Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-63311 Sun, 19 Nov 2017 04:42:13 GMT Trump's Saudi Scheme Unravels http://implode-explode.com/viewnews/2017-11-18_TrumpsSaudiSchemeUnravels.html Why did Trump gamble so heavily on the inexperienced Kushner and the impulsive MbS? Well, of course, if such a "grand plan" had indeed worked out, it would have been a major foreign policy coup -- and one done over the heads of the professional foreign policy and defense echelon who were excluded from it. Trump then would have felt himself freer to ascend above the Establishment tentacles: to attain a certain elevated independence and freedom from his "minders." He would have achieved his coup through family channels, rather than be officially advised.

But, if it sinks into farce, and MbS becomes regarded in the U.S. as a maverick, rather than a Machiavelli, the (slighted) "system" will exact its revenge: presidential judgments will stand devalued -- and ever more in need of justification and "minding."

MbS (and Kushner) may have hurt President Trump in a much wider way therefore: the failed bet on the untried MbS may leach into other spheres -- such as, in consequence, U.S. allies' openly questioning the soundness of Trump's North Korea judgments. In short, the U.S. President's credibility will bear the consequences for his falling for MbS' spin.

]]>
iehi-feed-63299 Fri, 17 Nov 2017 23:58:30 GMT Saudi Arabia Offers Arrested Royals A Deal: Your Freedom For Lots Of Cash http://implode-explode.com/viewnews/2017-11-17_SaudiArabiaOffersArrestedRoyalsADealYourFreedomForLotsOfCash.html Saudi authorities are negotiating settlements with princes and businessmen held over allegations of corruption, offering deals for the detainees to pay for their freedom, people briefed on the discussions say.

 

In some cases the government is seeking to appropriate as much as 70 per cent of suspects' wealth, two of the people said, in a bid to channel hundreds of billions of dollars into depleted state coffers.

 

The arrangements, which have already seen some assets and funds handed over to the state, provide an insight into the strategy behind Crown Prince Mohammed bin Salman's dramatic corruption purge.

...

Regular Saudis, who've seen their benefits cut and some of their jobs taken away, support MbS's decision. "Why should the poor take all the pain of austerity," said one Saudi academic. "The rich need to pay their way too."

In Saudi Arabia, they are about to do just that.

]]>
iehi-feed-63285 Tue, 14 Nov 2017 20:54:24 GMT Venezuela's Bondholder Meeting Is a Bust as S&P Declares Default http://implode-explode.com/viewnews/2017-11-14_VenezuelasBondholderMeetingIsaBustasSPDeclaresDefault.html Venezuela's grand gathering with creditors Monday lasted all of 30 minutes and didn't produce anything of substance. To make matters worse, S&P Global Ratings declared the country in default while Fitch Ratings cited missed payments by the state oil company prompting a fresh selloff in the nation's bonds.

...

Very little was announced and nothing was resolved, according to attendees who said they left just as confused about the government's intentions as they were going in. Vice President Tareck El Aissami was the only official to speak, and devoted most of his prepared remarks to railing against Donald Trump and global financiers who he said have conspired to keep the country from making debt payments on time. He pledged the nation would continue to honor its obligations and work with bondholders to find new ways to get them their money, but offered no concrete proposals for restructuring.

President Nicolas Maduro had summoned holders of some $60 billion of bonds issued by the government and state oil company Petroleos de Venezuela SA to begin a renegotiation as the nation's cash crunch worsens, sanctions make it difficult to transfer money and delayed payments pile up.

...

The nation, home to the world's largest oil reserves, owed investors about $200 million and failed to make those payments by the end of a 30-day grace period, S&P said in the statement in which it lowered the country's rating to SD. Plagued with payment delays and running low on cash -- and with most of its debt trading near 30 cents on the dollar -- it's the first time in recent years the government has exceeded the buffer period on its bonds.

...

Investors in Venezuela's $5 billion of bonds maturing in 2019 and 2024 can organize to demand that the nation immediately pay back all they're owed, and down the line, holders of the nation's other debt, which have cross-default provisions, could choose to do the same... they risk setting off what could be the start of one of the messiest debt restructurings ever. S&P said there was a 50 percent chance Venezuela will default again within the next three months.

]]>
iehi-feed-63264 Thu, 09 Nov 2017 17:51:31 GMT Dissecting the "$250 Billion" China Deals Trump Got for U.S. http://implode-explode.com/viewnews/2017-11-09_Dissectingthe250BillionChinaDealsTrumpGotforUS.html The White House has unveiled a slew of agreements with China as President Donald Trump seeks to address an imbalance in trade. While Commerce Secretary Wilbur Ross boasted a total of $250 billion in business deals, getting to that figure may require some fuzzy math. 

