>>> Closing Commodities: Crude erases initial morning gains & close lower

Closing Commodities: Crude erases initial morning gains & closes with a loss for the day after EIA reported mixed data; natural gas extends yesterday's gains ahead of tomorrow's inventory data release

  • Crude oil erased all initial morning gains and turned negative after EIA reported mixed data; crude build below expectations coupled with a gasoline draw below Consensus
  • April crude oil futures fell $0.19 (-0.4%) to $53.82/barrel
  • Reminder: Baker Hughes rig count data will be released Friday at 1 pm ET.
  • EIA highlights:
    • Crude oil inventories had a build of +1.5 mln barrels (consensus called for a build of about +3.079 mln barrels).
    • Gasoline inventories had a draw of -0.5 mln barrels (consensus called for a draw of -1.789 mln barrels).
    • Distillate inventories had a draw of -0.9 mln barrels.
  • Natural gas extended yesterday's notable +3.4% gains ahead of tomorrow's EIA data
    • April natural gas closed $0.02 higher (+0.7%) at $2.80/MMBtu
    • EIA natural gas data will be released tomorrow at 10:30 am ET.
      • Expectations call for EIA to report a draw of just around ~4 bcf, compared to last week's draw of 114 bcf. If realized, this would be the smallest winter draw on record.
      • Reminder: The release of Monday's updated 15-day weather forecast shifted moderately warmer, creating downward bias earlier in the week.
  • In precious metals, gold extended yesterday's losses on a strong dollar index following yesterday evening's Presidential address to Congress
    • April gold ended today's session down $4.40 (-0.4%) to $1249.30/oz
    • May silver closed today's session $0.01 higher (+0.1%) at $18.48/oz
  • The dollar index was +0.6% around the 101.72 level
    • Commodities, as measured by the Bloomberg Commodity Index, were +0.7% around the 88.32 level

FT : Canadian fossils push back date of origins of life,

Canadian fossils push back date of origins of life
Hudson Bay microbes proven to be up to 4.3bn years old

The world’s oldest known fossils have been found in ancient Canadian rocks, a discovery that will push back the accepted scientific timeframe for the origins of life on Earth.

Remains of microbes that lived 3.8bn-4.3bn years ago were identified in the Nuvvuagittuq belt in eastern Canada, some of the world’s oldest sedimentary rocks, by an international team led by University College London.

The microbes, which originated in a system of deep-sea hydrothermal vents, were formed by bacteria that obtained energy by oxidising iron minerals. Similar microbes live close to hot water vents in today’s oceans.

“Our discovery supports the idea that life emerged from hot seafloor vents shortly after planet Earth formed,” said Matthew Dodd of UCL, lead author of the scientific paper published in Nature magazine. Earth is understood to have formed about 4.5bn years ago.

Until now the oldest individual organisms preserved as fossils were microfossils from Western Australia dated at 3.46bn years old.

Scientists also recently found mats of bacteria that lived in shallow water, known as stromatolites, in 3.7bn-year-old rocks from Greenland. “The Greenland stromatolites and our discovery show a rapid diversification of life in different environments,” said Mr Dodd.

Nick Lane, an evolutionary biochemist at UCL who was not involved in the research, said the finds were “evidence of a vibrant early ecosystem” on Earth.

A high level of proof is required by scientists that ancient microfossils are really remains of living organisms rather than non-biological artefacts in the rocks. Several previous claims, notably the alleged discovery in 1996 of microbes in a Martian meteorite from Antarctica, were undermined by subsequent analysis.

This led the UCL-led team to undertake extensive chemical and physical examinations of the microscopic tubes and filaments found in the Canadian rocks to rule out other possible explanations such as temperature and pressure changes during and after the sediment’s burial and mineralisation.


They found that the microfossils, which are composed of the iron oxide mineral haematite, have the same branching structure as modern bacteria living near hydrothermal vents.

They are also associated with other carbon and calcium minerals that accompany fossils in younger rocks.

“The structures are composed of the minerals expected to form from putrefaction [of dead bacteria] and have been well documented throughout the geological record, from the beginning until today,” said Dominic Papineau, the project leader.

