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Updated: 9 hours 46 min ago

July 22/Huge increase in amount of gold standing at the comex for July at 20 tonnes: sets the stage for a wild August/Open interest rises to a record 221,246 for the entire complex/COT very bullish for gold as commercials try and rein in their shorts...

12 hours 49 min ago

Gold:1323.10 down $7.40

Silver 19.66  down 12 cents

In the access market 5:15 pm

Gold: 1322.50

Silver: 19.63

.

For the July gold contract month,  we had ANOTHER HUGE 323 notices served upon for 32,300 ounces. The total number of notices filed so far for delivery:  6391 for 639,100 oz or 19.878 tonnes

In silver we had 125 notices served upon for 625,000 oz.  The total number of notices filed so far this month for delivery:  2259 for 11,295,000 oz

 

Silver today at the comex recorded an all time record for open interest and yet the price is 29 dollars cheaper. It defies commodity law!

Last night, I was up again in the early hours when I saw the bankers continue with their raid.   I took a look at the daily bulletin which is an estimated OI and then I knew the reason for the raid:

  1. the high open interest for silver (and a record high) despite silver being 29 dollars cheaper when it had its former high OI in 2011. (Oi 220,587)
  2. the front July contract month in gold saw a huge gain in an amount standing. (31,000 oz). Now we have close to 20 tonnes standing in this a non active month.It sure looks like August will be exciting.

We are now entering options expiry month for gold and silver:

The comex options expiry on Tuesday July 26.

The OTC options in London expire Friday at noon July 29.

So expect downward drafts in gold and silver trading until both of these contracts expire.

Let us have a look at the data for today

.

Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 311.898 tonnes for a gain of 9  tonnes over that period

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In silver, the total open interest ROSE BY 659 contracts UP to 221,246, AND A NEW ALL TIME RECORD. THE OI ROSE WITH  THE  PRICE OF SILVER WHICH ROSE BY 20 CENTS IN YESTERDAY’S TRADING.In ounces, the OI is still represented by just over 1 BILLION oz i.e. 1.106 BILLION TO BE EXACT or 158% of annual global silver production (ex Russia &ex China).

In silver we had 125 notices served upon for 625,000 oz.

In gold, the total comex gold FELL BY 6,536 contracts despite the fact that gold ROSE in price YESTERDAY to the tune of $11.70. The total gold OI stands at 607,543 contracts.

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With respect to our two criminal funds, the GLD and the SLV:

GLD

we had no change  in gold inventory. /

Total gold inventory rest tonight at: 963.14 tonnes

SLV

we had no changes into the SILVER INVENTORY TO THE SLV

Inventory rests at 348.580 million oz.

First, here is an outline of what will be discussed tonight:

1. Today, we had the open interest in silver ROSE by 659 contracts UP to 221,246 as the price of silver ROSE BY 20 cents with YESTERDAY’S trading. The gold open interest FELL by 6536 contracts DOWN to 607,543 as  the price of gold ROSE by $11.70  YESTERDAY. As is their customer the open interest starts to obliterate as we approach the active contract month.

(report Harvey).

 

2 a) Gold/silver trading overnight Europe, Goldcore

(Mark OByrne/zerohedge

2b) COT report

(Harvey)

3. ASIAN AFFAIRS

 i)Late  THURSDAY night/FRIDAY morning: Shanghai closed DOWN 26.19 POINTS OR 0.86%/ /Hang Sang closed DOWN 36.22 OR 0.16%. The Nikkei closed DOWN 182.97 POINTS OR 1.09% Australia’s all ordinaires  CLOSED DOWN 0.241% Chinese yuan (ONSHORE) closed UP at 6.6745 /Oil ROSE to 44.84 dollars per barrel for WTI and 46.29 for Brent. Stocks in Europe ALL IN THE GREEN. Offshore yuan trades  6.6716 yuan to the dollar vs 6.6745 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS CONSIDERABLY AS CHINA TRIES TO STOP MORE USA DOLLARS LEAVING THEIR SHORES. 

REPORT ON JAPAN  SOUTH KOREA AND CHINA a) REPORT ON JAPAN

none today

b) REPORT ON CHINA

NONE TODAY

4 EUROPEAN AFFAIRS

i)The British pound was pummeled today almost 200 basis points as its PMI crashed from 52.1 down to 491 suggesting a .4% GDP contraction.

( zero hedge)

ii)Then the Euro crashes to post BREXIT lows: as investors are losing faith in the European economies:

( zero hedge)

iii)This is awful:  a shooting rampage in Munich with now 9 dead

( zero hedge)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

TURKEY

 

And now the fun begins as Erdogan formally requests the extradition of Gulen from the USA.  Turkey turns on the power at Incirlik:

( zero hedge)

6.GLOBAL ISSUES

With many attacks in France, Germany, Belgium, and the USA no wonder world’s airlines stocks are crashing at the worst at since the crisis of 2008

( zero hedge)

7.OIL ISSUES

i)With expectations of drilling and fracking forecasting to decline, service sector Schlumberger fires another 8,000 workers siting market conditions have worsened in second quarter.

( Schlumberger/zero hedge)

ii)Oil had a bad week culminating in at one point the WTI contract breaking into the 43 dollar handle.  We have outlined to you the huge glut on gasoline and that seems to be the central theme these past few days:

( zero hedge)

iii)This caused further deterioration in the oil fundamentals as more USA rigs entered the scene.  This is the highest jump in rigs since the crisis of 2008.

( zero hedge)

8.EMERGING MARKETS

none today

9.PHYSICAL STORIES

i)Craig Hemke describes the options expiry week and how the bankers always raid on gold and silver.  However Craig believes that their number is up

( Craig Hemke)

 

ii)Alasdair Macleod’s commentary for the week:

Is the rise in prices on stocks due to collapse in the purchasing power of money (currencies)  Find out in this incredible commentary!

( Alasdair Macleod)

iii)Academics now prove gold market rigging

( Chris Powell/GATA)

iv)Chris Powell debunks Gold seek’s article on no manipulation in the gold market:

( Chris Powell/GATA)

v)Russia adds 18.7 tonnes to its official reserves but China “added” 15 tonnes.

The Chinese addition is really gold held at Chinese banks that change their status each month to official.

(courtesy Lawrence Williams/Sharp’s Pixley)

 

10.USA STORIES WHICH MAY INFLUENCE THE PRICE OF GOLD/SILVER

i)After England reported a huge decline in PMI, surprisingly the USA showed a gain in manufacturing with the PMI rising to 52.9 form 51.3 on expectations of 51.9.

Surprisingly this was done with a higher USA dollar.  This is the first estimations known as the flash July PMI.  The more important data is the confirmed July PMI which comes next month.

( zero hedge)

 

ii)General Electric reports horrific numbers:

1.organic orders down 16%

2.equipment orders down 30%

3.aviation orders down 37%

4.power down 27%

and yet these “clowns” beat expectations.  Take a look and see how they mal-reported

( zero hedge)

 

iii) this week’s wrap up with this offering from Greg Hunter and Greg Mannarino:

( Greg Hunter/USAWatchdog) Let us head over to the comex: The total gold comex open interest  FELL TO AN OI level of 607,543 for a LOSS of 6,536 contracts DESPITE THE FACT THAT  THE PRICE OF GOLD ROSE BY $11.70 with respect to YESTERDAY’S TRADING We are now in the non active month of July. As I stated yesterday: “Somebody big is continually standing for the gold metal even though July is  generally a poor delivery month. The open interest for the front July contract stands at 374 for a LOSS of 429 contracts. We had 739 notices filed on yesterday, so we gained 310 contracts or an additional 31,200 gold ounces that will stand for delivery in this non active month of July. We  are again witnessing the same scenario as in May and June whereby the front delivery month increases in OI standing for metal or a slight contraction.  The next big active contract month is August and here the OI FELL by 30,663 contracts down to 243,010 as this month continues its wind down until first day notice for the August contract, Friday,July 29/2016: 1 week a way.  The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was  good at 275,618. The confirmed volume  yesterday (which includes the volume during regular business hours + access market sales the previous day was VERY GOOD at 329,493 contracts.The comex is not in backwardation. Today, we had a huge 323 notices filed for 32,300 oz in gold And now for the wild silver comex results. Total silver OI ROSE by 659 contracts from 220,587  up to 221,246.  We are now at an all time record high for silver open interest set today (221,246). The front active delivery month is July and here the OI fell BY 33 contracts down to 348. We had 28 notices served on YESTERDAY so we lost 5 silver contracts or an additional 25,000 oz that will not stand for delivery. The next non active month of August saw it’s OI fell by 0 contracts down to 467. The next big active month is September and here the OI FELL by 33 contracts DOWN to 159,924. The volume on the comex today (just comex) came in at 47,544 which is VERY GOOD. The confirmed volume yesterday (comex + globex) was EXCELLENT at 66,760. Silver is not in backwardation. London is in backwardation for several months. We had 125 notices filed for 625,000 oz. in silver JULY contract month :INITIAL standings for JULY July 22. Gold Ounces Withdrawals from Dealers Inventory in oz   nil OZ Withdrawals from Customer Inventory in oz  nil  nil Deposits to the Dealer Inventory in oz  NIL

  Deposits to the Customer Inventory, in oz   3,118.550 OZ BRINKS No of oz served (contracts) today 323 notices  32300 oz No of oz to be served (notices) 51 contracts 5100 oz Total monthly oz gold served (contracts) so far this month 6391 contracts (639100 oz) (19.878 tonnes) Total accumulative withdrawals  of gold from the Dealers inventory this month   NIL Total accumulative withdrawal of gold from the Customer inventory this month   595,321.8 OZ Today we had 0 dealer DEPOSITS total dealer deposit:NIL   0z Today we had  0 dealer withdrawals: total dealer withdrawals:  nil oz We had 1 customer deposit: i) Into Brinks:  3118.550 oz Total customer deposits: 3118.550 oz Today we had 0 customer withdrawal: Total customer withdrawals nil  oz Today we had 0 adjustment: Today, 0 notices was issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 323 contracts of which 0 notices was stopped (received) by JPMorgan dealer and 320 notices was stopped (received)  by JPMorgan customer account.  To calculate the initial total number of gold ounces standing for the JULY contract month, we take the total number of notices filed so far for the month (6391) x 100 oz  or 639,100 oz , to which we  add the difference between the open interest for the front month of JULY  (374 CONTRACTS) minus the number of notices served upon today (323) x 100 oz   x 100 oz per contract equals 644,200 oz, the number of ounces standing in this active month.    Thus the INITIAL standings for gold for the JULY. contract month: No of notices served so far (6391) x 100 oz  or ounces + {OI for the front month (374) minus the number of  notices served upon today (323) x 100 oz which equals 644,200 oz standing in this non   active delivery month of JULY  (20.037 tonnes). We  gained  31,000 gold ounces that will stand for metal in this non active month of July. SOMEBODY WAS IN URGENT NEED OF PHYSICAL GOLD TODAY. Since the comex allows GLD shares to be used for settling, it may take quite a while for the physical gold to enter the comex vaults.  So far I have seen little evidence of any settling of contracts but I will continue to monitor it for you.    We now have partial evidence of gold settling for last months deliveries We now have  +  6.889 TONNES FOR MAY + 49.09 TONNES FOR JUNE +  20.034 TONNES FOR JULY + 12.3917 tonnes (April) +2.2311 tonnes (March) + 7.99 (total Feb)- .940 (probable delivery on March 1) tonnes -.0434 tonnes (March 11,12,17,18) + March 31: 1.2470 and then  April 1,2: – .0006 tonnes  and last week April 16.3203 and April 22 .(0009 tonnes) + april 29  .205 tonnes + May 5:  3.799 and May 6: 1.607 tonnes –MAY 12  .0003- May 18: 1.5635 tonnes-May 19/   2.535 tonnes-May 27 .0185 – .024 TONNES MAY 31 -jUNE 4: .5044 ; june 10 -.0008 / June 22:0.48 tonnes /June 23: 0489 tonnes, June 24..018; june 29 .036 tonnes; JUNE 30 2.49 /july 1 17.78 tonnes = 51.004 tonnes still standing against 50.893 tonnes available.  Total dealer inventor 1,636.227.922 tonnes or 50.893 tonnes Total gold inventory (dealer and customer) =10,027,524.393 or 311.898 tonnes    Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 311.898 tonnes for a  gain of 9  tonnes over that period.    THE GOLD COMEX IS AN ABSOLUTE FRAUD. THE USE OF KILOBARS AND EXACT WEIGHTS MAKES THE DATA TOTALLY ABSURD AND FRAUDULENT!!

To me, the only thing that makes sense is the fact that “kilobars” are entries or hypothecated gold sent to other jurisdictions so that they will not be short in their derivatives like in England.  This would be similar to the gold used by Jon Corzine. If this is the case, this would be the greatest fraud perpetrated on USA soil.

     end GOOD ACTIVITY AGAIN INSIDE THE SILVER COMEX And now for silver   JULY INITIAL standings  July 22.2016 Silver Ounces Withdrawals from Dealers Inventory NIL Withdrawals from Customer Inventory  250,011.200 OZ (jpm) Deposits to the Dealer Inventory 596,740.600 oz CNT Deposits to the Customer Inventory  nil OZ No of oz served today (contracts) 125 CONTRACTS  (625,000 OZ) No of oz to be served (notices) 223 contracts 1,115,000 oz) Total monthly oz silver served (contracts) 2259 contracts (11,295,000 oz) Total accumulative withdrawal of silver from the Dealers inventory this month  NIL oz Total accumulative withdrawal  of silver from the Customer inventory this month  5,668,931.1 oz today we had 1 deposit into the dealer account i) into CNT:  596,740.600 oz total dealer deposit 596,740.600 oz we had 0 dealer withdrawal: : total dealer withdrawals:  NIL oz we had 1 customer withdrawals: i)Out of JPM:  250,011.200 oz Total customer withdrawals: 250,011.200 oz We had 0 customer deposit: total customer withdrawals:nil. oz        we had 0 adjustments The total number of notices filed today for the JULY contract month is represented by 28 contracts for 140,000  oz. To calculate the number of silver ounces that will stand for delivery in JULY., we take the total number of notices filed for the month so far at (2259) x 5,000 oz  = 11,295,000 oz to which we add the difference between the open interest for the front month of JULY (348) and the number of notices served upon today (125) x 5000 oz equals the number of ounces standing    Thus the initial standings for silver for the JULY contract month:  2259(notices served so far)x 5000 oz +(348 OI for front month of JULY ) -number of notices served upon today (215)x 5000 oz  equals  12,410,000 oz  of silver standing for the JULY contract month. We lost 5 contracts or 25,000 ounces will not stand in this active month of July.   Total dealer silver:  28.967 million (close to record low inventory   Total number of dealer and customer silver:   155.368 million oz (close to a record low) The total open interest on silver is NOW AT its all time high with the record of 221,246 being set July 22.2016.  The registered silver (dealer silver) is NOW NEAR  multi year lows as silver is being drawn out at both dealer and customer levels and heading to China and other destinations. The shear movement of silver into and out of the vaults signify that something is going on in silver. END And now the Gold inventory at the GLD July 22/ no change in gold inventory at the GLD/Inventory rests at 963.14 tonnes July 21/ a large withdrawal of gold inventory to the tune of 2.08 tonnes/Inventory rests at 963.14 tonnes July 20./no changes in gold inventory at the GLD/Inventory rests at 965.22 tonese July 19/no change in gold inventory at the GLD/Inventory rests at 965.22 tonnes July 18./ a good sized deposit of 2.37 tonnes of gld into GLD/this is a paper gold entry/inventory rests at 965.22 tonnese July 15./no change in gold inventory at the GLD/Inventory rests at 962.85 tonnes July 14/a good sized withdrawal of 2.37 tonnes from the GLD/this would be a “paper withdrawal”/inventory rests tonight at 962.85 tonnes.. July 13/ we had a huge paper withdrawal of 15.98 tonnes of gold from the GLD/inventory rests at 965.22 tonnes. July 12/we had no changes in gold inventory at the GLD/Inventory rests at 981.20 tonnes July 11/no changes in gold inventory at the GLS/Inventory rests at 981.20 tonnes JULY 8/ A  good sized deposit of 2.91 tonnes into the GLD/Inventory rests at 981.20 July 7/a good sized withdrawal of 4.15 tonnes from the GLD/Inventory rests at 978.29 tonnes (this was nothing but a paper entry/no physical moved) JULY 6/WHAT A FRAUD!! A MASSIVE 28.53 TONNES OF PAPER GOLD ADDED INTO THE GLD July 5/no change in inventory/rests tonight at 982.44 July 1/a huge change in the gold inventory/ a deposit of 3.86 tonnes/rests tonight at 953.91 tonnes JUNE 30/no change in gold inventory /inventory rests tonight at 950.05 tonnes June 29/ a good sized deposit of 2.67 tonnes/inventory rests at 950.05 tonnes June 28/ a huge deposit of 13.067 tonnes into inventory/new inventory rests so far at 947.38 tonnes.  This was a paper addition June 27/a huge deposit of 18.415 tonnes into the GLD inventory/the new inventory rests at 934.313 tonnes.  The addition was a paper addition and not physical xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx July 22 / Inventory rests tonight at 963.14 tonnes

end

Now the SLV Inventory July 22/we had no change in silver inventory at the SLV.Inventory rests at 348.580 million oz/ July 21/no change in silver inventory at the SLV/Inventory rests at 348.580 million oz July 20/no change in silver inventory at the SLV/Inventory rests at 348.580 million oz July 19/no change in silver inventory at the SLV/Inventory rests at 348.580 million oz July 18/no change in silver inventory at he SLV/inventory restss at 348.580 million oz July 15/ no change in  silver inventory at the SLV/Inventory rests at 348.580 million oz July 14/no changes in silver inventory at the SLV/Inventory rests at 348.580 million oz/ July 13./ a huge addition of 5.187 million oz into silver inventory at the SLV/ this is a paper addition as inventory rests at 348.580 million oz July 12/ a huge addition of 1.94 million oz into silver inventory at the SLV/a “paper” addition/inventory rests at 343.393 million oz July 11/no changes in silver inventory/rests tonight at 341.453 million oz JULY 8/no change in silver inventory/rests tonight at 341.453 million oz July 7./no change in silver inventory/inventory rests at 341.453 million oz JULY 6/AND ANOTHER FRAUD!! A MASSIVE 7.909 MILLION OZ ADDED INTO THE SLV/INVENTORY RESTS AT 341.453 MILLION OZ july 5/no change in silver inventory/inventory rests at 333.554 milllion oz july 1/no change in silver inventory/inventory rests at 333.544 million oz JUNE 30/no changes in silver inventory/inventory rests at 333.544 million oz June 29/ a small deposit of 760,000 oz/Inventory rests tonight at 333.544 million oz/ June 28/no change in silver inventory/rests tonight at 332.784 million oz June 27/ a small deposit of 570,000 oz in the SLV inventory/Inventory rests at 332.784 million oz . July 22.2016: Inventory 348.580 million oz end At 3:30 pm we receive the COT report First let us head over to the gold COT Gold COT Report – Futures Large Speculators Commercial Total Long Short Spreading Long Short Long Short 366,871 80,960 75,151 119,433 434,910 561,455 591,021 Change from Prior Reporting Period -11,210 342 -3,977 -3,825 -13,800 -19,012 -17,435 Traders 197 95 98 54 58 309 206   Small Speculators   Long Short Open Interest   55,614 26,048 617,069   3,061 1,484 -15,951   non reportable positions Change from the previous reporting period COT Gold Report – Positions as of Tuesday, July 19, 2016 A rather good COT report: Our large specs; Those large specs that have been long in gold pitched a huge 11,210 contracts and were fleeced again by the crooked bankers Those large specs that have been short in gold added 342 contracts to their short side. Our commercials; Those commercials that have been long in gold pitched 3825 contracts from their long side Those commercials that have been short in gold covered a huge 13,800 contracts from their short side. Our small specs: Those small specs that have been long in gold added 3061 contracts to their long side Those small specs that have been short in gold added 1484 contracts to their short side . Conclusions; commercials go net long by another 9975 contracts/ and thus very bullish for gold. Something is bothering our commercials And now for the silver COT: Silver COT Report: Futures Large Speculators Commercial Long Short Spreading Long Short 120,839 26,449 21,362 50,379 156,634 6,463 -275 1,747 -3,656 2,479 Traders 119 60 42 34 43 Small Speculators Open Interest Total Long Short 219,206 Long Short 26,626 14,761 192,580 204,445 35 638 4,589 4,554 3,951 non reportable positions Positions as of: 174 128 Tuesday, July 19, 2016   © Silve Our large specs: Those large specs that have been long in silver added 6463 contracts to their longs Those large specs that have been short in silver covered a tiny 275 contracts from their short side. Our commercials; Those commercials that have been long in silver pitched a huge 3656 contracts from their long side. Those commercials who are short in silver added 2479 contracts to their short side as silver headed for a record OI of 219,206. Our small specs: Those small specs that have been long in silver added a tiny 35 contracts to their long side Those small specs that  have been short in silver added 638 contracts to their short side. Conclusions: Our commercials had no choice but to add to their net shortfall as the OI got to record levels..However it is bearish that the bankers must continue to raid so they can excise their huge OI. END NPV for Sprott and Central Fund of Canada 1. Central Fund of Canada: traded at Negative 4.5 percent to NAV usa funds and Negative 4.6% to NAV for Cdn funds!!!!  (the discount is starting to disappear) Percentage of fund in gold 59.0% Percentage of fund in silver:39.8% cash .+1.2%( July 22/2016).  2. Sprott silver fund (PSLV): Premium falls  to -0.04%!!!! NAV (July22/2016)  3. Sprott gold fund (PHYS): premium to NAV  falls TO  0.63% to NAV  ( July 22/2016) Note: Sprott silver trust back  into NEGATIVE territory at -0.04% /Sprott physical gold trust is back into positive territory at +0.63%/Central fund of Canada’s is still in jail.      

end

And now your overnight trading in gold,FRIDAY MORNING and also physical stories that may interest you: Trading in gold and silver overnight in Asia and Europe Mark O’Byrne/David Russell Is Gold Set To Hit $1,500 Per Ounce? by GoldCore Jul 22, 2016 7:37 AM

Rising macroeconomic risks, low real interest rates, and a decline in the dollar versus emerging market currencies are major price catalysts for gold.

