The decomposition of real commodity prices based on the BP filtering technique provides evidence of four past super-cycles ranging between 30 to 40 years. For the total real non-fuel commodities, these cycles have occurred (1) from 1894 to 1932, peaking in 1917, (2) from 1932 to 1971, peaking in 1951, (3) from 1971 to 1999, peaking in 1973, and (4) the post-2000 episode that is still ongoing. These long cycles, which possess large amplitudes varying between 20 to 40 percent higher or lower than the long-run trend, are also a characteristic of sub-indices. Among the agricultural indices, the tropical agriculture exhibits super-cycles with much larger amplitude relative to non-tropical agriculture. The amplitudes of super-cycle components of real metal and crude oil prices are comparable to those of agricultural products in earlier parts of the twentieth century, but they become much more pronounced and strong in the latter parts of the century. The presence of co-movement among non-fuel commodity indices is supported by the correlation analysis across the entire sample, and a marked co-movement between oil and non-oil indices is present for the second half of the twentieth century.
Another important finding of the paper is that, for non-oil commodities, the mean of each supercycle has a tendency to be lower than that of the previous cycle, suggesting a step-wise deterioration over the entire period in support of the Prebisch-Singer hypothesis*. This finding applies especially to tropical and non-tropical agricultural prices, as well as metals in previous cycles. An exception to this rule is that of metals during the current super-cycle, when the mean last cycle is higher than the preceding one; however, the contraction phase of this cycle has not even began yet, which can lower the mean of the whole cycle in the upcoming years. Another way of capturing these trends is through long-term trends, with tropical agricultural prices experiencing a long severe long-term downward trend through most of the twentieth century, followed by non-tropical agriculture and metals. The duration of the long-term downward trends across all non-fuel commodity groups is on average 100 years. The magnitude of cumulative decline during the downward trend is 47 percent for the non-fuel commodity prices, with recent increases of around 8 percent far from compensating for this long-term cumulative deterioration. In contrast to these trends in non-oil commodity prices, real oil prices have experienced a long-term upward trend, which was only interrupted temporarily during some four decades of the twentieth century.
The recent commodity price hike of the early twenty-first century has commonly been attributed to the strong global growth performance by the BRIC economies, and particularly China, which is particularly metal- and energy-intensive. Based on the VECM results, it is found that super-cycles in the world output level are a good predictor of the super-cycles in real non-fuel commodity prices, both for the total index and sub-indices. This finding confirms that the global output accelerations play a major role in driving the commodity price hikes over the medium run. Therefore, the ongoing commodity price boom could last only if China and other major developing countries are capable of delinking from the long period of slow growth expected in the developed countries.
* Prebisch-Singer hypothesis – suggests that over the long run the price of primary goods such as commodities declines in proportion to manufactured goods.
What is clear from this research is that commodities are far from homogeneous. A strong trend in industrial metals may not coincide with a strong trend in tropical soft commodities or North American grains. Nonetheless, the idea of the super-cycle is beguiling, because it ties the demand for all commodities to economic growth. The Russian economist Nikolai Kondratiev (1892-1938) developed a theory of Long Waves in the early 1920's. He discarded exogenous factors, such as wars and revolutions, in favour of endogenous drivers, like technological advances and capital accumulation. The Austrian economist Joseph Schumpeter took these ideas further, developing his theory of 'Creative Destruction'.
This chart shows commodity prices between 1850 and 2005, adjusted for inflation. Schumpeter's theory of Creative Destruction looks compelling; periods of high commodity prices spur innovation which leads to a lowering of prices in response to productivity gains.
The above chart – which is not inflation adjusted – shows the current commodity super-cycle since January 1999. The meteoric rise, the impact of the Great Recession of 2008-2009, the subsequent rebound, as QE kicked-in, and the continuation of the downward trend, marking a complete retracement of the upward move from 1999 to 2008, are all clearly evident. Now a number of commodities have begun to rise simultaneously.
Has the period of creative destruction run its course and permanently reduced supply? Or is the current rebound merely a shorter-term correction which, through higher prices, will encourage new capital investment in productivity enhancing techniques which will rapidly lower those prices once more – 17 years, after all, would make this the shortest super-cycle to date? To answer these questions we need to consider the state of the world economy, especially the growth potential of emerging and developing countries.
The pickup in global growth anticipated in the April World Economic Outlook remains on track, with global output projected to grow by 3.5 percent in 2017 and 3.6 percent in 2018. The unchanged global growth projections mask somewhat different contributions at the country level. U.S. growth projections are lower than in April, primarily reflecting the assumption that fiscal policy will be less expansionary going forward than previously anticipated. Growth has been revised up for Japan and especially the euro area, where positive surprises to activity in late 2016 and early 2017 point to solid momentum. China's growth projections have also been revised up, reflecting a strong first quarter of 2017 and expectations of continued fiscal support. Inflation in advanced economies remains subdued and generally below targets; it has also been declining in several emerging economies, such as Brazil, India, and Russia.
Even these sub-indices mask some individual trends. Palladium, a constituent of the precious metals index, made a 16 year high at $945/oz. on 29th August – up 122% from its January 2016 low. Lesser known PGMs, Ruthenium and Rhodium are both up more than 60% in the nine months to May 2017. Copper, the bellwether of industrial metals tested $3.08/lb, its highest since October 2014. LME 3 month Aluminium traded $2,121.75/ton, the highest since February 2013 and 3 month Zinc traded $3,179.50/ton, its highest level for a decade.
Mining companies have rallied in the wake of these higher prices. Market commentators argue that a combination of tight supply and increased demand, especially from China – whose growth forecast was revised from 6.2% to 6.7% by the IMF last month – are the principal near-term factors behind the rally. Additional factors include the relative weakness of the US$ and a, widely anticipated, more hawkish, central bank stance on interest rates.
In 2016, traditional players continued balance sheet bolstering to calm the market and stop the angst associated with financial distress. A heavy emphasis was placed on shedding debt. The brakes were firmly applied to exploration activities which continued to shrink, and what little was undertaken was generally allocated to "safe" jurisdictions. Capex fell dramatically again, by a further 41 percent, to a new record low of just $50 billion, and there was a lack of significant greenfield projects announced or commenced. Production was generally flat. While the Top 40 faced external headwinds in the form of increased oil prices, prudent cost control measures ensured operating expenditure was constrained. Traditional miners were rewarded with a strong upswing in their market cap, and earned some breathing space. Many planned disposals were called off in response to better market conditions. The exception to this was the 11 Chinese companies within the Top 40. China defied conventional industry behaviour and invested at the bottom of the cycle. Indeed, the most significant asset buyers among the Top 40 were Chinese companies.
In the short term, shareholders may appreciate the strengthening of balance sheets and increases in share prices. But the industry will need to execute a longer term vision or it will remain at the mercy of commodities speculators. Shareholders will demand performance from the existing asset base, culminating in dividends, or they will simply reallocate their capital if the mining sector cannot provide a long-term growth vision. There is clearly a divergence in thinking between Chinese companies and the rest of the Top 40 as their goals are different and Chinese capital is more patient. China aside, the old guard have donned hard hats, high viz jackets and steel-capped boots in a bid to protect themselves from the pitfalls of the recent past. Praise should be given for the efforts to repay debt, innovate and adopt new efficiency measures – all of which have helped to curb costs and restore credit ratings and investor trust. But where will this thinking take the industry if a "playing it safe" attitude to investment prevails in the future? We argue that it will lead back to old habits of lavish spending in a boom followed by a wave of write-offs during the bust that inevitably follows.
Balance sheet clean-ups require discipline and much hard work has been done. We witnessed the tailing-off of impairments, the avoidance of any new bankruptcies, the absence of any significant streaming transactions and the general passing of distress. The market rightly applauded this, reinstating a positive gap between market caps and net book values that was absent in 2015. Healthier price-to-earnings (P/E) multiples returned. And, even as price growth slowed early this year, valuations continued to rise until April. This provides a platform for the industry to act into the future. What we failed to see was significant action on the future direction of the Top 40, at least by the traditional players. We've called the industry out in the past for reacting to short-term price movements, and thankfully this did not happen in 2016. Is the pause an indication of longer term thinking by the industry? One major (Rio Tinto) may think so. Recognising the long-term, cyclical nature of the industry, it has publicly stated that its new CEO has a "10-year mandate…Emerging market companies, who are also focused on new world minerals, are increasingly integrated. In the traditional markets, we are seeing new players seeking to secure supply and even calls by stakeholders for BHP to get on board the battery train. It remains to be seen if a major will pivot in this direction. What will be the results of this reflection for the remainder of 2017? Will action come in the form of investment in greenfield projects, M&A or technology? The latter, we think, simply cannot be ignored. Aside from the completion of new projects, none of the majors has signalled bold intentions for future growth. But who could blame them when early 2017 has heralded further volatility in prices and the subsequent reversal of some of the 2016 gains. Few things are certain in this industry, but we know that China is unwavering in its strategy, shareholder activism is rising, government interventions are becoming more commonplace and new players are disruptive. Will the industry also act, or simply react?
It is too early to predict the beginning of a new up-trend in the next commodity super-cycle, however, mining companies, outside of China, have reduced capital expenditure over the last few years and, given the long lead times in the mining industry, the current uptrend in prices is probably a function of supply constraints, emanating from a lack of investment, combined with a marginal increase in global demand. I believe, however, that this trend can continue for some while. Inflation in the US and Europe remains subdued, deflation remains a near and present danger in Japan; therefore the major Central Banks are likely to maintain a low interest rate regime. The current long economic expansion will continue for a while yet.
During the last major uptrend in commodity prices, China was the main source of additional demand. Since announcing their 12th Five Year Plan in March 2011, China has adopted a policy of 'Rebalancing' towards domestic demand, away from mercantilist export oriented growth. Under this new regime, the services sector should expand faster than manufacturing and demand for raw materials, such as industrial commodities, should decline structurally. July saw the publication of a new paper from the IMF – Financial Development Resource Curse in Resource-Rich Countries: The Role of Commodity Price Shocks – it develops some of the ideas contained in the Prebisch-Singer hypothesis. I suspect the Chinese authorities have known the advantage of diversifying their economy away from basic materials from many years. Barring a significant increase in demand from other emerging and developing economies, such as India, the current up-trend in industrial metals is likely to be relatively short-lived, another year to 18 months should see new capital expenditure deliver increased supply. Prices will diminish.
