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With hedge fund short positions near record highs and speculators at their least bullish in almost five years, oil prices have spurted higher in the early trading as the diplomatic gloves come off in The Middle East. Despite record levels of crude inventory around the world, WTI Crude is trading above $38, up over 3% from its $37.07 close on New Year's Eve. Algos ran the stops above last week's highs ($38.32) but for now prices are not as excited as many would have expected.

WTI tags last week's highs but is holding for now...

Submitted by Adam Taggart via PeakProsperity.com,

Actuary Gail Tverberg explains the tight correlation between the rates of GDP growth and growth in energy supply. For decades, energy has been becoming more costly to obtain, and instead of accepting lower GDP growth, we have been using debt to fund further energy exploration and extraction.

That strategy has diminishing returns, Tverberg warns. And we are close to the moment of reckoning: 

Submitted by John Rubino via DollarCollapse.com,

If 2015 was the year in which no investment strategy worked, 2016 is looking like the year in which all economic policies fail. Already, at what should be the blow-off peak of a long expansion, US corporate profits are instead rolling over:

Two months ago, and roughly 6 weeks before the Fed's first rate hike in 9 years, Janet Yellen warned that if the "outlook worsened, the fed might weight negative rates" adding that "negative rates could help encourage banks to lend."

With the Fed hiking rates in order to signal a "return of confidence" to the economy, one - the most important - aspect of a recovering economy continues to be absent: rising wages.

As the following chart showing the annual growth in wages of production and non-supervisory workers (who make up 83% of the US workforce) reveals, wage growth is not only well below the Fed's goal of 4.5%, at 1.7% it is below the Fed's goal of 2% inflation, suggestion that on a real basis wages would be declining if the Fed had attained its 2% inflation mandate.