Since hitting its high of over $1,900 an ounce in 2011 after a 12 year bull run, gold fell steadily until 2015 when it reached a low near $1,000. However, this year alone we have seen a 25% increase in the yellow metal. It hit a high of $1,370 pre-Brexit and while this new bull run seems to be currently taking a breather, many analysts feel that there is still plenty of steam left in this rally.

An article in Forbes today cites continued stimulus measures by Central Banks and the current under-bought nature of gold as being indicative of a prolonged rally to come for gold.

You can read the full article here 

 

Gold and Silver Bullion – News and Prices

Gold holds on to overnight gains as stocks, dollar retreat (Reuters)

Gold Rebounds as BoJ, ECB Eye Further Easing (Marketpulse)

Gold futures settle higher after touching a 1-month low (Marketwatch)

Strong U.S. home sales, low layoffs highlight economy’s strength (Reuters)

Gold Daily and Silver Weekly Charts – Comex Options Expiry and FOMC Next Week (24hgold)

How low interest rates are crippling capitalism (Moneyweek)

China’s Plan B Is About To Shock The World And The Gold Market (Kingworldnews)

SILVER TODAY – Room seen below while prices attempt to form a base (Bulliondesk)

Gold Prices (LBMA AM)

22 July: USD 1,323.20 ., EUR 1,199.216 & GBP 1,005.103 per ounce
21 July: USD 1,322.00 ., EUR 1,199.318 & GBP 1,000.754 per ounce
20 July: USD 1,325.60, EUR 1,204.308 & GBP 1,005.865 per ounce
19 July: USD 1,332.20, EUR 1,203.376 & GBP 1,009.042 per ounce
18 July: USD 1,326.15, EUR 1,200.298 & GBP 1,000.050 per ounce
15 July: USD 1,330.50, EUR 1,194.789 & GBP 994.150 per ounce
14 July: USD 1,325.705, EUR 1,192.99 & GBP 1,001.96 per ounce

Silver Prices (LBMA)

22 July: USD 19.70, EUR 17.87 & GBP 15.03 per ounce
21 July: USD 19.34, EUR 17.55 & GBP 14.66 per ounce
20 July: USD 19.70, EUR 17.88 & GBP 14.95 per ounce
19 July: USD 19.99, EUR 18.07 & GBP 15.18 per ounce
18 July: USD 19.72, EUR 17.83 & GBP 14.89 per ounce
15 July: USD 20.14, EUR 18.08 & GBP 15.06 per ounce
14 July: USD 20.25, EUR 18.23 & GBP 15.15 per ounce


Recent Market Updates

– Why Italy’s bank crisis could be a ‘ticking time bomb’
– Gold Holds Near Two-Week Low as Risk Appetite Rises on U.S. Data
– IMF Scraps Forecast for Global-Growth Pickup on Brexit Fallout
– Gold, Trump and Rates: Bank That Foresaw Rally Flags $1,500
– Gold Lower After Central Bank’s Surprise Move
– “We Are On the Cusp of an Explosion in the Silver Price” – John Embry

– Stocks Rally – Is Brexit Systemic Risks Contained?
– Britain has a new prime minister – here’s what that means for you
– Metals Caught Between Global Gloom, U.S. Job Gains as Gold Slips
– Central Bank Resumes Monthly Gold Buying in Bid to Diversify Reserves
– Property Fund Turmoil in the UK has Eerie Echoes of Bear Stearns
– “In Gold We Trust” Annual Report – New Bull Market “Emerging”

 

end

 

Craig Hemke describes the options expiry week and how the bankers always raid on gold and silver.  However Craig believes that their number is up

(courtesy Craig Hemke/)

 

A Timeline For The Next Rally In Gold By Turd Ferguson | Thursday, July 21, 2016 at 11:27 am

We’ve been watching for two weeks as prices have once again been pushed backward into expirations. However, the pattern calls for a renewed up trend to begin as soon as next week. Is it possible to connect the dots and project that far out? Yes!

As we’ve been following for the past two weeks, the USDJPY has now rallied seven points or 7% in just eight days as Krazy Kuroda in Japan has promised to buy 1T yen worth of new government debt and perhaps even begin the “helicopter money” plan of direct government debt monetization going forward.

The correlation between the yen and gold has been present for years and we have monitored it closely since 2014. As a reminder, here’s how it looks in 2016:

This unexpected rally in the USDJPY (the inverse of the yen shown above) has conveniently helped the market-making Bullion Banks to manage their positions into the front-and-delivery month August gold expirations next week. Here’s the calendar:

Tuesday, July 26 August gold option expiration

Thursday, July 28 – August gold contract “expiration” as it goes “off the board”

Friday, July 29 – August gold First Notice Day as August gold trades only with 100% margin and in its “delivery” phase

Previously in 2016, there’s a clear pattern of price management and selloffs as front-and-delivery month contracts moved toward expiration. As you can see below, the latter stages of March (ahead of April) and May (ahead of June) saw declines similar to what are seeing now:

But more importantly, look at the price action while “deliveries” were taking place this year. During the calendar months of February, April and June, gold has soared anywhere from 7% to 12%! Could August be setting up for a similar move? Yes!

And what, besides the end of the August expirations next week could prompt such a turnaround? Most likely, another change in sentiment and trend in the USDJPY. And what might cause that shift? Two events that will occur within 36 hours of each other next Wednesday and Friday:

Wednesday, July 27 – FOMC meeting ends with “Fedlines” announced at 2:00 pm EDT. No rate changes!

Friday, July 29 – The Bank of Japan meets and releases its latest QE plans. However, with the USDJPY already having moved over 7% ahead of this “news”, this sets up as a classic “buy-the-rumor, sell-the-news” event. The thought here is that the USDJPY then will resume its downtrend in early August. See link here: http://www.reuters.com/article/us-boj-markets-idUSKCN10032J

And the USDJPY has already reached a major point of resistance on its chart. This, too, hints at a turnaround soon and continuation of the downtrend:

So, if we’re looking at a reversal and continuation of gold’s 2016 uptrend in August, how far might the next leg up take price. For an answer, we’re going to consult another chart.

Back in February, we started following an important breakout on gold’s weekly chart. The chart below is from Friday, March 7 and shows gold finally breaking out from its nearly 3-year downtrend:

What happened next? Well, as noted above, March was an “expiration” month for the April Comex contract AND, even more importantly, a breakout of this 3-year trend was something that The Banks wanted to avoid. By the end of the month, the chart looked like this:

Eventually, though, the falling USDJPY and the surging amount of global debt with negative interest rates served to drive gold even higher. By the middle of June, it became clear that The Banks were going to lose this fight. The Brexit vote that followed only served to seal their fate:

The last remaining line of defense for The Banks and their maintenance of a downtrend in gold was violated with the weekly close back on Friday, July 8. (Again, what an interesting coincidence that Kuroda’s unexpected announcements came before trading resumed the following Monday, July 11.) Here’s a chart we posted with that day’s podcast review:

As you can see, it should have been clear to any objective observer that gold had bottomed and a renewed bull market had begun. That The Banks have used the USDJPY strength and the Spec liquidation surrounding August contract expirations to their advantage should, therefore, come as no surprise. They are attempting the same block-and-stall routine that they put on gold back in March when it broke out of its 3-year down channel. Therefore, expect the same fight now. Though we should expect price improvement and a renewed rally in August, do not be surprised if it takes until October for gold to really get cooking to new highs. Again, the March to May action around the earlier breakout is your guide.

So, summing up, what should we expect going forward:

  • Further choppy to downward price action into late next week. It’s still possible that gold could trade as low as $1285 and back near its 50-day moving average before bottoming. This area has proven as support all year.
  • A renewed rally in August back to near, but likely not exceeding much, the highs of late June and early July. Something between $1370 and $1390. Talk will begin to spread that gold has seen a “double top”.
  • Another tumble in mid-late September as the next front and delivery month (October) comes off the board, However, October is never a big volume or big “delivery” month. Instead, most of the action after August typically shifts into the December contract. Therefore, following the 2016 pattern, any dropoff in September should be more shallow than what we’re seeing at present.
  • Then, finally, a breakout to new 2016 highs in October and November. This year-end rally  should take gold all the way back to near the April 2013 manipulated breakdown level of $1525. Let’s call it $1475-$1525.

So there you go. That’s what we expect. If I’m proven correct, I’ll gladly take all the adulation that comes this way. If we’re wrong…well, I’m not eating my hat again. That almost killed me last time.

Have a great day,

TF

end

Alasdair Macleod’s commentary for the week:

Is the rise in prices on stocks due to collapse in the purchasing power of money (currencies)  Find out in this incredible commentary!

(courtesy Alasdair Macleod)

The real message from asset inflation BY ALASDAIR MACLEOD

GOLDMONEY INSIGHTS JULY 21, 2016

The earliest signs are developing of hyperinflation, more correctly described as a collapse of the purchasing power of all the major government currencies.

Central bankers are almost certainly unaware of this danger, partly because their chosen statistics fail to capture it, but mostly because conventional monetary economic theory is lacking in this regard.

This article draws on the evidence of extreme overvaluations in equities and bonds worldwide, and concludes the explanation lies increasingly in a greater perception of risk against holding cash, or bank deposits. Risk relationships between cash and assets are inverting, due to failing monetary policies and escalating counterparty risk with the banks.

There are of course subplots involved, such as the real and imagined rigging of markets by central banks, and the bullish confidence that gives to buyers and holders of investments. Then there is the unanimous assumption that interest rates must not and therefore will not be permitted to rise.

Extreme one-way bets aside, the overriding reason for valuation disparities is becoming more consistent with the downgrading of cash, rather than a revaluation of assets. If this was happening to money’s relationship with goods and services, economists would begin to worry about inflation, stagflation, and even hyperinflation.

Why asset inflation matters

Because today’s price inflation is mainly confined to assets, no one worries. Instead investors rejoice in the wealth effect. Assets are excluded from the consumer price indices, so the danger of a fall in the purchasing power of money in respect of assets does not appear to exist. This does not mean that the problem can be ignored. But if the reason behind rising markets is a flight from cash, we should begin to worry, and that point in time may have arrived. If so, we should stop rejoicing over our increasing wealth, and think about the future purchasing power of our currencies.

Confining the estimation of price inflation to selected finished goods and services is a myopic mistake. It was originally for econometric convenience that consumer purchases became so categorised, but it is misleading to assume that for the consumer there is any such clear categorisation between the purchase of different items. In pure economics there can be no distinction between the purchase of an item of food, a capital good, or the lending of money which is used by someone else to purchase capital assets and use as working capital. The exclusion of partially depreciated second-hand goods is equally illogical. All purchases are purchases, full stop.

Not only do the neo-Cambridge economists and econometricians of today ignore this fundamental error in their attempts to construct measures of price inflation, central bankers and the whole investment community make a further omission without even realising it, and that is to assume that money has a constant value in all transactions. This is hardly surprising, because we account in money, and we pay our taxes on profits measured in it.

These two important errors distort all economic analysis and can have serious consequences.

Asset inflation is increasingly spilling over into commodities, the feedstock for final goods. It has also been inflating services, for example driving up the wage rates in building trades and raising agency commissions. This effect has been developing since the last financial crisis began to recede, and has accelerated with the reversal of falling commodity prices. The official line, that there is almost no price inflation, is misleading markets, the general public, and economic planners themselves as well.

Investors act rationally

It is becoming clear that some investors are showing a growing preference for investment assets over bank deposits. Analysts unquestioningly believe that this preference is not a vote against money, but is driven by a desire to profit from investment. This is correct for regulated managers of mutual funds, who are required by their mandates to generate valuation profits in absolute or relative performance terms.

Others, particularly the very rich with a close eye on their own finances, are beginning to take a different view. They observe the share prices of the banks that owe them money, and worry. Private bankers in Europe are reportedly trying to persuade their very-rich customers not to withdraw substantial funds. Anyway, transferring deposits from one bank to another doesn’t protect you against systemic risk, so you must buy something, such as a short-dated government bond or gold, to get rid of your money and transfer the risk to others.

The principal danger to these wealthy investors is a pick-up in the inflation rate, but at the moment, talk is exclusively of deflation and systemic risk, not inflation. However, raw material prices have been rising noticeably this year, reversing the trend of the last few. Unless commodity prices start falling materially and soon, they are certain to drive up recorded price inflation, despite the lack of economic activity in the advanced economies. Eventually, central banks will have to respond by raising interest rates, undermining government bond markets and the valuation of all asset classes that refer to them.

The flight from cash, for the moment at least, reflects in large part systemic risks. However, we cannot say that a collapse of the banking system will definitely happen unless interest rates rise to reflect the falling purchasing power of fiat currencies. Only then can we be much more certain of a general financial immolation, accelerating the flight from bank deposits.

For the moment, markets have gone nap on deflation. Deflationary conditions are necessary for the future monetary expansion required to rescue the banks, the economy, or both. Most investors appear to be as sure of this outcome as they were that the UK would choose to remain in the EU. The error here is to have little or no understanding that price inflation can coexist with contracting business activity.

Monetary inflation, particularly when it becomes extreme, actually guarantees a contraction in economic activity, because it withdraws purchasing power from the masses. This is why the early warning signs of asset price inflation from a declining preference for money should be taken very seriously. And as the effect spreads into the consumer price index, so too will a wider rejection of money in favour of goods.

It could easily develop into what the Austrian economist, Ludwig von Mises, described as a crack-up boom, the final flight out of money in preference for goods. We are not yet hoarding toilet paper and baked beans, but the prospect that we will be driven to do so has already been signalled to us.

end

Academics now prove gold market rigging

(courtesy Chris Powell/GATA)

Vindicating GATA, academic study says central banks rig markets with gold lending

Submitted by cpowell on Thu, 2016-07-21 18:02. Section:

2:10p ET Thursday, July 21, 2016

Dear Friend of GATA and Gold:

Dirk Baur, formerly a finance professor at the University of Technology in Sydney, now professor of accounting and finance at the University of Western Australia in Perth, this month updated his 2013 study about gold market manipulation —

http://www.gata.org/node/13045

— and has incorporated much of GATA’s documentation. With that documentation in hand, Baur cites GATA and vindicates GATA’s work, concluding that secret gold lending by central banks has become their primary mechanism of controlling the gold market.

Baur’s study is titled “Central Banks and Gold” and he concludes it this way:

“The theoretical arguments for central bank gold price management are based on the connection of gold with fiat currency. Gold reserves are designed to build confidence in fiat currency. This confidence would be jeopardized if the price of gold increased by too much, which is the theoretical basis for control and management of the price.

“There is also an incentive for central banks to control the downside of gold prices and thus preserve the value of their gold reserves.

“The Central Bank Gold Agreement is clear acknowledgement of central banks’ potential price impact and evidence of coordinated and mostly hidden price and reserves management. In addition, the European Central Bank’s gold reserves and recent increases of emerging market central banks’ gold reserves are further evidence of the role of gold in central bank monetary policy beyond the ‘legacy’ gold holdings of the United States and many, mostly European central banks.

“Furthermore, the gold lending activities of central banks implicit in the gold leasing rate establish a link between central banks, bullion banks, and gold mining companies and imply an indirect and transferred gold price management. Gold lending is the basis for the gold carry trade, which is profitable in stable gold price regimes and provides market-based incentives to stabilize or control the gold price.

“In other words, the gold carry trade represents a market-driven suppression of the gold price based on the gold lending of central banks.

“Whilst there are strong economic arguments for central bank gold price management following the high inflation episode and the rising price of gold in the late 1970s, it is less clear why central banks would have ended such strategies rather abruptly in the 2000s.

“In contrast, the unwinding of the gold carry trade in the early 2000s offers an explanation for the significant price change between 2003 and 2011. Remarkably, whilst central bank gold lending can stabilize gold prices and the gold carry trade is creating a self-sustaining environment, gold lending is not effective in rising gold price regimes as in such regimes there is no market-based borrowing demand and the creation of such a demand would be too costly.

“This asymmetry in the ability to influence the price of gold does not only apply to gold lending but also to actual gold reserve sales and purchases. The empirical analysis of global central bank gold reserves changes illustrates that central banks can enforce a price floor but not enforce a price ceiling.

“There is also an explanation for the apparent lack of transparency regarding central bank gold reserve management including gold lending. If central banks disclosed planned gold reserve changes or gold lending activities, they would provide signals to the market that would make the changes more costly or increase the volatility and uncertainty in the gold market. The disclosure of the Bank for International Settlements about a gold swap in 2010 and a subsequent fall in the price of gold is a good example for the effects of such announcements.

“This study demonstrated that central banks have an economic interest in gold prices and directly and indirectly influence the price of gold. It also illustrated that central banks can only stabilize a falling gold price but not a rising gold price and that the stabilization can work only if it is hidden from the public and coordinated among central banks.”

Baur’s study is posted at the Social Science Research Network’s Internet site here —

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2326606

— and has been copied onto GATA’s Internet site here:

http://www.gata.org/files/Baur-CentralBanksAndGold-07-20-2016.pdf

Your secretary/treasurer will send Baur’s study to major financial news organizations so it can be added to the long list of market-rigging documentation they suppress in order to ingratiate themselves with governments and financial institutions, thereby disgracing journalism and subverting democracy.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org

 

end

 

Chris Powell debunks Gold seek’s article on no manipulation in the gold market:

(courtesy Chris Powell/GATA)

The magic charts of technical analysis can’t penetrate central bank trading rooms

Submitted by cpowell on Thu, 2016-07-21 20:37. Section:

4:42p ET Thursday, July 21, 2016

Dear Friend of GATA and Gold:

With his commentary written yesterday, “Damn Manipulators,” posted today at GoldSeek and Gold-Eagle —

http://news.goldseek.com/GoldSeek/1469110080.php

http://www.gold-eagle.com/article/damn-manipulators

— was Elliott Wave Trader’s Avi Gilburt sneering about GATA?

Gilburt wrote of yesterday’s trading: “As the metals market dropped today, I am quite certain that the evil manipulators have become the talk of the town once again. No one speaks of them when we are rising, because that is how the market is supposed to move (cough, cough). But now that we have dropped, it is ‘clear’ that it must be manipulation.”

Gilburt adds that yesterday’s smashing of gold and silver was ordinary market action predicted by his magic charts of technical analysis — and maybe it was. But how does he or anyone outside central banking know that the market action had nothing to do with government intervention? Can Gilburt’s charts penetrate the trading rooms of the Federal Reserve Bank of New York, the Bank of England in London, the Banque de France in Paris, the International Monetary Fund in Washington, and the Bank for International Settlements in Basle?

