Posted at 1:58 PM (CST) by & filed under In The News.

U.S. Economy Gained 126,000 Jobs in March, an Abrupt Slowdown in Hiring
By PATRICIA COHENAPRIL 3, 2015

The yearlong streak of robust monthly job creation was broken on Friday with the Labor Department’s report that employers added just 126,000 workers in March, a marked slowdown in hiring that echoed earlier signs that sluggish business investment and punishing weather were exacting a toll on the economy.

Analysts blamed the plunge in oil prices as well as the pall cast by a difficult winter across the Northeast and Midwest, a combination that put a crimp on spending in the energy patch and held back consumer spending and construction.

Still, this new report presents only a limited snapshot, and many said they expected the economy to regain at least some of its momentum later this year.

“The American energy industry is adjusting very quickly to low oil prices, and we’ve seen this in the counts of the number of rigs that are active,” said Carl R. Tannenbaum, chief economist at the Northern Trust Company. “The bad news is we’re losing some jobs. The good news is, we hope, that the average consumer is saving a tremendous amount of money in lower gasoline prices.”

The unemployment rate held steady at 5.5 percent. Hourly wages, in one of the few bright spots in the report, rose 0.3 percent for private sector workers in March, after a meager 0.1 percent rise in February. But hours worked were down slightly, so overall paychecks were left essentially flat.

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Jim Sinclair’s Commentary

The Eastern economic power shift is obvious.

BRICS leadership passes to Russia, $100bn development bank ‘main priority’
Published time: April 01, 2015 13:21
Edited time: April 02, 2015 09:42

As Russia assumes the chairmanship of the BRICS business council, the launch of the New Development Bank for its members will begin as an alternative to the US-dominated International Monetary Fund (IMF).

Sergey Katyrin, President of the Russian Chamber of Commerce, took over the chairmanship of a business council of BRICS, an economic association made up of Brazil, Russia, India, China and South Africa, on Wednesday.

The seventh summit of BRICS will be held in the southern Russian city of Ufa in July.

Last month, Katyrin emphasized that Russia would concentrate its energy on the launch of the BRICS New Development Bank (NDB) in an effort to generate greater cooperation among the five emerging markets.

"The main priority for Russia will definitely be the launch of the BRICS bank. We will do our best to facilitate this process," Katyrin told RIA Novosti in an interview last month.

The bank will finance infrastructure projects in the BRICS countries and across other developing countries, and is expected to start functioning by the end of 2015.

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Iran Accuses U.S. of Lying About New Nuke Agreement
Says White House misleading Congress, American people with fact sheet
BY: Adam Kredo
April 2, 2015 5:40 pm

LAUSANNE, Switzerland — Just hours after the announcement of what the United States characterized as a historic agreement with Iran over its nuclear program, the country’s leading negotiator lashed out at the Obama administration for lying about the details of a tentative framework.

Iranian Foreign Minister Javad Zarif accused the Obama administration of misleading the American people and Congress in a fact sheet it released following the culmination of negotiations with the Islamic Republic.

Zarif bragged in an earlier press conference with reporters that the United States had tentatively agreed to let it continue the enrichment of uranium, the key component in a nuclear bomb, as well as key nuclear research.

Zarif additionally said Iran would have all nuclear-related sanctions lifted once a final deal is signed and that the country would not be forced to shut down any of its currently operating nuclear installations.

Following a subsequent press conference by Secretary of State John Kerry—and release of a administration fact sheet on Iranian concessions—Zarif lashed out on Twitter over what he dubbed lies.

“The solutions are good for all, as they stand,” he tweeted. “There is no need to spin using ‘fact sheets’ so early on.”

Zarif went on to push back against claims by Kerry that the sanctions relief would be implemented in a phased fashion—and only after Iran verifies that it is not conducting any work on the nuclear weapons front.

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Jim Sinclair’s Commentary

This is an answer to auto traffic problems. Maybe debtors prison is to follow.

These States Will Take Your License for Not Paying Student Loans

Legislators in two states are trying to repeal laws that let authorities revoke driver’s licenses or professional licenses when people fall severely behind on their student loan payments.

The Montana senate is considering a bill, which passed the state’s house in March, that would repeal a statute that made it possible for student debtors to lose their occupational and driver’s licenses if they defaulted on their student loans—meaning they had not made payments in at least 270 days. Iowa legislators introduced a similar bill in February, but it stalled in the state senate this month because of a procedural obstacle.

The little-known laws exist in at least 22 states and have been on the books in some states since as far back as 1990. Advocates for repealing them say they have real consequences for people who cannot make a dent in their student debt.

“It’s the most inappropriate consequence, because you are taking away their ability to eventually pay [their loans] back,” says Moffie Funk, the Montana state representative who sponsored the bill. In Montana, where there is little public transportation to speak of, driving is the only way most people can get to the jobs they need to repay their debt, Funk says. 

Since 2007, Montana has suspended the driver’s licenses of 92 people for defaulting on their student loans, according to John Barnes, a spokesman for the Montana attorney general’s office. By 2012, Iowa had suspended more than 900 licenses because the license holders could not repay their student debt, according to Geoffrey Greenwood, a spokesman at the Iowa attorney general’s office. Those suspensions were reversed two years ago but not because the policy changed. The Iowa College Student Aid Commission, which once collected federal loans in the state, reserved the suspensions and stopped revoking licenses in 2012, because the commission transferred its student loan portfolio to the Great Lakes Higher Education Corporation, a Wisconsin guaranty agency.

Debt collectors say that the laws have been valuable tools for extracting long overdue payments and that they often stop short of issuing the most severe consequences for borrowers. "It’s more of a deterrent than something that goes all the way to license suspension," says Cheryl Poelman-Allen, who works in default prevention at the Montana Guaranteed Student Loan Program, a guaranty agency that collects federal student loans in the state. Poelman-Allen says the program tries to get borrowers to enroll in repayment plans that tie payments to their income level, before threatening them with the loss of their license. In a fiscal note explaining the cost of repealing the law, the agency said that the ability to revoke professional or driver’s licenses helped generate more than $200,000 in debt collections per year.

