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April 14, 2018

Tesla Was Kicked Off Fatal Crash Probe by NTSB ⁰

by MeDaryl • Cars • Tags: AMERICAN AIRLINES GROUP INC, business, Elon Reeve Musk, family, hyperdrive, Los Angeles, National Transportation Safety Board, New York, Robert L Sumwalt, technology, TESLA INC, Washington, Wyoming

Tesla Was Kicked Off Fatal Crash Probe by NTSB

Alan Levin

Won’t Hinder

"By removing yourself from the process, you’re really taking yourself out of play in a critical element of the investigation," he said. "It will by no means stop the investigation, and it will by no means hinder the investigation."

The dispute between the safety agency and carmaker stems from statements the company made regarding Walter Huang, a 38-year-old who died last month in his Model X using the driver-assistance system known as Autopilot.

In a March 30 blog post, Tesla said that the Model X driver’s hands weren’t on the steering wheel for six seconds prior to the fatal crash. An NTSB spokesman said the agency was "unhappy" with the company for disclosing details during the investigation.

Musk and Sumwalt spoke by phone over the weekend and had what an agency spokesman said at the time was a constructive conversation. Musk promised to follow NTSB rules barring the company from commenting on the investigation.

But this week, Tesla responded to a local television appearance by Huang’s family saying the "only" explanation for the crash was that he "was not paying attention to the road, despite the car providing multiple warnings to do so."

The company’s statements violated agency protocol for parties to an accident investigation by alleging the cause of the crash, Goelz said.

Goelz said Tesla’s statement that it was withdrawing from the so-called party agreement was likely a preemptive move to get ahead of the NTSB announcing that the agency was giving Tesla the boot.

"The NTSB is a trusted investigatory agency. Their processes can be challenging and frustrating but they are ultimately fair," Goelz said by phone. "Mr. Musk and his company, and frankly the future of autonomous vehicles, would have been better served had they followed the rules and continued to participate fully in the investigation."

Companies or others who lose formal status as a party to an NTSB investigation can lose access to certain information uncovered in the probe and the ability to shape the official record of the incident, Goelz said.

Prior Ejections

The action to remove the company from the probe was limited to the most recent fatal accident. Tesla is still a formal participant in the NTSB’s investigation of a January crash involving a Tesla Model S that was using Autopilot when it rear-ended a fire truck parked on a freeway near Los Angeles, according to the person.

The stakes for Tesla’s bid to defend Autopilot are significant. The NTSB’s investigation of the March 23 crash involving Huang contributed to a major selloff in the company’s shares. Musk claimed almost 18 months ago that the system will eventually render Tesla vehicles capable of full self-driving, and much of the value of the $50 billion company is linked to views that it could be an autonomous-car pioneer.

The safety board has in some cases thrown airlines, aircraft manufacturers and unions off of investigations in cases where they were either making unauthorized statements or not producing information the NTSB expected of them.

Small Agency

Because it’s a relatively small agency with a limited numbers of employees, the NTSB relies heavily on these parties to assist its investigations. The safety board has subpoena power that it’s used in rare instances to compel companies involved in investigations to provide information.

NTSB rules don’t in fact prohibit participants in investigations from releasing general information about their products. The agency’s oft-repeated rule of thumb is that factual information that could have been released before an accident can be put out afterward as well.

What the NTSB prohibits is the release of information related to the accident itself.

In December 2010, the safety board removed American Airlines, now part of American Airlines Group Inc., from an investigation into a runway accident in Jackson Hole, Wyoming. American had taken one of the plane’s two crash-proof recorders and downloaded its contents prior to turning the device over to the agency.

In 2014, it kicked United Parcel Service Inc. and its pilots’ union off of a probe into a cargo-jet crash that killed two people in Alabama. The safety board said then that the company and union "took actions prejudicial to the investigation by issuing comments and analyzing findings before the NTSB had met to determine a cause."

"If one party disseminates information about the accident, it may reflect that party’s bias," then acting chairman of the NTSB Christopher Hart said at the time. "This puts the other parties at a disadvantage and makes them less willing to engage in the process, which can undercut the entire investigation."