Of course GATA has no entree into those trading rooms either. But we have compiled some documents from the institutions that run the trading rooms, confirming that they are heavily and surreptitiously intervening in the gold market or facilitating the surreptitious intervention of other central banks and government agencies:

http://www.gata.org/node/14839

According to the director of market operations for the Banque de France, Alexandre Gautier, this surreptitious trading occurs “nearly on a daily basis”:

http://www.gata.org/node/13373

Since central banks have the power to create infinite money, why would they bother holding and trading gold, except as has been confirmed candidly by the annual reports of the Reserve Bank of Australia — “primarily to facilitate policy operations in the foreign exchange market”?:

http://www.rba.gov.au/publications/annual-reports/rba/2015/pdf/2015-repo…

Gilburt is mistaken again when he writes that “no one” speaks about gold market manipulation when the price is rising. For many years, with the price rising and the price falling, GATA has addressed the possibility of an upward revaluation of gold by central banks, another form of market manipulation.

For example, since 2007 GATA often has called attention to the 2006 paper on this subject by the Scottish economist Peter Millar, who argued that central banks will have to revalue gold upward by as much as 700 percent to avert a catastrophic debt deflation:

http://www.gata.org/node/4843

We also often have called attention to the 2012 study by the American economists and fund managers Paul Brodsky and Lee Quaintance, who maintain that the major central banks are engaged in redistributing world gold reserves among themselves in advance of such an upward revaluation:

http://www.gata.org/node/11373

And we often have called attention to the 2008 appearance on Business News Network in Canada by former Federal Reserve Governor Lyle Gramley, in which he asserted that the Fed might reliquefy itself by upwardly revaluing gold:

http://www.gata.org/node/6989

Yes, manipulation of the gold market by central banks can be up as well as down, and since it defeats free markets either way, it’s objectionable either way.

Odds are that since they are the biggest participants in the gold market, central banks know a lot more about the origin of yesterday’s price smash than Gilburt’s magic charts know. The central banks aren’t telling and Gilburt isn’t asking them and making a point of their refusal to answer, since it might be very bad for his newsletter business if anyone outside central banking knew exactly how central banks were intervening at any moment. For then people also would know that the data Gilburt is analyzing is no more genuine than Pokemon characters.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org

 

end

 

Russia adds 18.7 tonnes to its official reserves but China “added” 15 tonnes.

The Chinese addition is really gold held at Chinese banks that change their status each month to official.

 

 

(courtesy Lawrence Williams/Sharp’s Pixley)

 

Central Bank Gold Buying Back On Track

Jul. 21, 2016 9:20 AM ET

Summary

The Russian central bank has announced an 18.7 tonne increase in its gold reserves in June after only expanding them by 3 tonnes in May.

This follows on from China announcing a 15 tonne rise in its central bank gold reserve in June following a zero increase in May.

Overall rises in central bank gold holdings for the full year look like coming in at around 300-350 tonnes, down from over 560 tonnes in 2015.

Central Bank gold buying has been put forward as one of the key gold demand elements in the metal’s supply/demand fundamentals. In reality, though, for the past couple of years or so there have only been two central bank gold buyers of any real significance – Russia and China – which between them had been announcing month-on-month purchases equivalent to around 400 tonnes a year, ever since China started announcing its monthly gold holding increases from the middle of 2015. There have been some other buyers, which have reported sporadic rises, or falls, in their reserves, while the only other regular gold buyer has been Kazakhstan, taking in about 2.5-3 tonnes a month which amounts to approximately the monthly production from its own gold mining industry.

So when in May Russian gold buying fell to a paltry 3 tonnes and China announced a zero increase in its reserves, analysts wondered whether this signified an almost total cutback from the world’s principal central bank gold buyers, which would throw their supply/demand projections for the year into total disarray.

However, in June things seem to be getting back on track with respect to Chinese and Russian gold buying. First China announced a return to increasing its gold reserves by 15 tonnes that month – see:Chinese Central Bank Gold Buying Is Back – and now the Russian central bank has announced a good increase in its gold reserves too, also for June. Analysts may still have to reduce their overall central bank buying forecasts for the year, though – particularly as Venezuela has been having to sell a significant proportion of its gold to meet its international debt commitments. (So far this year it has reported sales of around 67 tonnes.) At this stage of the year we would estimate net central bank gold buying for the year at perhaps only 300-350 tonnes, somewhat below previous analyst forecasts of perhaps 490 tonnes. By comparison, gold consultancy Metals Focus, which provides the World Gold Council with its supply/demand statistics, estimated 2015 central bank gold purchases at 566 tonnes.

After only increasing its gold reserves by a paltry 3 tonnes in May, giving rise to some doubts as to whether its recent high gold purchase levels would be continuing, the Russian central bank has thus allayed some of those fears with its announcement yesterday of a 600,000 troy ounce (18.7 tonnes) rise in its gold holdings in June. This brings its year to date announced gold purchases to around 84 tonnes for the half year with a total of 1,499 tonnes held – maintaining its 6th place amongst the world’s national holders of gold.

So, both Russia and China are increasing their central bank gold holdings – believed to be in part to diversify an important proportion of their foreign reserves away from the US dollar, but also as both nations see an increased role for gold in any future realignment of the global financial system. This may not be a universally shared opinion, but it may also account for the large amounts of gold retained in the central banking system – particularly by some of the world’s largest economies. Notably this applies to the USA, which according to the IMF, holds some 75% of its forex reserves in gold and Germany which holds around 69%. By contrast China only holds a reported 2% of its forex reserves in gold, although there is a strong belief that its gold holdings position is substantially understated through holding gold in non-reported accounts and in the state- controlled commercial banking system.

Nevertheless, even if some of the wildest estimates of the true Chinese gold holdings are correct (unlikely), the overall percentage of its forex reserves held in gold would still be tiny in relation to the percentage holdings by many of the most financially dominant Western nations. Russia comes slightly higher up the list in terms of the percentage of its forex holdings in gold – around 15% – but that is still at a much lower level than that for the major Western economies. Hence the perceived need for both countries to continue building their gold reserves at a reasonable rate.

We would thus anticipate both China and Russia continuing to increase their gold reserves at a combined monthly rate of perhaps between 30-40 tonnes a month through the remainder of the year. Apart from Kazakhstan we don’t see any other regular central bank buying emerging.

http://seekingalpha.com/article/3990143-central-bank- gold-buying-back-track

-END-

Your early FRIDAY morning currency, Asian stock market results,  important USA/Asian currency crosses, gold/silver pricing overnight along with the price of oil Major stories overnight    

:

1 Chinese yuan vs USA dollar/yuan SLIGHTLY UP to 6.6745 (  SMALL REVALUATION NORTHBOUND  /CHINA UNHAPPY TODAY CONCERNING USA DOLLAR RISE/MORE $ USA DOLLARS LEAVE CHINA/OFFSHORE YUAN NARROWS TO 6.6716) / Shanghai bourse  DOWN 26.19 OR 0.86%   / HANG SANG CLOSED DOWN 36.22 OR 0.16% 

2 Nikkei closed /USA: YEN RISES TO 106.09

3. Europe stocks opened ALL IN THE GREEN    /USA dollar index UP to 97.12/Euro DOWN to 1.1015

3b Japan 10 year bond yield: RISES AT  -.221%     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 106.09

3c Nikkei now JUST BELOW 17,000

3d USA/Yen rate now well below the important 120 barrier this morning

3e WTI::  44.73  and Brent: 46.29

3f Gold DOWN  /Yen DOWN

3g Japan is to buy the equivalent of 108 billion uSA dollars worth of bond per month or $1.3 trillion. Japan’s GDP equals 5 trillion usa./“HELICOPTER MONEY” OFF THE TABLE FOR NOW

Japan to buy 100% of all new Japanese debt and by 2018 they will have 25% of all Japanese debt. Fifty percent of Japanese budget financed with debt.

3h Oil UP for WTI and UP for Brent this morning

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund FALLS to -.004%   German bunds BASICALLY negative yields from  10+ years out

 Greece  sees its 2 year rate RISE to 8.41%/: 

3j Greek 10 year bond yield FALL to  : 7.99%   (YIELD CURVE NOW  FLAT TO INVERTED)

3k Gold at $1326.20/silver $19.77(7:45 am est)   SILVER FINAL RESISTANCE AT $18.50 BROKEN 

3l USA vs Russian rouble; (Russian rouble DOWN 21/100 in  roubles/dollar) 64.52-

3m oil into the 44 dollar handle for WTI and 46 handle for Brent/

3n Higher foreign deposits out of China sees huge risk of outflows and a currency depreciation  (already upon us). This can spell financial disaster for the rest of the world/China forced to do QE!! as it lowers its yuan value to the dollar/GOT a SMALL REVALUATION UPWARD from POBC.

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 106.09 DESTROYING WHATEVER IS LEFT OF OUR YEN CARRY TRADERS

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning .9861 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0861 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

3p BRITAIN VOTES AFFIRMATIVE BREXIT

3r the 10 Year German bund now POSITIVE territory with the 10 year FALLS to  -0.004%

/German 10+ year rate BASICALLY  negative%!!!

3s The Greece ELA NOW a 71.4 billion euros,AND NOW THE ECB WILL ACCEPT GREEK BONDS (WHAT A DISASTER)

The bank withdrawals were causing massive hardship to the Greek bank. the Greek referendum voted overwhelming “NO”.  Next step for Greece will be the recapitalization of the banks and that will be difficult.

4. USA 10 year treasury bond at 1.580% early this morning. Thirty year rate  at 2.307% /POLICY ERROR)

5. Details Ransquawk, Bloomberg, Deutsche bank/Jim Reid.

(courtesy Jim Reid/Bloomberg/Deutsche bank/zero hedge)

HELICOPTER MONEY COMING! US Futures Rebound Despite Global Stock Weakness As USDJPY Ramps HIgher

After breaking a multi-year stretch of 9 daily record highs in the Dow Jones, overnight global markets saw some early weakness with Asian stocks retreating after BOJ chief Kuroda dashed hopes for so-called helicopter money, triggering yen’s steepest rally in a month and pulling the Nikkei lower by 1.1%. This however did not last long, and around the European open the traditional ramp in the USDJPY helped European equities shrug off early downside, while US equity futures have already recovered half of yesterday’s losses.

In another case of bad news is good news, Europe indices were led higher by the FTSE 100, which strengthened in the wake of terrible UK PMIs, which saw the Service PMI tumble from 52.3 to 47.4, missing expectations and printing at the lowest in 87 months, while the manufacturing PMI dropped from 52.1 to 49.1, the worst in 41 months. The poor figures increased the call for stimulus from the Bank of England, and pushed the FTSE 100 higher by 0.3%.

“The concern about global central banks withdrawing from providing further stimulus definitely affects markets across the board,” Ang Kok Heng, chief investment officer at Phillip Capital Management told Bloomberg. “That’s why we see some investors selling down their assets. Profit-taking that happened in the U.S. also triggered selling.”

Equity markets had been on a roll, gaining more than $4.5 trillion in three weeks amid speculation central banks in Asia and Europe will add stimulus to stoke inflation and growth, while positive surprises in U.S. corporate results also supported the rally. The gains drove global stock valuations to a one-year high, leaving the securities vulnerable to disappointments on the policy and earnings fronts. A growing number of officials at the Bank of Japan are said to be concerned about the use of massive monetary easing and traders are pricing in a growing likelihood of a U.S. interest-rate increase this year.

As noted yesterday, with conventional valuations already massively stretched, and allowing little upside to stocks, analysts are increasingly pointing to the last “model” they have, the “Fed Model”, and namely the equity risk premium upside as implied by near record low global bond yields: “Extraordinary monetary policy has compressed risk premia in global fixed income markets, but it has not done the same for equities,” Citi says in global equity strategy note. “We estimate that the current ex-ante global equity risk premium is 5.3%, which is high compared to the historic median of 3.0%”

Meanwhile, ignoring the soft tone in global stocks, US equity futures recovered half of their yesterday’s losses, rising 0.2% after the index lost 0.4% in the last session. So far, 115 of the benchmark’s members have
released quarterly results and 81 percent of those beat analysts’
profit estimates. Earnings are nonetheless falling for the fifth quarter
in a row, the longest streak since 2009.

U.S. Treasuries stabilized this week with the 10-year yield hovering around 1.55 percent. That compares with an all-time low of 1.32 percent on July 7. Ten-year sovereign bonds in Australia and New Zealand extended their weekly gains on Friday as prospects for monetary easing bolstered demand for the securities. Australia’s yield dropped by seven basis points this week to 1.91 percent and New Zealand’s slid 14 basis points to 2.22 percent.

Market Snapshot

  • S&P 500 futures up 0.2% to 2162
  • Stoxx 600 little changed at 340.7
  • FTSE 100 up 0.3% to 6718
  • DAX down less than 0.1% to 10149
  • German 10Yr yield up 1bp to -0.01%
  • Italian 10Yr yield up 1bp to 1.26%
  • Spanish 10Yr yield up 2bps to 1.15%
  • S&P GSCI Index down 0.5% to 349.2
  • MSCI Asia Pacific down 0.5% to 134
  • Nikkei 225 down 1.1% to 16627
  • Hang Seng down 0.2% to 21964
  • Shanghai Composite down 0.9% to 3013
  • S&P/ASX 200 down 0.3% to 5498
  • US 10-yr yield up less than 1bp to 1.56%
  • Dollar Index up 0.02% to 97.02
  • WTI Crude futures down 0.6% to $44.48
  • Brent Futures down 0.2% to $46.09
  • Gold spot down 0.5% to $1,325
  • Silver spot down 0.6% to $19.67

Top Global News

  • Goldman Said to Plan Buyout Fund Wielding Up to $8 Billion: Some employees may participate, helping align interests
  • Boeing Sees $2.1 Billion Cost on 787 Dreamliners, Air Tanker: Dimming prospects for 747 freighter also contribute to loss
  • PayPal and Visa End Battle, Unveiling Pact on Fees and Data: PayPal agrees to stop steering business away from Visa, Visa offers some certainty on what fees it will charge PayPal
  • Brexit Vote Wreaks Havoc on U.K. Economy, Flash Estimates Show: Purchasing Managers’ Index combining flash estimates of services and manufacturing slumped to 47.7 in July, its lowest since April 2009
  • Schlumberger Joins Halliburton in Calling Bottom of Oil Downturn: Paal Kibsgaard says worst is over for oil services industry
  • Trump’s America Grows More Ominous Over 13-Month Run

* * *

Looking at regional markets, we start in Asia which opened in negative territory and tracked US losses following the ECB’s decision to hold fire on any further action. ASX 200 (-0.3%) and Nikkei 225 (-1.1%) both traded in negative territory with the latter underperforming in reaction to yesterday’s BoJ Kuroda comments regarding the lack of interest in helicopter money, whilst reservations over current policy measures from some current BoJ members also dampened sentiment. Elsewhere, Chinese markets were weighed by renewed reports of debt concerns in the property sector and SMEs as the Hang Seng (-0.2%) & Shanghai Comp (-0.9%) completed the negative picture. Finally, 10yr JGBs have seen muted price action overnight in spite of the risk-averse sentiment in Japanese equities.

Top Asian News

  • Singapore Puts 1MDB-Linked Banks on Notice: We’re Not Done: Regulator says it’s still examining other financial cos.
  • China Sovereign Fund Posts Loss on Commodities, Negative Rates: CIC had loss of 2.96% in year ended Dec.
  • Hong Kong Bears Pile Record Short Bets on China Consumer Stocks: Bearish wagers in Tingyi, Want Want have risen to record
  • Yen Bulls Dig In Seeing Fed Outweigh BOJ Helicopter Money Debate: Strategists turned bullish on the yen for the first time in more than a year
  • Pokemon Go Debuts in Japan as Viral Monster-Hunt Game Comes Home: Game is available for download in Android, Apple stores
  • Samsung Invests $449 Million in Buffett-Backed Carmaker BYD: Chinese co. to use proceeds from placement to fund battery production

European equities shrugged off early downside to head into the North American crossover in positive territory. Europe indices were led higher by the FTSE 100, which strengthened in the wake of downbeat UK PMIs as the poor figures increases the call for stimulus from the data dependent Bank of England. However, gains have been capped amid single stock earnings, with Banca Sabadell and Dassault Aviation among the worst performers in Europe. In Fixed income markets, Bunds have pared the entirety of its gains amid the better than expected PM! readings from Germany and France, while the German 10-yr benchmark has also been weighed by the rise in yields. In tandem with the move higher in equities amid expectations for easing, Gilts outperform their European counterparts in the wake of the aforementioned data.

Top European News

  • Vodafone Service Revenue Beats Estimates on European Rebound: Shares gain after organic service revenue increases 2.2%
  • ‘Sluggish’ Euro Area Sees Initial Brexit Fallout in Services: PMI for service sector slipped to to 52.7, an 18- month low
  • Syngenta Says U.S. Talks Over ChemChina Bid ‘Constructive’: CEO confident in closing the transaction by end of the year
  • Anglo American Coal Bidders Said in Talks for Acquisition Loans: Coking coal mines in Queensland may fetch up to $1.5 billion

In FX, The yen fell 0.4 percent to 106.20 per dollar. It surged 1 percent in the last session as Kuroda, in a BBC Radio interview recorded on June 17 and aired on Thursday, said there was no possibility of introducing helicopter money, which would involve the BOJ’s direct financing of government spending. Kuroda’s “comments will disappoint investors who had been selling the yen in anticipation of the Bank of Japan announcing helicopter money at its meeting next week,” said Jasper Lawler, a London-based analyst at CMC Markets Plc. “After the failure of its current quantitative easing program to boost inflation, helicopter money is one of the few remaining tools in the Bank of Japan’s arsenal,” he said, noting that Kuroda may have changed his opinion since he made the remarks on June 17.

The Bloomberg Dollar Spot Index was poised for a third weekly gain as signs of improvement in the U.S. economy revive expectations for interest-rate increases. A report on Thursday showed sales of previously owned homes climbed to a nine-year high and futures traders are pricing in a 45 percent chance the Federal Reserve will increase borrowing costs by December, up from 12 percent at the start of the month.

The yuan strengthened 0.1 percent, headed for its first weekly gain in seven weeks amid speculation the central bank was seeking to limit losses. Chinese Premier Li Keqiang said Friday the nation’s economy is growing steadily and the exchange rate will be kept stable at a reasonable level. The Australian and New Zealand dollars were headed for weekly declines amid speculation central banks in both countries will cut interest rates from record lows. The Reserve Bank of New Zealand said Thursday further monetary easing is probably needed to boost inflation, while the Reserve Bank of Australia noted on Tuesday that the economy probably cooled last quarter and inflation is set to remain weak. The Aussie and the kiwi retreated at least 1.4 percent this week, the biggest declines among 16 major currencies.

In commodities, The Bloomberg Commodity Index fell for a sixth day, its longest losing streak in three months. Oil dropped to a two-month low as the U.S. heads toward the end of its summer-driving season with ample crude and motor fuel stockpiles. The price dropped 0.8 percent to $44.40 a barrel in New York. “It’s an inventory story,” said Jonathan Barratt, the chief investment officer at Ayers Alliance Securities in Sydney. “The summer drive-time hasn’t been as strong as some had expected. There’s more supply coming on and there are indications that the strength of the global economy is not there.”Copper fell 0.6 percent, trimming its weekly advance to 0.5 percent, and nickel retreated 1.8 percent from an 11-month high on the London Metal Exchange, where the start of trading was delayed owing to a technical problem. Gold fell 0.6 percent, set for a second weekly loss.  Iron ore in China had its biggest weekly drop in two months, sliding 7.2 percent on concern a global supply glut will endure.