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China’s SWIFT Alternative and the Death of the Dollar
China is ready to launch its SWIFT alternative in the most significant move in the unfolding process of de-dollarization yet
James Corbett

Forget all the nonsense and hoopla about the Apple Watch or the GM stock buy-back. Far and away the most important economic story of the week is one you won’t find on the front page of Bloomberg or MarketWatch. New reports indicate that China is ready to launch its SWIFT alternative, and for those who have their ear to the ground this is the most significant move yet in the unfolding process of de-dollarization that is seeing the BRICS-led “resistance bloc” breaking away from the financial stranglehold of the US-led “Washington Consensus.”

For those who don’t know, SWIFT stands for the Society for Worldwide Interbank Financial Telecommunication and is shorthand for the SWIFTNet Network that is used by over 10,500 financial institutions in 215 countries and territories to transmit financial transaction data around the world. SWIFT does not do any of the clearing or processing for these transactions itself, but instead sends the payment orders that are then settled by correspondent banks of the member institutions. Still, given the system’s near universality in the financial system, it means that virtually every international transaction between banking institutions goes through the SWIFT network.

This is why de-listing from the SWIFT network remains one of the primary financial weapons wielded by the US and its allies in their increasingly important financial warfare campaigns. In 2012, SWIFT agreed to de-list 30 Iranian financial institutions (including the central bank) from their network as part of the US/EU-led sanctions on Tehran, a move that was meant to stop billions of dollars’ worth of oil and export sales from being repatriated into the country and bring Iranian business to a standstill. Throughout the recent tensions between the US bloc and Russia over the civil war in Ukraine, the idea that SWIFT could similarly de-list Russian banks has been repeatedly floated as a potential next step for the US and its allies.

Of course, SWIFT is nominally “independent” from any government entity and thus does not have to follow the dictates of Washington or anyone else pursuing their own personal vendettas in the financial arena. In practice, however, SWIFT put up no resistance whatsoever and obligingly complied with the Iranian sanctions request despite the fact that the blockade was repeatedly ruled illegal by the EU’s own courts. Does anyone doubt that, despite their protestations to the contrary, they would do any different if push came to shove with Russia? This is precisely why Moscow, Beijing and other countries in the cross hairs have been floating ideas of their own, namely the creation of an alternative payment network that bypasses SWIFT.

Now it seems that talk is materializing into something very real. Called the China International Payment System, the CIPS network is meant to facilitate cross-border transactions specifically in yuan and the latest reports suggest that the system is already in place and could be launched as early as this September.

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March Payrolls Huge Miss: Only 126,000 Jobs Added, Worst Since December 2013
Submitted by Tyler Durden on 04/03/2015 08:36 -0400

We warned yesterday that the "whisper expectation is for a NFP print that will be well below consensus, somewhere in the mid-100,000s if not worse now that the bartender hiring spree is over", and we were right: moments ago the BLS reported that in March a paltry 126K jobs were added, nearly 50% below the 245K expected, and the lowest monthly increase since March 2013.The unemployment rate was unchangned at 5.5%.

The change in total nonfarm payroll employment for January was revised from +239,000 to +201,000, and the change for February was revised from +295,000 to +264,000. With these revisions, employment gains in January and February combined were 69,000 less than previously reported.  Over the past 3 months, job gains have averaged 197,000 per month.

Most importantly this ends any speculation about a rate hike in mid 2015, or ever for that matter, as virtually all Fed credibility is now lost.

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And before you ask, no it wasn’t the weather:

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More from the report:

Total nonfarm payroll employment increased in March (+126,000). Over the prior 12 months, employment growth had averaged 269,000 per month. In March, employment continued to trend up in professional and business services, health care, and retail trade, while employment in mining declined. (See table B-1.)

Employment in professional and business services trended up in March (+40,000). Job growth in the first quarter of 2015 averaged 34,000 per month in this industry, below the average monthly gain of 59,000 in 2014. Within professional and business services, employment continued to trend up in architectural and engineering services (+4,000), computer systems design and related services (+4,000), and management and  technical consulting services (+4,000).

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Posted at 1:43 PM (CST) by & filed under Jim's Mailbox.

Jim,

This meeting is a very big deal. Putin will have flowers and a gift basket ready!

CIGA Richard VT

Moscow expects progress from Tsipras visit

Prime Minister Alexis Tsipras’s planned visit to Moscow on April 8 will be a “big event” in the course of relations between Greece and Russia, according to the Russian ambassador in Athens, Andrey Maslov, who told Sunday’s Kathimerini that his government would examine any request from the SYRIZA-led coalition for a loan.

“The new Greek government is aiming to strengthen Greek-Russian ties,” said Maslov. “Russia is prepared to progress in this direction,” he added, referring to recent meetings between officials from the two countries, including foreign ministers Nikos Kotzias and Sergey Lavrov, who met in Moscow on February 11.

“We are certain that the Greek prime minister’s working visit to Moscow will be a big event for our bilateral relations,” said Maslov. “The possibility of further cooperation in trade, energy, technical military issues, education and culture will be examined.”

Maslov said that any request from Athens for a loan would have to be “examined very carefully” because of Greece’s euro membership. “If the Greek government submits a request for a loan, it will be examined – as Foreign Minister Sergey Lavrov said after meeting his counterpart Nikos Kotzias and as Russian Finance Minister Anton Siluanov has said,” the Russian ambassador told Kathimerini.

Maslov played down the possibility of Moscow lifting the embargo on food imports from Greece or other European Union countries as long as the EU keeps its sanctions on Russia in place. However, the ambassador praised Athens for helping prevent a rift in the EU’s relations with Russia.

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Jim,

Well, well. Finally the tone is changing from blind euphoria with Ukraine to irritation. This emerges also in Der Spiegel. Are we reaching another tipping point?

CIGA Richard VT

Le Monde: Kiev peace accord violation starts to trouble the West
April 03, 15:56 UTC+3

PARIS, April 3. /TASS/. Influential French newspaper Le Monde has told its readers of concern in Paris about a policy U-turn by Ukraine’s government over peace in the country’s war-torn east, noting that the West is "beginning to voice irritation and reminding that its support is not unconditional".