“The fact we unearthed them from one of the oldest known rock formations suggests we have found direct evidence of one of Earth’s oldest life forms.”

It is hoped further research will narrow down the age range for the Nuvvuagittuq rocks.

The first geological era after Earth’s formation is known as the Hadean period, with intense volcanism, meteorite bombardment and a dense atmosphere rich in carbon dioxide. When Earth cooled enough for liquid water to form is not clear. But if life began quickly in Earth’s first oceans, the likelihood is increased of it being widespread elsewhere in the universe.

Because conditions on Earth and neighbouring Mars were very similar in the first few hundred million years of their existence, this raises hopes that fossils could be found in ancient Martian sedimentary rocks.

Mr Dodd said that unless Earth was a special exception, “we expect to find evidence for past life on Mars 4bn years ago”.

FT : House of Lords votes to protect EU citizens’ rights

House of Lords votes to protect EU citizens’ rights
Call for May to ‘think again’ as peers pass amendment to Brexit bill

The House of Lords has voted by an overwhelming majority to guarantee the rights of EU citizens living in the UK after Brexit, in defiance of Theresa May.

Peers backed an amendment to the government’s Article 50 Bill — which will give Mrs May the power to trigger the formal Brexit process — by a majority of 102.

The amendment requires the government to guarantee unilaterally that EU citizens living in the UK will retain all the rights they currently enjoy once Britain leaves the bloc.

The government had argued that Britain should wait until other EU countries offered reciprocal guarantee for UK citizens abroad. However peers found that unpersuasive.

The vote was the biggest turnout by peers since 1999, according to the House of Lords library.

A number of Tories voted against the government after a passionate debate in which several Conservatives spoke out.

Conservative peer Lord Bowness warned the government not to “bargain with people”, saying: “We are not dealing with enemy aliens in times of war.”

He did not wish to be associated with the government’s “mean-spirited” position, he said.

Former Tory minister Viscount Hailsham also argued in favour of the amendment, saying that it “offends natural justice” to remove rights from EU citizens retrospectively.

The peers’ decision came despite assurances from Amber Rudd, the home secretary, that reciprocal rights would be an early priority in the Brexit negotiations.

The legislation will now return to the House of Commons, which voted by a majority of 42 against a similar amendment last month.

A Tory aide said the government was confident that it would have a majority in favour of excising the peers’ amendment, and opposition peers have indicated they are unlikely to have the appetite for a prolonged fight.

But Keir Starmer, shadow Brexit secretary, said Labour would now back the amendment — despite Labour siding with the government when the Bill was discussed by MPs.

Richard Newby, the leader of the Liberal Democrats in the Lords, called on Theresa May, the prime minister, to “think again”.

“Theresa May has been stubbornly determined to use EU citizens in the UK as bargaining chips. Today the Lords have told her this is not acceptable,” he said.

A spokesperson for the Department for Exiting the EU said it was disappointing that the Lords had chosen to amend the bill when the government’s position on EU nationals “has repeatedly been made clear”.

The spokesperson said: “We want to guarantee the rights of EU citizens who are already living in Britain, and the rights of British nationals living in other member states, as early as we can.”

Ahead of the vote, Ms Rudd wrote to peers urging them not to go against the government.

Ministers had the “utmost respect” for EU citizens and wanted to guarantee their rights as quickly as possible, Ms Rudd said.

However, she added that a “one-sided guarantee” from the UK could damage the interests of British people living abroad who could “end up facing two years of uncertainty if any urgency to resolve their status were removed”.

In the letter, which was similar to one the home secretary had previously sent to MPs, Ms Rudd promised that “nothing will change for any EU citizen, whether already resident in the UK or moving from the EU, without parliament’s approval”.

She blamed “a few EU countries” for rebuffing the UK government’s attempts to reach a reciprocal agreement for UK citizens living abroad before formal negotiations begin.

Baroness Smith, Labour’s leader in the Lords, said the letter was “deeply disappointing”, adding: “Confirming the rights of those EU citizens living in the UK can only be of benefit to our citizens worried about their future in EU countries.”

Peers will further challenge the government next week, when they will attempt to force ministers to grant parliament a “meaningful” vote on the final terms of the exit deal once Mrs May’s negotiations have concluded. .