Bulletin Headline Summary from RanSquawk and Bloomberg

  • Downbeat UK PMI’s dictate play in Europe, sending GBP/USD below 1.3150 and supporting FTSE and Gilts
  • USD/JPY retakes 106.00 as participants await official details of any fiscal stimulus package
  • Highlights include US PMI’s, Canadian Retail Sales and CPI as well as earnings from General Electric
  • Treasuries lower in overnight trading, European equities rise, Asia’s drop along with WTI crude oil and gold; in Japan it seems as if hopes for “helicopter money” are for naught.
  • The U.K.’s decision to leave the European Union inflicted an immediate blow on the economy as business activity shrank at its fastest pace since the last recession seven years ago as a gauge of the private-sector economy plunged to 47.7
  • Germany’s manufacturing output reached the highest level since early 2014 in a survey of purchasing managers this month as the economy was supported by a strong labor market and increasing demand
  • Mario Draghi is part of a growing club of central bankers who are just fine with admitting they’re uncertain what’s going on right now — and that’s no barrier to action
  • The cost of trading Europe’s corporate debt is higher than at any time since April 2013, according to a gauge of the difficulty traders have in buying and selling, likely a result of Mario Draghi’s buying spree
  • Don’t count on the world’s No. 2 economy to ride to the rescue. That was the message from China’s Premier Li Keqiang on the eve of a gathering of finance chiefs from the top emerging and developed economies
  • China’s weakening currency has triggered an increase in the amount of cash leaving the country, to $49 billion in June compared to $25 billion in May, according to Goldman Sachs estimates
  • Goldman Sachs is about to start raising money for its first private-equity fund since the financial crisis, potentially gathering $5 billion to $8 billion, according to a person with knowledge of the matter
  • HSBC Holdings is selling $2.7 billion of loans as part of a plan to cut risk-weighted assets by $290 billion over the next three years, according to two people with knowledge of the sale

* * *

DB’s Jim Reid concludes the overnight wrap

In markets we’re all obsessed with the next round of global stimulus at the moment but the more markets rally and the more the immediate post Brexit fall out risk recedes the less in a hurry central banks seem to be. Last week the BoE held steady while it reviewed the landscape and yesterday the ECB replicated the move. It’s fair to say the above two are likely to ease further in 2 weeks and 7 weeks respectively but stable markets confuses the issue a little. Also confusing yesterday were comments from Japan. In an interview on BBC’s Radio 4, the BoJ’s Kuroda ruled out the idea of using helicopter money, or directly underwriting the budget deficit in a bid to combat deflation. Kuroda said instead that the BoJ has ‘three options with quantitative and qualitative easing with negative interest rates’ and that these current policies can be expanded if needed. The Yen immediately strengthened nearly 2% with the news before there was a bit of confusion in markets as it turned out that the interview was actually recorded on June

17th and prior to Bernanke’s visit this month which of course reignited the helicopter money chatter. Anyway the 1 week countdown to the BoJ meeting starts today.
Meanwhile in terms of the ECB, Draghi did seem more concerned about Italian banks than Brexit but he helped the whole banking sector by suggesting that a state backstop was a ‘very useful’ way of dealing with NPLs. He also suggested that there was room to offer state aid thus offering some confidence that a deal in Italy can be done. I was at a big DB macro client dinner on Wednesday night and it’s fair to say the question that came up most was how the Italian banking issues would be resolved so this is a big theme at the moment. Japan was probably the next most discussed topic. Brexit was only discussed a little and China not at all. So this shows the biases at the moment.

Back to Draghi, in terms of further monetary policy he certainly left the door ajar without pre committing. Our economists’ expectations remain unchanged. They feel that post the Brexit vote there are new downside risks to the economic recovery and the normalization of inflation. They don’t think a deposit rate cut is appropriate given the pressures on banks. Instead they expect a 9-12 month extension of the timeframe of the QE programme at the next meeting in September as well as complementary measures to ensure this is credible by making sufficient assets eligible for the programme.

In terms of the market reaction, the bigger moves came in financials and specifically peripheral banks on the back of those NPL comments. The Stoxx 600 (-0.07%) closed marginally lower although the Euro Stoxx Banks index did rise +0.89%. Financials credit also outperformed with the iTraxx Senior and Sub Fins indices 5bps and 14bps tighter respectively, while iTraxx Main closed 2bps tighter.

Back to post Draghi markets and the Euro ended fairly unchanged, while sovereign bond markets were modestly firmer at the margin. Across the pond the tone in markets appeared to be more dictated by a couple of disappointing corporate earnings reports, namely Intel and Southwest Airlines. A drop in energy stocks on the back of a 2% fall for Oil also helped to drag markets lower. The S&P 500 closed -0.36% while the Dow was -0.42%. Amazingly that’s the first daily decline for the Dow since July 7th.

Looking forward, today is global PMI day with the big focus on Europe where we should see the first signs of how Brexit has impacted the wider services and manufacturing sectors in the Euro area. Importantly, the UK will also release its data. Current consensus is for a 3.4pt drop in the UK flash manufacturing print to 48.7, while the services reading is expected to tumble 3.5pts to 48.8. The composite is expected to edge down to 49.0 from 52.4 as a result. The Euro area indicators are also expected to weaken, although not quite to the same extent. The manufacturing and services prints are expected to fall to 52.0 and 52.3 respectively which if true would represent falls of 0.8pts and 0.5pts respectively.

Before we get there, let’s take a look at markets overnight where that weaker tone on Wall Street appears to be setting the pace in Asia. The Nikkei (-0.90%) in particular has dropped reflecting that rally for the Yen yesterday, while the Hang Seng (-0.35%), Shanghai Comp (-0.41%) and ASX (-0.31%) are also in the red. US equity index futures are little changed, with weaker than expected earnings after the closing bell from AT&T and Starbucks offset by quarterly reports from Schlumberger and PayPal. Meanwhile an article released in the Nikkei newspaper suggests that Finance Ministry officials in Japan have briefed PM Abe that a stimulus package worth 20t-30t yen is possible if it includes government guarantees and other off-budget measures.

Before we look at the day ahead, a quick wrap up of yesterday’s economic data which, in a nutshell, was a bit of a mixed bag. In the US initial jobless claims continue to stay at low levels with the 253k print for last week down 1k from the week prior and so taking the four-week average down to 258k. In the factory sector the Philly Fed manufacturing survey was disappointing at the headline after printing at -2.9 (vs. +4.5 expected). That represented a 7.6pt decline from June although we did see improvements in both new orders and shipments components. Meanwhile in the housing market existing home sales rose unexpectedly in June (+1.1% mom vs. -0.9% expected). The FHFA house price index rose a slightly below market +0.2% mom in May (vs. +0.4% expected). The final data came in the form of the Conference Board’s leading index which rose +0.3% mom (vs. +0.2% expected) in June.

Prior to this in Europe we learned that business confidence rose marginally in France this month (+2pts to 102). In the UK retail sales were a little bit softer than expected last month. The ex-fuel sales reading declined -0.9% mom which was three-tenths worse than expected. The statistics office reported that the survey period for the data was between May 29th and July 2nd so some post-Brexit impact will have been captured.

end

ASIA MARKETS

i)Late  THURSDAY night/FRIDAY morning: Shanghai closed DOWN 26.19 POINTS OR 0.86%/ /Hang Sang closed DOWN 36.22 OR 0.16%. The Nikkei closed DOWN 182.97 POINTS OR 1.09% Australia’s all ordinaires  CLOSED DOWN 0.241% Chinese yuan (ONSHORE) closed UP at 6.6745 /Oil ROSE to 44.84 dollars per barrel for WTI and 46.29 for Brent. Stocks in Europe ALL IN THE GREEN. Offshore yuan trades  6.6716 yuan to the dollar vs 6.6745 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS CONSIDERABLY AS CHINA TRIES TO STOP MORE USA DOLLARS LEAVING THEIR SHORES. 

FIRST  REPORT ON JAPAN  SOUTH KOREA AND CHINA a) JAPAN ISSUES b) REPORT ON CHINA EUROPEAN ISSUES

The British pound was pummeled today almost 200 basis points as its PMI crashed from 52.1 down to 491 suggesting a .4% GDP contraction.

(courtesy zero hedge)

 

Pound Plummets On Renewed Recession Fears As PMI Shows Fastest Contraction Since 2009

Sterling plummeted nearly 200 pips this morning, after rising in early trade to just shy of 1.33, when the latest July Markit flash PMI surveys suggested the UK is heading for a quick recession in the form of a 0.4% GDP contraction in the third quarter. Manufacturing PMI tumbled from 52.1 to 49.1, modestly beating expectations, if still the lowest in 41 months, but it was the service economy which imploded, with the Service PMI plunging from 52.3 to 47.4, in line with the worst estimate, and the lowest print in 88 months.

 

While considered “soft data”, and perhaps suggesting that Markit had not gotten the memo that Brexit fearmongering is now a thing of the past and is instead increasingly spun as positive for the local and global economy, the surveys pointed to the worst performance for more than seven years – when the economy was in the depths of a recession – in the aftermath of Brexit. As a result of renewed recession fear, the pound was trading below 1.31 at last check.

Ironically, UK stocks jumped, with the FTSE trading well in the green as traders quickly figured these figures will add to pressure on the Bank of England to cut interest rates next month to cushion the economy from the Brexit blow.

The poor data comes as new Chancellor Philip Hammond indicated the UK could “reset fiscal policy” as data emerges about how the economy has reacted to the vote – indicating a less aggressive approach to cuts aimed at shrinking the deficit than that taken by former chancellor George Osborne.

Markit chief economist Chris Williamson said: “July saw a dramatic deterioration in the economy, with business activity slumping at the fastest rate since the height of the global financial crisis in early 2009.”

He said the downturn – seen in order cancellations, a lack of new orders and the postponement or halting of projects – was “most commonly attributed in one way or another to Brexit”.

The Service PMI print also saw a record slump in expectations. Markit’s Williamson said it suggested there was “more pain to come in the short term at least”.

He added: “At this level, the survey is signalling a 0.4% contraction of the economy in the third quarter, though much of course depends on whether we see a further deterioration in August or if July represents a shock-induced nadir.”

Mr Williamson said the figures provided “a powerful argument for swift action” from the Bank of England as it weighs up whether to cut interest rates next month.

Cited by SkyNews, Investec economist Chris Hare said: “Our view remains that post-Brexit uncertainty will see the UK flirting heavily with a recession.”

* * *

The full commentary from Markit’s chief economist, Chris Williamson

“July saw a dramatic deterioration in the economy, with business activity slumping at the fastest rate since the height of the global financial crisis in early-2009.

 

“The downturn, whether manifesting itself in order book cancellations, a lack of new orders or the postponement or halting of projects, was most commonly attributed in one way or another to ‘Brexit’.

 

“The one ray of light was an improvement in manufacturing export growth to the best for two years as the weak pound helped drive overseas sales, though producers also suffered the flip-side of a weak currency as import prices spiked higher.

 

“At this level, the survey is signalling a 0.4% contraction of the economy in the third quarter, though much of course depends on whether we see a further deterioration in August or if July represents a shock-induced nadir. Given the record slump in service sector business expectations, the suggestion is that there is further pain to come in the short-term at least.

 

“With policymakers waiting to see hard data on the state of the economy before considering more stimulus, the slump in the PMI will provide a powerful argument for swift action.”

David Noble, Group Chief Executive Officer at the Chartered Institute of Procurement & Supply: “The UK economy has suffered sharp falls in output and new orders following the EU referendum as uncertainty has taken hold. The overall pace of decline was the strongest since early-2009.

 

“Weaker sterling has driven a steep rise in input prices for manufacturers but there is a glimmer of positivity with the new exchange rate encouraging a rise in export orders. However, with a subdued global economy, it is not yet clear whether these opportunities will materialise in the long term.

 

“Supply chain managers must use this uncertainty to demonstrate what they do best – being agile, adaptive, sourcing the best goods and prices to steer their organisations successfully in the months and years ahead.

 

“The true extent of the impact of this uncertainty still remains to be seen next month. But with optimism in the UK’s service sector at a seven-and-a-half year low, policymakers must take swift action to stop further decline amid political upheaval.”

end

 

Then the Euro crashes to post BREXIT lows: as investors are losing faith in the European economies:

(courtesy zero hedge)

 

 

EURUSD Plunges To Post-Brexit Lows

Following disappoingly un-dovish commentary from Bank of England and ECB, it appears a dearth of additional monetary exuberance (over and above the current insanity) is prompting capital flight from Europe. EURUSD tumbled to a 1.09 handle this morning, near post-Brexit lows…

EUR at post-Brexit lows…

 

Sending USD Index to fresh 4-month highs…

 

So are we now back to pre-“whatever it takes” regime where a weaker EUR is not policy-enduced butrepresents loss of faith in the EU?

 

END

 

This is awful:  a shooting rampage in Munich with now 9 dead

(courtesy zero hedge)

 

Multiple Casualties Reported After “Shooting Rampage” Attack In Munich, Shooters On The Loose – Live Feed by Tyler Durden Jul 22, 2016 12:34 PM 515 SHARES

What is known so far:

  • Shots have been fired at the Olympia shopping mall in Munich, Germany.  Multiple casualties and injuries have been reported, with local police reporting 8 dead and many injured.
  • According to a statement by the Munich police on its facebook page, witnesses report three different people
    with firearms. The number of victims is currently unconfirmed.
  • No perpetrators have been arrested and the search for them continues.  Officers ask everyone in the urban area of Munich to stay indoors.
  • Reuters add that the local police believes it is dealing with a “shooting rampage” following unconfirmed reports of a second shooter
  • Public transportation services have been halted on multiple train, tram and bus lines after the shooting. The main train station in Munich is currently being evacuated.
  • The Munich police has cited an “acute terror threat.”
  • German Magazine Focus says that according to police sources, the one of the perpetrators has shot himself in the head.

 

Update 27: A police spokesman confirms that the number of dead is now 8.

* * *

Update 26: Below is a translation of the incident captured in the video between the alleged shooter and a man on a balcony:

Man: “You fucking Asshole you…”
Shooter: “Because of you I [unintelligible]…”
Balcony Man: “You cunt you. you’re a cunt”
Shooter: “…and now I have to buy a gun to shoot you”
Balcony Man: “a gun fuck off your head isn’t on right”
Shooter and Balcony man shouting at each other
Balcony Man apparently to people filming: “He’s got a gun here the guy has one”
Unseen voice: “Shit/Fucking Turks!”
Balcony Man: “Shit/Fucking Kanacken” (foreigners basically)
Balcony man to someone else : “EY! HE’S GOT A GUN! He has loaded his gun! Get the cops here!”
Shooter: “I am German.”
Balcony Man: “You’re a cunt is what you are”
Shooter: “Stop filming!”
Balcony Man: “A cunt is what you are, what the fuck are you doing?”
Shooter: “Yeah what, I was born here!”
Balcony Man: “Yeah and what the fuck you think you’re doing???”
Shooter: “I grew up here in the Hartz 4 (unemployment benefits in Germany) area.
Balcony Man and Shooter talk at same time, can’t make it out.
Shooter says something about “Behandlung” which is “treatment” in both medical treatment or just how you treat people,not sure which one he means.
Balcony Man says something like “Yeah treatment is something for you”
Shooter: “I haven’t done anything here for [unintelligible]”
Shooter: “Just shut your fucking face man”
Balcony Man: “You cunt you”
Balcony Man: “HEY! HE’S ON THE UPPER FLOOR HERE [unintelligible]”
Filming man goes into cover, shooter starts firing.
Balcony man calls him a cunt again.
Balcony man shouts something at him about “shooting here” and Shooter replies multiple times “Yeah, that’s where you’re right! Yeah you’re right with that!” Yeah you’re right!”

Video ends.

 

Julie Lenarz @MsJulieLenarz

CNN reports shooter shouted “allahu akbar”, meanwhile everyone else, including police, say no indication it’s Islamist terror.

END

RUSSIAN AND MIDDLE EASTERN AFFAIRS

TURKEY

 

And now the fun begins as Erdogan formally requests the extradition of Gulen from the USA.  Turkey turns on the power at Incirlik:

(courtesy zero hedge)

 

Erdogan Formally Requests Gulen Extradition From US, As Power At Incirlik Airbase Restored

One week after the Turkish coup, U.S. officials reported that electric power has been finally restored to the Incirlik air base in southern Turkey.

The base had been operating on a backup generator since July 16, when power was shut off at all military bases in Turkey following a failed military coup. Turkish authorities have alleged that planes involved in the coup attempt were refueled by Turkish planes housed at the base.

The U.S. military’s European Command said Friday there is a steady flow of hot food, water, and fuel to support U.S. service members and civilians in Turkey. EUCOM said it is working with the Turkish military to make sure the base is prepared to carry out its missions. It is used by U.S.-led coalition jets fighting the Islamic State group in Syria and Iraq.

That’s the quid, to what we expected last week would be a bargaining chip in Turkey’s negotiation with the US on extraditing the cleric Fethullah Gulen, who has been blamed for masterminding the coup, and who lives in the US.

Some have speculated that the airbase may be held “hostage” by Ankara as a bargaining chip ahead of demands for the extradition of Erdogan’s arch enemy, Fethullah Gulen, currently a resident of the state of Pennsylvania.

The base is no longer hostage, if only for the time being.

What is the quo? We found out moments ago, when Turkey’s ablassador to the US, Kilic, formally requested the extradition of Gulen:

We have formally submitted the necessary documents” for extradition of Fethullah Gulen, Ambassador Serdar Kilic told reporters in Washington.

WaPo adds that Turkey’s top diplomat urged the United States on Friday to quickly hand over a self-exiled cleric whom Turkish leaders have linked to last week’s coup attempt — an issue that risks causing serious tension between the two allies. Foreign Minister Mevlut Cavusoglu told the state-run broadcaster TRT that Turkey was ready to take part in a commission proposed by Washington to discuss the extradition of Fethullah Gulen. But Cavusoglu insisted there was no need for it to take a long time. “If you want to draw out the Gulen extradition issue, it can take years, but if you are decisive, it can be completed in a short period,” he said, according to the Reuters news agency.

And now the ball is in Obama’s court: does he yield to a person who has clearly made a mockery of the democratic process and hand over a frail 77-year-old man who hardly was the evil mastermind that managed to somehow plan and coordinate with the 60,000+ people detained, arrested or charged in Turkey. Or does he deny, and risk Erdogan’s ira, which could potentially spillover by forcing Turkey to gravitate closer to Moscow’s sphere of influence and maybe even open the European gates for some 2 million Syrian refugees currently held inside Turkey’s borders.

We doubt Obama will rush to resolve this issue and will most likely punt it to Hillary Clinton, who takes over in just 4 months. As America knows, the Secretary of State has an admirable record of resolving foreign diplomatic crises.

 

END

GLOBAL ISSUES

With many attacks in France, Germany, Belgium, and the USA no wonder world’s airlines stocks are crashing at the worst at since the crisis of 2008

(courtesy zero hedge)

World’s Airlines Crashing At Worst Rate Since 2008

With ‘terrorist’ incidents breaking out everywhere from San Bernardino to the south of France, it is perhaps no surprise that the world’s airlines are struggling. But, as Bloomberg notes, over-capacity, rising fuel costs (so far this year), and weaker demand have hurt profits and crushed airline stocks to their worst year since 2008

Down over 18% this year…

 

Troubles keep mounting for the world’s leading airlines. With the group already struggling with overcapacity and weakening global demand, Bloomberg reports that Lufthansa and EasyJet Thursday said terror threats could hurt profits, while Southwest Airlines predicted airfare cuts will accelerate.

The Bloomberg World Airlines Index tumbled 2.8 percent for a third straight loss. The group has posted the worst performance since 2008, dramatically lagging global stocks…

 

Charts: Bloomberg

 

END

OIL MARKETS/OIL ISSUES

With expectations of drilling and fracking forecasting to decline, service sector Schlumberger fires another 8,000 workers siting market conditions have worsened in second quarter.

(courtesy Schlumberger/zero hedge)

 

Energy Giant Schlumberger Fires Another 8,000 As “Market Conditions Worsened” In Q2

Last quarter, Paal Kibsgaard, the Chairman and Chief Executive Officer the world’s largest oilfield services company, Schlumberger warned that “the decline in global activity and the rate of activity disruption reached unprecedented levels as the industry displayed clear signs of operating in a full-scale cash crisis. This environment is expected to continue deteriorating over the coming quarter given the magnitude and erratic nature of the disruptions in activity.” He then promptly fired 8,000 workers in the first quarter, and said that he is not expecting a meaningful recovery in the company’s activity until sometime next year.

He was right, because while the oil industry was touted as experiencing a substantial rebound since then, this appears to not have been the case for the energy services giant. This was confirmed in the results reported moments ago by Schlumberger which announced another unexpected loss or $2.16 billion, or $1.56 cents a share, compared with a profit of $1.12 billion, or 88 cents, a year earlier.

As Bloomberg notes, as the downturn dragged on, executives at the world’s largest oilfield services provider have had to push back their expectations for an improvement in drilling and fracking work, with crude prices remaining more than 50 percent lower than their peak in 2014.

As a result, the tone of Paal Kibsgaard this quarter was even gloomier than in Q1:

In the second quarter market conditions worsened further in most parts of our global operations, but in spite of the continuing headwinds we now appear to have reached the bottom of the cycle.

Or so he hopes.