April 3, 2018

Tesla Asks for Model 3 Factory Volunteers to Prove Haters Wrong ⁰

by MeDaryl • Cars • Tags: Automotive, Bonds, business, Credit Rating, Doug Field, Elon Reeve Musk, Engineering, hyperdrive, MOODY'S CORP, New York, technology, TESLA INC, US Dollar Spot

Some Model S and X workers may switch to Model 3 line Friday
Reaching goal would be ‘incredible victory,’ executive says

Tesla Inc. exhorted its factory workers to prove wrong the “haters” betting against the company and is letting a small number of volunteers join the effort to ramp up output of the crucial Model 3 line.

In a pair of internal memos last week, the heads of engineering and production spelled out measures to free up workers for the Model 3 line and challenged them to reach production goals. Doug Field, the engineering chief, told staff that if they can exceed 300 Model 3s a day, it would be an “incredible victory” at a time when short-sellers and critics are increasingly doubting the company’s ability to fulfill CEO Elon Musk’s vision of building a mass-production electric-vehicle manufacturer.

“I find that personally insulting, and you should too,” Field wrote in the March 23 email. “Let’s make them regret ever betting against us. You will prove a bunch of haters wrong.”

Tesla has been routed this month as analysts and investors have questioned the company’s ability to mass-manufacture the sedan it spent billions of dollars on to quickly expand sales. Bottlenecks at Tesla’s battery factory and assembly plant have undermined that effort, limiting the return on that investment and arousing concern that the company may need to raise more cash.

Shares fell 22 percent this month in New York, the biggest one-month drop since the year it went public. The stock rose 3.2 percent Thursday to close at $266.13. The stock then fell in after-market trading after the carmaker said it would voluntarily recall all Model S cars built before April 2016 to retrofit a power-steering component.

Tesla’s bonds maturing in 2025 traded at 87.25 cents on the dollar, down more than 1 cent, according to Trace data compiled by Bloomberg.

Tesla will suspend Model S and Model X production Thursday and Friday because it’s ahead of target on building those this quarter, Peter Hochholdinger, vice president of production, wrote to employees in a March 21 email obtained by Bloomberg News. An unspecified “limited number” of workers who build those vehicles will have the option to work on the Model 3 line on those two days and Saturday, he said.

A Tesla spokesperson said Thursday that the planned shutdown of the Model S and Model X production line is now occurring only on Friday, not both days, and said that the pause is unrelated to Model 3 production targets.

At the time of Field’s email, Tesla was making more than 200 Model 3 sedans a day on every line, he wrote. Field urged workers to quickly break through the 300-cars-a-day barrier and keep going, while keeping quality standards high. Some Model 3 reviewers have criticized inconsistent body panel gaps and glitches with the 15-inch touch screen that controls many of the car’s features.

“The world is watching us very closely, to understand one thing: How many Model 3’s can Tesla build in a week?” Field wrote. “This is a critical moment in Tesla’s history, and there are a number of reasons it’s so important. You should pick the one that hits you in the gut and makes you want to win.”

In addition to the Model 3 issues, Tesla has been working with regulators to investigate a fatal crash involving a Model X last week that prompted the company to defend the record of its driver-assistance system Autopilot. Moody’s Investors Service also downgraded Tesla’s credit rating further into junk on Tuesday.

Tesla Loses Market Cap Crown

GM is once again the most valuable U.S. automaker, amid Tesla's slide in March

Source: Bloomberg

During the temporary shutdown of Model S and Model X production, Hochholdinger said workers who don’t move to the Model 3 line will have to take unpaid time off or can use paid vacation days. His email didn’t specify what the company’s Model S and Model X target was for the quarter.

Estimate Tesla Model 3 Production With Bloomberg’s VIN-Tracker Tool

If Tesla reaches its weekly Model 3 production target, employees will have doubled the size of the company as measured by cars shipped, and output of that vehicle will exceed Model S and Model X combined, Field wrote. He said Model 3 will outsell the battery-electric Nissan Leaf, BMW i3, Audi E-Tron and Chevrolet Bolt and Volt combined.

