primary ballot, asking Texas Republicans if they would support secession was rejected by the State Republican Executive Committee on Dec. 5, 2015.

The proposal reads: “If the federal government continues to disregard the Constitution and the sovereignty of the State of Texas, the State of Texas should assert its status as an independent nation.”

Texas is referred to as “The Lone Star Republic” for a reason — it was an independent nation from 1836 to 1845, and its separatist movement has attracted Russia’s attention.[3]

Russian state media has also taken the Crimea-as-Texas analogy and sprinted with it — noting how both had originally split off from Russia and Mexico.

In early 2015, when the US was waffling about whether to militarily intervene in the European theater, the speaker of Chechnya’s parliament, Dukuvakha Abdurakhmanov, warned that should the US boost arms deliveries to Ukraine, “we will begin delivery of new weapons to Mexico” and “resume debate on the legal status of the territories annexed by the United States,” which are now the US states of California, New Mexico, Arizona, Nevada, Utah, Colorado and Wyoming.[4]

By coincidence in July 2015, the Pentagon began conducting a large-scale military exercise called Operation Jade Helm, with a map covering similar states in the Southwest.[5]

China, often suspicious that the US doesn’t support its “One China Policy” over Taiwan, Tibet and Xinjiang, also reminded Washington about its own sensitivities towards Texas and other southwest territories at the time.

China won’t intervene in Texas

Hoping the US would extend the quid pro quo, Senior PLA Colonel Liu Mingfu signaled in a piece in The China Dream, “If any part of the United States declares independence or wants to secede, China will not intervene, or establish a regional relationship with that portion of the United States, nor will China provide it military aid.”

At the same time, if Syria were to be partitioned along ethnic and religious lines, China would be concerned by how this impacts the legitimacy of its “core interests” based on the Westphalian concept....MORE

Natural Gas: How Low Can It Go?

$1.50?
Uncharted territory here, so anything anyone says is just a guess.
Front futures $1.729 down 6.20 cents, Mays $1.830 down 4.30 cents. Daily low $1.69.
From Inside Futures:

Natural Gas Futures--- Natural gas futures in the April contract is sharply lower this Monday morning in New York down 9 points hitting a fresh contract low currently trading at 1.70 as record temperatures across the Midwestern part of the United States is sending prices to new lows. I have been recommending a short position from around the 2.15 level and if you took that trade place your stop loss above the 10 day high which stands at 2.03 as the chart structure will start to improve later this week therefore lowering monetary risk as prices have absolutely crumbled over the last several weeks. Natural gas prices are trading far below their 20 and 100 day moving average telling you that the short-term trend clearly is to the downside, however if you have missed this trade move on as the risk/reward is not in your favor at this time....MORE

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