Individual industrial commodities, such as Cobalt and Lithium, will see higher prices, even from their current elevated levels, due to structural demand increases. Other industrial commodities will be more likely to revert to mean as new supply meets global demand over the next couple of years.
Bitcoin (BTC) came into existence in January 2009. It was not the first 'cryptocurrecny' and there are now an estimated 950 competitors, with new ICO's 'Initial Coin Offerings' appearing almost daily.
I want to concentrate on BTC since it remains the market leader with a total circulation of $33bln (reference BTCUSD 2000) whilst the outstanding issuance of its nearest rival ETH is $16bln.
The recent price action needs to be seen in a broader context. The price has increased from less than BTCUSD 1000 in late March. On April 1st the Japanese authorities officially recognised BTC for the first time: perhaps, this was the catalyst for its spectacular rise.
SegWit2x software, which introduces SegWit while doubling the block size to 2MB, will be released on July 21. More than 80% of the network hash rate has agreed to run the SegWit2x code, which suggests that the solution to increasing bitcoin's scalability will be enacted smoothly.
There have been victories and defeats during the evolution of BTC, as it has evolved from an obscure novelty to a serious contender for investors seeking a store of value. The price volatility reflects these uncertainties but it is not demonstrably different from the volatility seen in several commodity markets.
There may well be other exchanges offering a variety of differing interest rates. but this, I hope, provides a snapshot of the current environment.
The other aspect of financial deepening which will help BTC come of age is the development of a derivatives market. I believe the arrival of exchanges for BTC futures and options is a very positive signal.
The futures exchanges include Okex, CryptoFacilties, BitMEX, BitVC, Coinut and Deribit which also offers options – there may be several others. Today (Monday 17th July) I have taken some snap shots of the futures and options pricing from Deribit.
…when the market is bullish, US$ interest rates spike up and BTC interest rates go down: uses want to borrow USD to buy BTC. In other words, short USD and go long BTC…there is an overall tendency for speculators to be long, therefore, the arbitrage traders are short BTC (lending out their USD) or short the future. USD interest rates are, therefore, normally higher than BTC rates which explains the contango in BTCUSD futures prices.
…on BTC platforms, annualized interest rates on US$ are on average maybe 20%…which would imply that the future should trade at a 20% annualized contango. Arbitrage traders take the other side of the trade…but get paid for their trouble.
Over time I expect the BTC market to become more efficient and the natural relationship for BTC futures should (other things equal) eventually become a small backwardation, reflecting the 1.5% differential between lower US$ and higher BTC interest rates. There are a number of arbitrage opportunities for those who want to dig deeper, but remember credit risk, both in terms of counterparties and exchanges, together with risks surrounding convertibility are nuanced. It may not be the free-lunch you perceive it to be.
The July option series expires on 28th but the mid-market implied volatility for the September 29th expiration is not significantly lower – implied call volatility stands at 97%, for puts it is 85%. At this stage in the development of the BTC options market, I suspect the majority of the buyers are speculative traders rather than desperate hedgers, but option market-makers are wise to build in a margin of safety given the tendency of the underlying market price to gap lower or higher: delta and gamma hedging is challenging with these price swings. The bid/offer spreads on the options are also wide, another reflection of the nascent nature of the marketplace.
In a liquid options market one would normally expect the lowest implied volatility to be at-the-money – around the $2000 strike price. In the chart above the nadir of volatility is around the $1900 strike, a level breached briefly last weekend.
Cryptocurrencies have captured the imagination of many new participants, from geeks to gold bugs, but, as BTC achieves greater legitimacy, the market will deepen and mature. The adoption of scalable technology to deal with the exponential increases in trading volume is a part of this process. The acceptance of distributed ledger technology across other parts of the financial services sector will also be supportive.
From a technical perspective the price of BTC has corrected by around 50% – since March it has risen from under $1000 to $3000 and is now back around $2000 (Monday 17th July). In absolute terms it has fallen by just over one third. This is a healthy price correction, typical of the price action witnessed from time to time in more liquid and established commodity markets: US Natural Gas springs to mind.
As an investment, the argument for holding BTC is more tenuous. It is a currency with no government or central bank to underwrite its value, however, the expansion of the BTC monetary base is strictly controlled, making it more like a hard currency, such as we had during the Bretton Woods era, as opposed to the endlessly debased fiat currencies we are inveigled to consider of value today.
Currencies have no implicit yield but BTCUSD currently offers a theoretical positive carry of around 1.5%. As mentioned above, this relationship is currently distorted by the demand to borrow US$ to buy BTC by leveraged traders. Any investment in an asset which has no earnings and pays no dividend/coupon/interest must by its nature be a trading asset. However, strategies such as high frequency, robotic, liquidity provision and long term, trend following, are among a number of exciting trading opportunities for the active BTC operator.
The fundamentals driving BTC investment revolve around: investor distrust in fiat currencies, loathing of government intervention in asset markets and belief in the tenability of cryptocurrencies as a lasting store of value both from a technical and regulatory perspective. These fundamental drivers of valuation have, in the past and will in the future, cause sudden repricing's. Outside of these seismic episodes, the price of BTC will be driven by capital flows. With liquid currency pairs like EURUSD, the economic fundamentals of both geographic regions are of equal importance. This is unlikely to be the case for BTC for the foreseeable future. BTC volatility eclipses the majority of its developed currency peers; its true value, whilst it is becoming gradually clearer, will remain ephemeral for some time to come.
The gritty potential of Fire Ice – Saviour or Scourge?
Concerning the second offshore methane hydrate production test, since May 4, 2017, ANRE has been advancing a gas production test in the offshore sea area along Atsumi Peninsula to Shima Peninsula (Daini Atsumi Knoll) using the Deep Sea Drilling Vessel "Chikyu." However, on May 15, 2017, it decided to suspend the test due to a significant amount of sand entering a gas production well.
In response, ANRE advanced an operation for switching the gas production wells from the first one to the second one for which a different preventive measure against sand entry is in place. Following this effort, on May 31, 2017, it began a depressurization operation and, on June 5, 2017, confirmed the production of gas.
Sand flowing into the well samples has been a gritty problem for the Agency for Natural Resources and Energy – ANRE since 2013. They continue to invest because Japan relies on imports for the majority of its energy needs, especially since the reduction in nuclear capacity after the Tōhoku earthquake and tsunami in 2011. It has been in the vanguard of research into the commercial extraction of Methane Hydrate or 'Fire Ice' as it is more prosaically known.
During the last two months there have been some important developments. Firstly the successful extraction of gas by the Japanese, albeit, they have run into the problem of sand getting into the pipes again, which poses an environmental risk. Secondly China has successfully extracted gas from Methane Hydrate deposits in the South China Sea. This article from the BBC – China claims breakthrough in mining 'flammable ice' provides more detail. The Chinese began investment in Fire Ice back in 2006, committing $100mln, not far behind the investment commitments of Japan.
For countries such as Japan, South Korea and India, Methane Hydrate could transform their circumstances, especially in terms of energy security.
Estimates of global reserves of Methane Hydrate range from 10,000 to 100,000trln cubic feet (TCF). In 2015 the global demand for natural gas was 124bln cubic feet. Even at the lower estimate that is 80 years of global supply at current rates of consumption. This could be a game changer for the energy industry.
The challenge is to extract Methane Hydrate efficiently and competitively. Oceanic deposits are normally found at depths of around 1500 metres. Even estimating the size of deposits is difficult in these locations. Alaskan and Siberian permafrost reserves are more easily assessed.
Under the new plan, Japan will end its lone efforts and pursue cooperation with others. The country has been spending tens of millions of yen per day on its tests. By working with other nations, it seeks to reduce the cost.
A joint trial with the U.S. to produce methane hydrate on land in the state of Alaska is expected to begin as early as next year. Test production with India off that country's east coast may also kick off in 2018.
The new blueprint will define methane hydrate as an alternative to liquefied natural gas. Based on the assumption that Japan will be paying $11 to $12 per 1 million British thermal units of LNG in the 2030s to 2050s, the plan will set the target production cost for methane hydrate over the period at $6 to $7.
In the shorter term METI hope to increase daily production from around 20,000 cubic metres/day to around 56,000 cubic metres/day which they believe will bring the cost of extraction down to $16/mln BTUs. That is still three times the price of liquid natural gas (LNG).
Japan was squeezed by rising fuel costs between 2009 and 2012 only to be confronted by the Yen weakening from USDJPY 80 to USDJPY 120 from 2012 to 2014. If Abenomics succeeds and the Yen embarks upon a structural decline, domestically extracted Methane Hydrate may be a saviour.
Cooperating internationally also makes sense for Japan. The US launched a national research and development programme in 1982. They have deep water pilot projects off the coast of South Carolina and in the Gulf of Mexico as well as in the permafrost of the Alaska North Slope.
And escaping methane has serious consequences for global warming – recent studies suggest the gas is 30 times more damaging than CO2.
Given the long term scale of the potential reward, it may seem surprising that the Japanese have only invested $179mln to date, however these projects have been entirely government funded. Commercial operators are waiting for clarification of the cost of extraction and size of viable reserves before entering the fray. Most analysts suggest commercial production is unlikely before 2025. With the price of Natural Gas depressed, development may be delayed further but in the longer term Methane Hydrate will become a major global source of energy. Like the fracking revolution of the past decade, it is only a matter of when.
The history of fracking can be traced back to 1862 and the first patent was filed in 1865. In the case of Fire Ice, I do not believe we will have to wait that long. Deep sea mining and drilling technologies are advancing quickly in several different arenas. The currently depressed price of LNG is only one factor holding back the development process.
At the sector level, nine sectors are projected to report year-over-year growth in earnings for the quarter. However, the Energy sector is projected to report the highest earnings growth of all eleven sectors at 401%.
This sector is also expected to be the largest contributor to earnings growth for the S&P 500 for Q2 2017. If the Energy sector is excluded, the estimated earnings growth rate for the index for Q2 2017 would fall to 3.6% from 6.5%.
