Friday, April 1, 2016

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End Of An Era: Walmart Records First Ever Revenue Drop

Photo Credit Mike Mozart
Photo Credit Mike Mozart
(Shelly Banjo)  Not every milestone is worth celebrating.
For the first time ever – or at least since the company went public some 45 years ago – Walmart’s revenues shrank from the year before, according to its annual financial filing released Wednesday.
Walmart is clearly having trouble adapting its gigantic stores to the Internet age. To be sure, it is a retail juggernaut that brings in half a trillion dollars (that’s right, trillion) in sales every year. And with more than 11,500 stores in 28 countries,there’s no way it will disappear anytime soon.
Still, Walmart might have just hit its growth limit.
And the sales dip comes despite the fact that Walmart spent $11.5 billion (roughly matching what J.C. Penney made in sales last year) to build more than 400 new stores, remodel old locations, and revamp its website and other technology to better serve its customers.
Though Walmart shares were a safe haven in the rocky start of 2016, investors are pricing in more weakness. The stock has fallen behind retail competitors and the broader market.
In February, Walmart lowered its annual net sales growth forecast to “relatively flat,” from earlier guidance that called for an increase of as much as 4 percent (the company has pointed out that previous guidance didn’t account for currency changes, which have stung the global retailer).
Wednesday’s filing attributes part of the 2015 sales drop to currency impacts and a decrease in fuel sales due to lower gas prices. Sales have also suffered from ongoing store closures, including the shuttering of its entire fleet of smaller, “Express” stores.
But Walmart also acknowledged it has shifted the way it runs the company, dropping a long-time focus on growing net sales and cutting operating expenses as a percentage of sales. Its aim now is on making “strategic investments” to support the “long-term health of the company.”
While that’s happening, Walmart warned, it may not be able to deliver the kind of steady net sales and profit growth investors have grown accustomed to seeing. (Though it notes it will continue to build new stores and e-commerce capabilities and grow sales at established stores.)
While jarring, these changes aren’t necessarily bad. Walmart remains a massive retail force, and investors shouldn’t discount the muscle behind any decision it makes. This can already be seen in its fast-growing mobile app and its rapidly expanding and seemingly successful grocery pick-up program, which lets shoppers order groceries online and then swing through a Walmart drive-through to pick them up.
It’s also pretty amazing that executives are finally willing to take poor results on the chin and veer away from precedent in order to morph the company from a mostly brick-and- mortar operation into one that serves customers the way they want to shop – whether in stores, the web, on mobile, or a mix of all three. And if these investments work, they could position the company for another half-century of retail dominance.
But what Walmart doesn’t have is an unlimited amount of time. Reporting declining sales might be OK for a year or two, but at some point a turnaround plan could become a failed strategy. Its first revenue decline should serve as a wake-up call.