“We set high goals at Tesla, but I know we can do this,” Field wrote. “If we keep climbing from 300 through the end of the week, it will be an incredible victory. Your friends and family will hear about it in the news.”

March 7, 2018

East Coast Travel Recovering After Noreasters Winds and Rain ⁰

by MeDaryl • Cars • Tags: Boston, business, Federal Aviation Administration, Laguardia Airport, Maine, Massachusetts, New England, New York, Port Authority, Real Estate, Washington

The impact of a powerful nor’easter diminished on Saturday after the storm caused chaos along the U.S. East Coast, halting trains and forcing airports to ground flights as high winds and heavy rain knocked out power and flooded Boston streets.

Hundreds of thousands of homes and businesses were still without power on Saturday along the Atlantic Coast, and flight delays continued but at a lower rate as the storm system pulled away from the New England coast.

Strong winds on Friday prompted the federal government to close offices in Washington, and flights were temporarily suspended at New York’s LaGuardia and John F. Kennedy International airports. Downed trees led Amtrak to suspend service between Boston and Washington.

“This could be one of those storms that goes into the record books,” said Kim Buttrick, a National Weather Service meteorologist.

In Washington, winds of almost 99 miles-per-hour (159 kilometers per hour) prompted the Federal Aviation Administration to close Dulles International Airport’s control tower around noon Friday local time, said Christina Saull, a spokeswoman for the Metropolitan Washington Airports Authority. Controllers were able to move back to the main tower about 30 minutes later, Saull said.

Planes, Trains

More than 3,400 flights were canceled and almost 5,000 were delayed across the U.S. on Friday, according to FlightAware, an airline-tracking service. More than 40 percent were at LaGuardia, JFK and Newark Liberty International Airport, said Steve Coleman, a spokesman for the Port Authority of New York & New Jersey.

High winds downed a tree onto power lines, blocking the street and damaging a vehicle March 2, in Takoma Park, Maryland.

Photographer: Chip Somodevilla/Getty Images

By 1 p.m. ET on Saturday some 585 cancellations and 1,349 delays had been logged, mostly in the Northeast, with Boston’s Logan International Airport heading the list.

In addition to the Northeast Corridor, Amtrak suspended service between New York City and Harrisburg, Pennsylvania, on Friday. The rail service was still operating on a modified schedule Saturday; partial service resumed between Washington and New York.

Power outages climbed Friday as the advancing storm toppled trees and power lines. At the peak, more than 2 million homes and businesses from Ohio and North Carolina to Maine were without electricity, according to data compiled by Bloomberg from utility websites.

Slow Motion

Tropical-storm-force gales roiled waters off Massachusetts and flooding streets in Boston. The city’s harbor recorded its third-highest tide ever. Cities from Maine to Virginia reported minor to moderate flooding.

Daniel Cunningham, 22, of Quincy kayaks out to check on a stranded driver in the flooded Squantum section of Quincy, Mass. on March 2.

Photographer: Stan Grossfeld/The Boston Globe via Getty Images

Tides were far higher than normal in Jamaica Bay in Queens and along southern Long Island. Heavy surf was also recorded along the coast, and buoys in Massachusetts Bay logged waves of 15 feet (4.6 meters). They were nearly 14 feet south of Montauk, Long Island, according to the National Data Buoy Center in Stennis Space Center, Mississippi.

Powerful 20-foot waves crashed into coastal towns in the vicinity of Boston and on Cape Cod, washing out roads, damaging homes. That could leave people stranded “for an extended time,” the National Weather Service said.

The Massachusetts Emergency Management Agency urged residents along the coast to make evacuation plans. Many schools in coastal cities and towns closed on Friday.

$468 billion

Coastal flood warnings, watches and advisories are in effect along the New Jersey coast and as far south as Virginia. More than 1.2 million homes worth more than $468 billion are at risk from coastal flooding in 11 states from Maine to Virginia, according to the Insurance Information Institute in New York.

“Nor’easters can cause higher tides than hurricanes,” Ronald Busciolano, a supervisory hydrologist with the U.S. Geological Survey, said in a statement.