Kiev’s perceived violation of the peace accords signed in Minsk, Belarus, was generating disquiet in the French capital, the daily says, noting the Elysee presidential administration’s reaction to the fact that Ukrainian authorities’ fail to honour commitments aimed at bringing peace to the embattled Donbas region.

Le Monde quotes a source close to French President Francois Hollande as saying Ukrainian head of state Petro Poroshenko had "failed to push through parliament a law that guarantees holding local elections in the eastern regions and granting special status for them".

"Kiev puts forward conditions which are not stipulated by the Minsk agreements," the paper said.
The Minsk accords envisaged elections and withdrawal of forces "after the beginning of political changes and granting a certain autonomy to Donbas", the paper notes.

"However, law endorsed by the Ukrainian parliament links granting autonomy to Ukraine’s eastern regions to holding local elections and withdrawing illegal armed groups," it adds.
"Such a U-turn only makes the settlement process, complex as it is, even more unstable and very difficult to implement," the paper says.

By acting this way, Kiev gave rise to criticism, with the West "beginning to voice irritation and reminding that its support is not unconditional," it adds.

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Posted at 9:31 AM (CST) by & filed under In The News.

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Jim Sinclair’s Commentary

This is coming fast.

We’ll run out of cash by April 9th, Greece tells creditors
Thu, Apr 2, 2015, 14:57

Euro zone officials reject request for more loans before critical reforms in place

Greece has told its creditors it will run out of money on April 9th, making an appeal for more loans before reforms on which new disbursements hinge are agreed and implemented, but the request was rejected, euro zone officials said.

The appeal was made by Athens at a teleconference of euro zone deputy finance ministers on Wednesday organised to assess how far Athens still was from meeting the conditions for unlocking new financial aid.

Greece’s appeal echoed remarks by interior minister Nikos Voutsis on Wednesday that the country would have to choose whether to pay back €450 million to the International Monetary Fund on April 9th, or pay salaries and pensions. He said it would choose the latter.

A government spokesman later denied Greece would miss the IMF repayment deadline. But the choice Athens said it would face was repeated at the closed teleconference with creditors.

Greece can get €7.2 billion of new loans from the euro zone and the IMF if it implements reforms that the previous government agreed would be the condition for disbursement.

Election promises

The new government does not want to implement most of these measures because they go against its election promises of ending budget consolidation policies.

It is now negotiating a new list of steps that would keep both sides satisfied.

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Jim Sinclair’s Commentary

This is the shift of economic power to the East.

Egypt next in line to join Asian Infrastructure Investment Bank

nsnbc : Egypt applied for membership in the Asian Infrastructure Investment Bank (AIIB). Last week Australia signaled that it was ready to negotiate about AIIB membership after the United States had stated that is was interested in applying for membership. Only days earlier, the US criticized the UK and others for their interest in joining the AIIB.

The Egyptian government filed a membership request with the Chinese government on Tuesday, reports The Cairo Post. So far a total of 47 nations have requested to join the AIIBwhich was proposed by the Chinese administration of President Xi Jinping.

The bank is planned to be established on the basis of a capital of $50 billion and is besides the BRICS Development Bank the second large banking project that challenges U.S. dominated institutions such as the IMF, the World Bank and the World Bank’s regional banks.

The administration of Egyptian President Abdel Fatah al-Sisi reportedly also perceives the move as one further step towards strengthening Egypt’s role as regional and independent actor with a balanced and diversified economic, foreign and security policy.

Egypt is, among others, attempting to gain regional, especially African support for a permanent seat at the UN Security Council. As member of the Non-Aligned Movement, Egypt is strongly supports comprehensive reforms of the UN system.

Last week Australian Treasurer Joe Hockey said that Australia was prepared to negotiate about AIIB membership.

The statement came after Australia earlier caved in to pressure form the United States and stressed concerns about governance.

In November 2014 Australian PM Tony Abbott said unequivocally no to an Australian participation in the AIIB project.

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Merkel’s ‘Anti-Russian Front’ Falls Apart – German Newspaper
13:43 02.04.2015(updated 14:17 02.04.2015) Get short URL

More and more European countries oppose an extension of anti-Russian sanctions and disagree with the German policy towards Russia.

Attempts to save "European unity" are doomed, the German online newspaper “Die Freie Welt” reported.

During her recent visit to Helsinki, German Chancellor Angela Merkel tried to convince Finns to further follow the anti-Russian course and stressed the importance of pursuing a common EU policy towards Russia. However, this policy is in fact far from being united, the German online edition wrote.

The Chancellor visited Finland shortly before the upcoming elections in the country. During her speech at Helsinki University, she expressed concerns about a split in the European Union and called all EU countries to follow a common approach regarding economic sanctions.

The power of the EU is in its unity, Finnish Prime Minister Alexander Strubb agreed with the German Chancellor. However, it was not easy for him to make this statement.

During the election campaign, Strubb’s opponents have successfully exploited the negative impact of sanctions and called for a dialogue with Russia. They draw attention to the fact that Finland has the longest border with Russia among EU states and that both countries always had close economic ties.

Finns are not the only ones who criticize Merkel’s tough stance towards Russia. Greece, Hungary, Spain, Italy, Slovakia, Cyprus and Austria are also expressing discontent about the anti-Russian sanctions under which they suffer more than other EU countries.

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The Illusion Of Recovery: Five Reasons Why Obama & Yellen Should Stop Crowing
by Frank Hollenbeck • April 1, 2015

President Obama and Fed Chair Janet Yellen have been crowing about improving economic conditions in the US. Unemployment is down to 5.5 percent and growth in 2014 hit 2.2 percent.

Journalists and economists point to this improvement as proof that quantitative easing was effective.