The price of Brent Crude Oil has been falling but the previous investment in technology combined with some aggressive cost cutting in the recent past has been the driving force behind this spectacular increase in Energy Sector profitability. Between 2014 and 2016 Energy Sector capital expenditure fell nearly 40%. I expect a rebound in capex over the next couple of years. It may be too soon for this to spill over to commercial investment in Methane Hydrate, but developments in Japan and China during the past two months suggest a breakthrough may be imminent. The next phase of investment may be about to begin.
Saudi Arabian bonds and stocks – is it time to buy?
The Saudi Arabia's first international bond deal raised $17.5bln. They tapped the market across the yield curve issuing 5yr, 10yr and 30yr bonds. The auction was a success – international investors, mostly from the US, placed $67bln of bids. The issues were priced slightly higher than Qatar, which raised $9bln in May, and Abu Dhabi, which issued $2.5bln each of 5yr and 10yr paper in April.
The high bid to cover ratio (3.8 times) enabled the Kingdom to issue $2.5bln more paper than had been originally indicated: and on better terms – 40bp over, higher rated, Qatar rather than 50bp which had been expected prior to the auction.
The bonds immediately rose in secondary market trading and other Gulf Cooperation Council (GCC) issues also caught a bid. The Saudi issue was also unusual in that the largest tranche ($6.5bln) was also the longest maturity (30yr). The high demand is indicative of the global quest for yield among investors. This is the largest ever Emerging Market bond issue, eclipsing Argentina's $16.5bln offering in April.
Another means by which the Kingdom plans to balance the books is through the Saudi Aramco IPO – part of the Vision 2030 plan – which may float as much as 5% of the company, worth around $100bln, in early 2018. This would be four times larger than the previous record for an IPO set by Alibaba in September 2014.
As part of the implementation of this plan, Saudi Aramco and Shell (NYSE:RDS.A) (NYSE:RDS.B) are dividing up their U.S. joint venture, Motiva, which will result in Saudi's full ownership of the Port Author refinery. Aramco will fully own Motiva on April 1, 2017, and has been in talks of buying Lyondell's Houston refinery.
I suspect Motiva may also purchase U.S. oil shale properties (or companies) that are in financial trouble as a result of the drop in prices since 2014. According to restructuring specialists, about 100 North American oil and gas companies have filed for bankruptcy, and there may be another 100 to go. This would enable Aramco to expand market share as well as control how fast production is brought back online if prices rise.
By using its ability to cut production to create additional spare capacity, Aramco can use that spare capacity to control prices as it wishes. It probably does not want prices much above $50/b to keep U.S. shale production to about where it is now, 8.5 mmbd. And it doesn't want prices below $45/b because of the adverse impact of such low prices on its budget. And so it will likely adjust its production accordingly to keep prices in a $45-$55/b range.
Although I authored a series of articles stating that OPEC was bluffing (and it was), I now think that Saudi Arabia has formulated a plan and will assume the role of swing producer to satisfy its goals. It can and will cut unilaterally to create excess spare capacity, which it needs to control oil prices.
This will make the company attractive for its IPO. And by selling shares, Aramco can use some of the proceeds to buy U.S. shale reserves "on the cheap," not unlike John D. Rockefeller, who bankrupted competitors to acquire them.
The Saudi's long-term plan is to convert Aramco's assets into a $2 trillion fund, which can safely reside in Swiss banks. And that is a much safer investment than oil reserves in the ground subject to external and internal political threats.
Whatever the motives behind Vision 2030, it is clear that radical action is needed. The Tadawul TASI Stock Index hit its lowest level since 2011 on 3rd October at 5418, down more than 50% from its high of 11,150 in September 2014 – back when oil was around $90/bbl.
As a starting point here is a brief review of the Saudi economy.
Country GDP YoY Interest rate Inflation rate Jobless rate Gov. Budget Debt/GDP C/A Pop.
In terms of inflation the KSA is in a better position than Iran and its unemployment rate is well below that of Iran or Iraq, but on several measures it looks weaker than its neighbours.
Moody's downgraded KSA in May – click here for details – citing concern about their reliance on oil. They pointed to a 13.5% decline in nominal GDP during 2015 and forecast a further fall this year. This concurs with the IMF forecast of 1.2% in 2016 versus 3.5% GDP growth in 2015. It looks likely to be the weakest economic growth since 2009.
Despite austerity measures, including proposals to introduce a value added tax, the deficit is unlikely to improve beyond -13.5% in 2016. It is estimated that to balance the Saudi budget the oil price would need to be above $79/bbl.
They have temporary room for manoeuvre, but Moody's forecast this ratio rising beyond 35% by 2018 – which is inconsistent with an Aa3 rating. Even the Saudi government see it rising to 30% by 2030.
Reserves will continue to decline, but it will be some time before the Kingdom loses its fourth ranked position by FX reserves globally. Total private and public sector external debt to GDP was only 15% in 2015 up from 12.3% in 2014 and 11.6% in 2013. There is room for this to grow without undermining the Riyal peg to the US$, which has been at 3.75 since January 2003. A rise in the ratio to above 50% could undermine confidence but otherwise the external debt outlook appears stable.
The National Vision 2030 reform plan has been launched, ostensibly, to wean the Kingdom away from its reliance on oil – which represents 85% of exports and 90% of fiscal revenues. In many ways this is an austerity plan but, if fully implemented, it could substantially improve the economic position of Saudi Arabia. There are, however, significant social challenges which may hamper its delivery.
Another and more immediate issue is the cost of hostilities with Yemen – and elsewhere. Exiting these conflicts could improve the government's fiscal position swiftly. More than 25% ($56.8bln) of the 2016 budget has been allocated to military and security expenditure. It has been rising by 19% per annum since the Arab spring of 2011 and, according to IHS estimates, will reach $62bln by 2020.
…at maximum levels that make sense as part of any output limits.
Iranian production reached 3.65mln bpd in August – the highest since 2013 and 10.85% of the OPEC total. Nigeria pumped 1.39mln bpd (4.1%) and although Libya produced only 363,000 bpd, in line with its negligible output since 2013, it is important to remember they used to produce around 1.4mln bpd. Nigeria likewise has seen production fall from 2.6mln bpd in 2012. Putting this in perspective, total OPEC production reached a new high of 33.64mln bpd in September.
The oil price responded to the "good news from Algiers" moving swiftly higher. Russia has also been in tentative discussions with OPEC since the early summer. President Putin followed the OPEC communique by announcing that Russia will also freeze production. Russian production of 11.11mln bpd in September, is the highest since its peak in 1988. Other non-OPEC nations are rumoured to be considering joining the concert party.
Saudi Arabia is currently the largest producer of oil globally, followed by the USA. In August Saudi production fell from 10.67mln bpd to 10.63mln bpd. It rebounded slightly to 10.65mln bpd in September – this represents 32% of OPEC output.
While drilling activity has edged up, industry participants believe it will be awhile before activity significantly increases. When queried in the third quarter 2016 Dallas Fed Energy Survey, most respondents said prices need to exceed $55 per barrel for solid gains to occur, with a ramp-up unlikely until at least second quarter 2017.
…RBC Capital Markets was of the view oil prices would indeed rise but not until 2019. RBC says 2.2 million b/d of new non-OPEC production will enter the markets this year, 1.3 million b/d next year and 1.6 million b/d in 2018. Somehow U.S. production will rise by 900,000 b/d from 2017 and 2019 despite falling by 1.1 million b/d in the past 15 months and with rigs count at historic lows. At the same time RBC reported the 124 E&P companies it follows will cut spending another 32 percent in 2016 from 2015, a $US106 billion reduction.
…The Telegraph ran it under the title, "When oil turns it will be with such lightning speed that it could upend the market again". Citing the lowest levels of oil discoveries since 1952, annual investment in new supplies down 42 percent in the past two years and how the International Energy Agency (IEA) estimates 9 percent average annual global reservoir depletion, the article stated, "…the global economy is becoming dangerously reliant on crude supply from political hotspots". "Drillers are not finding enough oil to replace these (depletion) barrels, preparing the ground for an oil price spike and raising serious questions about energy security".
Depletion of 9 percent per year is about 8.6 million b/d. Add demand growth and you're approaching 10 million b/d. How do the crystal ball polishers of the world who see flat oil prices for the foreseeable future figure producers can replace this output when others report $US1 trillion in capital projects have been cancelled or delayed over the rest of the decade?
The last ingredient in the oil price confusion in inventory levels. OECD countries currently hold 3.1 billion barrels of oil inventory. That sounds like lot. But what nobody reports is the five-year average is about 2.7 billion barrels. Refinery storage tanks. Pipelines. Field locations. Tankers in transit. It's huge. The current overhang is about 6 days of production higher than it has been for years, about 60 days. So inventories are up roughly 10 percent from where they have been.
Obviously this is going to take a change in the global supply/demand balance to return to historic levels and will dampen prices until it does. But don't believe OECD inventories must go to zero.
…The current production overhang suppressing markets is only about 1 million b/d or less depending upon which forecast you're looking at. Both the IEA (Paris) and the EIA (Washington) see the curves very close if they haven't crossed already. Neither agency sees any overhang by the end of the next year.
…OPEC has no meaningful excess capacity. Non-OPEC production is flat out and, in the face of massive spending cuts, is more likely to fall than rise because production increases will be more than offset by natural reservoir depletion.
Whether or not David Yager is correct about supply, the direct cost to Saudi Arabia, of a 623,000 bpd reduction in output, pales into insignificance beside the cost of domestic oil and gas subsidies – around $61bln last year. Subsidies on electricity and water add another $10bln to the annual bill. These subsidies are being reduced as part of the Vison 2030 austerity plan. The government claim they can save $100bln by 2020, but given the impact of removing subsidies on domestic growth, I remain sceptical.
The Kingdom's domestic demand for crude oil continues to grow. Brookings – Saudi Arabia's economic time bomb – forecast that it will reach 8.2mln bpd by 2030. By some estimates they may become a net importer of oil by their centenary in 2032. Saudi oil reserves are estimated at 268bln bbl. Her gas reserves are estimated to be 8.6trln M3 (2014) but exploration may yield considerable increases in these figures.
The Kingdom is also planning to build 16 nuclear power stations over the next 20 years, along with extensive expansion of solar power generating capacity. Improvements in technology mean that solar power stations will, given the right weather conditions, produce cheaper electricity than gas powered generation by the end of this year. This article from the Guardian – Solar and wind 'cheaper than new nuclear' by the time Hinkley is built – looks longer term.
According to EIA data US production in July totalled 8.69mln bpd down from 9.62mln bpd in March 2015. A further 200,000 bpd reduction is forecast for next year.
Crude oil produced by shale made up 48% of total U.S. crude oil production in 2015, up from 22% in 2007 according to the Energy Information Administration (EIA), which warns that the horizontal wells drilled into tight formations tend to have very high initial production rates–but they also have steep initial decline rates. Some wells lose as much as 70% of their initial production the first year. With steep decline rates, constant drilling and development of new wells is necessary to maintain or increase production levels. The problem is that many of these smaller shale companies do not have the capital nor the manpower to keep drilling and keep production going.