In addition to the coastal flooding, heavy rain may send rivers over their banks, the weather service said.

Buttrick said residents should heed evacuation notices and no one should go sightseeing. “We don’t want any casualties,” she said.

February 24, 2018

New Jersey Transits Hidden Danger: Bad Brakes, Bare Wires, Rotten Parts ⁰

by MeDaryl • Cars • Tags: Automotive, business, Employment, Hudson River, Manhattan, National Transportation Safety Board, New Jersey, New York, Pennsylvania, politics, Software, U.S. Republicans

Federal inspectors found scores of New Jersey Transit train cars riddled with fire risks, faulty brakes and electrical hazards as they scrutinized the troubled railroad that brings 95,000 workers to Manhattan daily.

One engine was so defective it was declared unsafe, documents obtained under New Jersey’s Open Public Records Act show. In some cases, NJ Transit’s own checks failed to identify faults brought to light a day or two later by Federal Railroad Administration officials. One was a locomotive with seized air valves and misaligned foundation gear that compromised the braking system’s very core. Another had broken equipment that provides traction on slippery tracks.

While federal regulators regularly inspect railroads, safety failures at NJ Transit led them to conduct a deeper audit in 2016. Though the agency appears to have mostly resolved its findings, the inspectors last year tested NJ Transit equipment with unprecedented frequency, uncovering persistent defects that speak to years of budget starvation and routine risks for more than 300,000 daily riders.

Incurious Inspections

“How do you claim it’s OK for service?" said Richard Beall, a retired railroad engineer and Miami-based train-accident consultant. “It needs to be gone over with a fine-tooth comb every day. If the FRA can find a missing brake clip, I can find a missing clip, too.”

The 400 pages of reports validate riders’ social-media gripes about screeching wheels and rickety suspensions. Passengers have little ability to assess their personal safety. Neither the FRA nor NJ Transit makes the findings readily accessible; NJ Transit took more than five months to fulfill Bloomberg’s public-records request.

In 2017, eight recorders were in use beyond their mandated inspection deadlines, according to the FRA.

“If that lead locomotive is missing its event recorder, now you’re missing the most vital stuff on the train — bells, headlights on,” Beall said. “It’s fine to have another recorder on the train, but it’s not duplicative.”

Nancy Snyder, an NJ Transit spokeswoman, said all recorders now are inspected daily.

Hand in Hand

Diane Gutierrez-Scaccetti, the acting New Jersey transportation commissioner and NJ Transit chairwoman, said agency and federal regulators are cooperating closely.

“They’re our partner in this, not our punisher,” she said at a news conference in Trenton on Feb. 15.

NJ Transit says it’s addressed many flaws identified by inspectors. The resting engineer in Hoboken wasn’t violating rules because he was on break, according to Snyder. Still, the episode was raised as a cause for concern by the railroad administration, which recommended a fine because all the train’s brakes weren’t applied.

NJ Transit appears to have mostly tackled worn track parts, misaligned switches and unsecured trains discovered in 2016 and 2015, when inspectors recommended fines totaling at least $262,000. In Hoboken, Dover and Little Falls, inspectors in June 2017 found NJ Transit following rules on switches, personal protective equipment, warning bells and hand brakes, problem areas in the past.

Fire Hazards

Staff “has exceeded my expectations in their drive” to fine-tune a safety program in Hoboken, Inspector Douglas E. Johnson wrote on June 28.

In the first nine months of 2017, inspectors documented 140 hazards just on train floors or passageways. Unlocked high-voltage electrical panels were widespread, and 18 contained ticket collectors’ paper seat checks — some touching bare wires. New Jersey Transit conducted an internal investigation, though it wasn’t able to identify who was responsible. Inspectors recommended a fine.

“Detailed instructions have been given to crews and the issue has been resolved,” Snyder said. No more seat checks have been found stashed in the panels, she said.

In a Morrisville, Pennsylvania, yard on March 13, Locomotive 6044 was “not in proper condition and safe to operate,” with complete air-brake reservoir failure. An inspector that day documented 24 defects on 14 vehicles, including missing exit signs and emergency glow-in-the-dark evacuation routes, wheel disc pads that lacked retaining clips and seized air-brake cocks.