Pile on More Debt

Unfortunately, this latest boom is artificial and has been built by adding debt on top of debt. Total household debt increased 2.5 percent in 2014 — the highest level since 2010. Mortgage loans increased 1.5 percent, student loans 6.6 percent while auto loans increased a hefty 9.6 percent. The improving auto sales are built mostly on a bubble of sub-prime borrowers. Auto sales have been brisk because of a surge in loans to individuals with credit scores below 620. Since 2010, such loans have increased over 100 percent and have gone from 20 percent of originations in 2009 to 27 percent in 2013. Yet, auto loans to individuals with strong credit scores, above 760, have barely budged over the last year.

Subprime consumer borrowing climbed $189 billion in the first eleven months of 2014. Excluding home mortgages, this accounted for 41 percent of total consumer lending. This is exactly the kind of lending that got us into trouble less than a decade ago, and for many consumers, this will only end in tears.

But we need to ask ourselves: is the current boom built on sound foundations? In other words, do we have sharp increases in productivity or real wage growth?

Productivity increased less than 1 percent on average in the last three years and real wages have flat lined or declined for decades. From mid-2007 to mid-2014, real wages declined 4.9 percent for workers with a high school degree, dropped 2.5 percent for workers with a college degree and rose just 0.2 percent for workers with an advanced degree.

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The Economic Wall Dead Ahead Is Hidden Behind False Signs Of “Recovery”
by David Stockman • April 1, 2015

This morning I had left the TV mistakenly tuned to CNBC with the sound on—-and unavoidably caught another bullish strategist jawing about the US economy’s awesome strength. This one was peddling as exhibit #1 the recent surge in C&I loans, arguing that it is a sure sign that business is gearing up for a post-winter boom.

It turns out that the $1.8 trillion of C&I loans outstanding at the end of February, in fact, were up by 14% since January 2014. But then again, when are they going to find a guest which wasn’t born yesterday. That is to say, an analyst who is capable of looking at the historic context in which the latest data points are anchored, the quality of the numbers at issue and the deeper implications of the indicators.

In this case, like most of the blizzard of bullish factoids spewed out each day on bubble vision, the purported business lending boom is not all that. The upward blip during the last 13 months was from a level which had first been reached way back in October 2008. In other words, it had taken 63 months to dig out of the deep crater that had resulted from the liquidation of the mountains of bad debt that existed on the eve of the financial crisis.

Next consider the quality and content of the purported “surge” in business lending. The skunk in the woodpile is patently obvious in the graph below.

The “surge” is almost entirely due to financial engineering and LBOs. In fact, virtually all of the growth in business lending during the past two years is due to a dramatic rise in leveraged loans from the deal business. Thus, overall C&I loans are up a modest $220 billion since October 2008, but 100% of that gain is accounted for by the 37% rise in leveraged loans outstanding since 2008.

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Needless to say, even a quick peak under the hood results in just the opposite conclusion to that offered by CNBC’s bull peddler of the day. Back in some dusty economic textbook a few decades ago, it might have plausibly been argued that rising C&I loans were evidence of business expansion and a rising requirement to fund working capital and plant and equipment.

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Jim Sinclair’s Commentary

Look what we started.

China pins hopes on China-Mongolia-Russia economic corridor — diplomat
April 02, 6:31 UTC+3

BEIJING, April 2. /TASS/. China hopes the project to set up a transport corridor linking China, Russia and Mongolia will be soon translated into practice, Chinese Foreign Minister Wang Yi said at talks with his Mongolian counterpart Lundeg Purevsuren on Thursday.

"Setting up a trilateral economic corridor is one of the key points in Chinese Silk Road Economic Belt initiative," the foreign minister said, referring to the project to revive the ancient trade route linking China with Central Asia and Europe.

"It also correlates with the infrastructure project Steppe Road of Mongolia and Russia’s strategy to create a Eurasian transport corridor," the Chinese Foreign Ministry quoted him as saying.

"Establishing a new path that will connect three states will open a new channel for cooperation. It will cross the European and Asian continents, creating a new platform for joint development," the diplomat added

Wang Yi also said that at the moment China was also implementing two similar initiatives of transport corridors – a project with India, Myanmar and Bangladesh, as well as a bilateral project with Pakistan.

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The "Revolver Raid" Arrives: A Wave Of Shale Bankruptcies Has Just Been Unleashed
Tyler Durden on 04/02/2015 09:26 -0400

Back in early 2007, just as the first cracks of the bursting housing and credit bubble were becoming visible, one of the primary harbingers of impending doom was banks slowly but surely yanking availability (aka "dry powder") under secured revolving credit facilities to companies across America. This also was the first snowflake in what would ultimately become the lack of liquidity avalanche that swept away Lehman and AIG and unleashed the biggest bailout of capitalism in history. Back then, analysts had a pet name for banks calling CFOs and telling them "so sorry, but your secured credit availability has been cut by 50%, 75% or worse" – revolver raids.

Well, the infamous revolver raids are back. And unlike 7 years ago when they initially focused on retail companies as a result of the collapse in consumption burdened by trillions in debt, it should come as no surprise this time the sector hit first and foremost is energy, whose "borrowing availability" just went poof as a result of the very much collapse in oil prices.

As Bloomberg reports, "lenders are preparing to cut the credit lines to a group of junk-rated shale oil companies by as much as 30 percent in the coming days, dealing another blow as they struggle with a slump in crude prices, according to people familiar with the matter.

Sabine Oil & Gas Corp. became one of the first companies to warn investors that it faces a cash shortage from a reduced credit line, saying Tuesday that it raises “substantial doubt” about the company’s ability to continue as a going concern.

It’s going to get worse: "About 10 firms are having trouble finding backup financing, said the people familiar with the matter, who asked not to be named because the information hasn’t been announced."

Why now? Bloomberg explains that "April is a crucial month for the industry because it’s when lenders are due to recalculate the value of properties that energy companies staked as loan collateral. With those assets in decline along with oil prices, banks are preparing to cut the amount they’re willing to lend. And that will only squeeze companies’ ability to produce more oil.

Those loans are typically reset in April and October based on the average price of oil over the previous 12 months. That measure has dropped to about $80, down from $99 when credit lines were last reset.

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Posted at 7:54 PM (CST) by & filed under In The News.

