Implode-Explode Heavy Industries news feed Tracking the many faces of the global credit implosion. en-us iehi-feed-63878 Wed, 18 Apr 2018 19:26:30 GMT US crude tops $68 for the first time in more than three years iehi-feed-63852 Wed, 11 Apr 2018 21:54:48 GMT Venezuela in apparent "Stealth Default"; stopped bond payments in September Venezuela stopped paying bondholders in September, according to central bank data, contradicting statements by President Nicolás Maduro that the country would continue to honour its debts while negotiating a resettlement with its creditors.The data show that regular foreign debt payments of hundreds of millions of dollars a month, in line with the country's sovereign obligations, fell to a few tens of millions from last October for fees and the legacy of a 1980s-era restructuring."This proves that Venezuela is deliberately hoodwinking bondholders and engaging in a stealth default," said Russ Dallen of boutique bank Caracas Capital, who follows Venezuelan debt closely.The data were posted in an Excel file as part of a recent revamp of the central bank's website and include monthly expenditures in US dollars on public foreign debt payments going back to 1996. Previously, data on foreign debt payments were published in the form of a ratio that revealed little information, Mr Dallen said. "This must have been posted by an intern," he added.


The central bank data, which cover payments of sovereign debt only and exclude obligations by PDVSA and other state entities, show that just $83m was paid in October, compared with sovereign obligations amounting to $465m, according to data from Caracas Capital.Payments in November fell to $28m, compared with obligations of $183m, and in December declined to $23m, compared with obligations of $242m.


"They have been doing it [defaulting] strategically to sow confusion. They have said they have begun the process of paying things they clearly did not pay, and blamed it all on sanctions."The US has imposed several rounds of sanctions on Venezuelan individuals and institutions. Adding to pressures last August, it also banned any involvement in new bonds or shares issued by the government or PDVSA. Last month it prohibited involvement in the country's proposed digital currency, the petro, as well

iehi-feed-63834 Wed, 04 Apr 2018 18:04:18 GMT Wall St. plunges, but mostly recovers from sharp losses sparked by China tariffs iehi-feed-63828 Tue, 03 Apr 2018 15:12:13 GMT U.S. Carmakers May Regret What They Wished For on Pollution Rules In announcing the decision, Environmental Protection Agency Administrator Scott Pruitt included a tacit threat that the federal government might no longer go along with California's smog-fighting policies. That could lead to pollution rules that vary state-by-state, greatly complicating life for the people making the cars.

"Automakers will get the flexibility they wished for, but at what cost?" said Jessica Caldwell, executive director of industry analysis at the car shopping website Edmunds. "The unfortunate reality is that this decision comes with a logistical nightmare in the short term."

In other news, EPA boss Scott Pruitt is getting kickbacks from lobbyists.

iehi-feed-63823 Mon, 02 Apr 2018 14:25:50 GMT China announces new tariffs on US meat and fruit, 128 products total, amid trade war fears

All told, the extra tariffs will hit 128 kinds of U.S. products, multiple outlets reported. The list of new duties matches the proposed list released by the government on March 23, according to Reuters.

At that time, China said the affected U.S. goods had an import value of $3 billion in 2017 and included wine, fresh fruit, dried fruit and nuts, steel pipes, modified ethanol and ginseng.


The decision to target $3 billion in U.S. imports is significant, but it's widely seen as a drop in the ocean given the size of the bilateral trading relationship. U.S. goods exported to China in 2016 totaled $115.6 billion, according to official data.

China's retaliation is "a statement of intent ... but it's not an escalation in our opinion," Steve Brice, chief investment strategist at Standard Chartered Private Bank, told CNBC on Monday.


Of note, China's trade retaliation is not against Trump's announcement in March that he is planning new tariffs on up to $60 billion in Chinese imports... Observers have suggested that Beijing may be saving stronger retaliatory measures for a response to that White House plan.

iehi-feed-63815 Fri, 30 Mar 2018 16:39:57 GMT Tesla's ‘day of reckoning' is near as its plunging stock increases risk One hedge fund manager believes Tesla's business model is permanently broken.