This is one of the reasons that the EIA is predicting that U.S. oil production will fall by 7.4%, or roughly 700,000 barrels a day. That may be a modest assessment as we are hearing of more stress and bankruptcies in the space. The EIA warns that with the U.S. oil rig count down 76% since the fall of 2014, that unless capital spending picks up, the EIA says that U.S. oil production will keep falling in 2017, ending up 1.2 million barrels a day lower than the 2015 average at 8.2 million barrels a day.
OPEC might just have the whip hand for the first time in several years.
But, how sustainable is any oil price increase?
In recent years, the technology deployed in America's shale fields has advanced more rapidly than in any other segment of the energy industry. Shale 2.0 promises to ultimately yield break-even costs of $5–$20 per barrel—in the same range as Saudi Arabia's vaunted low-cost fields.
These reductions in extraction costs, combined with improvements in fuel efficiency and the falling cost of alternative energy, such as solar power, will constrain prices from rising for any length of time.
The authors expect demand for electricity to double by 2060 requiring $35trln to $43trln of infrastructure investment. Solar and Wind power are expected to increase their share of supply from 4% in 2014 to between 20% and 39% dependent upon the scenario.
As to the outlook for fossil fuels, global demand for coal is expected to peak between 2020 and 2040 and for oil, between 2030 and 2040.
…peaks for coal and oil have the potential to take the world from stranded assets predominantly in the private sector to state-owned stranded resources and could cause significant stress to the current global economic equilibrium with unforeseen consequences on geopolitical agendas. Carefully weighed exit strategies spanning several decades need to come to the top of the political agenda, or the destruction of vast amounts of public and private shareholder value is unavoidable. Economic diversification and employment strategies for growing populations will be a critical element of navigating the challenges of peak demand.
The economic diversification, to which the World Energy Council refer, is a global phenomenon but the impact on nations which are dependent on oil exports, such as Saudi Arabia, will be even more pronounced.
As part of Vision 2030 – which was launched in the spring by the King Salman's second son, Prince Mohammed bin Salman – the Saudi government introduced some new measures last month. They cancelled bonus payments to state employees and cut ministers' salaries by 20%. Ministers' perks – including the provision of cars and mobile phones – will also be withdrawn. In addition, legislative advisors to the monarchy have been subjected to a 15% pay cut.
These measures are scheduled to take effect this month. They are largely cosmetic, but the longer term aim of the plan is to reduce the public-sector wage bill by 5% – bringing it down to 40% of spending by 2020. Government jobs pay much better than the private sector and the 90/90 rule applies –that is 90% of Saudi Arabians work for the government and the 10% of workers in the private sector are 90% non-Saudi in origin. The proposed pay cuts will be deeply unpopular. Finally, unofficial sources claim, the government has begun cancelling $20bln of the $69bln of investment projects it had previously approved. All this austerity will be a drag on economic growth – it begins to sound more like Division 2030, I anticipate social unrest.
The impact of last month's announcement on the stock market was unsurprisingly negative – the TASI Index fell 4% – largely negating the SAR20bln ($5.3bln) capital injection by the Saudi Arabian Monetary Agency (SAMA) from the previous day.
Considering the geo-political uncertainty surrounding the KSA, is the spread over US Treasuries sufficient? In the short term – two to five years – I think it is, but from a longer term perspective this should be regarded as a trading asset. If US bond yield return to a more normal level – they have averaged 6.5% since 1974 – the credit spread is likely to widen. Its current level is a function of the lack of alternative assets offering an acceptable yield, pushing investors towards markets with which many are unfamiliar. KSA bonds do have advantages over some other emerging markets, their currency is pegged to the US$ and their foreign exchange reserves remain substantial, nonetheless, they will also be sensitive to the price of oil.
For foreign investors ETFs are still the only way to access the Saudi stock market, unless you already have $5bln of AUM – then you are limited to 5% of any company and a number of the 170 listed stocks remain restricted. For those not deterred, the iShares MSCI Saudi Arabia Capped ETF (KSA) is an example of a way to gain access.
Tightness in supply makes it likely that oil will find a higher trading range, but previous OPEC deals have been wrecked by cheating on quotas. Longer term, improvements in technology will reduce the cost of extraction, increase the amount of recoverable reserves and diminish our dependence on fossil fuels by improving energy efficiency and developing, affordable, renewable, alternative sources of energy. By all means trade the range but remember commodities have always had a negative real expected return in the long run.
China – Coal, Steel, Water and Demographics – Which way now?
This year several commodity markets saw significant price increases. I discussed this in Macro Letter – No 51 – 11-3-2016 – How do we square the decline in trade with the rebound in industrial commodities?
The price of Iron Ore, Aluminium and other industrial metals has rallied sharply over the last few weeks – WTI now seems to have followed suit. Most commentators regard this as a short covering rally.
The rise in the price of coking is upending the economics of the iron ore and steel markets with the Australian export benchmark price climbing 164% so far this year.
Metallurgical coal was exchanging hands at $206.40 on Monday according to data provided by Steel Index as it consolidates at higher levels following weeks of panic buying not seen since 2011, when floods in key export region in Queensland sent the price surging to $335 a tonne (albeit not for long).
The rally was triggered by Beijing's decision to limit coal mines' operating days to 276 or fewer a year from 330 before as it seeks to restructure the industry. Safety closures and weather related supply curbs in China and Australia only added fuel to the fire.
The price of Iron Ore has also risen by 31% to around $55/tonne, but, as the chart above makes clear, the ratio between the price of iron ore and coking coal is now at its lowest this century.
China's coking coal output has fallen more than 10% due to the government edict to curtail domestic production. In response import volumes rose 45% in August alone. Goldman Sachs and Macquarie have both increased their price forecasts for 2017 and 2018.
The National Development and Reform Commission (NDRC) – the agency responsible for implementing production cuts – had achieved only 39% of the annual target for reducing coal capacity and 47% of the annual reduction in steel capacity as of the end of July. The Peterson – Institute – State of Play in the Chinese Steel Industry explains the reasons for this policy. Suffice to say, China's domestic steel production tripled between 2005 and 2015 taking its share of global steel production from 31% to 50%. Under WTO rules it will have Market Economy Status from December 2016 – a wave of anti-dumping laws suits may well follow unless it curtails production.
Despite common knowledge of official policy, commentators have suggested that the recent production cut was intended to deliberately squeeze coal prices, allowing heavily indebted coal producers to repay loans to domestic Chinese banks. After two meetings between the China Iron and Steel Association and the NDRC, coal producers will now be allowed to produce an additional 50 tonne/day from October to alleviate shortages.
The steel industry was under margin pressure even before the rise in coal prices – the government has been forcing an industry wide consolidation. The high price of coal accelerates this "oligopolisation" of the sector. It is part of a broader reform and consolidation of State Owned Enterprises (SOEs). The Peterson Institute – China's SOE Reform—The Wrong Path takes issue with this policy. It has its attractions in the short-term nonetheless – consolidation reduces competition within industries, the pricing power of these consolidated "oligopolies" should rise, enabling them to increase profitability and reduce their indebtedness. President Xi has called for "Stronger, bigger, better" state-owned enterprises. I fear for the squeezed private sector in this environment.
A more important structural reform was announced last month when the Supreme People's Court ordered the establishment of more special divisions to handle liquidation and bankruptcy cases in intermediate courts. China has an undeveloped bankruptcy code – defaulting borrowers linger, acting as a drag on the economy. At the G20 summit President Xi said, "China has taken the most robust and solid measures in cutting excess capacity and we will honour our commitment with actions". An efficient method of "zombie corporation liquidation" would expedite this process.
China's coal consumption grew from 1.36 billion tons per year in 2000 to 4.24 billion tons per year in 2013, an annual growth rate of 12 percent. As of 2015, the country accounts for approximately 50 percent of global demand for coal. In other words, China's economic miracle was fueled primarily by coal.
…China's coal consumption decreased by 2.9 percent in 2014 and 3.6 percent in 2015, and the economy has maintained a moderate speed of growth. This indicates that there is a decoupling of economic growth from the growth in coal consumption. China's coal consumption might have in fact already peaked.
Over the past 35 years, coal powered the engine of China's rapidly developing economy. Coal represented 75 percent of overall energy consumption. This number decreased to 64.4 percent in 2015—the lowest in China's modern history—as the country's energy intensity decreased by 65 percent relative to 35 years ago. In fact, though rarely noticed until the recent peak, this has been part of a fundamental shift in the Chinese economy's relationship with coal.
The authors present three arguments to support their view that China's reliance on coal is in structural decline. Firstly, a decrease in manufacturing and construction, which have seen over-investment during the last decade or more. Second, policies on climate change and air pollution—especially the Paris Agreement's, signed this month, which calls for a 20% clean energy target by 2030. Read China-United States Exchange Foundation – After the Paris Climate Agreement, What's Next? for more details. Finally, China's adoption of technological innovation in energy, communications, and manufacturing.
The total amount of water resources in China is so huge as to reach 2325.85 billion cubic meters, which is the 4th largest in the world. However, Chinese population is so large that the per capita amount of water resources is only 1730.4 cubic meters. This is extremely small in the world. Moreover, water resources are distributed unevenly by the region. Generally speaking, water is scarce in northern parts of China, including the Northeast, the North, and the Northwest regions. Beijing is in the North region. On the other hand, water is abundant in the South Central, the South, and the Southwest regions. The problem is that water is growing scarcer, while its consumption is rising. Particularly, people in Northwest China suffer from chronic shortage of water.
…It is not the quantity of water that matters critically in China. The quality of water is deteriorating rapidly. According to "The Monthly Report of Ground Water" which was released by the Ministry of Water Resources of China this January, they conducted water quality observation researches of 2,103 wells in the Songliao plain of the Northeast region and the Jianghan plain in an inland area last year, and it turned out that 80% of ground water is too severely contaminated to drink. Ground water pollution is serious, particularly in the regions of water scarcity.
Outside China the picture looks mixed. LME stocks of Copper and Zinc have recovered but Nickle and Aluminium stocks remain depleted. Global demand still appears to be subdued.
Chinese economy is unlikely to return to the double digit growth rates seen prior to the great recession, but, despite its indebtedness, the world's largest command economy may be able to avoid an imminent banking crisis.
The Debt to GDP ratio continues to rise. A source of grave concern which is noted in the BIS Quarterly Review, September 2016. At the end of July total Chinese debt reached $28trln – greater than the government debt of the US and Japan combined. Corporate debt, which is fortunately denominated primarily in local currency, now stands at 171% of GDP whilst total debt stands at 255%. A favourite BIS measure is the Credit to GDP gap. A figure above 10 is a warning signal that an economy may be approaching a "Minsky Moment" – China scores 30.1, the highest of any large economy.