Snyder wrote in an email that “all these components/parts are routinely replaced as they get damaged from wear and tear.”

Neglected Engines

Elsewhere, electrical grounding was non-existent on 23 cars, and 60 had suspension problems. Nine locomotives were in use beyond their mandated inspection dates. Eleven had either reduced or no capacity to spread slip-reducing grit on rails.

Democratic Governor Phil Murphy, who took office Jan. 16, has pledged to turn around a model operation that he said became “a national disgrace.” Under his predecessor, two-term Republican Chris Christie, NJ Transit’s annual state subsidy was cut as much as 90 percent, and $3.44 billion of its capital budget was diverted to cover daily expenses.

NJ Transit's Shaky Subsidy

Christie administration cut transit aid by 90 percent.

Source: New Jersey budgets

“If you use capital funds for day-to-day operations, it’s a snowball-type of effect, and it will be severe,” said Robert Halstead, a Syracuse, New York, accident analyst who investigated the Hoboken crash. “You’ve got to spend money or the tougher it gets to ever get back on top. Some railroads never do.”

Pressing Deadline

NJ Transit, a driver of the state’s employment and high property values, faces tremendous pressure to regain efficiency.

Despite a December 2018 federal deadline to install emergency-braking technology, software bugs led the agency to suspend installations on 400 locomotives. The sole rail link to Manhattan, a century-old Amtrak tunnel beneath the Hudson River, is crumbling and President Donald Trump has balked at a federal cost-share to construct a second crossing.

NJ Transit has the nation’s second-highest number of train breakdowns, and operates a fleet that includes 50-year-old locomotives and more than 300 passenger cars built in the 1970s and 1980s. In 2017, inspectors repeatedly cited missing or broken latches that allowed heavy cabinet doors to swing free. One car’s bathroom door was secured with duct tape.

“It is taking us longer to get parts,” Robert Lavell, the NJ Transit rail operations director who’s retiring in March, told lawmakers last month. In earlier testimony before that committee, which is investigating the railroad’s finances and slipping service, NJ Transit management said it was short-staffed throughout the system.

On Feb. 15, a week after Bloomberg obtained the inspection reports, Murphy told reporters that NJ Transit is meeting with suppliers to get more inventory and hiring technicians to step up repairs and inspections.

“The thousands of rank-and-file workers who show up every day at NJ Transit, some of whom are with us today, are not to blame,” Murphy said at the Trenton rail station. “In many ways they are the ones who have kept this system running and safe in the absence of real leadership and vision.”

February 6, 2018

Facebook Says Business Stays Strong Amid News Feed Changes

by MeDaryl • Cars • Tags: Advertising, Canada, Design, FACEBOOK INC-A, law, Mark Elliot Zuckerberg, New York, Russia, Social Media, Taxes, technology

Facebook Inc. may be making major changes aimed at fixing its impact on society. But its business is as safe as ever.

That’s the message from executives after an adjustment to the news feed algorithm — the company’s biggest moneymaker — prompted investor concerns that user attention could drop off, curbing demand for advertising. Yes, the time spent on Facebook in the quarter declined by 5 percent, but it was by Facebook’s design, executives said, in order to promote a higher quality experience. Yes, there was a dip in North American user numbers for the first time ever, but only because Facebook is already so dominant in the region.

The company reported another record quarter of revenue, boosted by mobile advertising, and said they don’t see the North American user decline as an ongoing trend. Executives also said Facebook advertisers have responded positively to the changes so far and predicted an increase in the number of ad impressions this year across the platform.

Facebook’s year was marred by challenges that led Chief Executive Officer Mark Zuckerberg to rethink the company’s main product, the news feed, to focus on “meaningful” social interaction. He said on Wednesday that changes in the fourth quarter cut the number of viral videos in people’s feeds and reduced time spent on the service by roughly 50 million hours a day.

“The most important driver of our business has never been time spent by itself, it’s the quality of the conversations and connections,” Zuckerberg said.