"Tesla represents a financially non-viable business. It has an upside-down balance sheet. The multi-billion cash burn is massive with no end in sight," Accipiter Capital's Gabe Hoffman wrote in an email Wednesday. "The financial need for Tesla to issue massive amounts of new equity has been glaringly obvious for quite some time."

Hoffman cited the recent departures of Tesla executives such as its chief accounting officer in early March.

"This is an incredibly ominous sign, which I believe confirms my thesis," he wrote. "Tesla is our fund's largest short position. We have not covered a single share on this decline."

iehi-feed-63801 Tue, 27 Mar 2018 01:05:16 GMT Mitch McConnell floats bill to remove hemp from controlled substance list iehi-feed-63799 Mon, 26 Mar 2018 20:33:20 GMT Trump Backs off Trade Hard-Line, To Markets' Delight iehi-feed-63796 Mon, 26 Mar 2018 14:46:04 GMT "Tesla, without any doubt, is on the verge of bankruptcy." iehi-feed-63778 Wed, 21 Mar 2018 21:48:44 GMT Trump's China syndrome could melt down Washington trade Alcoa opposed the tariffs out concern for its customers in a complex, global supply chain. Also, so far Canada (the largest steel exporter to the United States) and Mexico are exempt, and Chinese steel imports are tiny. Foreign aluminum is flooding in to beat the tariff date. So much for the "easy to win" part of the president's statement.


According to the Wall Street Journal, Beijing is promising a retaliation that is "measured and proportional." Let's hope one adult is in the room. But these things have a way of spinning out of control.

The Journal story has Chinese sources saying countervailing tariffs would be aimed at Trump's base in the Farm Belt. But these could easily affect Washington's vital agricultural sector, too.

Of course, the big enchilada here is Boeing, Washington's export king and a company already hugely dependent on China as a customer -- and facing competition from Airbus and a nascent, homegrown Chinese commercial aviation industry. If things spin out of control, even a little, Beijing can inflict enormous damage by steering orders away from Boeing. That would put the lie to the "trade wars are good" segment of the presidential tweet.

iehi-feed-63777 Wed, 21 Mar 2018 21:46:28 GMT Fed raises key rate and foresees 2 more hikes this year The Federal Reserve raised its key interest rate Wednesday in a vote of confidence in the U.S. economy's durability while signaling that it plans to continue a gradual approach to rate hikes for 2018 under its new chairman, Jerome Powell.

The Fed said it expects to raise rates twice more this year. And it increased its estimate for rate hikes in 2019 from two to three, reflecting more optimistic expectations for growth and low unemployment.

In a statement after its latest policy meeting, the Fed said it boosted its key short-term rate by a modest quarter-point to a still-low range of 1.5 percent to 1.75 percent. It also said it will keep shrinking its bond portfolio. The two moves mean that many consumers and businesses will face higher loan rates over time.

Taken together, the Fed's actions and forecasts suggest a belief that the economy remains sturdy even nearly nine years after the Great Recession ended.

Gold and silver seem to have found this action... dovish.

iehi-feed-63762 Thu, 15 Mar 2018 14:52:20 GMT Trump repeats Canada trade claim after admitting he bluffed in meeting with Trudeau President Donald Trump repeated Thursday his claim that the U.S. has a trade deficit with Canada to swipe at Prime Minister Justin Trudeau, a day after boasting about misleading the Canadian leader about his knowledge of the subject.

The Office of the U.S. Trade Representative says the U.S. in 2016 had a goods and services trade surplus with Canada of $12.5 billion.

"We do have a Trade Deficit with Canada, as we do with almost all countries (some of them massive). P.M. Justin Trudeau of Canada, a very good guy, doesn't like saying that Canada has a Surplus vs. the U.S.(negotiating), but they do...they almost all do...and that's how I know!" the president tweeted.

The president on Wednesday bragged to donors during a closed-door speech in Missouri about telling Trudeau that the U.S. was at a trade deficit with Canada, even though he wasn't sure of the details and the Canadian prime minister refuted the claim.

"I didn't even know," Trump said according to audio obtained by POLITICO. "I just said, ‘You're wrong.'"

Lovely, our "President" is gleefully pissing off trading partners with whom we actually are on top already. This will certainly end well.

