Category Archives: UK

Wealth share, Vehicle sales, US retail sales, US trade, German trade, HK index, UK, US Consumer credit

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The ‘labor market’ is not a ‘fair game’ as people need to work to eat, and business only needs to hire if it likes the return prospects, so real wages should be expected to remain depressed without some form of outside support, which broke down in the 80’s with globalization policies, and the share of GDP going to capital began to rise:


General weakness continues:


US imports way down, as reflected in general global weakness, and same for weak US exports. And also indicative of US weakness:

Highlights

A sharp pull back in imports, not strength in exports, led a much sharper-than-expected fall in November’s trade deficit to $49.3 billion. Imports, reflecting price declines for petroleum as well as a $4.3 billion drop in consumer goods especially cell phones, fell $7.7 billion in the month while exports also fell, down $1.3 billion and largely reflecting oil-related declines for supplies and materials.

Germany Balance of Trade

The German trade surplus decreased to EUR 13.9 billion in December 2018 from EUR 18.4 billion in the same month a year earlier. It was the smallest trade surplus since January 2016, mainly due to a sharp decline in exports.

Hong Kong Private Sector PMI

The seasonally adjusted Nikkei Hong Kong PMI inched higher to 48.2 in January 2019 from 48.0 in the previous month and marking the tenth straight month of contraction. New orders fell again, accompanied by lower sales to overseas markets, including China. At the same time, output continued to decline, while firms scaled back on purchasing activity and hiring.

Bank of England sees weakest UK outlook since 2009 on Brexit, global slowdown

The Bank of England said Britain faces its weakest economic growth in a decade this year as uncertainty over Brexit mounts and the global economy slows.

United States Consumer Credit Change

Consumer credit in the United States went up by USD 16.55 billion in December 2018, down from an upwardly revised USD 22.41 billion gain in the previous month and slightly below market expectations of a USD 17.0 billion rise. It was the lowest increase in three months. Revolving credit including credit card borrowing climbed USD 1.7 billion, compared to an upwardly revised USD 4.9 billion advance in November. Meantime, non-revolving credit including loans for education and automobiles jumped by USD 14.9 billion, after rising an upwardly revised USD 17.5 billion in the prior month.

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Trade, Factory orders, Vehicle sales, UK service sector, German PMI

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Deficit growing despite tariffs. Could be J curve effect:

Highlights

A slight 0.1 percent decline in exports and a slight 0.2 percent gain in imports made for a sizable 1.7 percent deepening in the nation’s trade deficit in October to $55.5 billion which is just outside Econoday’s consensus range.

The deficit with China was very deep, at $43.1 billion in October vs $40.2 billion in September for a year-to-date deficit of $420.8 billion that is 23 percent deeper than this time last year. This is important data for ongoing trade talks between the U.S. and China.

October’s deficit with the EU, at $17 billion, also deepened as did the deficit with Japan at $6.2 billion. The deficit with Mexico, at $7.2 billion, eased slightly while the deficit with Canada, at $1.9 billion, widened slightly. Note that country balances, unlike other data in this report, are not adjusted for calendar or seasonal effects.

Exports, in possible tariff effects, show another sizable drop in foods, feeds & beverages, to $10.3 billion vs September’s $11.0 billion. Exports of civilian aircraft were also weak, at $4.9 billion vs September’s $5.2 billion. Services exports, an area of strength for the U.S., edged higher in the month to $69.6 billion.

Foods, feeds & beverages on the import side rose slightly to $12.3 billion with imports of consumer goods, which are a special sore spot in the U.S. trade picture, rising $2.0 billion to $57.4 billion. Imports of services rose modestly to $47.0 billion.

October’s $55.5 billion headline deficit compares with a monthly average in the third-quarter of $52.8 billion and unfortunately marks a very weak opening for fourth-quarter net exports.