Facebook reported 1.4 billion daily active users in the fourth quarter, slightly missing a 1.41 billion average estimate from three analysts surveyed by Bloomberg. That amounted to the slowest user growth on record. DAUs in the U.S. and Canada declined from 185 million in the third quarter to 184 million in the period, the company also reported.

The shares rose 1.3 percent to $189 in late trading, after closing in New York at $186.89.

Slowing Growth

Users are joining the platform at the slowest rate on record

Source: Bloomberg

Fourth-quarter revenue rose to $12.97 billion, beating the $12.6 billion average analysts’ estimate and demonstrating dominance in mobile advertising.

The company reported net income of $4.3 billion, or $1.44 a share, in the period. Recent U.S. tax law changes forced Facebook to set aside more money to pay taxes, cutting earnings by 77 cents a share, it said. Without that, profit would have been $2.21 a share. Analysts were looking for $1.95 a share, according to data compiled by Bloomberg.

Facebook has become more self-critical since revealing a campaign by Russia to spread political discord around the 2016 presidential election that reached an estimated 150 million U.S. users on Facebook and Instagram. The company has been cooperating with Congress, while publicly questioning whether social media is good for democracy and mental health.

Russia’s operation — in the U.S. and ahead of other elections around the world — was made easier by incentives on Facebook that reward attention-grabbing content. Zuckerberg is looking to tweak the news feed to emphasize news and advertising from trustworthy sources, local providers and authentic accounts.

December 9, 2017

Gun Buying Loses the Fear Factor Under Trump, Sparking Price War

by MeDaryl • Cars • Tags: AMERICAN OUTDOOR BRANDS CORP, Barack Obama, business, Donald John Trump, earnings, Environment, Industrials, markets, New York, P James Debney, politics, S&P 500 INDEX, War

A bad dream for U.S. firearms producers has become reality: The fear-based motivation for gun purchases has evaporated and is being replaced by bargain hunting.

A price war has broken out across the gun industry with no end in sight. Sales and profits are dropping. American Outdoor Brands Corp., the maker of Smith & Wesson weapons, slashed its annual profit target by 45 percent.

“There was some fear-based buying that would take place from time to time. There is no fear-based buying right now,” James Debney, chief executive officer of American Outdoor, said in a conference call. Heavy discounting is “the primary driver for a consumer who wants to acquire a firearm.”

Blame the new business environment on Donald Trump, a self-avowed champion of gun owners and the right to bear arms. Weapons sales often spiked after mass shootings during President Barack Obama’s administration, as some customers fretted that lawmakers would respond with tougher gun-control measures.

Gunmakers aren’t reducing production enough to meet lower demand, and inventories at independent dealers is high, Debney said. He cited competitors offering rebates of $150 on sport rifles, a level of discounting he called unsustainable.

“We have to defend our position and weather the storm — ultimately until there’s a better balance between those production rates and the consumer demand,” he said after the close of regular trading Thursday. It’s unclear how long the discounting will continue, he said.

Shares Tumble

American Outdoor plunged 12 percent to $13.15 at 12:54 p.m. in New York after falling to $12.46, its lowest intraday since April 2015. The stock dropped 29 percent this year through Thursday, while the S&P 500 Index climbed 18 percent. Rival Sturm Ruger & Co. declined as much as 7.8 percent Friday, the most intraday in four months.

American Outdoor slashed its earnings target for the fiscal year through April to a range of 57 cents to 67 cents a share from $1.04 to $1.24, citing the need for price cuts to maintain market share. The Springfield, Massachusetts-based maker of the M&P Shield 9 mm handgun cut its sales goal to $670 million to $675 million. It previously forecast $700 million to $740 million.

“We believe the industry environment will remain difficult for several more months, if not longer,” Chris Krueger, an analyst with Lake Street Capital Markets, said in a note.

A record number of background checks, a proxy for gun purchases, during Black Friday had sparked investor hopes that gun demand had hit bottom. But that holiday buying was merely a sign that consumers were waiting for steep bargains, Debney said. The National Instant Criminal Background Check system dropped 12 percent in November from a year earlier.