Five OPEC producers are on the verge of collapse

Photo Credit Sergio Russo
Photo Credit Sergio Russo

The global oil price rout has left many oil producers reeling across the world. From Canada to Norway, Saudi Arabia to Russia, none of the world’s largest oil exporters have been spared from oil prices that declined 45 per cent last year alone.
While some of the biggest producers will stumble along, five oil-producing economies are on the verge of collapse if oil prices do not stabilize soon, according to RBC Capital Markets.
“There are five sovereign producers that are on the precipice of a major crisis amid the current low oil price environment,” Helima Croft, global head of commodity strategy, said in a report.
These countries face a mix of social, political and terrorism-related upheavals that could either lead to a regime change or create great instability that could knock out their oil production, leading to an oil-supply shock.
“Our ‘fragile five’ states…were already facing severe political and security challenges when oil prices were above $100/bbl and the situation has grown far more grim as these countries have struggled to fund their state apparatuses and provide essential services,” Croft wrote.
Here are the five countries most vulnerable to a protracted oil downturn (in alphabetical order):
The Algerian government is struggling to develop a new economic plan after its foreign reserves declined US$35 billion last year to US$143 billion, while the fiscal deficit nearly doubled to 16 per cent of GDP on lower hydrocarbon revenues.
“Algeria faces important challenges, with the large decline in oil prices expected to be sustained over the medium term. In response, the authorities have begun to undertake fiscal consolidation and implement selected reforms,” the International Monetary Fund said in a report. “These efforts need to be intensified.”
The OPEC member produced 1.11 million barrels per day in February.
High oil prices are a key tool for the regime led by Abdelaziz Bouteflika to control its restive population and rule the country with an iron fist. In the past, the government has paid lip service to economic and social reforms, but a continued crisis may force the government to loosen its tight grip on the economy.
“Algeria is also facing renewed terrorist threats, as evidenced by the recent Al Qaeda rocket attack on the Krebcha gas plant, which prompted BP and Statoil to withdraw its Algerian based staff,” RBC said.
Oil breakeven price: US$114.8 per barrel
Iraq is one of the few countries in the world that can raise crude oil production significantly.
The country produced 3.99 million bpd on average last year and could see production exceeding 4.22 million bpd this year, according to the International Energy Agency estimates.
The country’s oil production has been resilient despite a war raging in neighbouring Syria and ISIS terrorism activities in the north of the country, which has displaced nearly four million people.
“Northern Iraqi exports are increasingly at risk due to trouble in neighbouring Turkey, as well as dysfunctional Iraqi political dynamics,” Croft said in the report.
While most analysts believe that Iraq’s oil infrastructure in the south remains well-protected, the country faces a political crisis.
The country’s real GDP contracted by 2.1 per cent in 2015 owing to the conflict, destruction of infrastructure and assets, disruptions in trade, and deterioration of investor confidence, according to the IMF.
“Iraq needs to put its economic house in order, reducing waste of precious resources, strengthening accountability, and undertaking important, necessary reforms,”  Jim Yong Kim, World Bank Group president said in a speech in Baghdad earlier this month.
Oil breakeven price: US$77 per barrel
Libya’s oil production of 1.6 million barrels before 2011 has now contracted to just around 460,000 barrels per day, as various factions seek control of the country. A civil war has decimated the oil and gas industry, and the country’s GDP is set to fall to US$42 billion this year, compared to US$72 billion in 2012.
“Fighting between militias is growing, while terrorist groups such as ISIS and Al-Qaida have gained a stronger presence in the country and growing numbers of refugees are fleeing across the borders,” said the Institute of International Finance.
Oil breakeven price: US$68.8 per barrel
RBC also raised concerns about Nigeria. The country produces around 1.90 million bpd, but as much as 15 per cent of output remains offline.
“In fact, the government appears to be on course for a head on collision with armed militants in the oil region,” RBC said.
Assailants damaged a 250,000-bpd underwater pipeline linked to a Royal Dutch Shell Plc. facility, rendering it idle and exposing the fragility of the country’s energy infrastructure.
“Nigerian production has been slowly grinding lower over recent years, even absent acute outages due to natural declines, and this will be compounded over the next several years given the number of shelved projects,” RBC said. “The significant risks posed by the political, security, and economic risks mounting only adds to these falls in production.”
Oil breakeven price: US$122.70 per barrel
Venezuela’s economic meltdown belies its status as the world’s largest holder of crude oil reserves. The country, which has stopped releasing basic economic data on a timely basis, was set for a 10 per cent contraction in GDP last year, according to the IMF. Another 6 per cent economic decline was on the cards this year, the IMF estimated in a report last year.
Venezuela, which produced 2.37 million bpd last month, suffers from electricity and water shortages and has a dearth of basic medical and food supplies, as President Nicolas Madura’s party has failed to contain the damage from decade-low crude oil prices.
In addition, the country’s inflation rate is expected to skyrocket to 720 per cent this year, according to the IMF. The country’s central bank admitted last year’s inflation rate was at 180 per cent.
While the country was broken even before the oil price decline, Venezuela needs much higher oil prices to avoid a complete economic meltdown.
Oil breakeven price: US$117.5 per barrel


Jim Rickards, Financial Threat and Asymmetric Warfare Advisor and best selling author joins Gary Franchi to reveal the truth behind claims of an emergent gold backed Yuan and Ruble to challenge US Dollar dominance globally. What you’re about to discover may shock you.
James new book “The New Case For Gold” is available at Amazon:…