Many of the deals weren't broken out into separate valuations, while a large number were in the form of non-binding memoranda of understanding or involved agreements with existing Chinese partners.

Boeing Co.'s $37 billion aircraft order consists mostly of previously agreed deals, according to officials with knowledge of the matter. An agreement involving Cheniere Energy Inc. was presented at the signing ceremony as worth $11 billion, though neither company involved announced the value. Other pacts are stretched over lengthy periods, such as a 20-year shale gas and chemical project in West Virginia.

Still, the wave of deals signals the potential for an easing of tensions between the two countries, in addition to an increase in trade for products ranging from helicopters to beef...

]]>
iehi-feed-63251 Sun, 05 Nov 2017 17:12:48 GMT What Happened in Saudi Arabia Last Night -- And How Washington Corruption Enabled It http://implode-explode.com/viewnews/2017-11-05_WhatHappenedinSaudiArabiaLastNightAndHowWashingtonCorruptionEnab.html The move marks a moment of reckoning for Washington's foreign policy establishment, which struck a bargain of sorts with the Crown Prince Mohammed bin Salman, known as MBS, and Yousef Al Otaiba, the United Arab Emirates ambassador to the U.S. who has been MBS's leading advocate in Washington. The unspoken arrangement was clear: The UAE and Saudi Arabia would pump millions into Washington's political ecosystem while mouthing a belief in "reform," and Washington would pretend to believe that they meant it. MBS has won praise for some policies, like an openness to reconsidering Saudi Arabia's ban on women drivers.

Meanwhile, however, the 32-year-old MBS has been pursuing a dangerously impulsive and aggressive regional policy, which has included a heightening of tensions with Iran, a catastrophic war on Yemen, and a blockade of ostensible ally Qatar. Those regional policies have been disasters for the millions who have suffered the consequences, including the starving people of Yemen, as well as for Saudi Arabia, but MBS has dug in harder and harder. And his supporters in Washington have not blinked.

]]>
iehi-feed-63249 Sun, 05 Nov 2017 05:23:48 GMT In Apparent Purge, Saudi King Arrests Billionaire Prince Bin Talal, Dozens Of Others In Cabinet Crackdown http://implode-explode.com/viewnews/2017-11-05_InApparentPurgeSaudiKingArrestsBillionairePrinceBinTalalDozensOf.html iehi-feed-63222 Sat, 28 Oct 2017 14:18:53 GMT Tesla Cuts Vendor Orders: Could Be In A World Of Hurt http://implode-explode.com/viewnews/2017-10-28_TeslaCutsVendorOrdersCouldBeInAWorldOfHurt.html If 3,000 per week is the minimum contract size Tesla can go to, then Tesla may be forced to order 3K kits on an ongoing basis whether it needs or not. These 3,000 kits per week at $10,000 per kit of orders leads to $30M in cash burn per week.

Given these orders have a lead time of 2 months, it is likely that Tesla will be, or already has been, saddled with at least a quarters worth of inventory. One-quarter inventory could mean $650M in cash (in part financed with ABL) that needs to be parked in parts inventory ($50M X 13 weeks).

Going forward, for every week of delay in Model 3 ramping, Tesla will be burning cash/ABL at a rate of $30M per week.

...

As the capital raise comes into focus, and with Model 3 story in disarray, we expect that the next capital raise will be a difficult one for Tesla. As funds and savvy investors realize this eventuality, we expect that there will be an exodus from the stock.

In our opinion, there is a steep fall ahead for Tesla stock.

]]>
iehi-feed-63207 Thu, 26 Oct 2017 14:07:47 GMT Saudi Arabia becomes first country to grant citizen ship to a robot; To build "Robot City" http://implode-explode.com/viewnews/2017-10-26_SaudiArabiabecomesfirstcountrytograntcitizenshiptoarobotTobuildR.html iehi-feed-63197 Tue, 24 Oct 2017 22:03:39 GMT China's "Petro-Yuan" Plans Will Be a "Wake Up Call": Fund Mgr. http://implode-explode.com/viewnews/2017-10-24_ChinasPetroYuanPlansWillBeaWakeUpCallFundMgr.html Adam Levinson, of hedge fund manager Graticule Asset Management Asia, said China rolling out a yuan-denominated oil contract within the next two months will be a "wake up call" for investors who haven't paid attention to the plans.

The move toward creating a so-called "petro-yuan" will be a "huge story," Levinson, the founder and chief investment officer of Singapore-based Graticule, said in a Bloomberg Television interview on Tuesday.