Tariffs taking their toll:

Highlights

Held down by downturns in the defense goods and also civilian aircraft, factory orders sank 2.1 percent in October. The split between the report’s two main components shows a modest 0.3 percent increase for nondurable goods — the new data in today’s report where the gain is tied to printing and petroleum — and a 4.3 percent drop for durable orders vs 4.4 percent in last week’s advance report for this component.

Orders for defense goods have fallen 16.4 and 16.2 percent the last two reports but follow a giant 48.8 percent surge in August that was tied to aircraft. Orders for civilian aircraft in October and September have fallen 22.2 and 19.1 percent but here too follows an outsized gain in August, of 63.7 percent.

Core capital goods (nondefense ex-aircraft) are mostly weak in today’s report, with orders unchanged following declines of 0.6 and 0.2 percent in the prior two months. But core shipments, which are direct inputs into fourth-quarter GDP, did rise 0.3 percent for a respectable opening to fourth-quarter business investment.

Areas of strength in October include sharp order gains for fabrications, computers & electronics, and also electrical equipment. Other readings include a marginal 0.1 percent rise in factory inventories which will offset very strong October builds for retailers and wholesalers and will limit October’s contribution to GDP inventory. Both total shipments and also total unfilled orders posted soft 0.1 percent declines.

Monthly swings in aircraft can badly cloud results this report which focuses attention on the smoother reading of year-on-year change. This remains solidly positive at a 6.9 percent gain for total orders which, however, is down from 7.5 percent in September and a 4-year high of 10.3 percent in August. But a little slowing at year-end won’t dim manufacturing’s central contribution to the strength of the 2018 economy.


Still flat to down, much like housing:

Highlights

Unit vehicle sales in November came in on the high end of expectations but, at a 17.4 million annualized rate, still fell just short of October’s 17.5 million rate. The results do not point to a back-to-back monthly gain for motor vehicles which make up about 1/5 of total retail sales and which in October ended two months of declines. Yet November did come in at a very healthy rate with strength concentrated in light trucks which typically have high sticker prices and which help dollar totals of the retail sales report.

The IHS Markit Germany Composite PMI stood at 52.3 in November 2018, compared to a preliminary reading of 52.2 and October’s final 53.4. The latest reading pointed to the weakest pace of expansion in the private sector in nearly four years amid slower growth in service sector and a slight rise in manufacturing output that was the weakest for over five-and-a-half years. New orders rose the least since the start of 2015, with export orders falling for the third straight month, and job creation slowed. On the price front, output charge inflation eased to an 11-month low. Looking ahead, business confidence towards the outlook remained close to the lowest in almost four years. Composite Pmi in Germany is reported by Markit Economics.

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Personal income and spending, GDP, Trump meeting, North Korea tests

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Personal income growth continues to be depressed, which tends to keep spending down as well over time, though this month it had a nice one time increase due to the hurricanes, and the drop in the personal savings rate tells me it’s entirely unsustainable. Also the low inflation readings also support the notion of a general lack of aggregate demand:

Highlights

Core inflation remains lifeless in an unwanted highlight of an otherwise solid income and spending report. Personal income rose 0.4 percent in September and was underpinned by wages & salaries which also rose 0.4 percent. Consumer spending jumped 1.0 percent driven by a 2.1 percent surge in durable goods that was tied to vehicle replacement following Hurricanes Harvey and Irma.

But the rise in income and spending didn’t heat up ex-food ex-gas core inflation which posted a marginal 0.1 percent gain. This is the 5th straight 0.1 percent gain for this key reading. The core’s year-on-year rate has been stuck at a rock bottom 1.3 percent for the last two months. Total inflation, reflecting a hurricane-related gain for energy prices, rose 0.4 percent with this year-on-year rate rising 2 tenths to 1.6 percent.

But the pressure on energy prices has already faded and unless wage pressures can extend their emerging gains, inflation readings are not going to be climbing in the direction of the Federal Reserve 2 percent goal. Also helping spending in September was a sharp 5 tenths decline in the savings rate to 3.1 percent and a 10-year low in what, however, is likely to be another hurricane effect that will be quickly reversed.