Jim Rickards, Financial Threat and Asymmetric Warfare Advisor and best selling author joins Gary Franchi to breakdown the war between the Federal Reserve and the BRIC Bank… and who will win.
James’ new book “The New Case For Gold” is available at Amazon:…

2007 All Over Again, “We Are Outsourcing Our Monetary Policy”

In that deservedly-famous 2006 CNBC debate between Peter Schiff and economist Arthur Laffer (in which the latter manages to be both arrogant and wrong about literally everything), Laffer celebrates the fact that “we are outsourcing our monetary policy to China” (minute 5:17).

Alert listeners probably wondered what he meant by that, and also probably found the idea vaguely disturbing. But whatever it was we were doing, it turned out to be bad because within a year the global economy was in free-fall.
And now that strange, ominous concept has returned — but this time we’ve put our monetary fate in even less-stable hands:

Yellen Outsources U.S. Monetary Policy to the Financial Markets

(Bloomberg) – Fed Chair Janet Yellen told the Economic Club of New York on Tuesday that policy makers had scaled back the number of interest rate increases they expect to carry out this year after investors did the same.She argued that the downgrading of rate expectations in the market had led to lower bond yields, providing the economy with needed support in the face of weaker growth overseas. The Fed then followed suit this month by reducing its anticipated rate hikes in 2016 to two from four quarter-percentage point moves projected in December.
“That’s a good thing,” said Lou Crandall, chief economist at Wrightson ICAP LLC in Jersey City, New Jersey, commenting on the sequence of actions. “Monetary medicine gets into the blood stream faster if the public can anticipate what the Fed’s response to an economic shock will be.”
There are pitfalls. Investors may become so impressed with their ability to influence Fed policy that they’ll press for more stimulus than the central bank is willing to supply.
Forcing Fed
“The risk is that markets’ perception of such continued accommodation will embolden them even more to try to force the policy hand of the Fed,” Mohamed El-Erian, chief economic adviser at Allianz SE and a Bloomberg View columnist, said in an e-mail.
Indeed, investors in the federal funds market are betting that the central bank will raise rates just once this year, not the two times policy makers envisage.
The Fed’s experience over the last six months also shows how difficult it can be for the central bank to align investors’ view of optimal monetary policy with that of its own.
“It’s a constant learning process by both the Fed and the markets,” said Joachim Fels, global economic adviser for Pacific Investment Management Co., which oversees $1.43 trillion in assets.
Automatic Stabilizer’
Yellen used her spoken remarks though to extol the symbiotic relationship between the central bank and the financial markets. “This mechanism serves as an important ‘automatic stabilizer’ for the economy,” she said.
Her comments come against the backdrop of continued criticism from Republican lawmakers and economists that the Fed is following a discretionary monetary policy that investors don’t understand and is hurting the economy as a result. They want the Fed to follow a monetary policy rule, such as the one espoused by Stanford University professor John Taylor. It uses a simple equation to link changes in interest rates to movements in inflation and the economy.
With her remarks on Tuesday, Yellen was “implicitly defending the Fed’s approach in the rules versus discretion debate as being one that’s systematic” and understood by the markets, Crandall said.
I’m not going to try to explain (or even understand) any of this, except to say that putting oneself at the mercy of financial market sentiment seems a bit risky, given that Mr. Market is a well-known manic depressive.
It’s also an inversion of the proper relationship between “money,” or more accurately the monetary environment, and the players who act on that stage. Placing monetary policy in the hands of stock, bond, and derivatives traders is like putting the definition of meters and seconds into the hands of Olympic athletes: Within a few years the self-interest of the participants will make past records meaningless.
Some other fun analogies: putting criminals in charge of the legal system, putting kids in charge of the dinner menu, putting car makers in charge of auto safety testing, putting food companies in charge of nutritional reporting. All are recipes for incoherence if not disaster.
Apply the same process to interest rates and currency creation, and the price signaling mechanism of the capital markets will go haywire. And without accurate price signals, modern market-based capitalism descends into chaos.