Besides serving as a hedging tool for Chinese companies, the contract will aid a broader government agenda of increasing the use of the yuan in trade settlement, Levinson said. Chinese oil companies will probably be anchor investors in Saudi Arabia's initial public offering of its state oil company, Saudi Aramco, he said.

]]>
iehi-feed-63147 Mon, 16 Oct 2017 21:10:11 GMT Goldman Sachs thinks we're heading into a bear market http://implode-explode.com/viewnews/2017-10-16_GoldmanSachsthinkswereheadingintoabearmarket.html iehi-feed-63135 Sat, 14 Oct 2017 16:33:45 GMT Tesla fired hundreds of employees in past week http://implode-explode.com/viewnews/2017-10-14_Teslafiredhundredsofemployeesinpastweek.html iehi-feed-63134 Sat, 14 Oct 2017 16:24:13 GMT Trump Isn't Certifying the Iran Deal--What Happens Next? http://implode-explode.com/viewnews/2017-10-14_TrumpIsntCertifyingtheIranDealWhatHappensNext.html ... even if Trump's gambit to decertify and threaten the JCPOA did some harm to Iran, the international reaction would produce far less net economic and diplomatic pressure on Iran than existed before the JCPOA was finalized. And it is literally insane to believe that it is possible to produce 150 percent of the current deal with 50, 70, or even 99 percent of the leverage the United States possessed in 2015. It simply ignores the laws of diplomatic physics. ...

... Trump's move to decertify could end up the way his push for health-care reform did--with a whole lot of posturing and debate and false starts in Congress, and little to show for it. It could amount to Trump head-faking to a campaign promise and making a political statement about the folly of his predecessor without actually undoing that predecessor's policy.

... The gambit could also backfire in the opposite direction--by blowing up the Iran deal even if that's not what Trump wants. The elaborate decertification plan "suggests an elegance of plotting that the administration has given little evidence of possessing," Kori Schake writes in The Atlantic. "Congress is unlikely to trust the president enough to make a brave choice--which remaining in the agreement after the president decertifies it would be--they suspect he would then publicly castigate them for."

]]>
iehi-feed-63102 Sun, 08 Oct 2017 22:38:53 GMT Tesla's Pretense Of Model 3 Production Has Been Ripped Away http://implode-explode.com/viewnews/2017-10-08_TeslasPretenseOfModel3ProductionHasBeenRippedAway.html The WSJ report indicates that Tesla is still where I thought it was back in July. And the article points out that there is limited value in hand assembly of Model 3 at this point, since it doesn't serve to test out the final assembly process.

Hand assembly of the Model 3 now seems mainly designed to soothe investors by convincing them that Model 3 "production" has started. What I find so distressing about this is that increasingly, Tesla's actions seem to be governed not by technical necessity but by the need to keep investors sold on Tesla.

...

I think it remains a foregone conclusion that Tesla will not achieve its goal of 5,000 Model 3/week production by the end of the year. But I consider it a distinct possibility that Tesla will not even meet my "Pessimistic Scenario" of 2,500/week by the end of the year.

This will impose even more financial strain on the company and probably necessitate yet another capital raise early next year.

]]>
iehi-feed-63021 Sat, 23 Sep 2017 14:40:44 GMT Uber only has itself to blame for London license loss http://implode-explode.com/viewnews/2017-09-23_UberonlyhasitselftoblameforLondonlicenseloss.html iehi-feed-63019 Sat, 23 Sep 2017 14:21:10 GMT Creating Test for Trump, Panel Says Imported Solar Gear Hurts U.S. Firms http://implode-explode.com/viewnews/2017-09-23_CreatingTestforTrumpPanelSaysImportedSolarGearHurtsUSFirms.html A flood of imported solar equipment has seriously hurt American companies, the International Trade Commission ruled on Friday, setting up a major test of President Trump's willingness to use the protectionist measures he endorsed during the campaign.

The commission will now devise a course of action to recommend to Mr. Trump by Nov. 13. Its recommendations -- which the president will have broad leeway to accept, amend or reject -- could include establishing tariffs or minimum prices on imported solar equipment.

The commission ruled 4-0 in a case that focused on the question of whether the financial woes of two companies, Suniva and SolarWorld Americas, were caused by their own business practices or by unfair competition, often from Chinese companies that benefit from state subsidies.

...

"The president will examine the facts and make a determination that reflects the best interests of the United States," said Natalie Strom, a White House spokeswoman. "The U.S. solar manufacturing sector contributes to our energy security and economic prosperity."

...