For me, the numbers still don’t ‘add up’. Yes, subtracting inventories, trade, etc. bring the number down closer to 2%, but that’s still at odds with the bank lending reports, depressed personal income, decelerating employment, and the large drop in the personal savings rate. I suspect something has to give, and very soon, and most likely a further and larger drop in consumption:

The changes from the prior quarter reflect a general weakening of consumer and commercial spending growth, nearly offset by increased inventories and reduced imports. The contribution from consumer spending on goods dropped -0.24%, while the contribution from spending on services dropped -0.38% (a combined -0.62%). The inventory contribution became significant, at +0.73%, roughly a quarter of the entire growth. The contribution from fixed commercial investment was halved to +0.25% (from +0.53%). Governmental spending remained in a very minor contraction (-0.02%). The contribution from exports dropped -0.14% to +0.28%, while the contribution from imports turned positive, at +0.12%.

The BEA’s “bottom line” (their “Real Final Sales of Domestic Product”, which excludes inventories) decreased to +2.25%, down -0.69% from the prior quarter.

Real annualized household disposable income dropped -$19 to $39,280 (in 2009 dollars). The household savings rate also dropped -0.4% to 3.4%, the lowest level since the fourth quarter of 2007.

For this revision the BEA assumed an effective annualized deflator of 2.16%. During the same quarter (July 2017 through September 2017) the inflation recorded by the Bureau of Labor Statistics (BLS) in their CPI-U index was 4.31%. Underestimating inflation results in optimistic growth rates, and if the BEA’s “nominal” data was deflated using CPI-U inflation information the headline growth number would have been materially lower at an +0.89% annualized growth rate.

Among the notable items in the report :

  • The headline contribution from consumer expenditures for goods was reported to be +0.92% (down -0.24% from the prior quarter).
  • The contribution to the headline from consumer spending on services weakened to +0.70% (down -0.38% from the prior quarter). The combined consumer contribution to the headline number was +1.62%, down -0.62% from 2Q-2017.
  • The headline contribution from commercial private fixed investments decreased to +0.25%, down more than half (-0.28%) from the prior quarter. That continued to reflect a contraction in residential construction.
  • Inventory growth provided a material boost to the headline number (+0.73%). This was a +0.61% improvement from the prior quarter. It is important to remember that the BEA’s inventory numbers are exceptionally noisy (and susceptible to significant distortions/anomalies caused by commodity price or currency swings) while ultimately representing a zero reverting (and long term essentially zero sum) series.
  • Governmental spending was reported to be contracting very slightly, at a -0.02% rate. This was a +0.01% improvement from the prior quarter.
  • Exports contributed +0.28% to the headline number, down -0.14% from the prior quarter.
  • Imports added +0.12% to the headline, which was up +0.34% from the prior quarter. In aggregate, foreign trade added +0.42% to the headline number.
  • The “real final sales of domestic product” grew at an annualized 2.25%, down -0.69% from the prior quarter. This is the BEA’s “bottom line” measurement of the economy and it excludes the inventory data.
  • As mentioned above, real per-capita annual disposable income reportedly dropped -$19 per annum. At the same time the household savings rate was reported to have dropped to 3.4% (down -0.4% from the prior quarter). It is important to keep this line item in perspective: real per-capita annual disposable income is up only +7.10% in aggregate since the second quarter of 2008 — a meager annualized +0.74% growth rate over the past 37 quarters.
  • Household disposable income took another hit. Less money was available, and less money was saved — so that a significant portion of the already softening consumer spending came from savings, not pay checks.


    • At this meeting Papadopoulos told everyone he was setting up a meeting with Putin:

    North Korea on verge of ‘catastrophe’ at nuclear site – China warns Kim to STOP tests

    North Korea on verge of ‘catastrophe’ at nuclear site – China warns Kim to STOP tests (Express) Scientists from Beijing believe the Punggye-ri nuclear facility is unstable and that just one more explosion could blow the top off of Mount Mantap, beneath which all six of North Korea’s nuclear tests have been conducted. That could lead to the mountain collapsing, causing radioactive waste to escape and blow across the border into China just 50 miles away. Researchers from the Chinese Academy of Sciences’ Institute of Geology and Geophysics warned Pyongyang delegates of the risk during a briefing in Beijing soon after North Korea’s last nuclear test on September 3, according to the South China Morning Post.