Peter Schiff warns listeners against investing in U.S. stocks as the US dollar is set to weaken against other currencies.

Janet Yellen Admits Fed CAN’T Raise Interest Rates! Stock Market Hits 2016 High!

Stocks close at 2016 highs as Yellen strikes cautious tone – MarketWatch…
Yellen Says Caution in Raising Rates Is ‘Especially Warranted’ – Bloomberg…
Negative interest rates put the global economy on a razor’s edge – MarketWatch…
Corporate business: Profits before tax (without IVA and CCAdj) – FRED – St. Louis Fed…
German journo: European media writing pro-US stories under CIA pressure (VIDEO) — RT News…
China newspaper editor ‘resigns over media control’ – Telegraph…
Self-driving robots deliver food to your door after founders of Skype launch new tech company – Mirror Online…
0 of 1 uploaded – YouTube

US Dependent on Healthy China Economy, Positive Long Crude Good for Canadian Dollar – Sean Brodrick

Video: Keiser Report: Helicopter Money (E894)

In this episode of the Keiser Report, Max and Stacy discuss billions from heaven as more economists, bankers and pundits plead for helicopter money.

Via Youtube

“Someone” Serious Is Buying Gold Right Now… Bernanke: 98% Of All Monetary Policy Is Now Verbal… Robert Kiyosaki: Markets Headed For The Worst Crash In History This Year

Bill King : The Fed is Beyond Trapped | McAlvany Commentary 2016

Bernanke – 98% Of All Monetary Policy Is Now Verbal
The Fed Knows The Truth & The Goal Is To Keep People From Panicking
“Someone” Serious Is Buying Gold Right Now
Robert Kiyosaki – Markets headed for the worst crash in history this year

John Rubino – The Inevitable Is Now Imminent

In 2016, Modern Warfare Is Not About Tanks And Aircraft Carriers Anymore. Modern Warfare Is Insurgent, Cyber, And Financial.

In his History of the Peloponnesian War, ancient Greek historian Thucydides told us the tale of a dominant regional power (Sparta) that felt threatened by the rise of a competing power (Athens).
Sparta felt so threatened, in fact, that all the moves they made to keep the Athenian rise in check eventually escalated the power struggle into an all out war.
Modern political scientists call this the Thucydides Trap.
The idea is that when, out of fear, a dominant power takes certain steps to keep its competitor at bay, these actions ultimately lead to war between the two.
There’s a lot of concern that the US and China will fall into the Thucydides Trap.
This is certainly a valid concern. Both are nuclear superpowers with some of the largest militaries in the world.
But in 2016, modern warfare is not about tanks and aircraft carriers anymore. Modern warfare is insurgent, cyber, and financial.
In fact, if you look at the state of the financial system and the tactical brinksmanship between the US and China, it’s clear that the two are alreadyin a Thucydides Trap.
This power struggle is leading to financial warfare of nuclear proportions; and as with any war, there will be a lot of casualties.
Just over the last several months we’ve seen many exchanges of fire between the two nations.
  • The US government claimed legal jurisdiction over the Bank of China, one of the largest banks on the mainland.
  • The Chinese launched the Asian Infrastructure Investment Bank, a supernational bank designed to compete with the Western-dominated IMF.
  • The US blacklisted one of China’s largest telecom companies, forbidding any US company from doing business with China’s ZTE.
  • China has been rapidly expanding its global payment network, UnionPay to become a direct competitor with Western systems like Maestro, Visa, and Mastercard.
And don’t forget, China could unleash its nuclear option at any time– dumping its vast trillion+ pool of US government debt, which would potentially cause a major crisis for the US dollar.
It’s a bit sad, because almost EVERY action of the US government only escalates the conflict further… and the Chinese eagerly follow suit.
This is how World War III starts. And it will be financial.

Listen in to today’s podcast and learn more about how this conflict will unfold… and how to not to end up as collateral damage.

Banks are still too big to fail: Deutsche Bank’s default probability continues to trade in lockstep w/ Germany’s.

Banks are still too big to fail: Deutsche Bank's default probability continues to trade in lockstep w/ 's.