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The new Asian bank and a new world order
Washington has been standing in the way of business for years.
29 Mar 2015 08:41 GMT

It’s usual these days that every policy statement coming out of Beijing is minutely scrutinised and commented on by the English language media, so the absence of any alarm bells on and after February 3 came as something of a surprise.

The 13th Meeting of Russia, India and China’s foreign ministers should have merited at least passing mention – but not a single major western newspaper covered it.

There was no reporting of the final communique; no editorial comment was made and no reaction sought, from Washington or London.

Only Hong Kong’s South China Morning Post thought it newsworthy that China’s foreign minister, along with his Russian and Indian counterparts, was emphasizing a vision that many in the West have long feared – a vision of a new world order.

Conciliatory language

The relevant comment was short, and buried within 30 other paragraphs of much more conciliatory language; nonetheless it was punchy:

"Russia, India and China are determined to build a more just, fair and stable international political and economic order."

Now ordinarily, a statement like that would have raised the hackles of the China-baiters if no-one else, but not this time.

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Jim Sinclair’s Commentary

Really want a nuclear war? We can have one.

Russia Again Flight Tests New ICBM to Treaty-Violating Range
Test prompts renewed debate on violation of ’87 INF Treaty
BY: Bill Gertz  
March 31, 2015 5:00 am

Russia conducted a flight test of a new intercontinental ballistic missile earlier this month that some U.S. officials and security analysts say is a new violation of Moscow’s arms control treaty commitments.

The March 18 flight test of a new RS-26 missile is part of a large-scale nuclear arms buildup by Russia and is raising concerns about treaty compliance, said U.S. officials familiar with details of the missile test.

The RS-26 missile carried a dummy warhead from Russia’s Kapustin Yar missile facility, located about 80 miles south of Volgograd in southern Russia, to an impact range at Sary Shagan in Kazakhstan.

The distance between the launch facility and the impact area is approximately 1,248 miles, far less than the threshold of 3,417 miles required by the 1987 Intermediate-range Nuclear Forces (INF) Treaty.

It is at least the fifth time in the past five years the Russians have conducted flight tests of the RS-26 to ranges prohibited under the INF treaty. An Oct. 10, 2013 flight test also traveled less than 2,000 miles.

Testing an intercontinental ballistic missile (ICBM) to intermediate range, as in the March 18 test, technically violates or circumvents the terms of the INF treaty, arms control analysts said.

However, a State Department official said the RS-26 is legal under the 2010 New START arms accord and is not covered by the INF treaty.

Technically, missiles are classified for treaty purposes as an ICBM or intermediate-range missile by the first flight test, and the RS-26 flew beyond the 3,417-mile INF threshold in its initial test. However, the multiple flight tests below that range have led U.S. intelligence agencies to report that Moscow covertly is developing INF missiles disguised as treaty-permitted ICBMs.

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Jim Sinclair’s Commentary

This is a milestone development in the shift of power in the world. This is how history is made.

Et Tu, Brute? Israel Latest US Ally to Join Chinese AIIB
22:41 01.04.2015(updated 04:06 02.04.2015)

As the United States continues to beg ally after ally to forgo joining the China-led Asian Infrastructure Investment Bank (AIIB), key nations have, nevertheless, ignored that plea. The UK, Turkey, and Australia have already applied, among others. But the latest application might sting the most, as PM Netanyahu tosses Israel’s name into the mix.

47 nations have already applied for membership in the AIIB, a multilateral development bank spearheaded by Beijing. Meant to provide financing for infrastructure projects throughout Asia – and to fill in loan gaps left by the International Monetary Fund – the bank is expected to significantly increase China’s influence.

Which is why the United States was largely against it. With a Chinese bank pumping $100 billion into infrastructure projects in the region, Washington will inevitably lose some its own clout. As such, the US has strongly dissuaded its allies from joining, but one by one, countries have flocked to the new institution.

And now the AIIB can add Israel to its list. The Israeli Foreign Ministry announced on Wednesday that Prime Minister Netanyahu had signed an application, saying membership would open up opportunities for Israeli companies to enter into one of the fastest growing markets on the planet.

The booming Asian economy isn’t the only thing pushing Israel toward the AIIB. Netanyahu’s government has been looking for ways to diversify its exports in response to a rising tide of anti-Semitism in Europe, and given that it could face potential sanctions over future conflicts.

At this point, Japan is the only major US ally who is still holding out on membership, but given the AIIB’s quickly growing influence, one can easily imagine Tokyo casting longing looks toward Beijing as Washington leads it in the other direction.

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Jim Sinclair’s Commentary

I think they mean 2 years.

Peak Gold? Goldman Calculates There Is Only 20 Years Of Gold Supply Left
Submitted by Tyler Durden on 03/27/2015

Late last year, when looking at a Goldcorp slideshow, we noticed something surprising: the gold miner had forecast that 2015 would be the year when gold production would peak among the mining industry.

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To be sure Goldcorp was really just pitching its own balance sheet, and was more focused on its far more levered gold-mining competitors going out of business…

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… and hence facilitating "peak production" this year as one after another producer is forced to file for bankruptcy, than actually making a statement on how much gold remains to be mined in the ground. Because the last thing even the most healthy gold miner, with the lowest production cost wants, is to face a world in which their primary commodity is running out.

Which may just be this world.

According to a report issued by Goldman’s Eugene King looking at commodity scarcity, the chart below "shows that there are only 20 years of known mineable reserves of gold and diamonds."

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Some further observations on gold and scarcity in general from Goldman: The combination of very low concentrations of metals in the Earth’s crust, and very few high-quality deposits, means some things are truly scarce. Perhaps unsurprisingly, these are the so-called precious metals (and diamonds), and that their value is derived from the fact they are rare. Their relatively scarcity, and the market’s belief that new discoveries will be limited, is what drives the price of these super rare commodities. Take diamonds as perhaps the most extreme example. A diamond has very little intrinsic value. Its value is determined by a belief that it is rare and, for a natural diamond, unique. Gold has been used as a measure of wealth for more than 4,000 years, as the ancient Egyptians soon worked out that gold was not only shiny and heavy, but rare.