China has also continued to reduce its vast foreign exchange reserves, although at a more moderate pace than in 2014 and 2015. In July it reduced its holding of US Treasuries by $22bln – the largest one month decline in three years. It also released information about its gold holdings which, as many market participants had predicted, have risen substantially – it last reported this information in 2009. The US Bond sales may, therefore, have been to insure the stability of the RMB versus the US$ ahead of the G20 summit which was hosted by China this month.
The only "solution" to excessive debt within the economy is to allocate the costs of that debt, and not to transfer it from one entity to another.
Pettis remains pessimistic about China's ability to grow its way out of debt. History is certainly on his side in this respect, however, policies such as the One Belt One Road Initiative, which aims to improve cross-border infrastructure in order to reduce transportation costs between China and its trading partners, still makes sense at this stage of China's development. Comparisons have been made with the US Marshall Plan which helped to regenerate Europe after WWII but with an indicated aim of financing $4trln of new projects, its scale is much larger. Chatham House – Westward ho—the China dream and 'one belt, one road': Chinese foreign policy under Xi Jinping reviews the policy in detail, as does Peterson Institute – China's Belt and Road Initiative.
In a benchmark scenario of relatively stable income growth and a further modest decline in the household saving rate, consumption growth in China remains at around 9 percent per year over the next five years, causing the share of Chinese consumption in GDP to increase by about 5 percentage points to 44 percent by 2020. This scenario has two implications. First, it suggests that strong consumption growth is sustainable in the near future, allowing China to continue transitioning toward a consumption-driven economy. Second, it suggests that strength in near-term Chinese consumption growth will partly rely on a further decline in the household saving rate. As the household saving rate cannot decline indefinitely, consumption growth may need to rely more heavily on household income to be sustainable in the long run.
The declining saving rate in China reflects both a changing demographic structure—an expected increase in the young dependency ratio after multiple decades of decline—and a changing consumption pattern of young people, who face less pressure to save thanks to financial support from their parents and grandparents.
In the long run, transitioning to a consumption-driven economy may require some policy changes. Specifically, China may need to implement successful supply-side reforms—which are on the government's agenda but haven't yet been significantly pushed forward—to enable domestic production to meet rising domestic demand. Although the Chinese household saving rate is declining from a very high level, the downward trend cannot last forever. A truly consumption-driven economy must rely on strong household income growth, which is ultimately driven by improved technology and investment.
In the long run, demographic forces will affect China more than any other factor. According to the Ministry of Human Resources China's working population hit a record 774.5mln in 2015, however, the UN estimate China will have 212mln fewer workers by 2050. The UN Demographic Profile is found on page 189.
Next week the RMB will be included in the SDR – the Peterson Institute – China's Renminbi Is about to Break the Financial Glass Ceiling discusses this in more detail. There is widespread speculation that the PBoC will widen the RMB currency bands at any moment. In other respects the PBoC is in a more difficult position. The RMB has already weakened by 5% against the US$ this year. Cutting interest rates would probably cause the currency to weaken further, riling the US voters ahead of the election. They are not impotent, however, and injected a record RMB 310bln into the money market in August – part of an overt policy to support the official banking sector, diminishing the influence of shadow banks.
Domestic investors have favoured bonds over equities for the past couple of months, while the spread between corporate bonds and government bonds has narrowed. Chinese 10yr government bond yields have fallen around 50bp this year, but official policy, encouraging investors to purchase higher yielding bonds and reduce their exposure to leveraged wealth management products and other non-standard assets, is boosting demand for corporate issues.
The Shanghai Composite Index (SHCOMP) is down 8.85% YTD and by 41.84% since its high in June 2015, however it is up 48.25% from June 2014. Russia's RTS Index by contrast is up 72.81% from its December 2014 low but still 29.68% below its level of June 2014.
Looking outside China, several Australia-centric mining stocks have already risen on the back of the move in coking coal but it seems unlikely that the supply imbalance will prove protracted. Anglo American (AAL) is still looking to sell more of its Australian coal mines – they may well find Chinese buyers.
Ultimately, however, we believe that this may well be the tipping point that ushers in 50 years (or more) of prosperity as capital starts to match up with projects which, in turn, will drive economic growth in the developing world and shore up retirement savings in the mature markets.
Commodity markets tend to exhibit very individual characteristics, however, several industrial and agricultural commodities have formed a longer term base this year. Is this the beginning of the next commodity super-cycle? It's too soon to call, but without a rise in global demand the prospects for substantial gains are likely to be limited – Indian GDP growth is slowing. The IMF WEO July update revised its India GDP forecast for 2016 to 7.4% from 7.5% – in 2015 it was 7.6%. Its China forecast was revised up 0.1% and its overall Emerging Market and Developing Economy forecast for 2016 and 2017 was unchanged at 4.1% and 4.6%, although, world economic growth was revised 0.1% lower.
China's stock market remains cheap by many metrics, but the level of indebtedness is an impediment to economic growth. The property market, although over-supplied, continues to attract investment, but this is economically unproductive in the long run. Government policy is attempting to steer the economy towards higher domestic consumption and technologically driven, productivity enhancing, investments. Environmental issues are finally being addressed, yet the challenge of clean water remains substantial.
Near term, debt reduction – and it has yet to begin – will hamper growth, which will, in turn, reduce the attractiveness of Chinese stocks. Reform of the SOEs will involve consolidation into a smaller number of vast enterprises. Private enterprises will suffer. "Zombie" companies will start to be dealt with as bankruptcy procedures become standardised, but, as with all policy in China, a gradualist approach is likely to be implemented. Commodity markets may continue to rise due to supply side factors but I doubt that Chinese demand will rebound even to the level of 2013/2014, let alone the early part of the century.
How do we square the decline in trade with the rebound in industrial commodities?
Chinese February trade data adds to the picture of a slowdown. Exports declined 25.4% YoY, while imports fell 13.8%. Analysts had forecast a 12.5% drop exports, and 10.0% in imports. The trade surplus fell to $32.59bln – against expectations of $50.15bln. This exceptionally sharp decline may be the result of the date of the Chinese New Year but the trend is disquieting.
At last weekends National People's Congress the 2016 GDP growth forecast was revised downwards to 6.5 – 7%. This followed the release of Q4 2015 GDP at 6.8% and the PBoC's decision to cut the reserve requirement ratio by 0.5% in order to insure ample liquidity – for large banks the ratio is now 17%.
Manufacturing activity is shrinking in the US and China, the world's two largest economies. Output is still rising in the euro area, but at the slowest pace in a year. Britain's manufacturing sector is back in recession.
Part of the problem is lacklustre global demand for manufactured products, particularly in emerging market economies. This has contributed to a slowdown in trade, one of the pre-crisis drivers of global growth. The value of global goods exports last year fell by 13.8% in dollar terms, the first contraction since 2009.
…And yet for me the big conclusion from last week's meeting in Beijing was that, despite the storm clouds, the world economy should keep growing this year. None of my colleagues, in the US, China, India, Europe, Japan or Australia, anticipate a sharp slowdown in GDP growth in their region this year. All expect consumer spending, the dominant element in GDP everywhere, to hold up.
The performance of many emerging markets has been particularly dire of late, as so many, in order to balance government budgets and meet debt servicing obligations, are reliant on a high price for their commodities.
The global economy now finds itself at the centre of three major economic developments. The first is disappointing growth and downward revisions of projections, especially in emerging economies; the second is the large shifts in exchange rates, again especially for emerging market currencies against the US dollar; and the third is the sharp fall in commodity prices, hitting a number of commodity-exporting countries particularly hard, but at the same time providing a positive dividend to other economies.
…Total debt in the global economy, including public debt, has increased significantly since the crisis (end of 2007). True, private debt has been reduced in some countries, namely Ireland, Spain, the United Kingdom, the United States and others. However, public debt has increased significantly in advanced economies, and private debt has increased in emerging economies and some advanced economies less affected by the 2008 financial crisis.
…Based on the most recent reading for the third quarter of 2015, global liquidity conditions may have begun to tighten for emerging economies. A key yardstick is the US dollar-denominated debt of non-bank borrowers outside the United States. It stood at $9.8 trillion in September 2015, unchanged from the previous reading in June, and the dollar borrowing by non-banks in the emerging economies stood at $3.3 trillion, again unchanged from June (Graph 3). This is the first time since 2009 that the latter has stopped increasing.
One important aspect of this additional borrowing in dollars is the strong association between the strength of the dollar and dollar-denominated borrowing by EME borrowers.
…As a rule of thumb, a 1% depreciation of the US dollar is associated with a 0.6 percentage point increase in the quarterly growth rate of US dollar-denominated cross-border lending outside the United States.
…Unlike in previous EME crises in the 1980s and 1990s that had the attributes of a sharp "sudden stop" in lending to EME sovereigns or a run on the banking system, the borrowing in dollars in recent years has been undertaken by private sector non-bank borrowers – mainly non-financial firms. Even if a firm operates in a country whose central bank holds large foreign exchange reserves, there is the question of how the dollars are transferred from the central bank to the firm itself. Unless there is some mechanism that transfers resources from the foreign exchange reserves to the firms themselves, the firms with dollar debts will need to curtail operations and reduce leverage, leading to a direct hit on overall economic growth.
This move occurred in the face of data from the World Steel Association – January 2016 crude steel production showing a 7.1% decline globally.
The inelastic nature of prices in many commodity markets and the shipping sector in particular, make it extremely dangerous to imply that a small "flight of swallows makes a summer".
Producer pain also shows up in US energy production data. Crude oil rig count peaked at 1,609 rigs in October 2014 reaching a low of 439 in February. The Kansas City Federal Reserve – The Reallocation of Energy-Sector Workers after Oil Price Booms and Busts is a timely research response to the 140,000 mining jobs lost during 2015.
Oil production peaked at 9.6mln bpd in April 2015 and is estimated to be down by more than 400,000 bpd. The EIA – Short-Term Energy Outlook forecasts production will decrease to 8.7mln bpd in 2016 and to 8.2mln bpd in 2017.
With anaemic growth and slowing global trade, I believe the current rebound in commodity prices will be relatively short-lived. Chart patterns suggest room for further upside in the next couple of months, possibly aided by seasonal factors, but, with a mounting burden of debt hanging over the global economy – especially those parts which are expected to deliver stronger structural growth – I do not anticipate the beginning of the next commodity upturn for a while.