It's one thing for policy to be based on ignorance, another for it to be based on innocently being wrong, and yet another for it to be based on willfully being wrong out of personal preference, just because you can get away with it..

iehi-feed-63749 Sun, 11 Mar 2018 01:17:13 GMT Trump Even Does Trade Protectionism Wrong - Michael Hudson The idea of industrial protectionism, from British free trade in the 19th century to U.S. trade strategy in the 20th century, was to obtain raw materials in the cheapest places -- by making other countries compete to supply them -- and protect your high-technology manufactures where the major capital investment, profits and monopoly rents are.

Trump is doing the reverse: He's increasing the cost of steel and aluminum raw materials inputs. This will squeeze the profits of industrial companies using steel and aluminum -- without protecting their markets.

In fact, other countries are now able to legally raise their tariffs to protect their highest-technology sectors that might be most threatened by U.S. exports. Harley Davidson motorcycles have been singled out. They also can block U.S. monopoly exports, such as bourbon and Levi blue jeans, or pharmaceuticals. Or, China can block whatever U.S. technology it decides it wants to compete with.

iehi-feed-63746 Sat, 10 Mar 2018 01:53:28 GMT Trump steel tariffs may leave some U.S. steelworkers jobless Lang is one of around 780 workers at the Novolipetsk Steel PAO (NLMK) mill, NLMK's U.S. subsidiary which imports around 2 million tons of steel slabs annually from its Russian parent company. The slabs that the mill rolls into sheets for customers including Caterpillar Inc (CAT.N), Deere & Co (DE.N) Harley Davidson Inc (HOG.N) and Home Depot Inc (HD.N), are almost impossible to acquire from U.S. steel producers.

Bob Miller, Chief Executive Officer of NLMK's U.S. unit, said if his company's customers refuse to accept a 25 percent price hike as a result of the tariffs, nearly 1,200 workers could eventually lose their jobs - and the ones in Farrell would be the first to go when supplies of imported slabs run out.


Miller said tariffs will also force NLMK to shelve planned $600 million investments in plants in Pennsylvania and Indiana, around $400 million of which was earmarked for upgrading antiquated equipment at its Farrell plant.


Some steel executives such as Miller say this is the ultimate irony: by acting ostensibly to protect U.S. steel jobs with sweeping tariffs, Trump will also kill off some steel jobs.

"The workers here in Farrell are on the front line," Miller said. "This policy is picking winners and losers and unfortunately, we are the losers."

The tariffs are good for steel producers that melt and produce their own steel. But for those like NLMK, which is reliant on imported raw materials, they could prove catastrophic.


Its blast furnace was sold for scrap and instead of producing steel, its current crop of workers heat 25-ton imported steel slabs to a glowing-orange temperature of 2,400 degrees fahrenheit (1,316 Celsius) before rolling them down in some cases to as thick as a few sheets of paper.


Miller is working to lobby the Trump administration to follow the precedent of former Republican President George W. Bush's administration, which allowed quotas for slab steel in 2002 rather than applying tariffs as it did for products that were domestically produced.

Those quotas allowed the Farrell plant to keep operating and Miller hopes the Trump administration will follow suit.

The mood in Farrell is grim and fearful. Truckers coming to pick up coils of rolled steel ask when the mill will go out of business and plant manager Bill Benson says workers keep asking him: "What on earth is Trump thinking?"

iehi-feed-63742 Fri, 09 Mar 2018 15:04:23 GMT Stockman - Whistling Past The Graveyard ... last year China produced 800 million tons of steel, which is more than the next 40 worldwide suppliers combined; and even then this tsunami of steel came from a partially idled industry that actually has 1.2 billion tons of capacity.

Stated differently, the world is drowning in China's excess steel capacity.But since it has now diverted most of the exports it was previously dumping on the US market to other customers, the Donald's tariff won't amount to even a pinprick.

To wit, in 2017 China was only the #12  steel importer at 800,000 tons into the 107 million ton US end market. Its shipments compared to 36 million tons of total steel imports. Accordingly, we'd be surprised if the Donald's tariff would add even $100 million to the landed cost of China's current exports to the US.