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    Existing home sales, Oil rig count

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    Now down year over year, and in line with the deceleration in bank mortgage lending:

    Highlights

    Existing home sales posted their first gain in four months, rising 0.7 percent in September to a 5.390 million annualized rate that is near Econoday’s top forecast. Hurricane effects are hard to gauge with the National Association of Realtors reporting that sales in Florida were down substantially though sales in Houston have already recovered.

    The sales gain came at a price discount as the median fell 3.2 percent to $245,100 for what is still, however, a respectable 4.2 percent year-on-year gain. Supply is still very tight, at 1.900 million resales on the market which makes for a useful 1.6 percent gain though the yearly rate is down 6.4 percent. On a sales basis, supply is unchanged at only 4.2 months.

    Sales in the South fell 0.9 percent in September and follow August’s 5.7 percent decline. These may be hurricane effects but they’re not overly substantial given mixed readings in other regions. All regions are either slightly lower to flat year-on-year.

    And overall sales are flat, down 1.5 percent compared to September last year. Yet this report is positive for what is a lukewarm housing sector. Watch for sales of new homes and pending sales of existing homes on next week’s calendar.


    This peaked a while back and continues to fade:

    Highlights

    The Baker Hughes North American rig count is down 25 rigs in the October 20 week to 1,115. The U.S. rig count is down 15 rigs at 913 but is up 360 rigs from last year at this time. The Canadian count is down 10 rigs from last week at 202 but compared to last year is up 59 rigs.

    For the U.S. count, rigs classified as drilling for oil are down 7 rigs at 736 while gas rigs are down 8 at 177. For the Canadian count, oil rigs are down 5 at 107 and gas rigs are also down 5, at 95 rigs.

    The week’s large drop is the fourth consecutive weekly decline in the count, and is partly caused by seasonality as cold weather begins to curtail operations in northern regions, and partly probably by lingering hurricane damages, with Texas down 8 rigs to 436.

    Schlumberger, Baker Hughes Warn Of N. America Slowdown

    Oct 20 (Reuters) — Schlumberger Ltd and Baker Hughes, the world’s top two oilfield services firms, warned on Friday of a slowdown in North America and a challenging year ahead as crude oil prices stay volatile.

    Schlumberger said investments in North America were moderating as energy companies increasingly shied away from chasing higher production at the cost of financial returns.

    “Oil prices remain volatile and, as a result, our customers remain cautious,” Baker Hughes Chief Executive Lorenzo Simonelli said.

    The company, in its first report to include GE Co’s oil and gas business since their merger, reported a quarterly profit that missed analysts estimates by a wide margin.

    Schlumberger reported a 53 percent jump in revenue from North America, its biggest market, in the latest quarter, but cautioned that activity had been slowing.

    “In the U.S. Gulf of Mexico, activity continued to weaken in the third quarter, and the outlook remains bleak for this region based on current customer plans,” Schlumberger said.

    The company’s results and warnings come amid slowing drilling activity in North America.

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    JOLTS, Redbook sales, Rig count, Credit check, NK comment, PMC jersey

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    Openings higher than hires tells me employers don’t want to pay up, which is also suggested by low wage growth:

    Highlights

    In the latest indications of strong, tight conditions in the labor market, job openings rose to a higher-than-expected 6.170 million in July for a 0.9 percent increase from June. Hirings also rose, up 1.3 percent to 5.501 million which, however, is 669,000 below openings. Openings have been far ahead of hirings for the past several years to indicate that employers are having a hard time filling positions.