Mrs May has said she plans to trigger Article 50 by the end of this month.

>>> Fed's Kaplan (moderate, voter): reiterates Fed should begin process of gradu

Fed's Kaplan (moderate, voter): reiterates Fed should begin process of gradual rate hikes - comments in Dallas 
- Economy is strong enough for the Fed to start raising rates; rate hikes can be done in a very patient way 
- Concerned that if inflation starts to heat up, Fed may need to hike rates more dramatically 
- US economic growth is sluggish by historical standards, but it is healthy given current demographics; lower US growth is the new reality

REcode.net : Is Snapchat going public too soon?

Is Snapchat going public too soon?
Evan Spiegel doesn’t think so. Your mileage may vary.

Every IPO sells a story: We went from here to here, and now we’re going ... there.

The trick is convincing investors that you’re going somewhere lucrative, and you’re moving fast. Sure, it’s risky — can’t have reward without risk! — but you know how you’re getting there.

But Snap does lots of things differently, and Snap’s IPO is different, too: Even by internet company standards, Snap isn’t sure, exactly, how it’s going to make money — it’s just sure that it will, and that it will make a lot of it.

In the meantime, Snap says, things will be “lumpy,” a word it uses repeatedly in its prospectus and roadshow presentations, to describe user growth, product development and revenue sources. Everything’s going to change, because lots of things haven’t been invented yet. It’s the financial equivalent of the shruggy emoticon: ¯\_(ツ)_/¯

Contrast that with Google, Facebook and Twitter, all of which had more concrete stories to tell about their business plans when they went public: Google was selling AdWords. Facebook was selling “social ads” in its News Feed. Twitter sold promoted tweets.

Some of those stories changed a lot after their IPOs, of course. Facebook spent a year in purgatory while it scrambled to create a mobile ad business from scratch. Twitter learned, eventually, that its ad ambitions didn’t fit the size of its audience. Now it’s in perpetual turnaround mode.

Snap’s story is fuzzier. Instead of a single ad product at the center of its pitch, it has two: “Creative tools” like sponsored filters, and TV-style “snap ads.” Wall Street would be very happy if Snap focused on the latter, but Snap won’t even identify itself as an ad company — it’s a camera company, CEO Evan Spiegel insists.

And while most big digital platforms sell advertisers on the notion that they have reams of personal information about their users so they can deliver personalized ads with precision, Snap has shied away from most targeting technology. Last fall, in the run-up to its IPO, instead of focusing on ad tech, Snap pushed Spectacles, a $130 pair of novelty glasses. Now it may be playing with drones.

If Snap does have a core selling point, it’s Spiegel himself, and the notion that he’s a product savant who can figure out how to attract and retain young users. The money part will come later.

It’s a good story. Here’s a chapter, relayed by Snap employees: Last fall, Spiegel showed up at Snap’s Venice, California headquarters and announced that he wanted to change the look of his app’s main “stories” page.

Spiegel said the page had too much stuff from Discover, the content supplied by professional publishers*. It was crowding out all the stuff posted by users’ friends. Push all the Discover stuff to the bottom of the page, he told his product people.

Cue a quiet freakout from Spiegel’s revenue team. While Discover isn’t the most popular feature on the app, it had been Snap’s most significant source of ad revenue. Pushing that stuff away from users, they worried, would push ad revenue down, and that would cause real problems for a company that planned on going public.

But Spiegel hadn’t asked anyone on his business team — including Imran Khan, his chief strategy officer — for their opinion. He thought it would make for a better product.

Days later, Spiegel got what he asked for. And, it turns out, Discover ad revenue didn’t decline.

If you’re buying Snap shares tomorrow, you’re hoping for more stories like this. It looked lumpy! But Evan was right and it all worked out.

I do wonder, though, why Snap is selling shares tomorrow. Why not wait a year, or longer, smooth out some of those lumps, and then go public, once you’ve worked out exactly what Snap is going to be?

If you are a Snap skeptic, you will point to Snapchat’s decelerating user growth and the $750 million incentive clause Snap’s investors gave Spiegel to go public, and make a simple argument: Snap is going public now because this is as good as it’s going to get. Sell the story when there’s still a chance of a hopeful ending.