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Home » Huawei Y8s is Official, Check out Its Full Specification
Huawei Y8s is Official, Check out Its Full Specification
Just last month, we received brief information about an upcoming Huawei Y8s having a notch on its front and a dual-camera at the back. Today, the phone is officially announced and was listed on Huawei's website in Jordan.
Huawei Y8s Features
The Huawei Y8s has a 6.5-inch LCD screen with full HD+ resolution. It has a relatively small notch on the top, where it houses two selfie cameras on both sides of the earpiece. The selfie camera comprises of a main 8MP f/2.0 shooter, and a 2MP f/2.4 depth sensor for background blur.
Also read: Huawei Y6P, Y5P, and MediaPad T8 Launched in Romania – See Details
On the back, the Huawei Y8s also has two cameras – a 48MP main shooter with f/1.8 aperture, and an 8MP shooter. They are both lined vertically and have an LED flash to keep them company in a black rectangle setup.
Under the hood, the Huawei Y8s has a Kirin 710 chipset paired with a 4GB RAM. There are two memory options – 64GB and 128GB,, but with support for microSD expansion. The phone is powered by a 4000mAh battery, but the sad part is that it charges through a microUSB port. The operating system is outdated too – Android 9 Pie with EMUI 9.1 on top, but at least it has Google Mobile Services. The price and availability are yet ti be made official as at the time this post was written.
Also read: Oppo A92 Specification, Price, and Release Date in Malaysia
Huawei Y8s Full Specification
3G bands HSDPA 850 / 900 / 2100 – JKM-LX2
HSDPA 850 / 900 / 1700(AWS) / 1900 / 2100 – JKM-LX3
HSDPA 900 / 2100 – JKM-LX1
4G bands 1, 3, 5, 7, 8, 28, 38, 40, 41 – JKM-LX2
2, 3, 4, 5, 7, 28 – JKM-LX3
Speed HSPA 42.2/5.76 Mbps, LTE-A
Announced 2020, May 6
Size 6.5 inches, 103.7 cm2 (~82.8% screen-to-body ratio)
OS Android 9.0 (Pie), EMUI 9.1, no Google Play Services
Chipset Hisilicon Kirin 710 (12 nm)
CPU Octa-core (4×2.2 GHz Cortex-A73 & 4×1.7 GHz Cortex-A53)
GPU Mali-G51 MP4
Card slot microSDXC
Internal 64GB 4GB RAM, 128GB 4GB RAM
Dual 48 MP, f/1.8, (wide), 1/2.0″, 0.8µm, PDAF
Features LED flash, HDR, panorama
Dual 8 MP, f/2.0, (wide)
Features HDR
Non-removable Li-Po 4000 mAh battery
Charging Charging 10W
Colors Emerald Green, Midnight Black
Models JKM-LX1, JKM-LX2, JKM-LX3
Huawei Y8s featuresHuawei Y8s Specification
Samsung Galaxy A01 Was Quietly Unveiled Today, See Its Features
By SpecsPriceBuy EditorialDecember 17, 2019