    Other indications are steady to higher with the separation rate at 3.6 percent, the quits rate at 2.2 percent, and the layoff rate at 1.2 percent. The only employment data that aren’t strong, in data however that are not part of the JOLTS report, are wages, yet job openings in this report are certain to catch the eye of the more hawkish FOMC policy makers who continue to warn that wage-push inflation is inevitable.

    The growth rate of new openings is at stall speed:


    The new hiring has stalled:


    Moving higher again, as previously discussed:


    Looks like the increases in new drilling are behind us, and new wells are costing a lot less than before the shale bust, so it’s all adding that much less to GDP:


    Not to kick a dead horse, but gdp growth is getting less support from credit growth than it did last year. And that reduction appears to be over 2% of GDP. So far GDP has held up from consumers dipping into savings, which looks to me to be an unsustainable process:


    I’m thinking I’d tell North Korea that if they don’t abandon their nukes will give China a green light to annex them… ;)

    China urges North Korea to ‘take seriously’ bid to halt nuclear program

    Sept 12 (Reuters) — China’s U.N. Ambassador Liu Jieyi called on North Korea to “take seriously the expectations and will of the international community” to halt its nuclear and ballistic missile development, and called on all parties to remain “cool-headed” and not stoke tensions. Liu said relevant parties should resume negotiations “sooner rather than later.” To kick-start talks, China and Russia have proposed a dual suspension of North Korea’s nuclear and ballistic missile testing as well as U.S. and South Korean military exercises. U.S. Ambassador to the United Nations Nikki Haley has called the proposal insulting.

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    CPI, Retail sales, Industrial production, Hotel stats, rail week, US budget deficit, Asset price chart,Trump comments

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    The Fed continues to fail to meet it’s target. They just need a little more time… ;)
    And coincidentally this is inline with the credit deceleration as previously discussed:

    Highlights

    In what is one of the very weakest 4-month stretch in 60 years of records, core consumer prices could manage only a 0.1 percent increase in June. This is the third straight 0.1 percent showing for the core (ex food & energy) that was preceded by the very rare 0.1 percent decline in March. Total prices were unchanged in the month with food neutral and energy down 1.6 percent.

    Housing, which is a central category, continues to moderate, also coming in at 0.1 percent following a 0.2 percent gain in May. Apparel is down for a fourth month in a row with transportation, reflecting falling vehicle prices, down for a second month. Medical care, which had been moderating, picked up with a 0.4 percent gain while prescription drugs which Janet Yellen has been citing for special weakness, bounced back with a 1.0 percent gain. However wireless telephone services, another area cited by Yellen for weakness, posted another sizable decline, down 0.8 percent in June.

    Year-on-year, the core is steady at 1.7 percent with total prices, which fluctuate much more than the core, down 3 tenths to 1.6 percent. The Fed may be blaming this stretch of weakness on special factors, but that argument is losing force.

    Also decelerating in line with decelerating credit aggregates:

    Highlights

    Consumer spending in second-quarter GDP will not be getting a lift from the retail component as retail sales fell an unexpected 0.2 percent in June. This follows a revised 0.1 percent decline in May and a revised 0.3 percent gain for April which proved to be the quarter’s only respectable showing.

    Readings show wide weakness with vehicle sales coming in with a marginal 0.1 percent increase, the same for furniture and also electronics & appliances. Declines include food & beverage stores, down a sharp 0.4 percent, and department stores down 0.7 percent following the prior month’s 0.8 percent plunge. Restaurants are also weak, down 0.6 percent for the third decline in four months. Gasoline sales fell 1.3 percent reflecting price weakness. Nonstore retailers, which include e-commerce, are a positive in the report with a 0.4 percent gain as are building materials rising 0.5 percent gain.

    But there really aren’t very many positives in today’s report, one that points to a surprising lack of consumer spirit and one that will not be raising estimates for second-quarter GDP.

    Annual growth chugging along at a modest 2%, leveling off after the setback from the oil capex collapse, as per the chart:

    Highlights

    Mining is once again the highlight of an otherwise soft industrial production report. Gaining 1.6 percent for a third straight sharp increase, mining pulled industrial production up 0.4 percent in June as utilities posted no change and manufacturing managed an as-expected 0.2 percent gain.