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Posted at 7:52 PM (CST) by & filed under Jim's Mailbox.

Jim,

Sure, she just discovered this…

CIGA Richard VT.

Merkel is Unaware of German Businesses Fleeing Ukraine
22:49 01.04.2015(updated 23:07 01.04.2015)

Angela Merkel did not confirm earlier reports that German businesses and investors were fleeing Ukraine amid the political crisis.

BERLIN (Sputnik) – German Chancellor Angela Merkel did not confirm on Wednesday reports that German investors are massively leaving Ukraine.

“As for businesses, I cannot speak for every single business. Businesses decide independently whether to make investments or not, but we wish the majority of businesses to stay. I have no indication that German enterprises are going to massively abandon Ukraine,” Merkel said at the joint news conference with Ukrainian Prime Minister Arseniy Yatsenyuk in Berlin.

Merkel further stressed that despite complicated economic conditions in 2014, some German agricultural businesses even managed to increase their revenues in Ukraine.

Ukraine’s economy faces a dramatic downturn following a military operation in the Southeast of the country, launched by Kiev forces in April 2014 against local independence supporters, who refused to recognize legitimacy of a new government that came to power after a coup.

In spring 2014, the International Monetary Fund (IMF) promised Kiev $17 billion in bailout loans to stabilize the economic situation in the country. In addition, several Western countries allocated funds to Ukraine to help the country rebuild its economy and enact structural reforms.

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Posted at 10:50 AM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

Looks like the depositors have nothing on deposit in reality.

US manufacturing slows as orders and hiring weaken
By JOSH BOAK

WASHINGTON (AP) — U.S. factories expanded last month at a weaker pace, with orders growing more slowly and hiring essentially flat.

The Institute for Supply Management, a trade group of purchasing managers, says its manufacturing index slipped to 51.5 in March from 52.9 in February.

It was the fifth straight drop. Still, any reading above 50 signals expansion.

U.S. manufacturers have faced a drag in recent months from falling oil prices and a rising dollar.

Some drilling rigs have stopped as oil prices have fallen more than 50 percent since June to below $50 a barrel, curbing demand for pipelines and machinery from factories. Simultaneously, the dollar has risen in value against the euro and other currencies, making American-made goods more expensive abroad and cutting into expo

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Jim Sinclair’s Commentary

Now, here is a real surprise as if everyone in the world but the White House knows this.

Saudi Defense Minister to Congress: ‘Iran Can’t Be Trusted’
BY: Adam Kredo  
April 1, 2015 10:10 am

LAUSANNE, Switzerland—Saudi Arabia’s newly installed defense minister told members of Congress on a recent trip to the oil-rich nation that “Iran can’t be trusted,” according to a readout of the meeting provided by Rep. Vern Buchanan (R., Fla.).

Buchanan, a member of the House Ways and Means Committee, participated in a meeting with Saudi Arabia’s defense minister, Prince Mohammed bin Salman, who is the son of the newly crowned King Salman, to discuss regional issues and Iranian aggression.

When asked by Buchanan and other lawmakers present at the sit-down about the current talks with Iran—which have now passed their March 31 deadline—Salman called the tentative agreement disastrous for the region.

Salman “said Iran can’t be trusted,” according to a readout provided by Buchanan following the hour-long meeting in Riyadh. “He questioned why we would be negotiating with the Iranians when they are responsible for growing tension in the Middle East.”

One foreign policy analyst with extensive contacts in the Middle East told the Free Beacon that regional players are dismayed by the concessions that Washington is willing to make to Iran.

“Parties in the region are aghast. It literally seems like there’s nothing the Iranians could do that would convince the Americans Tehran is too hostile and untrustworthy to deal with,” said the source.

Saudi Arabia has criticized the Obama administration’s dealings with Iran, vowing in recent days to pursue its own nuclear weapons program as an avenue to counter the Islamic Republic’s growing influence in the region.

Salman spoke in harsh terms when asked by Buchanan to explain his position on the negotiations.

“I asked the Prince what he thought about the discussions between the U.S. and Iran, and he responded that he doesn’t think the United States is taking the threat posed by Iran seriously,” according to Buchanan. “He said the Saudis would also like more military assistance from the U.S. to combat Iran’s growing influence in the region.”

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President Obama Must Not Complete a Disastrous Deal With Iran
Forget Churchill—Obama Isn’t Measuring up to Neville Chamberlain
By The Editors | 03/31/15 3:32pm

With the US on the brink of signing an agreement that will lift the crippling economic sanctions on Iran in exchange for alleged guarantees that Iran will limit its nuclear ambitions to peaceful means, the Observer urges President Obama not to place his personal hunger for a legacy issue ahead of his most solemn duty – protecting America’s national security.

Barack Obama has been compared to British Prime Minister Neville Chamberlain , who concluded the ill-fated Munich Pact with Hitler in 1938. But Chamberlain acted out of a sincere belief that he was avoiding a greater evil. Chamberlain was not thinking of his place in history. He was thinking only of the Britain that he loved, a Britain that was all but disarmed, exhausted, and vulnerable. He was dealing with a nation that had been decimated by the Great War, a nation whose “best and brightest” five years earlier had declared in the infamous Oxford Oath that they would not fight for king or country, and a nation that was as materially unprepared for war as Germany was prepared to fight. Chamberlain dealt from a position of weakness, one that Hitler continually exploited in the negotiations, even by changing the time and place to make it more inconvenient for the British leader to attend them.

In sharp contrast, Mr. Obama is acting out of personal aggrandizement. He believes he is replicating President Richard Nixon’s historic opening of China. For Mr. Obama, the Iranian nuclear arms deal is about his place in history. Mr. Obama is dealing from a position of strength that he refuses to use. The sanctions have hurt Iran. Falling oil prices only add to Iran’s vulnerability. Instead of using the sanctions to pursue his original promise that Iran would not get the bomb, Mr. Obama has moved the goal post. Iran would not get the bomb immediately. It would be permitted to enrich uranium well beyond the 5 percent need for generating nuclear energy and be left with a breakout capacity to create a bomb.