On a pro forma basis, revenue decreased 12% sequentially with North America falling 20% due to the Canadian spring break-up and a 25% drop in the US land rig count,while international revenue decreased 9% due to weaker activity, continued pricing pressure, and a large-scale cutback in our operations in Venezuela. However, our wide geographical footprint and broad technology portfolio continued to offer unique advantages that helped to mitigate these effects.

And the real story behind the recovery, or lack thereof:

As a result of the weakness in activity that will persist through 2016 as expected, we have made another significant adjustment to our cost and resource base, including the release of more than 16,000 employees during the first half of 2016 and a further streamlining of our overhead, infrastructure, and asset base. This has led to $646 million in restructuring charges in the second quarter for the reduction in our workforce, as well as a non-cash $1.9 billion impairment charge for fixed assets, inventory, and multiclient seismic data. We also recognized $335 million in merger and integration charges relating to the Cameron acquisition.

So after firing 8,000 in the first quarter, Schlumberger just laid off another 8,000 workers. It may have been even more because while Schlumberger reported a headcount of 113,000 people at the beginning of this week, in the earnings release it said the company has “approximately 100,000 employees”, so it seems that even more cuts could have come in July.

As a result of the ongoing energy recession, Schlumberger, Houston’s largest energy employer as of a month ago, has now eliminated about 50,000 jobs, or a third of its entire workforce, in the two years of the ongoing oil bust according to FuelFix calculations.

 

END

 

Oil had a bad week culminating in at one point the WTI contract breaking into the 43 dollar handle.  We have outlined to you the huge glut on gasoline and that seems to be the central theme these past few days:

(courtesy zero hedge)

 

WTI Tumbles To $43 Handle – 3-Month-Lows – As Gasoline Glut Deepens

Mainstream media is beginning to catch on to what we detailed first in February, the gasoline glut is about to bite back. As Bloomberg reports,

Oil’s retreat to a three-month low this week demonstrates that surpluses in other parts of the market, most notably refined fuels like gasoline, are holding back any lasting recovery.

 

Combined inventories held by industrialized nations of all forms of oil — from crude to refined products to natural gas liquids — reached a record of more than 3 billion barrels last month, data from the Paris-based International Energy Agency shows.

 

 

In the U.S., gasoline stockpiles were at the highest for the time of year since 1984 as record consumption failed to drain the glut refiners created when crude was cheap, according to the Energy Information Administration.

 

Sept 16 WTI has tumbled from over $51 a month ago to a $43 handle today..

 

Three-month lows… (pre-OPEC plunge and ramp levels)

 

Tracking last year’s pump-and-dump of hope perfectly.

 

“In many ways, the bigger issue is the total inventory overhang,” Amrita Sen, chief oil analyst at consultant Energy Aspects Ltd. in London, said by e-mail. “It is the plight of oil products — in particular the light products such as gasoline — that is slowing the pace of total stock-draws even as crude stocks fall, and of the eventual re-balancing.”

 

END

 

This caused further deterioration in the oil fundamentals as more USA rigs entered the scene.  This is the highest jump in rigs since 2009

(courtesy zero hedge)

 

Crude Drops After US Oil Rig Count Jumps Most Since 2009

Having risen for 6 of the last 7 weeks, the US oil rig count extended its run with a 14 rig surge this week – the biggest absolute rise since Dec 2015. Oil rigs have now risen 55 rigs in the last 8 weeks –the biggest percentage rise since Dec 2009. WTI is tumbling to fresh 3-month lows on the news…

  • *OIL RIGS IN D-J/NIOBRARA ROSE BY 2 TO 18: BAKER HUGHES
  • *OIL RIGS IN EAGLE FORD ROSE BY 2 TO 29: BAKER HUGHES
  • *OIL RIGS IN PERMIAN ROSE BY 8 TO 168: BAKER HUGHES

The 14 rig surge to 371 is the biggest weekly percentage rise since Nov 2009…

 

And crude hit fresh 3mo lows…

end Your early morning currency/gold and silver pricing/Asian and European bourse movements/ and interest rate settings/FRIDAY morning 7:00 am

Euro/USA   1.1015 DOWN .0016 (STILL  REACTING TO BREXIT/

USA/JAPAN YEN 106.09  UP 0.318(Abe’s new negative interest rate (NIRP), a total DISASTER/SIGNALS U TURN WITH INCREASED NEGATIVITY IN NIRP/JAPAN OUT OF WEAPONS TO FIGHT ECONOMIC DISASTER/KURODA:  HELICOPTER MONEY NOT ON THE TABLE

GBP/USA 1.3088 DOWN .01420(MORE STIMULUS PLANNED)

USA/CAN 1.3119 UP .0047

Early THIS FRIDAY morning in Europe, the Euro FELL by 16 basis points, trading now JUST above the important 1.08 level RISING to 1.1012; Europe is still reacting to Gr Britain BREXIT,deflation, announcements of massive stimulation (QE), a proxy middle east war, and the ramifications of a default at the Austrian Hypo bank, an imminent default of Greece, Glencore, Nysmark and the Ukraine, along with rising peripheral bond yield further stimulation as the EU is moving more into NIRP, and NOW THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE / Last night the Shanghai composite DOWN 26.19 POINTS OR .86%   / Hang Sang closed down 36.22 points or .16%  /AUSTRALIA is lower by .24%/ EUROPEAN BOURSES ARE ALL IN THE green (barely   as they start their morning

We are seeing that the 3 major global carry trades are being unwound. The BIGGY is the first one;

1. the total dollar global short is 9 trillion USA and as such we are now witnessing a sea of red blood on the streets as derivatives blow up with the massive rise in the rise in the dollar against all paper currencies and especially with the fall of the yuan carry trade. The emerging market which house close to 50% of the 9 trillion dollar short is feeling the massive pain as their debt is quite unmanageable.

2, the Nikkei average vs gold carry trade ( NIKKEI blowing up and the yen carry trade HAS BLOWN up/and now NIRP)

3. Short Swiss franc/long assets blew up ( Eastern European housing/Nikkei etc.

These massive carry trades are terribly offside as they are being unwound. It is causing global deflation ( we are at debt saturation already) as the world reacts to lack of demand and a scarcity of debt collateral. Bourses around the globe are reacting in kind to these events as well as the potential for a GREXIT>

The NIKKEI: this FRIDAY morning closed down:  182.97 points or 1.09% 

Trading from Europe and Asia:
1. Europe stocks ALL IN THE GREEN (BARELY) AS THEY START THE DAY

2/ CHINESE BOURSES / : Hang Sang CLOSED DOWN 36.22 POINTS OR .16%  ,Shanghai CLOSED DOWN 26.19 POINTS OR .86%   / Australia BOURSE IN THE RED: /Nikkei (Japan) CLOSED DOWN 182.97 OR 1.09%/India’s Sensex IN THE GREEN  

Gold very early morning trading: $1325.60

silver:$19.70

Early FRIDAY morning USA 10 year bond yield: 1.580% !!! UP  3 in basis points from THURSDAY night in basis points and it is trading WELL BELOW resistance at 2.27-2.32%. The 30 yr bond yield RISES to 2.307 UP 1 in basis points from WEDNESDAY night. (SPREAD GOES AGAINST THE BANKS)

USA dollar index early FRIDAY morning: 97.12 UP 15 CENTS from THURSDAY’s close.

This ends early morning numbers FRIDAY MORNING

END

And now your closing FRIDAY NUMBERS

 

Portuguese 10 year bond yield:  3.05% par in basis points from THURSDAY  (does not buy the rally)

JAPANESE BOND YIELD: -0.222% DOWN 1/2  in   basis points from THURSDAY

SPANISH 10 YR BOND YIELD: 1.11%  DOWN 1 IN basis points from THURSDAY( this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 1.24 down 1 in basis points from THURSDAY (again totally nuts/)

the Italian 10 yr bond yield is trading 13 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: -.013% up 1/3 IN  BASIS POINTS ON THE DAY

END

IMPORTANT CURRENCY CLOSES FOR FRIDAY

Closing currency crosses for FRIDAY night/USA DOLLAR INDEX/USA 10 YR BOND YIELD/3:30 PM

 

Euro/USA 1.0978 DOWN .0053 (Euro =DOWN 53 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 106.07 UP 0.285(Yen DOWN 29 basis points/HELICOPTER MONEY OFF THE TABLE )

Great Britain/USA 1.3143 DOWN 0.01370 ( Pound DOWN 137 basis points/BREXIT DECISION AFFIRMATIVE/QE TO START AGAIN/UK DOWNGRADED/NEW PRIME MINISTER T. MAY/

USA/Canada 1.3143-UP 0.0071 (Canadian dollar DOWN 71 basis points AS OIL FELL (WTI AT $44.18). Canada keeps rate at 0.5% and does not cut!

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

This afternoon, the Euro was DOWN by 53 basis points to trade at 1.0978

The Yen FELL to 106.07 for a LOSS of 29 basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY NOW OFF THE TABLE

The POUND was DOWN 137 basis points, trading at 1.3097 AS PRIME MINISTER THERESA MAY TAKES OFFICE/CONCERNS ON BREXIT/CONCERNS ON TERRIBLE PMI

The Canadian dollar FELL by 71 basis points to 1.3143, WITH WTI OIL AT:  $44.20

CANADIAN RATES WERE NOT CUT

The USA/Yuan closed at 6.6876

the 10 yr Japanese bond yield closed at -.222% DOWN 1/3  IN BASIS  points in yield/

Your closing 10 yr USA bond yield: UP 1 IN basis points from THURSDAY at 1.566% //trading well below the resistance level of 2.27-2.32%)

USA 30 yr bond yield: 2.282 DOWN 2  in basis points on the day /AND THE DOW RISES??

BANKS NEED THE LONGER BOND HIGHER IN YIELD: INSTEAD THE SPREAD LESSENS.

Your closing USA dollar index, 97.39 UP 42 CENTS  ON THE DAY/4 PM 

Your closing bourses for Europe and the Dow along with the USA dollar index closing and interest rates for FRIDAY

 

London:  CLOSED UP 30.59 OR 0.46%
German Dax :CLOSED DOWN  8.75 OR  0.09%
Paris Cac  CLOSED UP 4.95  OR 0.11%
Spain IBEX CLOSED UP 16.30 OR 0.19%
Italian MIB: CLOSED DOWN 26.73 OR 0.16%

The Dow was UP 53.62 points or 0.29%

NASDAQ  UP 26.26 points or 0.52%
WTI Oil price; 44.23 at 4:30 pm;

Brent Oil: 45.73

USA DOLLAR VS RUSSIAN ROUBLE CROSS:  64.87 (ROUBLE DOWN  55/100 ROUBLES PER DOLLAR FROM TUESDAY) 

TODAY THE GERMAN YIELD RISES TO -.013%  FOR THE 10 YR BOND

END

This ends the stock indices, oil price, currency crosses and interest rate closes for today

Closing Price for Oil, 5 pm/and 10 year USA interest rate:

WTI CRUDE OIL PRICE 5 PM:44.23

BRENT: 45.73

USA 10 YR BOND YIELD: 1.564% 

USA DOLLAR INDEX: 97.39 UP 42 cents

The British pound at 5 pm: Great Britain Pound/USA: 1.30950 down .01400 or 140 basis pts.

German 10 yr bond yield at 5 pm: -.013%

END

And now your more important USA stories which will influence the price of gold/silver

Trading Today in Graph form;  VERY IMPORTANT FOR YOU TO VIEW ALL THE CHARTS TODAY

After “Pause That Refreshes” ‘Investors’ Panic-Buy Stocks Back To Record Highs

After yesterday’s ‘stumble’ everything is once again epic today…

 

Let’s start with Turkey… Borsa Istanbul 100 plunged over 13% this week, the most since Lehman…

 

We’re gonna need another coup this weekend (failed or otherwise) to keep this going into FOMC.

But that never worried stocks which just kept on keeping on to record-er highs… (Trannies were worst with airlines crushed but even they saw a panic dip-buying effort)…

 

The Dip… Was Bought… on weak volume all week…

 

As VIX was crushed back to an 11 handle to ensure the S&P hit new record highs…

 

Post-Brexit, gold still leads and bonds are slight winners over stocks…

 

Treasury yields ended the week very modestly higher (though below pre-coup levels) with the long-end outperforming the short-end…NOTE every day saw TSY selling into the US open…

 

The USD Index surged to 4-month highs this week (up 5 weeks in a row – biggest surge since November) with JPY and GBP most in play though EUR saw some post-Draghi swings…

 

 

Ugly week for oil (worst 3-week slump since Feb) but only copper managed a small gain on the week as USD strength pressured PMs…

 

While WTI bounced into the NYMEX close, Sept 2016 contracts hit 3-month lows intraday after a surprising surge in the rig count and reminder of the gasoline glut worldwide…

 

“It’s probably nothing”…

 

more nothing…

 

One final nothing…

 

Charts: Bloomberg

Bonus Chart: Nothing

 

Bonus Bonus Chart: The Trump Bounce

 

END

After England reported a huge decline in PMI, surprisingly the USA showed a gain in manufacturing with the PMI rising to 52.9 form 51.3 on expectations of 51.9.

Surprisingly this was done with a higher USA dollar.  This is the first estimations known as the flash July PMI.  The more important data is the confirmed July PMI which comes next month.

(courtesy zero hedge)

 

Fed Runs Out Of Excuses As US Manufacturing ‘Bounces’ Back To 9-Month Highs

 

Following this morning’s post-Brexit puke in UK PMI, Markit reports July’s preliminary manufacturing PMI considerably better than expected (up from 51.3 to 52.9 against 51.5 forecast). This follows the modest rebound in Industrial Production and is the highest PMI since Oct 2015. Manufacturing payrolls surged at the fastest pace in 12 months and new business expanded at the fastest since Oct 2015.  

 

 

Commenting on the flash PMI data, Chris Williamson, Chief Economist at Markit said:

“July saw manufacturers battle against a strong dollar, the ongoing energy sector downturn and political uncertainty ahead of the presidential election, yet still achieved the best growth seen since last year.

 

“It remains too early to say if this is the start of a stronger upturn, but this is a welcome and encouraging sign of revival after the second quarter, in which the PMI signalled the sector’s worst performance for over six years.

 

“In particular, an upturn in hiring which resulted in the strongest job growth for a year suggest companies are feeling brighter about the outlook and starting to expand capacity again.”

So China ‘stable’, Brexit ‘over’, record high stocks, good payrolls, rising inflation, and rebounding manufacturing? Data-dependent Fed is going to need more excuses.

Source: MarkitEconomics.com

 

END

General Electric reports horrific numbers:

 

1.organic orders down 16%

2.equipment orders down 30%

3.aviation orders down 37%

4.power down 27%

and yet these “clowns” beat expectations.  Take a look and see how they mal-reported

(courtesy zero hedge)

 

The Real Numbers Behind GE’s “Beat”: Organic Orders -16%; Power -27%; Equipment Orders -30%; Aviation -37%

On the surface, this morning’s GE non-GAAP results (defined as follows: “Non-GAAP results excluding acquired Alstom businesses, non-operating pension costs, gains and restructuring & other charges”) were spun as very bullish, with extensively adjusted revenues of $33.5 billion rising 15% and beating expectations of $31.4 billion, while non-GAAP EPS surged 65% to $0.51, well above the $0.46 expected.

 

Bloomberg immediately praised the result:

General Electric Co. reported second-quarter profit that beat analysts’ estimates as surging sales in energy units helped the industrial giant counter the impact of a sluggish economy.

 

Adjusted earnings rose to 51 cents a share, boosted by higher profits in the power and renewable energy divisions, GE said in a statement Friday. That exceeded the 46-cent average of analysts’ estimates compiled by Bloomberg. Sales of $33.3 billion compared with $31.9 billion expected by analysts.

 

“The diversity and scale of our portfolio enabled the company to perform well despite a volatile and slow-growth economy,” Chief Executive Officer Jeffrey Immelt said in the statement. “We expect strong organic growth in the second half of the year.”

What was less, if at all, noted is that any comparisons to prior periods were apples to oranges, as the entire upside contribution came not only from transaction “gains”, which added $3.1 billion to the top line, and restructuring charges but all the inclusion of the recently acquired Alstom.

Read the following as you keep the following assessment from Bloomberg in mind:

“GE is betting on markets such as energy and aviation to help it overcome economic malaise and global uncertainty highlighted by the U.K. vote to leave the European Union. Immelt has sold finance and consumer-focused operations while investing in equipment manufacturing and building a complementary software business.”

So for those curious how the increasingly industrial firm’s organic operations, and especially the abovementioned energy “and aviation” held up in the quarter when excluding the contributions from M&A, GE pointed out that excluding Alstom; organic orders – those attributable solely to GE’s core ops – crashed by -16% organic while industrial operating margins went nowhere, and stayed flat. Even including Alstom, overall orders declined by 2% from $27.1 billion to $26.6 billion, driven by a plunge in equipment orders from $14.5 to $12.9 billion, hinting just how troubled the global manufacturing sector remains.

 

But the real surprise was in GE’s core-core operations, whose breakdown we had to dig deep inside the presentation to find. It was, in a word, a disaster. Here is the breakdown:

  • Organic equipment, driven by market pressure in oil-and-gas and transportation, plunged 30%. 
  • Power tumbled 27%
  • And perhaps most disturbing was Aviation, despite strong prior results, crashed 37%

And that, in a nutshell, is how a company whose core lines of business are getting crushed, not only reported a 65% surge in “earnings”, but crushed expectations.

Source: GE

end Let us wrap up this week with this offering from Greg Hunter and Greg Mannarino: (courtesy Greg Hunter/USAWatchdog) Liars: Cruz, Bush, Kasich Do Not Endorse Trump, Hillary’s Mentor is Communist, Phony Economy Update By Greg Hunter On July 22, 2016 In Weekly News Wrap-Ups 115 Comments

By Greg Hunter’s USAWatchdog.com (WNW 247 7.22.16)

Even though former presidential candidates Ted Cruz, Jeb Bush and John Kasich signed a pledge to support the GOP candidate for president, none of them are doing it. Cruz gave a speech at the Republican Convention in Cleveland and was booed off the stage for not endorsing Trump. Some say this is helps Hillary Clinton and calls these former candidates selfish and liars.

Dr. Ben Carson brought up presumptive Democratic presidential nominee Hillary Clinton at the GOP Convention this past week. He said one of Hillary’s “mentors” and “heroes” is Communist/Marxist Saul Alinsky. The Washington Post (WaPo) was so freaked out about this fact it tried to explain it away as some sort of misguided guilt by association. This is very odd because even the WaPo’s own article says that “Clinton also brought Alinsky to Wellesley in 1969 to deliver a speech. And in her thesis, she refers to his ‘compelling personality’ and his ‘exceptional charm.’” It actually went well beyond a simple association. Alinsky knew Hillary Clinton well enough to offer her a job, but she turned him down because she wanted to change government from the inside. A lover of Marxism and Communism running for President of the United States of America, a Constitutional Republic. You can’t make this stuff up. This election is not just Democrat vs. Republican. This is Tyranny vs. Freedom, and nothing less.

Stocks are sky high, and yet, real earnings are bottom bouncing. What gives? Some say it is central banks propping up the financial system to try to stave off a crash as long as possible. Will it work? Gregory Mannarino of TradersChoice.net says it may have worked so far, but we are “nearing another major top and are in for another very big crash.”

Join Greg Hunter as he talks about these stories and more in the Weekly News Wrap-Up.

Join Greg Hunter as he talks about these stories and more in the Weekly News Wrap-Up.

Related Posts:
  • end

Well that about does it for today

As I am writing this on Saturday, I decided to check on the number of gold notices filed late Friday night: they were again very high at 54 notices so the amount standing must rise again as the amount left to be served upon on yesterday’s reporting was 51 notices.  The estimated comex gold OI rose from 207,543 up to 609,737 with gold down $7.40!.  The estimated silver OI again rose up to 221,828 with silver down 12 cents.  As I have stated our commercials are trapped.

However these are only estimated numbers, the official numbers come out at 1:33 pm Monday.

I will see you on Monday

Harvey


July 21/Another record high silver open interest at the comex: 220,600 contracts/gold and silver both do upside outside reversals: these are rare but the bankers like to attack after these events/ Huge increase in the amount of gold standing for July:...

Thu, 07/21/2016 - 19:45

Gold:1330.50 UP $11.70

Silver 19.78   UP 20 cents

In the access market 5:15 pm

Gold: 1331.10

Silver: 19.80

.