    Manufacturing makes up the vast bulk of the industrial sector and a breakdown does show strength with vehicles up 0.7 percent and selected hi-tech up 0.8 percent. But both consumer goods and business equipment came in flat with construction supplies down slightly.

    The gain for manufacturing follows May’s 0.4 percent decline with a 1.0 percent surge in April nearly offset by March’s 0.8 percent plunge. The factory sector is moving forward, just not very fast. Today’s report is the first definitive factory data for June; watch next week for the first tentative data on May with Empire State on Monday and Philly Fed on Thursday. Note that traditional non-NAICS numbers for industrial production may differ marginally from NAICS basis figures.

    Trumped up expectations have now all but reversed, also in line with the deceleration of consumer lending:

    Highlights

    Economic expectations are falling while current conditions remain high, a combination that the consumer sentiment report warns points to economic slowing ahead. The consumer sentiment index fell a sharp 2 points in the preliminary results for July to a much lower-than-expected 93.1.

    The expectations component is down nearly 4 points to 80.2 for its lowest reading since before the election, in October last year. Republican expectations have been falling sharply from steep highs, down to 108.9 for a more than 7 point decline from June. Democrat expectations are actually improving slightly but remain very low at 63.2.

    Current conditions rose slightly in the month to 113.2 which is a positive indication for this month’s consumer activity. But it’s future activity that may be in trouble. Inflation expectations edged higher in the month but remain very low at 2.7 percent for the 1-year outlook and 2.6 percent for the 5-year.

    The drop in this index together with the drop in this morning’s retail sales report are new and imposing negatives for the consumer outlook.

    Consequence of falling sales:

    No growth of consequence from last year:

    From HotelNewsNow.com: STR: US hotel results for week ending 8 July

    The U.S. hotel industry reported mixed year-over-year results in the three key performance metrics during the week of 2-8 July 2017, according to data from STR.

    In comparison with the week of 3-9 July 2016, the industry recorded the following:

    • Occupancy: -3.0% to 65.3%
    • Average daily rate (ADR): +1.1% to US$122.73
    • Revenue per available room (RevPAR): -2.0% to US$80.11
    Read more at http://www.calculatedriskblog.com/#biuKy43OQFvtIM6K.99

    Rail Week Ending 08 July 2017: Slowing Continues

    Week 27 of 2017 shows same week total rail traffic (from same week one year ago) improved according to the Association of American Railroads (AAR) traffic data. The economically intuitive sectors slowing continues.

    Receipts lower than expected due to income slowdowns:

    United States Government Budget

    The US government posted a USD 90 billion budget deficit in June 2017, larger than market expectations of a USD 35 billion gap and compared with a USD 6 billion surplus in the same month of the previous year. Outlays jumped 33 percent to USD 429 billion while receipts increased at a much slower 3 percent to USD 339 billion.

    Asset prices as a % of real disposable income:

    Question: You were joking about solar, right?

    Trump: No, not joking, no. There is a chance that we can do a solar wall. We have major companies looking at that. Look, there’s no better place for solar than the Mexico border — the southern border. And there is a very good chance we can do a solar wall, which would actually look good. But there is a very good chance we could do a solar wall.

    One of the things with the wall is you need transparency. You have to be able to see through it. In other words, if you can’t see through that wall — so it could be a steel wall with openings, but you have to have openings because you have to see what’s on the other side of the wall.

    And I’ll give you an example. As horrible as it sounds, when they throw the large sacks of drugs over, and if you have people on the other side of the wall, you don’t see them — they hit you on the head with 60 pounds of stuff? It’s over. As cray as that sounds, you need transparency through that wall. But we have some incredible designs.