redpajama_set_name: RedPajamaCommonCrawl


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Plate that reminded me of urcm..
K3wL I wish I'd owned one of those.
At the last insurance renewal I was told that I could not permit anyone under the age of 30 to drive the Exploder because "It's too powerful" for a young driver.
That's a first. It's just under 300bhp which isn't that excessive, Shirly?
They obviously don't take power-to-weight ratio into account!
I noticed that it's occasionally still going - the amount of spam on Google Groups makes it almost unreadable so I only get to check in a few times from home.
No. plate vs. year of first reg.


The rapid advance of technology over recent years has considerably changed the role of the marketing department.
Digital marketing has grown significantly becoming a core part of the customer acquisition and retention process.
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'Kick
'KICK is the story of Kayla Kick- a young, idealistic rocket scientist who, due to crippling student loan debt, must take a job providing tech support for a dysfunctional superhero team.
"light"
It is a Sci-Fi-Post-Kollaps story about the future. A future where our past is long forgotten and the people have changed their way of living.
The entire series of 100 Girls filled with lots of extras. Sylvia Mark is a thirteen year-old girl who feels separated from her peers, but Sylvia doesn't know is that she's just one of one hundred girls bred as part of a genetics experiment that sought to give normal humans extraordinary powers. Thirteen years ago, four girls were kidnapped and sent to families around the country to be raised and
100 Light Years of Solitude
When Francis rented this used spaceship, she just wanted to spend her vacation on a planet all by herself. How could she have known all the planets in charted space are chock-full of luxury tourist traps for the space-faring elite? But when a ship malfunction launches her into literal uncharted territory, Francis steps foot on a beautiful, untarnished world... and learns there's something even bet
Following the 20th anniversary edition of PAUL POPE's HEAVY LIQUID, IMAGE is proud to release POPE's follow-up, 100%, in a newly remastered edition collecting all 5 issues, a gallery of the wraparound covers, unseen art and sketches, and a stunning wraparound cover colored by YUKO SHIMIZU. Time Magazine listed both HEAVY LIQUID and 100% among their 100 most important science fiction graphic novels
A bi-monthly science fiction anthology from up and coming talent across the UK. Action! Suspense! Drama! Gigantic 50 foot tall guinea pigs! There's a little something for everyone.
1000 Nightmares
Cutting edge horror by some of the greatest creators in the world. I LOVE HORROR I have always been a big fan of horror. I'd rather read a good horror story than just about anything else. It is quite probably the second oldest story genre, coming in right behind the heroic adventure. Horror deals with the big questions - life, afterlife, good, evil, heaven,
120 Doses
Port Drogo is a city that decided it could be Mardi Gras and Halloween 24-7. A hedonistic metropolis in the near future where radical body modifications are the norm and the line between 'beautiful' and 'horrific' is hardly a line at all. But beneath it's tourist-trap exterior thrives a much more sinister trade.
13: The Astonishing Lives of the Neuromantics
"13" is a space opera that evokes Heavy Metal in its sexuality, innovation, and flat-out strangeness. In a future beset by poverty and subjugation, the privileged live in orbital penthouses and use the underclasses for parts. One young man has his arms taken from him and undertakes an epic journey to become whole.
The 13th Artifact
2015 TOP COW TALENT HUNT WINNER! Stranded on a mysterious alien planet after her shuttle crashes, astronaut Valentina Kedr is desperate to find a way to survive. With her oxygen rapidly running out, she decides to explore her new surroundings. Upon discovering a civilization on the planet, will her curiosity lead to her downfall?
1826: The Impossible Day
A service robot awakes on the day that it is meant to be recycled. It is self aware. With this new found awareness it must learn to become human in a world that still sees it as an appliance.
1985: Black Hole Repo
Welcome to an alternate 1985 where the space race never slowed down, where the push away from Earth relies on duct tape, analog computers, and unstable solid rocket fuel. It's the worst. Max, Roach, Doc, and Bear are the dregs of the cosmos. Punks. Losers. Dropouts. They make cash repossessing the starships of deadbeats who don't make their payments. When they unknowingly jack a mysterious ship, t
1X: short comics by Charles Butler
Four self-contained tales of varying genres which explore themes of cause and effect, life and death, love and madness.
2 Three Five
2 short stories
In the near future, nanomachine printers are capable of making high tech weapons and electronics. Biological applications of nanomachines in people result in enhanced strength and resistance to injury. Widespread access to this technology threatens to change the balance of power in the world.
It's the future, and the future sucks. The United States have been carved up into corporate fiefdoms, and between their walls and picket lines stand the gerrymanders -- DMZs full of forgotten people, gangs, and paramilitary groups just trying to get by. These are their stories.
From JONATHAN LUNA (ALEX + ADA, GIRLS, THE SWORD) and LAUREN KEELY, in her writing debut, comes an all-new ongoing series! This sci-fi thriller for mature readers imagines a not-so-distant future—a world of norms and syms, divided by fear. Syms, a small percentage of the population with telekinetic abilities, form gangs to survive. But division only breeds more division, and Mer and Nuon exp
23rd Century Dreamers
In the 23rd century, Don grew up in one of the last small towns on earth. Like the millions of other residents, his eyes were glued to the sky when the promise of a better life launched in the form of a state-of-the-art rocket ship. As he grows up, Don's dreams of space flight gets pushed to the background and become all but forgotten when he meets the girls of dreams. Together they start a cozy l
The 27 Run
Broken hero, bi-polar A.I., irradiated wasteland. A subversive/existential black-comedy crisis centuries in the making. But mostly? It's big frickin' Mechs versus big frickin' Monsters!
3 Minute Max
HEROES DON'T DIE UNLESS THAT'S PART OF THE JOB The Strike Gate kills whatever it teleports -- unless they are already dead! Max Reaper, former Army Ranger, can stop his heart for up to three minutes and still bring himself back to life. He alone can survive the Strike Gate and teleport into crisis situations. Haunted by visions, protected by the ghost of a beautiful girl, Max has onl
"321: Fast Comics" is a storytelling challenge where artists and writers must come up with short comic stories that always have: 3 Pages 2 Characters 1 Twist Ending As long as the above rules are respected, anything goes: any genre, any characters, any situation. The challenge is always to surprise readers at the turn of three pages. Join top comic book artists as they put themselves th
3Corps
3CORPS is a team of super humans that are assigned to watch over the growing super human population of the Earth. Operating from Station Zero, their hidden jungle Headquarters in Brazil, the group is commanded by their leader The Colonel.
3D Sweeties
In a digitally drawn, three-dimensional universe, characters grapple with interior decorating woes, amorous microbiology, and where to find the absolute most aspirational succulents. Readers will fall in love with "America's favorite mug," Cuppy; hear the familial bickering of sentient purple slime molds; and encounter Sarah Something and her musings about gaming culture and conceptual art.�
The 3rd Party
Rocco ha sido un "niño rata" y un compañero nefasto durante la mayor parte de su vida. Luego de ser expulsado del clan por sus amigos, Rocco es accidentalmente transportado a otra dimensión a través de una consola de videojuegos de los noventas, el SNEX. Es recibido con hostilidad por los habitantes del mundo desconocido, pero por suerte Rumble, un robot
40 Seconds (comiXology Originals)
40 SECONDS is a science fiction/fantasy story about a forward team of science explorers, traveling through a series of alien gateways, in order to answer a distress call a galaxy away. They find themselves jumping across the universe though strange and beautiful landscapes only to be hunted by a vast inexplicably unstoppable horde. Truths lie at the final gate. If only they can make it in time.
4000 Terabytes: Data Runner
In the 60s of the 21st century the last government was dissolved in the name of the Common Interest Corporation. It took twenty long years before someone organized a response... but in the 80s they started to gather, to organise public events and then, when police started shooting into the crowd, they passed the guerrillas. Now, in 2100, order has been restored. For the society you are a number
422nd BlackSheep
In the distant future, the habitable planets are connected through trade of natural and artificial resources. After the intergalactic war ended, peace has come to many galaxies in the known universe, but even in peace time some star systems are still having troubles with the old wounds of war, piracy, mega corporations, guerrilla military's, The Laniakea Supercluster is a big place. Perfect time t
49th Key
In the 16th century, during the golden age in England, forty-eight keys were passed between worlds. These angelic messages spoke of community, compassion, and forgiveness. Centuries later, there are still rumors of another message yet to come. One foretold to open the gates of wisdom and understanding...
50 Girls 50
Hot on the heels of his blockbuster New Ultimates run, FRANK CHO teams with Co-writer DOUG MURRAY (The 'Nam) and artist AXEL MEDELLIN (ELEPHANTMEN) to unleash a new universe-spanning sci-fi epic! Join in the fantastic voyage of the Space Vessel ESS Savannah and her beautiful crew as they fight their way from hostile aliens and exotic worlds, searching for the wormhole that will take them to their
When Professor Simon vanished, the Air Force shanghaied the professor's son to Groom Lake to take over the job of babysitting the "problem" residents of Delta Hanger. Now Kirby Simon has to not only process that aliens actually exist, but the fact his father has been running a refugee camp for them under Area 51 without the government's knowledge and the acting up of the "Deltas" has been a cover


If you desire a small to moderate improvement in the size of your breasts and prefer not to have breast implants. You need to have a reasonable amount of fatty tissue on your abdomen, thighs or buttock to remove and place in the breast.
Excess fat is removed through a very small incisions from your abdomen, thighs or buttock using liposuction and transferred with special instruments to your breast.
As an alternative, breast implants can be used to increase breast size.
Unless done to correct a birth defect or as part of a breast reconstruction, this procedure is considered cosmetic and therefore is not covered by your insurance.


text:
<?php
namespace Nor\BE;

/** HTTP status codes */
class HTTPStatusCodes {

	private static $http_codes = array(
		200 => 'OK',
		307 => 'Temporary Redirect',
		400 => 'Bad Request',
		401 => 'Unauthorized',
		403 => 'Forbidden',
		404 => 'Not Found',
		405 => 'Method Not Allowed',
		500 => 'Internal Server Error',
		501 => 'Not Implemented',
		503 => 'Service Unavailable'
	);

	public static function isCode($code) {
		return is_numeric($code) && isset(self::$http_codes[$code]);
	}

	public static function get($code) {
		if(!self::isCode($code)) return "Error";
		return self::$http_codes[$code];
	}

}

/* EOF */
?>

redpajama_set_name: RedPajamaGithub


text:
#include "config.h"
#include "core/rendering/RenderLayerClipper.h"

#include "core/rendering/RenderLayer.h"
#include "core/rendering/RenderView.h"

namespace WebCore {

void RenderLayerClipper::updateClipRects(const ClipRectsContext& clipRectsContext)
{
    ClipRectsType clipRectsType = clipRectsContext.clipRectsType;
    ASSERT(clipRectsType < NumCachedClipRectsTypes);
    if (m_clipRectsCache && m_clipRectsCache->getClipRects(clipRectsType, clipRectsContext.respectOverflowClip)) {
        // FIXME: these asserts trigger for squashing. Need to update this code to support squashing as appropriate.
        ASSERT(clipRectsContext.rootLayer == m_clipRectsCache->m_clipRectsRoot[clipRectsType]);
        ASSERT(m_clipRectsCache->m_scrollbarRelevancy[clipRectsType] == clipRectsContext.overlayScrollbarSizeRelevancy);

#ifdef CHECK_CACHED_CLIP_RECTS
        // This code is useful to check cached clip rects, but is too expensive to leave enabled in debug builds by default.
        ClipRectsContext tempContext(clipRectsContext);
        tempContext.clipRectsType = TemporaryClipRects;
        ClipRects clipRects;
        calculateClipRects(tempContext, clipRects);
        ASSERT(clipRects == *m_clipRectsCache->getClipRects(clipRectsType, clipRectsContext.respectOverflowClip).get());
#endif
        return; // We have the correct cached value.
    }

    // For transformed layers, the root layer was shifted to be us, so there is no need to
    // examine the parent. We want to cache clip rects with us as the root.
    RenderLayer* parentLayer = clipRectsContext.rootLayer != m_renderer->layer() ? m_renderer->layer()->parent() : 0;
    if (parentLayer)
        parentLayer->clipper().updateClipRects(clipRectsContext);