For the July gold contract month,  we had a huge 739 notices served upon for 73,900 ounces. The total number of notices filed so far for delivery:  6068 for 606,800 oz or 18.874 tonnes

In silver we had 28 notices served upon for 140,000 oz.  The total number of notices filed so far this month for delivery:  2134 for 10,670,000 oz

Silver today at the comex recorded an all time record for open interest and yet the price is 29 dollars cheaper. It defies commodity law!

 

Last night, I was up again in the early hours when I saw the bankers continue with their raid orchestrated by our crooked banks yesterday.  I took a look at the daily bulletin which is an estimated OI and then I knew the reason for the raid:

  1. the high open interest for silver (and a record high) despite silver being 29 dollars cheaper when it had its former high OI in 2011. (Oi 220,587)
  2. the front July contract month in gold saw a huge gain in an amount standing.  Now we have close to 19 tonnes standing in this a non active month.It sure looks like August will be exciting.

 

We are now entering options expiry month for gold and silver:

The comex options expiry on Tuesday July 26.

The OTC options in London expire Friday at noon July 29.

So expect downward drafts in gold and silver trading until both of these contracts expire.

 

 

Let us have a look at the data for today

.

Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 311.801 tonnes for a gain of 9  tonnes over that period

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

In silver, the total open interest ROSE BY 1,391 contracts UP to 220,587, AND A NEW ALL TIME RECORD. THE OI ROSE IN CONTRAST TO THE  PRICE OF SILVER WHICH FELL BY 40 CENTS IN YESTERDAY’S TRADING.In ounces, the OI is still represented by just over 1 BILLION oz i.e. 1.102 BILLION TO BE EXACT or 158% of annual global silver production (ex Russia &ex China).

In silver we had 38 notices served upon for 140,000 oz.

In gold, the total comex gold FELL BY 2,990 contracts as gold FELL in price YESTERDAY to the tune of $12.70. The total gold OI stands at 614,079 contracts.

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With respect to our two criminal funds, the GLD and the SLV:

GLD

we had a large withdrawal  in gold inventory. to the tune of 2.08 tonnes/

Total gold inventory rest tonight at: 963.14 tonnes

SLV

we had no changes into the SILVER INVENTORY TO THE SLV

Inventory rests at 348.580 million oz.

First, here is an outline of what will be discussed tonight:

1. Today, we had the open interest in silver ROSE by 1,381 contracts UP to 220,587 as the price of silver FELL BY 40 cents with YESTERDAY’S trading. The gold open interest FELL by 2990 contracts DOWN to 614,079 as  the price of gold FELL by $12.70  YESTERDAY.

(report Harvey).

 

2 a) Gold/silver trading overnight Europe, Goldcore

(Mark OByrne/zerohedge

3. ASIAN AFFAIRS

 i)Late  WEDNESDAY night/THURSDAY morning: Shanghai closed UP 11.11 POINTS OR 0.37%/ /Hang Sang closed UP 118.01 OR 0.54%. The Nikkei closed UP 128.33 POINTS OR 0.77% Australia’s all ordinaires  CLOSED UP 0.41% Chinese yuan (ONSHORE) closed UP at 6.6761 /Oil ROSE to 45.85 dollars per barrel for WTI and 47.12 for Brent. Stocks in Europe ALL IN THE RED. Offshore yuan trades  6.6788 yuan to the dollar vs 6.6761 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS CONSIDERABLY AS TRIES TO STOP MORE USA DOLLARS LEAVING THEIR SHORES. 

REPORT ON JAPAN  SOUTH KOREA AND CHINA a) REPORT ON JAPAN

It sure looks like helicopter money is off the table.  Thus the entire global rally is a lie?

( Phoenix  Research Capital)

b) REPORT ON CHINA

NONE TODAY

4 EUROPEAN AFFAIRS i)Draghi less accommodating as the 10 yr German bund drops again below 0%.Draghi decides to leave the QE program unchanged and thus less dovish;

( zero hedge)

ii)Draghi hints at a public backstop to bring aid to the ailing Italian and other European banks: Germany is not happy@!!

( zero hedge)

iii)George Soros  proposal will bankrupt Europe tenfold: he is asking to accept 300,000 refugees a year at an additional cost of 30 billion dollars or face an EU collapse!

( zero hedge)

iv)The following illustrates how sharia law is practiced in Denmark and what the government is trying to counter its offensive beliefs

( Judith Bergmann/Gatestone Institute)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS Goldman Sachs assists Malaysian embezzlers and are caught.  The USA seizes 1 billion dollars worth of ill gotten assets

(courtesy zero hedge)

6.GLOBAL ISSUES

Brandon Smith illustrates 6 possible black swan events that may surface:

( Brandon Smith/AltMarket.com)

7.OIL ISSUES

i)Why oil was fall

( Nick Cunningham/Oil Price.com)

8.EMERGING MARKETS 9.PHYSICAL STORIES

i)Bank of England considers cutting commercial banks  out of the payment systems

( Jon Sindreu/WallStreet Journal)

ii)The pros and cons of central banks buying equities

( Lynn/London Telegraph)

10.USA STORIES WHICH MAY INFLUENCE THE PRICE OF GOLD/SILVER

i)The Philly mfg index slumped to a 6th month low totally negated last month’s rise.  The Chicago national manufacturing activity remains in negative territory for the 17th straight month:

( zero hedge)

 

ii)This may turn out to be very interesting as Johnson is HSBC’s key FX trader and commodity trader.  Even though he was “cleared” of its own internal probe, the USA has an iron clad case against HSBC for front running and causing damage to its client.  This is a criminal action:

( zero hedge)

Let us head over to the comex: The total gold comex open interest  FELL TO AN OI level of 614,079 for a  LOSS of 2990 contracts AS  THE PRICE OF GOLD FELL BY $12.70 with respect to YESTERDAY’S TRADING We are now in the non active month of July. As I stated yesterday: “Somebody big is continually standing for the gold metal even though July is  generally a poor delivery month. The open interest for the front July contract stands at 803 for a GAIN of 459 contracts. We had 269 notices filed on yesterday, so we gained 728 contracts or an additional 72,800 gold ounces that will stand for delivery in this non active month of July. We  are again witnessing the same scenario as in May and June whereby the front delivery month increases in OI standing for metal or a slight contraction.  The next big active contract month is August and here the OI FELL by 21,065 contracts down to 273,673  as this month continues its wind down until first day notice for the August contract, Friday,July 29/2016: 1 week a way.  The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was  good at 218,673. The confirmed volume  yesterday (which includes the volume during regular business hours + access market sales the previous day was GOOD at 266,806 contracts.The comex is not in backwardation. Today, we had a huge 739 notices filed for 73900 oz in gold And now for the wild silver comex results. Total silver OI ROSE by 1381 contracts from 219206  up to 220,587.  We are now at an all time record high for silver open interest set today (220,587). The front active delivery month is July and here the OI fell BY 47 contracts down to 381. We had 38 notices served on YESTERDAY so we lost 9 silver contracts or an additional 45,000 oz that will not stand for delivery. The next non active month of August saw it’s OI fell by 10 contracts down to 467. The next big active month is September and here the OI ROSE by 813 contracts UP to 159,957. The volume on the comex today (just comex) came in at 56,914 which is excellent. The confirmed volume yesterday (comex + globex) was EXCELLENT at 66,013. Silver is not in backwardation. London is in backwardation for several months. We had 28 notices filed for 140,000 oz. in silver JULY contract month :INITIAL standings for JULY July 21. Gold Ounces Withdrawals from Dealers Inventory in oz   nil OZ Withdrawals from Customer Inventory in oz  nil 3215.000  oz SCOTIA  100 kilobars Deposits to the Dealer Inventory in oz  100,308.000 oz

brinks

3120 kilobars Deposits to the Customer Inventory, in oz   nil No of oz served (contracts) today 739 notices  73,900 oz No of oz to be served (notices) 64 contracts 6400 oz Total monthly oz gold served (contracts) so far this month 6068 contracts (606,800 oz) (18.874 tonnes) Total accumulative withdrawals  of gold from the Dealers inventory this month   NIL Total accumulative withdrawal of gold from the Customer inventory this month   595,321.8 OZ  MORE FARCICAL ENTRIES TODAY Today we had 1 dealer DEPOSIT i) Into Brinks:  100,308.000 oz  (3120 kilobars) total dealer deposit: 100,308.000   0z Today we had 0 dealer withdrawals: total dealer withdrawals:  nil oz We had 0 customer deposit: Total customer deposits: nil oz Today we had 1 customer withdrawal: i) Out of Scotia:  3215.000 oz 100 kilobars Total customer withdrawals 3215.000   oz Today we had 1  adjustment: i) Out of Brinks: we had 3,858.000 oz (120 kilobars) were transferred out of the customer and this landed into the dealer account of Brinks Today, 0 notices was issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 269 contracts of which 0 notices was stopped (received) by JPMorgan dealer and 255 notices was stopped (received)  by JPMorgan customer account.  To calculate the initial total number of gold ounces standing for the JULY contract month, we take the total number of notices filed so far for the month (6068) x 100 oz  or 606,800 oz , to which we  add the difference between the open interest for the front month of JULY  (803 CONTRACTS) minus the number of notices served upon today (739) x 100 oz   x 100 oz per contract equals 603,200 oz, the number of ounces standing in this active month.    Thus the INITIAL standings for gold for the JULY. contract month: No of notices served so far (6068) x 100 oz  or ounces + {OI for the front month (803) minus the number of  notices served upon today (739) x 100 oz which equals 6032 oz standing in this non   active delivery month of JULY  (18.762 tonnes). We  gained 72,800 gold ounces that will stand for metal in this non active month of July. SOMEBODY WAS IN URGENT NEED OF PHYSICAL GOLD TODAY. Since the comex allows GLD shares to be used for settling, it may take quite a while for the physical gold to enter the comex vaults.  So far I have seen little evidence of any settling of contracts but I will continue to monitor it for you.    We now have partial evidence of gold settling for last months deliveries We now have  +  6.889 TONNES FOR MAY + 49.09 TONNES FOR JUNE +  18.236 TONNES FOR JULY + 12.3917 tonnes (April) +2.2311 tonnes (March) + 7.99 (total Feb)- .940 (probable delivery on March 1) tonnes -.0434 tonnes (March 11,12,17,18) + March 31: 1.2470 and then  April 1,2: – .0006 tonnes  and last week April 16.3203 and April 22 .(0009 tonnes) + april 29  .205 tonnes + May 5:  3.799 and May 6: 1.607 tonnes –MAY 12  .0003- May 18: 1.5635 tonnes-May 19/   2.535 tonnes-May 27 .0185 – .024 TONNES MAY 31 -jUNE 4: .5044 ; june 10 -.0008 / June 22:0.48 tonnes /June 23: 0489 tonnes, June 24..018; june 29 .036 tonnes; JUNE 30 2.49 /july 1 17.78 tonnes = 49.194 tonnes still standing against 50.893 tonnes available.  Total dealer inventor 1,636.227.922 tonnes or 50.893 tonnes Total gold inventory (dealer and customer) =10,024,405.843 or 311.801 tonnes    Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 311.801 tonnes for a  gain of 9  tonnes over that period.    THE GOLD COMEX IS AN ABSOLUTE FRAUD. THE USE OF KILOBARS AND EXACT WEIGHTS MAKES THE DATA TOTALLY ABSURD AND FRAUDULENT!!

To me, the only thing that makes sense is the fact that “kilobars” are entries or hypothecated gold sent to other jurisdictions so that they will not be short in their derivatives like in England.  This would be similar to the gold used by Jon Corzine. If this is the case, this would be the greatest fraud perpetrated on USA soil.

     end GOOD ACTIVITY AGAIN INSIDE THE SILVER COMEX And now for silver   JULY INITIAL standings  July 21.2016 Silver Ounces Withdrawals from Dealers Inventory NIL Withdrawals from Customer Inventory  176,098.600 OZ (DELAWARE) Deposits to the Dealer Inventory nil Deposits to the Customer Inventory  907,495.694 OZ HSBC, DELAWARE No of oz served today (contracts) 28 CONTRACTS  (140,000 OZ) No of oz to be served (notices) 359 contracts 1,795,000 oz) Total monthly oz silver served (contracts) 2134 contracts (10,670,000 oz) Total accumulative withdrawal of silver from the Dealers inventory this month  NIL oz Total accumulative withdrawal  of silver from the Customer inventory this month  5,418,919.9 oz today we had 0 deposit into the dealer account total dealer deposit NIL oz we had 0 dealer withdrawal: : total dealer withdrawals:  NIL oz we had 1 customer withdrawals: i)Out of Delaware:  176,098.600 oz Total customer withdrawals: 176,098.600 oz We had 2 customer deposit: i)Into HSBC: 904,393.710 oz ii) Into Delaware: 3101.984 oz : total customer withdrawals:907,495.694. oz        we had 2 adjustments i) Out of Delaware:  9970.65 oz was removed from the customer and this landed into the dealer account of Delaware ii) Out of jpm:  60.30 oz was removed from the customer account as an accounting error. The total number of notices filed today for the JULY contract month is represented by 28 contracts for 140,000  oz. To calculate the number of silver ounces that will stand for delivery in JULY., we take the total number of notices filed for the month so far at (2134) x 5,000 oz  = 10,670,000 oz to which we add the difference between the open interest for the front month of JULY (381) and the number of notices served upon today (28) x 5000 oz equals the number of ounces standing    Thus the initial standings for silver for the JULY contract month:  2134(notices served so far)x 5000 oz +(381 OI for front month of JULY ) -number of notices served upon today (28)x 5000 oz  equals  12,465,000 oz  of silver standing for the JULY contract month. We lost 19 contracts or 95,000 ounces will not stand in this active month of July.   Total dealer silver:  28.370 million (close to record low inventory   Total number of dealer and customer silver:   155.021 million oz (close to a record low) The total open interest on silver is NOW AT its all time high with the record of 220,587 being set July 21.2016.  The registered silver (dealer silver) is NOW NEAR  multi year lows as silver is being drawn out at both dealer and customer levels and heading to China and other destinations. The shear movement of silver into and out of the vaults signify that something is going on in silver. END And now the Gold inventory at the GLD July 21/ a large withdrawal of gold inventory to the tune of 2.08 tonnes/Inventory rests at 963.14 tonnes July 20./no changes in gold inventory at the GLD/Inventory rests at 965.22 tonese July 19/no change in gold inventory at the GLD/Inventory rests at 965.22 tonnes July 18./ a good sized deposit of 2.37 tonnes of gld into GLD/this is a paper gold entry/inventory rests at 965.22 tonnese July 15./no change in gold inventory at the GLD/Inventory rests at 962.85 tonnes July 14/a good sized withdrawal of 2.37 tonnes from the GLD/this would be a “paper withdrawal”/inventory rests tonight at 962.85 tonnes.. July 13/ we had a huge paper withdrawal of 15.98 tonnes of gold from the GLD/inventory rests at 965.22 tonnes. July 12/we had no changes in gold inventory at the GLD/Inventory rests at 981.20 tonnes July 11/no changes in gold inventory at the GLS/Inventory rests at 981.20 tonnes JULY 8/ A  good sized deposit of 2.91 tonnes into the GLD/Inventory rests at 981.20 July 7/a good sized withdrawal of 4.15 tonnes from the GLD/Inventory rests at 978.29 tonnes (this was nothing but a paper entry/no physical moved) JULY 6/WHAT A FRAUD!! A MASSIVE 28.53 TONNES OF PAPER GOLD ADDED INTO THE GLD July 5/no change in inventory/rests tonight at 982.44 July 1/a huge change in the gold inventory/ a deposit of 3.86 tonnes/rests tonight at 953.91 tonnes JUNE 30/no change in gold inventory /inventory rests tonight at 950.05 tonnes June 29/ a good sized deposit of 2.67 tonnes/inventory rests at 950.05 tonnes June 28/ a huge deposit of 13.067 tonnes into inventory/new inventory rests so far at 947.38 tonnes.  This was a paper addition June 27/a huge deposit of 18.415 tonnes into the GLD inventory/the new inventory rests at 934.313 tonnes.  The addition was a paper addition and not physical xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx July 21 / Inventory rests tonight at 963.14 tonnes

end

Now the SLV Inventory July 21/no change in silver inventory at the SLV/Inventory rests at 348.580 million oz July 20/no change in silver inventory at the SLV/Inventory rests at 348.580 million oz July 19/no change in silver inventory at the SLV/Inventory rests at 348.580 million oz July 18/no change in silver inventory at he SLV/inventory restss at 348.580 million oz July 15/ no change in  silver inventory at the SLV/Inventory rests at 348.580 million oz July 14/no changes in silver inventory at the SLV/Inventory rests at 348.580 million oz/ July 13./ a huge addition of 5.187 million oz into silver inventory at the SLV/ this is a paper addition as inventory rests at 348.580 million oz July 12/ a huge addition of 1.94 million oz into silver inventory at the SLV/a “paper” addition/inventory rests at 343.393 million oz July 11/no changes in silver inventory/rests tonight at 341.453 million oz JULY 8/no change in silver inventory/rests tonight at 341.453 million oz July 7./no change in silver inventory/inventory rests at 341.453 million oz JULY 6/AND ANOTHER FRAUD!! A MASSIVE 7.909 MILLION OZ ADDED INTO THE SLV/INVENTORY RESTS AT 341.453 MILLION OZ july 5/no change in silver inventory/inventory rests at 333.554 milllion oz july 1/no change in silver inventory/inventory rests at 333.544 million oz JUNE 30/no changes in silver inventory/inventory rests at 333.544 million oz June 29/ a small deposit of 760,000 oz/Inventory rests tonight at 333.544 million oz/ June 28/no change in silver inventory/rests tonight at 332.784 million oz June 27/ a small deposit of 570,000 oz in the SLV inventory/Inventory rests at 332.784 million oz . July 21.2016: Inventory 348.580 million oz end NPV for Sprott and Central Fund of Canada 1. Central Fund of Canada: traded at Negative 3.2 percent to NAV usa funds and Negative 3.0% to NAV for Cdn funds!!!!  (the discount is starting to disappear) Percentage of fund in gold 59.4% Percentage of fund in silver:39.3% cash .+1.3%( July 21/2016).  2. Sprott silver fund (PSLV): Premium rises  to +0.39%!!!! NAV (July21/2016)  3. Sprott gold fund (PHYS): premium to NAV  falls TO  0.61% to NAV  ( July 21/2016) Note: Sprott silver trust back  into NEGATIVE territory at -+39% /Sprott physical gold trust is back into positive territory at +0.61%/Central fund of Canada’s is still in jail.      

end

And now your overnight trading in gold,THURSDAY MORNING and also physical stories that may interest you: Trading in gold and silver overnight in Asia and Europe Mark O’Byrne/David Russell (Goldcore) Why Italy’s bank crisis could be a ‘ticking time bomb’ by GoldCore Jul 21, 2016 7:27 AM 7 SHARES

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Just as the dust begins to settle on Brexit, Italy’s banking system looms as the next threat to global financial markets.

Previous attempts to resolve Italy’s banking sector woes have proven to be less than effective. Non Performing Loans on the balance sheets of Italian banks represent over 8% of the total loan portfolios. However some analyst fear that this is set to grow to a whopping 15% in the near future.

Results of a stress tests by the European Banking Authority due on July 29 are expected to shed more light on the capital needs of the Italian banking sector, potentially serving as a spark to renewed financial turmoil.

While foreign exposure to Italian banks is relatively low, the bigger worry is that a backlash over a bailout leads voters to revolt, empowering the euroskeptic 5 Star Movement, a political party that is growing in poularity, which has called for a referendum on eurozone membership.

Could we be moving from Brexit to Italeave?