Several analysts predicted that tariffs would revive the manufacturing of solar modules, or panels, in the United States, encouraging producers to open or expand American factories, as some large Chinese panel makers are already looking to do. But others said problems in the market were the result of low prices stemming from a global glut rather than a lack of capacity.

...

Although companies like Sunrun, which focuses on installing panels on residential rooftops, said they could withstand higher prices, developers of large-scale projects said they were already seeing a slowdown as customers pulled back from committing to deals that could become uneconomical if costs rose.

...

The case relied on a section of United States trade law that has not been used since President George W. Bush levied tariffs on foreign steel in 2002. In the intervening years, Barack Obama's administration chose to rely more heavily on the World Trade Organization to settle trade disputes.

President Trump and his advisers have argued that the World Trade Organization has been ineffective and slow at resolving trade violations. They have urged more unilateral action by the United States.

Analysts see a good chance of the president's taking action to protect the solar industry, given his longtime support for tariffs as a way to protect industries from cheap foreign products, especially from China.

]]>
iehi-feed-62968 Wed, 13 Sep 2017 15:29:35 GMT Wholesale Prices in U.S. Increase on Jump in Energy Costs http://implode-explode.com/viewnews/2017-09-13_WholesalePricesinUSIncreaseonJumpinEnergyCosts.html PPI rose 2.4% y/y after 1.9% gain in prior 12-month period... About three-fourths of the monthly gain in the headline gauge came from goods, most of which was due to a 9.5 percent jump in gasoline, along with the biggest rise in jet-fuel costs since 2009. Since the PPI pricing date was Aug. 15, the data shouldn't have captured the effects of Hurricane Harvey, said Scott Sager, a Bureau of Labor Statistics economist.

This would seem to take some of the wind out of the sails of that 3% median income gain announced yesterday (which, if you recall, was in part due to a rejiggered methodology... so we wonder now if it was even really greater than 2.4%, which is to say, greater than nothing at all, on an inflation-adjusted basis...)

]]>
iehi-feed-62964 Wed, 13 Sep 2017 03:10:10 GMT The automaker's perfect storm http://implode-explode.com/viewnews/2017-09-12_Theautomakersperfectstorm.html iehi-feed-62952 Mon, 11 Sep 2017 15:10:29 GMT Saudi Arabia Says It's Open to Another OPEC Cuts Extension http://implode-explode.com/viewnews/2017-09-11_SaudiArabiaSaysItsOpentoAnotherOPECCutsExtension.html Saudi Arabia and Venezuela, both members of the Organization of Petroleum Exporting Countries, agreed to consider prolonging production cuts "beyond the first quarter of 2018, if needed," the Saudi ministry said in one of the statements. The kingdom and Kazakhstan said such an extension "would be considered in due course as market fundamentals may dictate," according to a separate Saudi statement.

OPEC and other producers including Russia pledged to reduce output by about 1.8 million barrels a day through March to trim global oil inventories and buttress prices. The producers are seeking to strengthen compliance with the cuts accord they reached last year. Benchmark Brent crude has lost 6.2 percent this year and was trading 44 cents lower at $53.34 a barrel at 2:07 p.m. on Monday in London.

]]>
iehi-feed-62946 Sat, 09 Sep 2017 16:51:00 GMT Swamp Fever - Kunstler http://implode-explode.com/viewnews/2017-09-09_SwampFeverKunstler.html iehi-feed-62933 Wed, 06 Sep 2017 22:55:27 GMT The US is speeding toward its first national law for self-driving cars http://implode-explode.com/viewnews/2017-09-06_TheUSisspeedingtowarditsfirstnationallawforselfdrivingcars.html The overarching goal of the Self Drive Act is to establish a federal framework for the regulation of self-driving cars, something industry experts say is sorely needed in the early days of the technology. It would also dramatically increase the possible number of autonomous vehicles on the road. Right now, automakers and companies interested in testing self-driving technology have to apply for exemptions to the National Highway and Traffic Safety Administration's (NHTSA) federal motor vehicle safety standards, and the agency only grants 2,500 per year. The Self Drive Act would increase that cap to 25,000 per year initially, and expand it up to 100,000 annually in three years' time.

...

The Self Drive Act would make it so that states can no longer write legislation that the auto industry considers restrictive -- like in New York, for example, which requires expensive police escorts for autonomous tests. It would instead leave it in the hands of the federal government, which can make the guidelines more uniform. "The lack of regulations has often been cited as a potential obstacle to the proliferation of self-driving vehicles," Krebs says. "So having this federal framework, if it gets passed by the Senate, will take care of that."

]]>