On the other hand: Spiegel is smart. And with co-founder Bobby Murphy, he has full control of his company. If he was worried about exposing Snap’s flaws in public, he wouldn’t go public. Which means he believes Snap’s story, too.

* Vox Media, which owns this site, has a Discover partnership with Snap.

>>> Fed Beige Book Summary

Fed Beige Book Summary

Overall Economic Activity

  • Reports from all twelve Federal Reserve Districts indicated that the economy expanded at a modest to moderate pace from early January through mid-February.
  • Consumer spending expanded modestly since the last report. Retail sales increased at a subdued pace across most of the nation, with a number of Districts noting an ongoing shift from in-store to internet purchasing. Auto sales varied widely, but were said to be up in most Districts. Tourism activity was mixed but mostly stronger.
  • Manufacturing activity accelerated somewhat, with most Districts characterizing the pace of growth as moderate. The energy sector showed modest growth in early 2017, and transportation activity was steady to somewhat higher across the nation.
  • Home construction and sales continued to expand modestly in most Districts, while residential rental markets were mixed. Home prices were steady to up modestly in most Districts, and a number of Districts noted low inventories of existing homes. Commercial real estate construction grew modestly, and sales and leasing activity grew moderately. Lending activity was steady to somewhat higher.
  • Businesses were generally optimistic about the near-term outlook but to a somewhat lesser degree than in the prior report.

Employment and Wages

  • Labor markets remained tight in early 2017, with some Districts noting widening labor shortages. Employment grew moderately in most of the nation, though three Districts characterized growth as modest and two reported that it was little changed. A number of Districts noted that staffing firms were seeing brisk business for this time of year, and one noted more conversions from temporary to permanent workers.
  • In general, wages in most Districts rose modestly or moderately, with a few reporting some pickup in the pace of wage growth. A number of Districts noted that shortages of skilled workers—particularly engineers and IT workers—were driving up their wages, and there were also some reports of labor shortages in the leisure and hospitality, construction and manufacturing industries.

Prices

  • Pricing pressures were little changed from the prior report. Most Districts reported that selling prices were up modestly or moderately, though four indicated that prices had largely leveled off. Input prices were up modestly, on balance. Energy prices and farm prices were mixed but mostly steady, on balance, while prices for construction materials climbed in a number of Districts. Overall, businesses said they expected both input prices and selling prices to increase modestly in the months ahead.

(ZH) Euro Breakup Contagion Risk Is Exploding

Euro Breakup Contagion Risk Is Exploding

With existential elections looming, Sentix Euro Break-up Contagion Index - a market measure of the contagion risk from one or more countries leaving the euro area within the next 12 months period - has hit its post-2012 record recently...
As Sentix notes, the Eurocrisis is once again in the limelight. And this time the
drama consists of three main actors: Greece, Italy and France.
How
dangerous this tendency for the cohesion of the eurozone could become is
a look at the index to the spreading risk, which has almost climbed to
the 50% mark - an all-time high!


France and Italy both seeing Euro-exit odds rising...
The Eurozone has now developed many more breaking points than just Greece. Although it has now been somewhat calmer about Italy, the euro exit probability remains almost unchanged at 13.9%. Added to this is the strong rise in the probability of exit from France. This is now 8.4% - compared to 5.7% in January! An all-time high.

WSJ : Donald Trump’s Speech Agenda Will Face Legislative Challenges

Donald Trump’s Speech Agenda Will Face Legislative Challenges
GOP infighting and Democratic opposition await the president’s wish list

President Donald Trump on Tuesday night asked a joint session of Congress to set aside “trivial fights” and “work past differences of party” in order to act swiftly on his top policy priorities.

But Mr. Trump faces significant challenges in bringing lawmakers together. First, he needs to bridge differences within his own party on tax policy, health care and other matters. And he will also need support from Senate Democrats to pass much of his agenda, at a time when the party’s base voters are urging resistance.

Below are some of the policy goals Mr. Trump laid out in his speech and their prospects in Congress.

Mr. Trump: “We will soon begin the construction of a great, great wall along our southern border.”