You can read the full article here 

 

Gold and Silver Bullion – News and Prices

Gold hits 3-week low as equities rise; ECB in focus (Reuters)

Brexit Altering the Landscape for Gold: BofA’s Blanch (Bloomberg)

Chart of The Day – Gold DCL Still Several Days Away (24hgold)

HSBC Bankers Are First Individuals Charged in U.S. Currency Case (Bloomberg)

Gold miner Newmont cuts cost forecast, beats market (Reuters)

Silver Price Ignition or Money Reasserting: When Silver Investment Demand Merges with Industrial Demand (Silverseek)

Gold, Guns, and the New Silk Road – Rory Hall (24hgold)

Why gold’s bond with the dollar has broken (Marketwatch)

Gold Prices (LBMA AM)

21 July: USD 1,322.00 ., EUR 1,199.318 & GBP 1,000.754 per ounce
20 July: USD 1,325.60, EUR 1,204.308 & GBP 1,005.865 per ounce
19 July: USD 1,332.20, EUR 1,203.376 & GBP 1,009.042 per ounce
18 July: USD 1,326.15, EUR 1,200.298 & GBP 1,000.050 per ounce
15 July: USD 1,330.50, EUR 1,194.789 & GBP 994.150 per ounce
14 July: USD 1,325.705, EUR 1,192.99 & GBP 1,001.96 per ounce
13 July: USD 1,340.25, EUR 1,211.45 & GBP 1,009.74 per ounce

Silver Prices (LBMA)

21 July: USD 19.34, EUR 17.55 & GBP 14.66 per ounce
20 July: USD 19.70, EUR 17.88 & GBP 14.95 per ounce
19 July: USD 19.99, EUR 18.07 & GBP 15.18 per ounce
18 July: USD 19.72, EUR 17.83 & GBP 14.89 per ounce
15 July: USD 20.14, EUR 18.08 & GBP 15.06 per ounce
14 July: USD 20.25, EUR 18.23 & GBP 15.15 per ounce
13 July: USD 20.29, EUR 18.31 & GBP 15.25 per ounce


Recent Market Updates

– Gold Holds Near Two-Week Low as Risk Appetite Rises on U.S. Data
– Gold, Trump and Rates: Bank That Foresaw Rally Flags $1,500
– Gold Lower After Central Bank’s Surprise Move
– “We Are On the Cusp of an Explosion in the Silver Price” – John Embry

– Stocks Rally – Is Brexit Systemic Risks Contained?
– Britain has a new prime minister – here’s what that means for you
– Metals Caught Between Global Gloom, U.S. Job Gains as Gold Slips
– Central Bank Resumes Monthly Gold Buying in Bid to Diversify Reserves
– Property Fund Turmoil in the UK has Eerie Echoes of Bear Stearns
– “In Gold We Trust” Annual Report – New Bull Market “Emerging”
– 3 Charts Show “How Precious Brexit Is” for Gold and Silver Bullion
– Gold, Silver Best Performing Assets In H1, 2016 – Up 26% & 38%

end

Bank of England considers cutting commercial banks  out of the payment systems

(courtesy Jon Sindreu/WallStreet Journal)

Bank of England considers cutting commercial banks out of the payments system

Submitted by cpowell on Wed, 2016-07-20 14:14. Section:

The Central Bankers’ Bold New Idea: Print Bitcoins

By Jon Sindreu
The Wall Street Journal
Tuesday, July 19, 2016

When it comes to bitcoin and digital currencies, central banks might be considering the adage: “If you can’t beat them, join them.”

In a research paper published on Monday, economists at the Bank of England advocated that central banks issue their own kind of digital currency. Using the U.S. as a case study, they argued it could give a permanent boost to the economy of around 3%, as well as providing policy makers with more effective tools to tame financial booms and busts. …

But the main appeal of bitcoin isn’t that it’s electronic. In fact, most money already is: Only about 5% of money in the economy is physical cash; the rest is bank deposits.

Rather, a digital currency offers a decentralized way to make payments without needing commercial banks to stand in the middle and record the transaction. Payments are validated by other users in a global network of computers and then updated in a shared record known as the blockchain.

Central banks across the developed world, including the Bank of England and the Bank of Canada, are now studying the potential of this technology. Were central banks to issue digital cash and make it available to the public, money would exist electronically outside of bank accounts in digital wallets, much as physical bank notes do. This means households and businesses would be able to bypass banks altogether when making payments to one another. …

… For the remainder of the report:

http://www.wsj.com/articles/the-central-bankers-bold-new-idea-print-bitc…

… For the Bank of England research paper cited in this report:

http://www.bankofengland.co.uk/research/Documents/workingpapers/2016/swp…

end

The pros and cons of central banks buying equities

(courtesy Lynn/London Telegraph)

Analyze THIS (technically): We don’t need back-door nationalization by central banks

Submitted by cpowell on Wed, 2016-07-20 23:41. Section:

Central Banks Must Realise the Last Thing We Need Is Nationalisation by the Back Door

By Matthew W. Lynn
The Telegraph, London
Wednesday, July 20, 2016

http://www.telegraph.co.uk/business/2016/07/20/central-banks-must-realis…

Would you feel comfortable lending money to the mining conglomerate Glencore, a company that only last year came perilously close to imploding? Or Telecom Italia, with its massive exposure to the weakest major economy in the world? Or to Lufthansa, a lumbering beast of an airline just waiting to be eaten alive by new and aggressive low-cost carriers?

Well, perhaps you would, and perhaps you wouldn’t. If you are part of the eurozone, however, you don’t have any choice.

This week we learned that the European Central Bank (ECB) has been buying bonds in all those companies as part of its latest round of quantitative easing. It is far from alone in pumping money directly into corporations. Over the last few years, the Bank of Japan has been buying equities so furiously it is now one of the biggest stakeholders in Japan Inc. All it will take is one downturn, and it would be no surprise if the Bank of England and the Federal Reserve followed suit.

But is that really wise? Central banks, which are owned by the state, are going to end up controlling huge swathes of private industry. That is sold as a way of stimulating growth. But it could end up as nationalisation by the back door — and everything we know about economic history tells us that always ends in disaster.

Having exhausted just about every other way of stimulating some life into the moribund eurozone economy, the ECB has now resorted to pumping cash directly into the corporate sector. It tried loading the banks up with cash, but they are so reluctant to lend it out that the ECB has now started buying corporate bonds instead. It is currently doing so at a rate of 300 million euros a day — serious money even for the ECB.

Earlier this week it published details of what it has been buying. Most of the major eurozone corporations are there. So are companies from elsewhere, which are eligible so long as the debt is issued through a unit within the euro area. Such is the scale of the programme that prices are dropping and it is getting a lot easier for big corporations to tap the markets for money.

The ECB is far from alone. The Bank of Japan has been buying equities on a massive scale for several years now. It is now a Top 10 shareholder in 90 percent of the companies listed on the Nikkei 225. It is a Top 10 holder of Fast Clothing, which owns the Uniqlo chain, and a Top 3 holder of Yamaha, one of the world’s biggest instrument makers.

Plenty of economists will tell you that is simply a clever way of stimulating the economy when interest rates are already zero. The trouble is this, however. Even though the central banks claim they will be completely neutral with their holdings, it is hard to see how that can be true. In fact, there are two problems.

First, what happens in a crisis? Some of the bonds come with what the market makers call “event risk,” and the rest of us would describe as “terrible stuff about to happen at any moment.”

For example, the ECB now owns bonds in Volkswagen. As we know, the German car maker is still embroiled in a scandal over cheating on diesel emissions. Where will that end up, and can the business withstand the potential legal costs? No one yet knows. But one thing is clear. If it runs into serious trouble, then the bondholders will end up taking control. And yet the ECB has no mandate to get involved in sorting out VW or any other company.

Next, surely the ECB’s choice of purchases is a form of intervention. If it buys a Lufthansa bond, it lowers the cost of capital for that company. That gives it an advantage over its rivals — say, another EU-based airline such as Ryanair. In many industries, such as airlines or utilities, cheap capital is one of the most crucial factors in whether the business is a success or not.

Whether it likes it or not, the ECB is favouring one or another. Even worse, over time it opens up the bank to cronyism. How long before French or Italian politicians demand that some tottering conglomerate be propped up with cheap cash? It will probably happen before Christmas.

State control of the economy has always been a bad idea. It distorts the playing field, favours political lobbying over competitive excellence, and stops the market from allowing the best-managed businesses with the best products to flourish. Central banks are pushing it through the back door. They argue they are doing so to help revive demand and keep the economy alive. But as with so many of their recent innovations, from zero rates to printing money, the medicine is starting to look a lot worse than the disease.

 

end

Your early THURSDAY morning currency, Asian stock market results,  important USA/Asian currency crosses, gold/silver pricing overnight along with the price of oil Major stories overnight    

:

1 Chinese yuan vs USA dollar/yuan SLIGHTLY DOWN to 6.6761 (  SMALL DEVALUATION SOUTHBOUND  /CHINA UNHAPPY TODAY CONCERNING USA DOLLAR RISE/MORE $ USA DOLLARS LEAVE CHINA/OFFSHORE YUAN NARROWS TO 6.6788) / Shanghai bourse  UP 11.11 OR 0.37%   / HANG SANG CLOSED UP 118.01 OR 0.54% 

2 Nikkei closed /USA: YEN RISES TO 106.36

3. Europe stocks opened ALL IN THE RED    /USA dollar index DOWN to 97.02/Euro UP to 1.1017

3b Japan 10 year bond yield: RISES AT  -.222%     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 106.36

3c Nikkei now JUST BELOW 17,000

3d USA/Yen rate now well below the important 120 barrier this morning

3e WTI::  45.85  and Brent: 47.12

3f Gold UP  /Yen UP

3g Japan is to buy the equivalent of 108 billion uSA dollars worth of bond per month or $1.3 trillion. Japan’s GDP equals 5 trillion usa./“HELICOPTER MONEY” OFF THE TABLE FOR NOW

Japan to buy 100% of all new Japanese debt and by 2018 they will have 25% of all Japanese debt. Fifty percent of Japanese budget financed with debt.

3h Oil UP for WTI and UP for Brent this morning

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund RISES to +.011%   German bunds BASICALLY negative yields from  10+ years out

 Greece  sees its 2 year rate RISE to 8.40%/: 

3j Greek 10 year bond yield RISE to  : 8.01%   (YIELD CURVE NOW  FLAT TO INVERTED)

3k Gold at $1320.40/silver $19.41(7:45 am est)   SILVER FINAL RESISTANCE AT $18.50 BROKEN 

3l USA vs Russian rouble; (Russian rouble DOWN 14/100 in  roubles/dollar) 63.91-

3m oil into the 45 dollar handle for WTI and 47 handle for Brent/

3n Higher foreign deposits out of China sees huge risk of outflows and a currency depreciation  (already upon us). This can spell financial disaster for the rest of the world/China forced to do QE!! as it lowers its yuan value to the dollar/GOT a SMALL REVALUATION UPWARD from POBC.

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 106.36 DESTROYING WHATEVER IS LEFT OF OUR YEN CARRY TRADERS

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning .9869 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0873 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

3p BRITAIN VOTES AFFIRMATIVE BREXIT

3r the 10 Year German bund now POSITIVE territory with the 10 year RISES to  +.011%

/German 10+ year rate BASICALLY  negative%!!!

3s The Greece ELA NOW a 71.4 billion euros,AND NOW THE ECB WILL ACCEPT GREEK BONDS (WHAT A DISASTER)

The bank withdrawals were causing massive hardship to the Greek bank. the Greek referendum voted overwhelming “NO”.  Next step for Greece will be the recapitalization of the banks and that will be difficult.

4. USA 10 year treasury bond at 1.588% early this morning. Thirty year rate  at 2.308% /POLICY ERROR)

5. Details Ransquawk, Bloomberg, Deutsche bank/Jim Reid.

(courtesy Jim Reid/Bloomberg/Deutsche bank/zero hedge)

HELICOPTER MONEY COMING! Yen Soars, Stocks Slide After Kuroda Says “No Need Or Possibility For Helicopter Money”

The main catalyst that has pushed stocks to new all time highs, and sent the Yen plunging the most in the 21st century last week, were reports that Ben Bernanke was urging Japan to unleash helicopter money. Indeed, just yesterday, the USDJPY hit new two month highs on reports Japan was considering doubling the previously rumored fiscal stimulus of JPY10 trillion to 20, with the implication that the BOJ would provide the funds. It appeared that Japan had found just the jawboning tagline to keep stocks levitating and the Yen dropped: just hint every other day that more helicopter-funded stimulus is coming and jawbone assets, the same way verbal hints of more BOJ QE worked in 2015.

Which is why we were surprised to read this morning that BOJ governor Kuroda had shut down Bernanke, saying there is no need and no possibility of helicopter money in Japan, increasing speculation about the course of monetary and fiscal policy in the world’s third-largest economy. Given the current institutional setting, there is “no need and no possibility for helicopter money,” Kuroda said in a BBC Radio 4 program that was broadcast Thursday. “At this moment, the Bank of Japan has three options with quantitative and qualitative easing with negative interest rates.”

These current policies can be expanded, he said. Kuroda also repeated that he is determined to rid Japan of its deflationary mindset, and that there are no significant limitations to further monetary stimulus if needed by the BOJ.

Which, however, is not true: like the ECB, the BOJ is rapidly running out of willing bond sellers as its universe of eligible bonds gets smaller, while NIRP has proven to be far more deflationary than anyone had expected. In fact, the only way the BOJ’s policies can continue is if the government opens the debt issuance spigot, which is all that helicopter money really is. We are confident that Kuroda gets this, and we are confident that despite his reverse-jawboning today, helicopter money is precisely what will happen.

But first there needs to be a crisis. As BofA’s Athanasios Vamvakidis said, “markets had run ahead of themselves, expecting too much. Helicopter money is the inevitable end game in Japan, but we aren’t there yet, it will be the bazooka that the BOJ will use after a crisis.” So we just need the crisis. For now however, there is none, and immediately after Kuroda’s interview, the Yen soared, strengthening against all 16 of its major peers. The USDJPY tumbled more than 1% in the minutes after Kuroda’s interview was releaesed.

“Kuroda has just given investors a bit of a disappointment,” said Peter Garnry, head of equity strategy at Saxo Bank A/S in Hellerup, Denmark. “The market had actually changed its sentiment and pricing based on the assumption that we would get something big on the fiscal stimulus side, and that Japan would be the first wave.”

Meanwhile, almost $5 trillion has been added to the value of global equities since June 27 amid signs central banks including the BOJ will boost stimulus to shore up economies after the U.K. voted to leave the European Union.

Elsewhere, the euro hovered near a three-week low amid speculation the European Central Bank will leave rates unchanged and signal further easing for later in the year when Mario Draghi speaks in two hours.

The Stoxx Europe 600 Index slipped 0.4%, with share of airlines sliding after Deutsche Lufthansa AG cut its earnings forecast. Lufthansa tumbled 8.4 percent, and EasyJet Plc slid 5 percent after posting a drop in quarterly revenue. Tele2 AB lost 6.4 percent as its earnings missed estimates. Hermes International SCA gained 3.4 percent as the luxury clothing and handbag maker said its profitability improved. Miners in the Stoxx 600 advanced for the first time in three days.

Turkish stocks fell the most worldwide after the president called for a state of emergency and S&P Global Ratings cut the country’s credit score. S&P 500 futures expiring in September lost 0.2 percent, while the MSCI All-Country World Index gained 0.1 percent, trading at its highest level since November. In the U.S., Intel Corp. slipped 2.8 percent in early New York trading after reporting slower growth in its server-chip division, while Qualcomm Inc. gained 6.5 percent as its results showed the chipmaker is overcoming hurdles in China. Joy Global Inc. rallied 20 percent after Japan’s Komatsu Ltd., the world’s second-biggest mining and construction equipment maker, agreed to buy it. Komatsu added 2.3 percent.

The Borsa Istanbul 100 Index slumped 3.8 percent. Turkey imposed a three-month state of emergency as the government pursues those responsible for last week’s failed military coup, detaining thousands of army officers, judges and prosecutors. A wider purge is under way that encompasses universities, schools and the civil service. The country won’t be under military rule, with army units taking orders from provincial governors, President Recep Tayyip Erdogan said in Ankara on Wednesday.

Germany’s 10-year bond was little changed, with the yield at minus 0.005 percent. The yield on similar-maturity U.S. Treasuries was 1.58 percent. It sank to a record 1.32 percent on July 6 and analysts see it ending the year at 1.74 percent, a Bloomberg survey shows.

Market Snapshot

  • S&P 500 futures down 0.2% to 2164
  • Stoxx 600 down 0.4% to 340
  • FTSE 100 down 0.4% to 6703
  • DAX down 0.2% to 10117
  • German 10Yr yield up less than 1bp to -0.01%
  • Italian 10Yr yield up less than 1bp to 1.25%
  • Spanish 10Yr yield down 2bps to 1.14%
  • S&P GSCI Index up 0.1% to 355.4
  • MSCI Asia Pacific up 0.9% to 135
  • Nikkei 225 up 0.8% to 16810
  • Hang Seng up 0.9% to 22090
  • Shanghai Composite up 0.3% to 3036
  • S&P/ASX 200 up 0.4% to 5512
  • US 10-yr yield down less than 1bp to 1.58%
  • Dollar Index down 0.28% to 96.93
  • WTI Crude futures up less than 0.1% to $45.79
  • Brent Futures unchanged at 47.17
  • Gold spot up 0.5% to $1,322
  • Silver spot up 0.4% to $19.48

Global Headline News

  • Kuroda Says No Need and No Possibility for Helicopter Money: Central bank Governor Haruhiko Kuroda spoke in BBC Radio 4 program
  • Japan’s Komatsu to Buy U.S. Joy Global for $2.89b: Komatsu to pay $28.30 a share in cash, 20% premium to close
  • Tesla’s Musk Sees Building Semi Truck in New ‘Master Plan’: CEO plans business expansion to include ride-sharing, buses
  • Singapore Seizes S$240m in Assets Related to 1MDB Probe: U.S. seeks also to seize assets linked to 1MDB
  • Shenhua Said to Seek CGN Merger to Form $204b Giant: China’s top coal miner said to submit proposal to regulators
  • Exxon in Catbird’s Seat for InterOil as Oil Search Drops Out: Exxon bid values Papua New Guinea gas explorer at $2.5b
  • Qualcomm Shows China Progress While Intel Stokes Server Fears: Intel’s data center business lags behind growth target, Qualcomm gets catch-up licensing payments, more chip orders
  • Oil Extends Gains as U.S. Stockpiles Fall, Refinery Rates Rise: September futures added 0.5% in New York after gaining 0.7% Wednesday
  • Trump Chooses War With Cruz at Convention Aimed at Unification
  • LVMH Said to Be in Talks to Sell DKNY, DKI: New York Post

* * *

Looking at regional markets, we start in Asia where a positive picture was observed, following the latest record advance seen on Wall Street after a rally in WTI and strong financials led US higher. Nikkei 225 (+0.8%) was catapulted back into positive territory by reports that the government are preparing an additional JPY 9trl in fiscal spending to accompany the earlier reported JPY 10TRN package, however after the close Kuroda dashed Nikkei futures with his statement that helicopter money is “not possible.” ASX 200 (+0.6%) extended on its progress from yesterday’s session with widespread gains seen across sectors, although materials still lagged behind. Elsewhere, Chinese markets conformed to the upbeat tone with the Hang Seng (+0.5%) in the green, while new measures to boost the economy in China bolstered the Shanghai Comp (+0.4%). 10yr JGBs trade flat as the benefits from the BoJ entering the market to acquire JPY 1.135tr1 of government debt was capped by the bullish pressure in Japanese equities. According to sources, the Japanese government is said to be preparing an additional JPY 9trl in fiscal spending to accompany the reported JPY 10trl package and could be given the green light before the August 2nd cabinet is approved.

Top Asian News

  • China Factory Gauge Suspended Again, This Time ‘Indefinitely’: Two indicators of Chinese economy have been discontinued
  • PBOC Strengthens Yuan Fix Most in Three Weeks Amid Support Bets: Yuan trade-weighted basket advances most since February
  • Yen Collapse Seen by Kuroda Critic Pitching Perpetual Bond Plan: Japan addicted to stimulus that isn’t working, Mitsuru Iwamura says
  • Chinese-Owned Key Safety Systems Said to Plan Bid for Takata: Japanese co. is seeking buyers to tide over record air-bag recall
  • RBNZ Says Likely That Further Policy Easing Will Be Required: Reserve Bank of New Zealand says decline in exchange rate is needed

Comments from BoJ’s Kuroda have shaped the European morning, with the central bank head stating that there is no need or possibility for helicopter money. In terms of a sector breakdown, airlines were among the worst performers in Europe after downbeat updates from both EasyJet and Lufthansa, while energy names also softened. Although USTs saw upside in the wake of Kuroda’s comments to head into mid-morning outperforming their European counterparts, with Bunds remaining relatively stable as participants await the ECB rate decision. Some have speculated that the ECB could alter the makeup of their asset purchases given the recent increase of bond yields slipping lower.