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    Industrial production, Housing starts, Forecasts, Loan growth

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    Very modest growth continues from the lows following the crash in oil capex, and note that the numbers are not inflation adjusted:

    The painfully slow recovery following the crash continues, and note the numbers are not population adjusted:

    Trumped up expectations fading:

    Forecasters Lower Growth Outlook as Hopes for Quick Stimulus Fade

    By Josh Zumbrun

    Apr 13 (WSJ) — Following the election, respondents to The Wall Street Journal’s monthly survey of forecasters significantly raised their estimates for growth, inflation and interest rates. In December, the average forecast called for 2.3% growth in the first quarter. That had fallen to 1.9% in March and dipped again to 1.4% in this month’s survey. In January, 71% of economists in the Journal’s survey were including significant fiscal policy changes in their forecasts. In April, that number was down to 44%. A majority now say “significant” changes are unlikely, although many said a small fiscal boost remains possible.

    Slowing loan growth finally making the news:

    Loan growth stalls despite profit, trading gains at some U.S. banks

    By David Henry

    Apr 14 (Reuters) — Big U.S. banks revealed more evidence of a slowdown in loan growth in their earnings reports on Thursday. JPMorgan’s core loan portfolio averaged $812 billion during the first quarter, up 9 percent on an annualized basis. But that growth rate has ticked down from 12 percent in the previous quarter and 17 percent a year ago. Wells Fargo’s annual loan growth rate of 4 percent has also been slowing over the past year. Citigroup’s loan book has been skewed by divestitures and its acquisition of a credit-card portfolio. Adjusting for those matters, Citi’s core loan book grew 5 percent in the first quarter.

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    PMI, Earnings, euro zone holdings, oil related comments

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    Trumped up expectations cooling a bit?
    PMI Manufacturing Index Flash


    Services:


    Initial earnings estimates have tended to fall:


    This is extraordinary, as their liabilities are most likely predominately euro denominated, which is what I’d call a ‘fundamental short’ position. That is, this has been part of the ‘portfolio shifting’ that has been keeping the euro down:

    Source: http://uk.reuters.com/article/uk-ecb-eurozone-investment-idUKKBN15Z1GE


    Reserves capable of being profitable way down with lower prices:

    Energy Companies Face Crude Reality: Better to Leave It in the Ground

    By Sarah Kent, Bradley Olsen and Georgi Kantchev

    Feb 17 (WSJ) — U.S. regulations require companies to take oil reserves off their books if they aren’t profitable at existing prices or can no longer be included as part of five-year development plans. Canada was once thought to hold the world’s third-largest trove of crude. Today, only about 20% of those reserves, or about 36.5 billion barrels, are capable of being profitable, according to energy consultancy Wood Mackenzie. In the decade leading up to the 2014 price collapse, companies spent as much as $200 billion building megaprojects to extract heavy oil in Alberta’s boreal forest.

    Gasoline demand always falls this time of year but more than expected this year, raising questions of whether demand is fundamentally down even with lower prices, etc:

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    Mortgage purchase apps, Tax reform, Trump comments

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    Purchase applications seemed to have, at best, leveled off a what remains very depressed levels:

    20801
    Revenue neutral won’t do the trick, and since the tax cuts are likely to be lower multiple than any spending cuts it could slow things down:

    Taxpayers should expect to see revenue-neutral tax reform as early as this summer, Republican Sen. Rob Portman told CNBC on Wednesday.

    “We need to do it. It’s urgent. It’s one way we know we can give the economy a shot in the arm,” the Ohio senator told “Squawk Box.”

    He said the ultimate goal for Republicans besides passing the tax reform is making it revenue neutral, meaning no increase or decrease in federal tax revenues.

    20802

    As previously discussed, the CIA said they would do this type of thing to get Trump’s approval:

    Donald Trump’s staff get him to agree to policies by saying ‘Obama wouldn’t have done it’

    Military officials got Donald Trump to agree to the botched Yemen raid by suggesting Barack Obama would never have had the courage to do it, it has been reported.

    Seems to me every passing day further confirms President Trump is just a 7 or 8 year old child in a 70 year old body, thereby subject to this type of manipulation.

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