Meanwhile, Iran is refusing surprise inspections, the hallmark of any such agreement, and has ruled its military facilities, such as the enrichment plant at Fordo, off limits to any inspections, period. Iran continues to showcase public displays of Israel being obliterated by an Iranian nuclear bomb, and even in the midst of negotiations government-orchestrated mass rallies cry out, “Death to America.”

If Chamberlain possessed America’s strength and was dealing with Iran’s weakness, would he be negotiating as Mr. Obama is? Would he be more concerned about a Jew building an extra bedroom in Jerusalem than an Iranian building a bomb at Fordo?

Before becoming prime minister, Chamberlain held two ministerial portfolios. He was considered a thoughtful and effective cabinet member. Upon becoming Prime Minister in 1940, Winston Churchill appointed Chamberlain to the new War Cabinet.

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The Greatest Show on Earth
by Bill Holter.

It is pretty much a given that we are living the end times of a three ring financial circus.  If you doubt this, only a small amount of research on your part will confirm this.  The odds in my opinion are quite high we will witness some sort of military confrontation as usually occurs when business deals go bad.  The three leading acts today are Greece, Ukraine and special guest under the Big Top is Austria.  We don’t want to slight the tensions in the Middle East but that is already in the military stage, today let’s look more closely at the financial stage.

Greece has already begun raiding public pensions to run even day to day operations.  The current estimate is they will run out of cash before the end of April.  It is no wonder they are having high level meetings with Moscow and will meet with Mr. Putin this coming Monday.  It has been said they are not looking for a handout.  This may be so but they will certainly be talking about running a pipeline through their country.  As I have said all along, broke is broke, they simply cannot make payment on what they have already borrowed from the West.

  The West, led by Germany may be able to restructure terms or even offer the Greeks more current cash.  Any deal made will not solve anything as whatever Greece accepts (if they do) will also need to be paid back.  Paying one credit card off with another one does not lower your balance, on the contrary, the total balance rises and this is the problem.  Greece as recently as 2010 was the shining star of Europe, just as a bank rated AAA on a Friday afternoon is bankrupt on Monday morning, so went Greece.

  What is being missed here is Greek debt is held widely by German and French banks …and by the ECB itself.  When Greece does finally default, these already undercapitalized banks will capsize, but this is only part of it.  Just as happened back in 2008, there may be 10 times the amount of CDS (insurance) written versus their debt, now we are talking $3.5 trillion.  Do you know of any entity on the planet that could make good on this policy?

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Posted at 3:08 PM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

Only in India and maybe West Africa.

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Jim Sinclair’s Commentary

If it is there, down to the last ounce?

Gold In Fed Vault Drops Under 6,000 Tons For The First Time, After 10th Consecutive Month Of Redemptions
Tyler Durden on 03/31/2015 15:30 -0400

Two months ago, when looking at the most recent physical gold withdrawal numbers reported by the Fed, we observed something peculiar: between the publicly reported surprise redemption by the Netherlands (122 tons) and the just as surprise redemption by the Bundesbank (85 tons), at least 207 tons of gold should have vacated the NY Fed’s gold vault. Instead, the Fed reported that in all of 2014 "only" 177 tons of gold were shipped out of the massive gold vault located 90 feet below 33 Liberty Street. Somehow the delta between what we "shipped" and what was "received" in the past year was a whopping 30 tons, or about 15% of the total – a gap that is big enough to make even China’s outright fraudulent trade numbers seems sterling by comparison.

This prompted us to ask:

"what happened? Did an intern input the Fed’s gold redemptions figures for December, supposedly a different intern than the one who works at the IMF and who caused a stir earlier this week when the IMF, allegedly erroneously, reported that the Dutch – after secretly repatriating 122 tons of gold – had also bought 10 tons of gold in the open market for the first time in nearly a decade.

Or perhaps some "other" bank, central or commercial, decided to offset the redemptions by the Netherlands and Germany, and inexplicably added 30 tons of gold in December? The question then becomes: "who" deposited said gold, especially when one considers that even the adjoining JPM vault which is allegedly connected to the NY Fed by a tunnel, only contains some 740K ounces of gold, or about 23 tonnes.

Or is it simply that when it comes to accurately reporting the flows of physical gold, classical math is incapable of keeping track of the New Normal gold moves, and the Fed has decided that even when dealing with physical gold there is a "settlement" period?

We still don’t know the answer, and while the Fed has not revised its vault gold data, one thing is clear: the slow, stealthy and steady withdrawal of gold from the NY Fed continues.

According to the most recent earmarked gold data reported by the Fed, in the month of February another 10 tons of gold departed the NY Fed, following 20 tons in the month before -the tenth consecutive month of redemptions – which if one assumes is merely the delayed relocation of gold previously demanded for delivery, has crossed the Atlantic and is now to be found in Frankfurt.

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This means that after 177 tons of gold were withdrawn in 2014 – the largest year of gold redemptions since 2008 when 230 tons of gold departed the NY Fed vault – another 30 tons of parked gold has been recalled to their native lands so far in 2015.

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Dallas Fed manufacturing survey: worst print since 2011
Author: Asia Unhedged March 30, 2015

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Indicators of US economic activity continue to crumble, with the Dallas Fed Manufacturing Survey printing at -17.4, the worst since 2011.

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Japan "Wakes Up," Joins China-led Development Bank (And Then Backs Out)
Tyler Durden on 03/30/2015 21:00 -0400

It’s official: the US is on its own when it comes to opposing the China-led Asian Infrastructure Investment Bank (see here for full summary of AIIB developments). We suppose it was only a matter of time, but news that Japan will seek membership in a matter of months will likely still come as somewhat of a surprise to Washington, given the otherwise tenuous relationship between the two countries and considering Japan’s leadership role in the ADB. Nevertheless, the Japanese have apparently come to the same conclusion as Australia and South Korea: not joining simply isn’t an option no matter how loudly the US protests. Here’s more from FT:

Japan is likely to join the Asian Infrastructure Investment Bank within a few months, according to the country’s ambassador to Beijing, a move that would see Tokyo break ranks with Washington and leave the US as the only big holdout.