First, some fiscal conservatives have suggested that Mr. Trump needs to cut spending elsewhere, or find other revenue in order to cover the cost, which the Department of Homeland Security has said could top $20 billion to build and maintain.

Second, Democrats are dead set against the idea and are expected to mount a fight.

“The speaker has said that we’re going to do this in a fiscally conservative manner,” said Rep. Mark Meadows, the leader of a group of influential House conservatives known as the Freedom Caucus. Many of his colleagues support the proposed wall but want to see it paid for, Mr. Meadows has said. It isn’t clear how far that group will push if Republican leaders decide to advance legislation without a way to cover the cost.


Spending bills need to meet a 60-vote threshold to pass the Senate, more than the 52 held by Republicans. Few Democrats are likely to back the wall, and the party in any event would want to withhold its support to bargain for immigration measures it supports but that many Republicans don’t.

One option for Republican leaders: Fund the border wall as part of a spending bill needed to keep the government running—a fight that could prompt a partial federal shutdown if the bill didn’t attract enough support.

Mr. Trump: “I will be asking the Congress to approve legislation that produces a $1 trillion investment in the infrastructure of the United States—financed through both public and private capital—creating millions of new jobs.”

Legislative reality: Like the border wall, any major spending on infrastructure will need congressional approval. An infrastructure package, even partly financed by private dollars, would likely come with a big price tag that could cause discomfort among fiscal conservatives and deficit hawks.

Rep. Jim Jordan (R., Ohio) has said he would need to see details of the plan and its funding mechanism before supporting it. “We’ve got a $20 trillion debt,” he said. “Look, we’ve got to pay for things.”

Outside of Congress, some conservatives have started to rally opposition to the plan. Mark Levin, a radio host, said he opposes infrastructure spending aimed at “government-created jobs.”

“If you’re really an independent, thoughtful conservative, you’re scratching your head about that. You’re saying, ‘No, I reject that,’ ” he said this week.

Republicans were largely opposed to former President Barack Obama’s nearly $800 billion stimulus package that passed just weeks into his administration in 2009.

Mr. Trump: “I am also calling on this Congress to repeal and replace Obamacare with reforms that expand choice, increase access, lower costs, and at the same time, provide better health care.”

Legislative reality: Even Mr. Trump, who has promised “insurance for everybody,” acknowledged this week the difficulty of unwinding Mr. Obama’s signature health-care law without disrupting insurance markets and ensuring that covered people aren’t dumped off their health plans. “Nobody knew health care could be so complicated,” he said at the White House this week.

Conservative Republicans are opposed to a plan from the House GOP leadership to give tax credits to help Americans buy insurance after a repeal of the Affordable Care Act, calling it a new federal entitlement. Centrist Republicans don’t want to repeal the law without a robust replacement. GOP governors are divided over various plans for reshaping the federal-state Medicaid program, which the ACA expanded.

Democrats are unlikely to cooperate at all, as most see the law as a signature achievement for their party.

Former House Speaker John Boehner said this week that repealing the law and then replacing it with a new health system is “not what’s going to happen.” He predicted: “They’re basically going to fix the flaws and put a more conservative box around it.”

Mr. Trump: “My economic team is developing historic tax reform that will reduce the tax rate on our companies so they can compete and thrive anywhere and with anyone. At the same time, we will provide massive tax relief for the middle class.”

Legislative reality: Overhauling tax law is immensely complicated, because it affects the finances of so many businesses and individuals. The last major rewrite of the nation’s tax code was in 1986. Adding another complexity: Republicans want to put the difficult task of replacing the Affordable Care Act behind them before tackling taxes.

Though there is broad consensus, even across party lines, on the need to simplify the code, there are big divisions over the details. Republicans are split over a proposal called border adjustment, which would tax imports and exempt exports. Supporters favor it in part because it would raise money that could be used to lower rates overall. But many industries, such as retailers, would pay higher taxes under a border adjustment.

Mr. Trump’s stance on the proposal is unclear, though his comments Tuesday night were supportive of its premise. However, many Senate Republicans are opposed to it.

Democrats are unlikely to support either the framework put forward by House Republicans or the plan Mr. Trump proposed during the campaign, which would cut taxes on upper earners.