Tracking Demand

The industry eventually will match production with gun demand, and the large discounts will diminish, Debney said. Consumers are still driven to buy weapons on concerns over their personal safety, he said. The big unknown: What is the long-term level of demand under an administration that doesn’t spark concern over possible firearm regulation.

“Where do we settle out in terms of the size of the market?” Debney said. “We just don’t know.”

December 3, 2017

Oil Slips From Two-Year High as Doubts Over OPEC Meeting Linger

by MeDaryl • Cars • Tags: Economic Research, Generic 1st 'CL' Future, INTERCONTINENTAL EXCHANGE IN, markets, New York, New York Mercantile Exchange, Organization of the Petroleum Exporting Countries, Russia, TD SECURITIES, texas, Toronto

A rising U.S. rig count and continuing uncertainty over OPEC’s strategy to extend supply cuts pushed oil prices lower following a week in which they hit their highest close in more than two years.

Futures slid as much as 2.4 percent in New York after rising 1.6 percent Friday to the most since June 2015. OPEC and Russia, partners in the oil-cuts deal, have crafted the outline of an agreement to extend curbs to the end of next year, according to people involved in the discussions. But doubts remain over the size of the reductions after the current accord expires in March, as well as which exit strategy the group will adopt. Meanwhile, drillers targeting crude in the U.S. added nine rigs last week.

"What we’re seeing is cold feet heading into the OPEC meeting," said Ashley Petersen, lead oil market analyst at Stratas Advisors in New York. "After exuberance over three weeks now, investors are getting nervous. That’s going to be the dominant driver regardless of the weekly fundamental data."

Oil has advanced about 23 percent since the start of September on speculation the Organization of Petroleum Exporting Countries and its allies will prolong output reductions to drain a global glut. OPEC and Russia are still hammering out crucial details for an extension, the people involved in the conversations said last week. Russia wants the deal to include new language that would link the size of the curbs to the health of the oil market, they said.

Click for a TOPLive Q&A with oil strategist Julian Lee at 9 a.m. New York time.

"The consensus is building that Russia may not want to have a situation where they’re ready to restrict supply without any qualifications," Bart Melek, the global head of commodity strategy at TD Securities in Toronto, said by phone. "They don’t want to move prices too high to incentivize unconventional producers to produce."

West Texas Intermediate for January delivery settled at $58.11 a barrel on the New York Mercantile Exchange, after falling to an intraday low of $57.55. News that Cushing, Okla., crude inventories fell by 2 million barrels last week helped spur the mid-day rebound.

"That’s almost the primary reason that we’re so close to $60 in WTI," Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts, said by telephone.

Still, trepidation about Thursday’s gathering in Vienna will continue to keep crude lower, Lynch said. "There’s fear that stronger prices will lead to changes in production quotas."

Read our OPEC Reality Check to see what’s at stake for each producer

Brent for January delivery settled at $63.84 a barrel on the London-based ICE Futures Europe exchange, after rising 1.8 percent last week. The global benchmark crude traded at a premium of $5.73 to WTI.

Oil-market news:

Transcanada plans to resume service on its Keystone crude pipeline Nov. 28 at reduced rates, after shutting line Nov. 16 because of a leak in South Dakota.
Crude inventories in Cushing, Okla., fell 2 million barrels in the week ended Nov. 24, according to a forecast compiled by Bloomberg.
Iraq’s hitting a couple of speed bumps as it gears up for 2018 oil sales, after making unprecedented moves to sell one-time cargoes this year in addition to supplies under long-term contracts.
OECD fuel inventories were 140 million barrels above the five-year average in October, down from record of more than 380 million, according to the text of a speech on Monday by OPEC Secretary General Mohammad Barkindo.

November 30, 2017

What Bitcoin Watchers Are Saying After the Surge Past $10,000

by MeDaryl • Cars • Tags: Arthur Hayes, Asia, Bitcoin, BITMEX, Cryptocurrency, Currency, Hong Kong, Jehan Chu, New York, technology, Wall Street

Bitcoin entered uncharted territory on Wednesday after breaching $10,000 for the first time, leaving investors to wonder how long the rally will go — and whether it will end in tears.