That's right. the Donald is hitting the steel users of the US with a notional $7.5 billion tariff cost in order to smack the real target----the Red Ponzi---with what amounts to just 1.4% of the total upcharge.

iehi-feed-63739 Thu, 08 Mar 2018 00:53:20 GMT Trade Tariffs Will Not Make America Great Again Until the 1970s, America was the world's leading exporter. Then, in a few years, it became the world's leading importer. From having the biggest trade surplus, it soon had the biggest deficit.

Why? Did Americans suddenly forget how to make things? Did our businessmen and entrepreneurs lose interest in making money? Were they incapable of making a good deal?

What really happened was that the money system changed. In 1971, the Nixon administration created a new dollar by removing the last vestiges of gold backing.

Instead of making stuff at home, the U.S. began taking it from abroad, and paying for it with its new credit money.

Instead of being a manufacturing powerhouse, it became a consumer's EZ credit paradise. And instead of favoring real jobs with good wages on Main Street, the economy was distorted by over-empowered PhDs at the Fed, overpaid scalawags on Wall Street, and hoggish scoundrels in both parties wallowing in an overblown, overreaching, and over-indebted swamp in Washington.

But the president won't bother to think about it. And the Deep State wouldn't permit him to do anything about it even if he did.

iehi-feed-63738 Thu, 08 Mar 2018 00:49:49 GMT Buy-the-Dip Believers Rejoice After White House Tries to Ease Trade Tension iehi-feed-63737 Thu, 08 Mar 2018 00:09:53 GMT Conservatives Are to Blame for Steel and Aluminum Tariffs There was another way forward. At the start of the Trump presidency, House Speaker Paul Ryan devised a strategy that had the potential to reconcile the president's economic nationalism with his devotion to free trade. He proposed scrapping the corporate income tax altogether and replacing it with a destination-based cash-flow tax (also known as the "border-adjusted tax," or BAT) that promised to make America the world's most attractive place to do business. Though the BAT posed a number of complications, and though it is very unlikely it would have raised as much revenue as Ryan had suggested, it had the potential to greatly strengthen the U.S. tradable sector, the central objective of economic nationalism.

Yet as Joseph Lawler and David M. Drucker reported in the Washington Examiner, the BAT died at the hands of retail interests and conservative advocacy groups financed by retail interests, which insisted that it would harm consumers--a highly misleading claim given that the advent of border adjustment would lead to a stronger U.S. dollar. In the end, the intransigence of the House Freedom Caucus killed a measure that might have scratched the president's protectionist itch without actually hampering global trade.

This certainly gets closer to the real solution for lopsided trade: fixing the "capital account"; i.e., the "recycling" of deficit dollars into the financial economy. This is the true "giant sucking sound" in trade dysfunction, and the way to fix it at its root is monetary discipline (which can come in a variety of forms -- sound money being the most fundamental, but not sole version of that).

iehi-feed-63735 Tue, 06 Mar 2018 23:23:06 GMT Gary Cohn leaves White House in wake of tariff rift ``Cohn, who had once been rumored as a potential next chief of staff, will leave the White House in the wake of his fierce disagreement with the President's decision to impose tariffs on steel and aluminum imports. Cohn is expected to leave in the coming weeks, the White House said.


As recently as last week, Cohn was still thinking he could hold on -- and wanted to, this person says -- but losing the tariff fight made clear that it was time to leave, the person said.

"Trade was the last straw," the same person said.


For months, Cohn led the internal opposition to Trump's protectionist interests, working to rein in Trump's desire to slap steep tariffs on steel and aluminum imports. But his campaign fell apart last week when Trump sidestepped Cohn and announced his plans to impose the tariffs during a hastily arranged meeting with US steel and aluminum executives.

iehi-feed-63725 Sun, 04 Mar 2018 20:12:05 GMT Trump's trade war will hurt everyone -- the only question is how much ... the administration's contention the tariffs are aimed at China are misguided and that Trump's invocation of national security in its reasoning could open a "Pandora's box" for other countries to do the same.


Most of the unfair trading that's going on in steel and aluminum is emanating from China, and this action does very little, if anything, to affect China. So instead, we're hitting our closest allies and partners with a set of tariffs under the justification of national security, while the administration is making it more difficult for those allies and partners to work with us jointly to put pressure on China to reduce its excess capacity. We're the ones who now look internationally isolated as opposed to the Chinese, which is where the attention of the global economy should be, because that's where the distorting policies are taking place.