Masato Kitera told the Financial Times he agreed with Japanese business leaders’ belief that the country would sign up to the China-led development bank by June.

“The business community woke up late, but now they have mounted a big campaign for the AIIB which appears to be very effective,” Mr Kitera said…

A Japanese move to join the bank would be a reversal of rhetoric and, for China, the biggest coup yet given the fractious relationship between the two Asian powers.

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Jim Sinclair’s Commentary

Out of work? The solution is simple. Take the entire family to school.

Every young person should see the Fed’s startling numbers on student debt
by Simon Black on March 30, 2015
March 30, 2015
Sovereign Valley Farm, Chile

What I’m about to tell you is not my own opinion or even analysis. It’s original data that comes from the United States Federal Reserve and national credit bureaus.

1.  40 million Americans are now in debt because of their university education, and on average borrowers have four loans with a total balance of $29,000.

2.  According to the Fed, “Student loans have the highest delinquency rate of any form of household credit, having surpassed credit cards in 2012.”

3.  Since 2010, student debt has been the second largest category of personal debt, just after a home mortgage.

4.  The delinquency rate for student loans is now hovering near an all-time high since they started collecting data 12 years ago.

5.  Only 37% of total students loan balances are currently in repayment and not delinquent.

The rest—nearly 2 out of 3—are either behind on payments, in all-out default, or have entered some sort of deferral program to delay making payments, with a small percentage still in school.

It’s pretty obvious that this is a giant, unsustainable bubble (more on this below). But even more important are the personal implications.

University graduates now matriculate with tens of thousands of dollars worth of debt.

Debt is another form of servitude. Like medieval serfs, debt keeps people tied to jobs they dislike in places they don’t want to be working for bosses they hate doing things that make them feel unfulfilled.

Debt makes it very difficult to walk away and start fresh.

In fact, ‘starting fresh’ is almost legally impossible when it comes to student debt. Even in US bankruptcy court, student debt cannot be discharged in almost all cases.

It is an albatross that hangs over you for a decade or more if you do make the payments, and it follows you around for the rest of your life if you do not.

(I’m not suggesting anyone default on what they owed—simply pointing out that nearly every other form of debt can be discharged EXCEPT for student debt.)

This kind of debt has a huge impact on people’s lives.

Again, according to the Federal Reserve, “[G]rowing student debt has contributed to the recent decline in the homeownership rate and to the sharp increase in parental co-residence among millennials.”

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Jim Sinclair’s Commentary

Checking all markets now that the machines have taken over.

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Posted at 1:37 PM (CST) by & filed under In The News.

Chaos in Yemen Could Undermine Dollar
March 29, 2015 By Lior Alkalay

Yemen, a country south of Saudi Arabia, and with an economic output roughly the equivalent to that of say, San Antonio, Texas, is sinking deeper into chaos. Though in the grand scheme of things in the Middle East, that chaos stems from a relatively small country, it is likely to have widespread ripples that could affect market sentiment, in general, and specifically, in the FX market. One might ask how on earth Yemen, a small country that is primarily desert and which is categorized as among the world’s poorest, could affect trends in the Dollar, the Euro and other currencies?

Yes, it’s Oil Again

The answer, as you might have guessed, and the only way that trouble in a small Middle Eastern country could have repercussions on global markets, is through Oil. Despite the fact that Yemen produces less Oil than Denmark and its direct effect on Oil supply is marginal, its location is critical. Yemen is situated on the banks of the Gulf of Aden, the 4th largest passage for Oil in the world and a key passage for seaborne Oil and gas from the Middle East. Analysts point out that with the country deteriorating into chaos, the risk of Oil tankers being hijacked by pirates grows much higher and thus heightens Oil supply risks. Now, while this might be a plausible risk scenario, it is not the real

reason why Yemen’s chaos is an issue in the global markets. The real reason is the potential geopolitical threat that chaos, which is currently contained within Yemen, could continue to heat up and then “boil” or spill over. That spillover could result in a military showdown between Saudi Arabia and Iran, the Middle East’s two largest oil producers. The Iranian government is actively assisting the rebels against the Yemen president, Abed Rabbo Mansour Hadi, who is an ally of the Saudis. And Saudi forces are actively engaged against the rebels in an effort to protect their own (Saudi) interests. Thus this potential for a spillover could, in reality, eventually devolve into a major conflict between Saudi Arabia and Iran which could jeopardize Oil supplies and thus impact Oil prices.

Back to the FX Market

So, back to the question, how can this mess impact sentiment in the FX arena? Quite simply, if this Middle East hotspot spills over, Oil prices could bounce higher and thus encourage investors to move into risk-on mode. “Risk-on” sentiment tends to favor currencies oriented closely with commodities, such as the Norwegian Krone and the Aussie, Kiwi, and Canadian Dollars, while at the same time being rather negative for the US Dollar. In other words, if things do de-escalate towards a risk of real war, Oil could surge further and possibly generate a shift towards commodities and away from the US Dollar, thus being a potential catalyst for a Dollar correction.

Why the Dollar is Vulnerable

The Fed had just laid out its plans to raise rates when all of a sudden the data suggested it wasn’t necessarily warranted and so a dovish Fed prevails. With the biggest hurdle to rising interest rates being low inflation, one might presume that higher Oil prices would raise inflation expectations and thus increase the chances for an interest rate hike. However, under the current circumstances, that presumption would be wrong.

For Oil prices to generate inflationary pressures they need to rise constantly and create a buildup of expectations for higher prices. Currently, Oil fundamentals remain weak since the market is oversupplied and given that there is still excess capacity in the Oil market the chances are that any surge in Oil prices would be temporary and would likely even out over the long term. Even if Oil does eventually stabilize above $60 a barrel, the chances are it won’t be on a constant upward trend because for that to happen, supply has to really turn tight. This is why the mere risk of war between Saudi Arabia and Iran could push Oil to settle higher but it would not necessarily initiate a long-term bullish trend.

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