The digital currency climbed as much as 4.4 percent to a record $10,379.53 during Asia trading hours, capping a more than 10-fold increase this year. Its market value has surpassed $176 billion, according to Coinmarketap.com.

Here’s what bitcoin watchers are saying about the dizzying rally.

Arthur Hayes at BitMEX

“They said it was a bubble at $1,000, they said it was a bubble at $5,000 and they said it was a bubble at $10,000,” said Hayes, chief executive officer and co-founder of Hong Kong-based BitMEX, a cryptocurrency derivatives venue. “Shorting anything is a very dangerous game, especially if you’re shorting into a transformational monetary system. These transformational experiences happen once every few hundred years and are extremely chaotic.”

Hayes, who was speaking on the phone from New York after attending the Consensus: Invest cryptocurrency conference, said he saw more people wearing suits than jeans and hoodies — a sign of growing interest on Wall Street.

“The fear of missing out is becoming stronger and stronger,” he said. “The traditional asset manager or investor, banker who has probably poo-pooed bitcoin the past few years is now paying upwards of thousands of dollars to hear about how they can get involved in this new industry.”

Hayes said bitcoin may reach $50,000 by the end of 2018.

Stephen Innes at Oanda

“I’d be a little bit worried on a falling knife scenario,” said Innes, head of trading for Asia-Pacific at Oanda Corp. in Singapore. “Are current investors prepared for this? No, of course not.”

Longer term, cryptocurrencies will gain more credibility as CME Group Inc. starts selling bitcoin futures and other mainstream institutions get involved, Innes said. For now, he sees a short-term pullback of 3 percent to 6 percent as investors take stock of how much they’ve gained.

“When we’re starting to get into these crazy numbers, I’m a little bit fearful that retail traders are jumping in under the false guise of this will run on forever,” he said. “We know things never go in a straight line.”

Jehan Chu at Kenetic Capital

“If you look at the kind of trajectory not just of the currency and the price, but really of the mind share among influencers, among governments, among central banks, among enterprises — that’s actually where I see the real guideposts of where the price will go,” said Chu, managing partner at cryptocurrency fund Kenetic Capital in Hong Kong, who first bought bitcoin at about $1,100 in 2013.

“One of the main factors is the settling down of the civil wars that have been raging on,” Chu said, referring to intense debate within the industry over technology upgrades that resulted in the formation of a rival coin called bitcoin cash. “There’s much less drama at the moment at least. One side has disarmed and that has really provided a clear path ahead to show that the ecosystem can grow in a more predictable manner.”

Chu sees some risk of a correction, but not a major one, and said that high prices will ironically serve to draw more institutional interest.

Dave Chapman at Octagon Strategy

“Now, you’re getting an enormous amount of legitimacy and credibility in the bitcoin protocol,” said Chapman of cryptocurrency trading firm Octagon Strategy in Hong Kong. “Admittedly, there is an element of FOMO (fear of missing out). That’s not entirely healthy for the current market. There is a sizable amount of people investing in bitcoin purely on speculation.”

Chapman sees a correction coming, but is unsure how large it will be.

“I see possibly a correction but then also an immediate bounce-back just owing to the size of the market. People will double down and see it as a buying opportunity.”

Gavin Yeung at Cryptomover

“Owning a whole bitcoin is now a status symbol,” said Yeung, CEO of Hong Kong-based investment company Cryptomover. “We are coming to see that bitcoin itself is a Veblen good. The higher the price, the more desirable the product is to the general public.”

Lewis Fellas at Bletchley Park Asset Management

“The principal driver has been the proposed CME futures contract, which has really woken up Wall Street,” said Fellas, chief investment officer at Bletchley Park Asset Management, which invests in cryptocurrencies. “The secondary driver is media coverage. It’s fueling a fear-of-missing-out as we set successive new highs, luring people in for a quick profit ahead of the futures contract.”

The risk of a near-term retreat is real as regulators could still block or delay the proposed futures, Fellas said. “A delay or ‘no’ could easily trigger a 30 to 40 percent correction.”