    ClipRects clipRects;
    calculateClipRects(clipRectsContext, clipRects);

    if (!m_clipRectsCache)
        m_clipRectsCache = adoptPtr(new ClipRectsCache);

    if (parentLayer && parentLayer->clipper().clipRects(clipRectsContext) && clipRects == *parentLayer->clipper().clipRects(clipRectsContext))
        m_clipRectsCache->setClipRects(clipRectsType, clipRectsContext.respectOverflowClip, parentLayer->clipper().clipRects(clipRectsContext));
    else
        m_clipRectsCache->setClipRects(clipRectsType, clipRectsContext.respectOverflowClip, ClipRects::create(clipRects));

#ifndef NDEBUG
    m_clipRectsCache->m_clipRectsRoot[clipRectsType] = clipRectsContext.rootLayer;
    m_clipRectsCache->m_scrollbarRelevancy[clipRectsType] = clipRectsContext.overlayScrollbarSizeRelevancy;
#endif
}

void RenderLayerClipper::clearClipRectsIncludingDescendants(ClipRectsType typeToClear)
{
    // FIXME: it's not clear how this layer not having clip rects guarantees that no descendants have any.
    if (!m_clipRectsCache)
        return;

    clearClipRects(typeToClear);

    for (RenderLayer* layer = m_renderer->layer()->firstChild(); layer; layer = layer->nextSibling())
        layer->clipper().clearClipRectsIncludingDescendants(typeToClear);
}

void RenderLayerClipper::clearClipRects(ClipRectsType typeToClear)
{
    if (typeToClear == AllClipRectTypes) {
        m_clipRectsCache = nullptr;
    } else {
        ASSERT(typeToClear < NumCachedClipRectsTypes);
        RefPtr<ClipRects> dummy;
        m_clipRectsCache->setClipRects(typeToClear, RespectOverflowClip, dummy);
        m_clipRectsCache->setClipRects(typeToClear, IgnoreOverflowClip, dummy);
    }
}

void RenderLayerClipper::calculateClipRects(const ClipRectsContext& clipRectsContext, ClipRects& clipRects) const
{
    if (!m_renderer->layer()->parent()) {
        // The root layer's clip rect is always infinite.
        clipRects.reset(PaintInfo::infiniteRect());
        return;
    }

    ClipRectsType clipRectsType = clipRectsContext.clipRectsType;
    bool useCached = clipRectsType != TemporaryClipRects;

    // For transformed layers, the root layer was shifted to be us, so there is no need to
    // examine the parent. We want to cache clip rects with us as the root.
    RenderLayer* parentLayer = clipRectsContext.rootLayer != m_renderer->layer() ? m_renderer->layer()->parent() : 0;

    // Ensure that our parent's clip has been calculated so that we can examine the values.
    if (parentLayer) {
        if (useCached && parentLayer->clipper().clipRects(clipRectsContext)) {
            clipRects = *parentLayer->clipper().clipRects(clipRectsContext);
        } else {
            ClipRectsContext parentContext(clipRectsContext);
            parentContext.overlayScrollbarSizeRelevancy = IgnoreOverlayScrollbarSize; // FIXME: why?
            parentLayer->clipper().calculateClipRects(parentContext, clipRects);
        }
    } else {
        clipRects.reset(PaintInfo::infiniteRect());
    }

    // A fixed object is essentially the root of its containing block hierarchy, so when
    // we encounter such an object, we reset our clip rects to the fixedClipRect.
    if (m_renderer->style()->position() == FixedPosition) {
        clipRects.setPosClipRect(clipRects.fixedClipRect());
        clipRects.setOverflowClipRect(clipRects.fixedClipRect());
        clipRects.setFixed(true);
    } else if (m_renderer->style()->hasInFlowPosition()) {
        clipRects.setPosClipRect(clipRects.overflowClipRect());
    } else if (m_renderer->style()->position() == AbsolutePosition) {
        clipRects.setOverflowClipRect(clipRects.posClipRect());
    }

    // Update the clip rects that will be passed to child layers.
    if ((m_renderer->hasOverflowClip() && (clipRectsContext.respectOverflowClip == RespectOverflowClip || m_renderer->layer() != clipRectsContext.rootLayer)) || m_renderer->hasClip()) {
        // This layer establishes a clip of some kind.

        // This offset cannot use convertToLayerCoords, because sometimes our rootLayer may be across
        // some transformed layer boundary, for example, in the RenderLayerCompositor overlapMap, where
        // clipRects are needed in view space.
        LayoutPoint offset;
        offset = roundedLayoutPoint(m_renderer->localToContainerPoint(FloatPoint(), clipRectsContext.rootLayer->renderer()));
        RenderView* view = m_renderer->view();
        ASSERT(view);
        if (view && clipRects.fixed() && clipRectsContext.rootLayer->renderer() == view) {
            offset -= view->frameView()->scrollOffsetForFixedPosition();
        }

        if (m_renderer->hasOverflowClip()) {
            ClipRect newOverflowClip = toRenderBox(m_renderer)->overflowClipRect(offset, clipRectsContext.region, clipRectsContext.overlayScrollbarSizeRelevancy);
            if (m_renderer->style()->hasBorderRadius())
                newOverflowClip.setHasRadius(true);
            clipRects.setOverflowClipRect(intersection(newOverflowClip, clipRects.overflowClipRect()));
            if (m_renderer->isPositioned())
                clipRects.setPosClipRect(intersection(newOverflowClip, clipRects.posClipRect()));
        }
        if (m_renderer->hasClip()) {
            LayoutRect newPosClip = toRenderBox(m_renderer)->clipRect(offset, clipRectsContext.region);
            clipRects.setPosClipRect(intersection(newPosClip, clipRects.posClipRect()));
            clipRects.setOverflowClipRect(intersection(newPosClip, clipRects.overflowClipRect()));
            clipRects.setFixedClipRect(intersection(newPosClip, clipRects.fixedClipRect()));
        }
    }
}

} // namespace WebCore


text:
Religious School Submits Revised Plans To Move Into Church
A religious school that's been locked in a legal battle with Genoa Township has submitted revised plans to locate in the same church that spawned the dispute.
Livingston Christian Schools submitted new plans last week and a public hearing is scheduled during a Planning Commission meeting in October. The school filed suit in 2015 against Genoa Township for its refusal to grant a special use permit that would have allowed the school to relocate to the Brighton Church of the Nazarene. The board cited traffic concerns, the school's failure to follow the proper approval process and incompatibility with the township master plan among other reasons. Neighbors opposed to the project echoed those concerns and raised a myriad of others at multiple meetings.
The case was tossed out of court after a federal judge ruled the claims had no merit. The school appealed that to the U.S. Sixth Circuit Court of Appeals in Cincinnati, which upheld the judgment. LCS has been leasing space from Whitmore Lake Public Schools and is again trying to relocate to the Nazarene. Plans show the school is anticipating 280 students by the year 2020.
As part of the revised plans, the school plans to stagger start and stop times to fall between the peak traffic of the nearby schools which includes Brighton High School, Maltby Middle School and Hornung Elementary. Additionally, LCS provided a traffic study that shows the church driveway should be widened to provide a longer left turn lane to ensure site safety. They are asking that the township defer that requirement until the student count exceeds 190 students.
Township consultants and the Brighton Area Fire Department will now review the submitted plans. Based on their responses, the school will then need to make a second submittal. A second review will follow before a presentation and public hearing at the October 10th Planning Commission meeting. The Commission will make a recommendation to the township board, which will make any final decision.
Meanwhile as for the lawsuit, there has been no word of any appeal to the U.S. Supreme Court. Appellate counsel for LCS previously told WHMI they were hopeful something could be worked out between the parties.
When the permit was denied, there was an outcry from officials and parents from both LCA and Light of the World Academy (LOTWA), a formerly private religious-based Montessori school that obtained authorization to re-open as a public charter school. The academy planned to move into the old LCS facility once that school moved to Brighton Church of the Nazarene. LSC ultimately sold its Pinckney building and property to LOTWA, and ended up leasing space from the Whitmore Lake Schools district.
In its previous dismissal of the appeal, the 6th U.S. Circuit panel said the school was not substantially burdened within the meaning of the Religious Land Use and Institutionalized Persons Act despite the fact that LOTWA now occupies LCS's former Pinckney property, thus preventing the school from returning. It said any argument along those lines had no merit because LCS leased the building only after the special use permit application was denied and litigation commenced.
LOTWA purchased the building last year. The opinion added that the fact LCS cannot use the property is due to its own actions and the evidence about the Academy's decision to become a publicly funded charter school is insufficient because it does not explain the reason for LCS's financial difficulties. It was also noted that LOTWA became a charter school because it was having a difficult time keeping enrollment numbers up at a tuition based school. (JM)
Explore Other Current Livingston County News Stories
Hartland Twp. Discusses Proposed M-59 Pathway Connector
Brighton Man Charged With Church Break-In
No Foul Play Suspected In Lyon Cantina Fire
Back to WHMI for Complete List of Current News


One of the best ways to discover the fascination of the black perigord truffle is to join a truffle hunt followed by a three course truffle lunch.
Start your journey to understanding of the Black Perigord truffle as you trail truffle dogs Fahren and Tawdiffu, watch them display their amazing olfactory skills. Once the dogs discover truffle, you can help unearth the truffle, enjoy the archaeological event and discover your own perception of the truffle smell.
After the truffle hunt your taste buds are ready to sample one of the world's most sought after flavours.
Your journey from "paddock to plate" commences – sit back, relax and enjoy a leisurely three course truffle luncheon in warm rural surrounds.
Please remember when booking that this is an adults only event.