Top European News

  • Draghi May Flag Action Ahead for ECB Under Brexit’s Shadow: President will likely address fallout from U.K. referendum
  • Brexit to Halt U.K. Growth Streak With Mild Recession Seen: Survey of economists shows economy shrinking from this quarter
  • Lufthansa Cuts Profit Forecast After European Terror Attacks: Terror fears depress demand for long-haul trips to Europe
  • Publicis Chief Levy Sees Clear Improvement in 2017; Shares Rise: 30 years at the helm of ad firm, Levy plans to step down
  • U.K. Retail Sales Fall 0.9% in Month of Brexit Referendum: Monthly survey captures week following shock vote to leave EU
  • Daimler’s Mercedes Sustains Margins and Sees Boost From E- Class: Adjusted profit margin was 10% at Mercedes-Benz Cars division

In FX, the yen jumped 1.3 percent to 105.54 per dollar after Kuroda’s no helicopter money remarks. Speaking in a BBC Radio 4 program broadcast Thursday, Kuroda also repeated that he is determined to rid Japan of its deflationary mindset and that there are no significant limitations to further monetary easing if needed by the Bank of Japan. The euro was little changed at $1.1020. ECB President Mario Draghi has predicted that euro-area growth will slow as a result of Brexit, suggesting a response is needed. “Draghi will keep his options open for further easing,” helping fuel a gradual decline in the euro amid broad dollar strength, said David Forrester, a foreign-exchange strategist at Credit Agricole SA’s corporate and investment-banking unit in Hong Kong. “The yen has already sold off a lot in anticipation of the government’s fiscal stimulus package and next week’s BOJ meeting. We’re looking for it to continue tracking lower.” The Bloomberg Dollar Spot Index fell 0.2 percent, after four days of gains. A Citigroup gauge that tracks the degree to which American economic data are exceeding projections is at an 18-month high and futures put the chance of a Federal Reserve interest-rate increase this year at 47 percent, up from 9 percent at the end of June.

In commodities, oil for September delivery was little changed at $45.78 a barrel in New York after weekly U.S. government data showed crude stockpiles fell for a record ninth week and refining activity climbed to a 2016 high. Gold rose 0.5 percent to $1,322.34 an ounce

Bulletin Headline Summary from RanSquawk and Bloomberg

  • There is no need and no possibility of helicopter money in Japan,
    central bank Governor Haruhiko Kuroda said; An increasing number of
    officials at the Bank of Japan are concerned about the sustainability of
    the current framework for massive monetary stimulus, according to
    people familiar with the discussions
  • Treasuries little changed in overnight trading as Asian equities rise on Koruda’s dismissal of “helicopter money,” European stocks fall prior to ECB policy meeting.
  • While action isn’t seen as likely straight away, when Draghi addresses reporters after the ECB meeting he might signal more stimulus to be deployed in September
  • BOE’s Kristin Forbes said there’s no need to hurry to add stimulus after the U.K.’S vote to exit the European Union, citing a moderation of the immediate market turmoil, calm consumers and “quite solid” growth before the referendum
  • More Fed officials are making it clear with greater urgency that they need help from elected lawmakers. In June, Fed Chair Janet Yellen told the Senate Banking Committee that fiscal policy had “not played a supportive role”
  • Goldman Sachs, JPMorgan Chase and Morgan Stanley collectively reduced the amount of money they set aside for employee pay in the first and second quarters by 17%, the most in at least four years, to $19 billion
  • Terrorism in France, Brexit in Britain, a coup in Turkey — political convulsions everywhere. So where’s the hot money going? It’s going to the world’s riskiest markets, where at least investors are getting paid for the risks
  • Singapore vowed to take action against four banks for what it called serious lapses in their anti-money laundering controls and seized S$240 million ($177 million) in assets linked to the financial institution known as 1MDB
  • The political instability in Turkey threatens to add to an already difficult year for the nation’s banks as they contend with a 33% surge in bad loans and soaring bankruptcy filings

DB’s Jim Reid concludes the overnight wrap

With little else to feed off, a steady stream of better than expected corporate earnings results continues to keep the tone in markets on the positive side for now. Reports out of Microsoft (post Tuesday’s close) and Morgan Stanley (prior to the open yesterday) kept the train chugging yesterday and once again helped Wall Street and the S&P 500 (+0.43%) and Dow (+0.19%) to new record highs. That said the actual intraday moves have been incredibly small recently – perhaps also reflecting a bit of early summer fatigue – with the intraday high to low range for the S&P 500 yesterday just 0.50%. In fact since the 11th July the average daily intraday range has been just 0.51% despite the index closing up in six of the eight sessions. This month the index has actually only had a daily range above 1% on two occasions. Compare that to the excitement in June where the average daily range over the entire month was 1.06%.

The ECB has the potential to shake things up today though when we’ll get the outcome of their policy meeting at 12.45pm BST. In a nutshell our European economists believe that it’s a close call, but on balance the ECB will wait until the September meeting before easing again, with the focus on extending QE. A few factors lead them to this. Firstly, they note that based on press reports, the ECB sees a smaller impact from Brexit than they do and that it would require negative data surprises if the ECB is to converge to our economists view, for which the data generally hasn’t been available since the Brexit vote. Secondly, the ECB is confident about the benefits of the policies it has implemented and believes the benefits from recent policy announcements like the TLTRO2 and CSPP will be slow to accrue. Thirdly, by waiting until September the ECB will have the benefit of additional information on the Brexit impact and the benefits of its new policies. It will also have the benefit of updated staff forecasts. They note that the ECB dislikes being under pressure to reconsider the policy stance at every meeting and has a tendency to coordinate action with the analysis accompanying new staff forecasts.

That said the scale of the Brexit impact is uncertain but negative. The ECB’s room for manoeuvre on policy is constrained by the political nature of the Brexit shock and the side-effects of further easing. In that case, the sooner the ECB acts the better. On top of this, the decline in European bank equity is a concern and another important factor to consider. So this makes the call a bit of a closer one.

Staying on this subject, yesterday our strategists published a note taking a look at the potential technical changes in QE purchases which could be introduced alongside an extension, including increasing issuer limits, removing the yield floor and deviating from capital keys. They assess how this could impact bund and peripheral spreads in particular should Draghi provide some meaningful indication at the press conference.

Elsewhere, the fallout from the failed coup in Turkey on the weekend continues. Yesterday evening President Erdogan declared a three-month state of emergency in the country. According to the FT officials in Turkey have said that this will allow the government to pass laws rapidly, however there will be no financial or commercial activity restrictions. Meanwhile the Turkish Lira weakened another -1.56% yesterday and to a fresh historic low after S&P cut the sovereign’s rating by one notch to BB with a negative outlook. The start of the week also saw Moody’s put Turkey’s Baa3 rating on review for downgrade. With Fitch (BBB-/Stable) still at IG that Moody’s move is the most important development given the possibility now of Turkey losing its IG status (with most global indices/index trackers requiring at least 2 IG ratings for a credit to be classified as IG). DB’s Seb Barker published an interesting note yesterday discussing the implications for the credit following this news.

Switching over to the latest in Asia this morning where bourses are generally following the lead from Wall Street last night. The Nikkei (+0.71%) in particular has bounced back, with a weaker Yen (-0.50%) this morning helping. Meanwhile the Hang Seng (+0.75%), Shanghai Comp (+0.69%) and ASX (+0.60%) are also up. US equity index futures are also a smidgen higher, helped by eBay’s better than expected results after the closing bell last night which saw shares climb as much as 8% in extended trading. In the FX space the Kiwi Dollar is down half a percent or so after the RBNZ strengthened its easing bias in an economic update overnight.

Moving on. In terms of the rest of markets yesterday, European equities also had a decent day yesterday with some corporate earnings results there also helping. German software maker SAP stood out while Volkswagen also provided some positive earnings guidance which helped sentiment to remain fairly positive. The Stoxx 600 closed up +1.03% while sovereign bond markets eased off, with yields edging up a few basis points.

Meanwhile, in what was another fairly quiet day for data yesterday the notable release was the European Commission’s flash consumer confidence report for July which weakened 0.7pts to -7.9 and more or less in line with expectations. Unlike the German ZEW survey from earlier in the week it’s hard to argue that the Brexit result has had a material detrimental impact on confidence given that data. Indeed the absolute value of the index was weaker in February-April earlier in the year. Elsewhere there was also some data out of the UK, albeit pre-Brexit. The ILO unemployment rate was reported as nudging down one-tenth to 4.9% (expectations had been for no change). The last time unemployment was this low was in 2005. Average weekly earnings including bonuses rose +2.3% yoy in the three months to May (from +2.0%) however ex bonus earnings were down one-tenth to +2.2%.

Before we look at the day ahead, there was a bit more chatter out of the BoE yesterday too. In an article on the Telegraph website, policy maker Kristin Forbes said that ‘given the substantial uncertainty and likelihood that growth slows, there is a valid case to ease monetary policy to support demand’. She did however go on to say that ‘but until more hard data is available, I believe this is a good time to keep calm and carry on’.

Looking at today’s calendar, this morning we’re kicking things off in France where we’ll get the latest confidence indicators for July. The UK will then report June retail sales data before focus of course turns to the ECB meeting just after midday, with Draghi scheduled to speak after at 1.30pm BST. Meanwhile there’s a bit of data to highlight out of the US this afternoon. Initial jobless claims is the early release along with the Philly Fed manufacturing survey for July. Existing home sales data and the FHFA house price index reading are also due out, along with the Conference Board’s leading index for June. In terms of corporate earnings we’re due to hear from 35 S&P 500 companies including General Motors (before market), AT&T (after market) and Schlumberger (after market). We’ll also get reports from 12 Stoxx 600 companies.

end

ASIA MARKETS

i)Late  WEDNESDAY night/THURSDAY morning: Shanghai closed UP 11.11 POINTS OR 0.37%/ /Hang Sang closed UP 118.01 OR 0.54%. The Nikkei closed UP 128.33 POINTS OR 0.77% Australia’s all ordinaires  CLOSED UP 0.41% Chinese yuan (ONSHORE) closed UP at 6.6761 /Oil ROSE to 45.85 dollars per barrel for WTI and 47.12 for Brent. Stocks in Europe ALL IN THE RED. Offshore yuan trades  6.6788 yuan to the dollar vs 6.6761 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS CONSIDERABLY AS TRIES TO STOP MORE USA DOLLARS LEAVING THEIR SHORES. 

FIRST  REPORT ON JAPAN  SOUTH KOREA AND CHINA a) JAPAN ISSUES

It sure looks like helicopter money is off the table.  Thus the entire global rally is a lie?

(courtesy Phoenix  Research Capital)

So… the Entire Rally Was Based on a Lie? by Phoenix Capital… Jul 21, 2016 9:52 AM

The Bank of Japan admitted back in June helicopter money is not on the agenda. Amazingly this is news today after the market has rallied hard based on hope that helicopter money is about to be unveiled.

The yen pared an advance against the dollar as it emerged that an interview in which Bank of Japan Governor Haruhiko Kuroda dismissed the idea of so-called helicopter money was conducted in June.

The Japanese currency earlier jumped more than 1 percent after, in comments broadcast on BBC Radio 4 on Thursday, Kuroda said there was no need or possibility for such a strategy. The interview was conducted on June 17, a BBC spokeswoman said.

Source: Bloomberg

This is not a surprise to anyone who does actual analysis. Kuroda said back in April 2016 (even before the above interview) that the Bank of Japan CANNOT implement helicopter money because it is ILLEGAL under Japan’s constitution.

But then again, we are talking about the same Central Bank head that claimed NIRP wasn’t coming… only to launch it eight days later in February 2016. However, that proved a disaster with the Yen surging while the Nikkei plunged.

This is the problem with the entire financial system today: everything is trading based on the words of a handful of Central Bankers, many of whom was perfectly willing to lie or deceive just to push stocks higher.

Indeed, the entire market move from the BREXIT lows has been a desperate manipulation by Central Banks as they begin to lose control of the financial system.

We saw the same thing happen in 2007: a final push to new all-time highs in October. What followed wasn’t pretty.

A Crash is coming… and the time to prepare is NOW, before it hits.

On that note, we are already preparing our clients for this with a 21-page investment report titled the Stock Market Crash Survival Guide.

In it, we outline the coming crash will unfold…which investments will perform best… and how to take out “crash” insurance trades that will pay out huge returns during a market collapse.

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Graham Summers

Chief Market Strategist

b) REPORT ON CHINA EUROPEAN ISSUES

Draghi less accommodating as the 10 yr German bund drops again below 0%.Draghi decides to leave the QE program unchanged and thus less dovish;

(courtesy zero hedge)

10Y Bund Yield Falls Back Under 0% After Draghi Leave QE Program Unchanged In Less Dovish Announcement

Earlier we previewed the prevailing consensus which expected Draghi to announce some easing if not in monetary policy, then in the bank’s QE program to make more German securities eligible. However, that did not happen and instead Draghi said the Eurozone has weathered the Brexit fallout and that at this point the ECB did not have enough information to take decisions in regard to altering the current QE programme, with no attention paid to specific instruments.

This means that the collateral squeeze will continue over the next few months, and since the pool of securities – especially those belonging to Germany – will decline further (recall UBS forecast that the ECB may run out of Bunds to monetize as soon as several months from now), it means that paradoxically, Draghi’s less dovish than expected announcement has pushed Bund yields lower, if only for now.

And since Draghi also said hinted that it is now time for the monetary policy handover to fiscal stimulus, a move seen as less dovish than expected, the EUR has pushed modestly higher, if only in early trading.

As usual Draghi left himself a loophole, and said that the ECB remains willing to act by using all tools available.

end

Draghi hints at a public backstop to bring aid to the ailing Italian and other European banks: Germany is not happy@!!

(courtesy zero hedge)

European Banks Soar As Draghi Hints At “Public Backstops”

If ever there was a reason for more European nations to ‘exit’ the sinking ship, Mario Draghi just spewed one. Having sent European bank stocks sliding with earlier calls for reforms, Draghi’s wishful-thinking sent bank stocks soaring (especially Italian banks) after he noted a “public backstop is a measure that would be very useful and should be agreed with the Commission according to the existing rules.” We can only imagine Herr Schauble’s face when he heard this… and what about the Dijsselblom “template”?

Draghi’s wish-list…

  • *DRAGHI SEES NEED TO ADDRESS NON-PERFORMING LOANS IN EURO AREA (umm yeah!)
  • *DRAGHI: PROBLEM FOR BANKS IS WEAK PROFITABILITY, NOT SOLVENCY (bwuahahah!!! even if that were true, you did it! NIRP!)
  • *DRAGHI SAYS PUBLIC NPL BACKSTOP POSSIBLE IN EXCEPTIONAL TIMES (rules change)
  • *DRAGHI SAYS NPL PUBLIC BACKSTOP WOULD BE VERY USEFUL (indeed)

And Italian bank stocks loved the wishes…

end

George Soros  proposal will bankrupt Europe tenfold: he is asking to accept 300,000 refugees a year at an additional cost of 30 billion dollars or face an EU collapse!

(courtesy zero hedge)

George Soros Doubles Down: Accept 300k Refugees Costing $30Bn, Or Risk EU Collapse

Seemingly doubling down on his comments in April (following what he called Europe’s “flawed asylum policy”), George Soros has expanded his demands from four to seven fundamental pillars on how to prevent the collapse of the European Union. In an article penned for Foreign Policy titled “This Is Europe’s Last Chance to Fix Its Refugee Policy,” Soros details his plan (over-riding the current “piecemeal approach”) for rescuing Europe before it is too late. Simply put, the billionaire says the EU must take in hundreds of thousands of refugees a year, spend at least 30 billion euros (a minor sum, since he believes it can all be financed by debt and taxes) or Europe faces an “existential threat.”

Soros begins ominously: The EU’s piecemeal solutions are coming apart. Only a surge of financial and political creativity can avoid a catastrophe.

The refugee crisis was already leading to the slow disintegration of the European Union. Then, on June 23, it contributed to an even greater calamity — Brexit. Both of these crises have reinforced xenophobic, nationalist movements across the continent. They will try to win a series of key votes in the coming year — including national elections in France, the Netherlands, and Germany in 2017, a referendum in Hungary on EU refugee policy on Oct. 2, a rerun of the Austrian presidential election on the same day, and a constitutional referendum in Italy in October or November of this year.

Rather than uniting to resist this threat, EU member states have become increasingly unwilling to cooperate with one another. They pursue self-serving, discordant migration policies, often to the detriment of their neighbors. In these circumstances, a comprehensive and coherent European asylum policy is not possible in the short term, despite the efforts of the EU’s governing body, the European Commission. The trust needed for cooperation is lacking. It will have to be rebuilt through a long and laborious process.

This is unfortunate, because a comprehensive policy ought to remain the highest priority for European leaders; the union cannot survive without it. The refugee crisis is not a one-off event; it augurs a period of higher migration pressures for the foreseeable future, due to a variety of causes including demographic and economic imbalances between Europe and Africa, unending conflicts in the broader region, and climate change. Beggar-thy-neighbor migration policies, such as building border fences, will not only further fragment the union; they also seriously damage European economies and subvert global human rights standards.

What would a comprehensive approach look like? It would establish a guaranteed target of at least 300,000 refugees each year who would be securely resettled directly to Europe from the Middle East — a total that hopefully would be matched by countries elsewhere in the world. That target should be large enough to persuade genuine asylum-seekers not to risk their lives by crossing the Mediterranean Sea, especially if reaching Europe by irregular means would disqualify them from being considered genuine asylum-seekers.

This could serve as the basis for Europe to provide sufficient funds for major refugee-hosting countries outside Europe and establish processing centers in those countries; create a potent EU border and coast guard; set common standards for processing and integrating asylum-seekers (and for returning those who do not qualify); and renegotiate the Dublin III Regulation in order to more fairly share the asylum burden across the EU.

And, as ValueWalk’s Jacob Wolinksy notes, specifically Soros thinks the seven points below are key…

First, the EU and the rest of the world must take in a substantial number of refugees directly from front-line countries in a secure and orderly manner, which would be far more acceptable to the public than the current disorder…

Second, the EU must regain control of its borders. There is little that alienates and scares publics more than scenes of chaos…

Third, the EU needs to develop financial tools that can provide sufficient funds for the long-term challenges it faces and not limp from episode to episode…

Fourth, the crisis must be used to build common European mechanisms for protecting borders, determining asylum claims, and relocating refugees…

Fifth, once refugees have been recognized, there needs to be a mechanism for relocating them within Europe in an agreed way

Sixth, the European Union, together with the international community, must support foreign refugee-hosting countries far more generously than it currently does

The seventh and final pillar is that, given its aging population, Europe must eventually create an environment in which economic migration is welcome.

Soros concludes as follows:

The benefits brought by migration far outweigh the costs of integrating immigrants.Skilled economic immigrants improve productivity, generate growth, and raise the absorptive capacity of the recipient country. Different populations bring different skills, but the contributions come as much from the innovations they introduce as from their specific skills — in both their countries of origin and their countries of destination. There is plenty of anecdotal evidence for this, starting with the Huguenots’ contribution to the first industrial revolution by bringing both weaving and banking to England. All the evidence supports the conclusion that migrants have a high potential to contribute to innovation and development if they are given a chance to do so.

Pursuing these seven principles is essential in order to calm public fears, reduce chaotic flows of asylum-seekers, ensure that newcomers are fully integrated, establish mutually beneficial relations with countries in the Middle East and Africa, and meet Europe’s international humanitarian obligations.

The refugee crisis is not the only crisis Europe has to face, but it is the most pressing. And if significant progress could be made on the refugee issue, it would make the other issues — from the continuing Greek debt crisis to the fallout from Brexit to the challenge posed by Russia — easier to tackle. All the pieces need to fit together, and the chances of success remain slim. But as long as there is a strategy that might succeed, all the people who want the European Union to survive should rally behind it.

Interestingly, Soros goes back hundreds of years to give us the examples Huguenots and not fifty years to when France starting letting in migrants from Algeria and Morocco – so far the much recent plan has been a failure most would agree even before the recent terror attack in Nice. While hope continues to spring eternal (for many establishmentarians) that the EU stays together, we can’t help but suspect that spending 30 billion euros a year (funded by taxing or indebting EU citizens more) and letting in ‘even’ 300,000 refugees a year when the social fabric of the looming super-state is near collapse, terrorist attacks are increasing, and unemployment in many European countries is in double digits – will likely be a non-starter.

Soros’ full treatise can be found here…

END

The following illustrates how sharia law is practiced in Denmark and the government is trying to counter its offensive beliefs

( Judith Bergmann/Gatestone Institute)

Sharia In Denmark

Submitted by Judith Bergmann via The Gatestone Institute,

  • “All the bullying happens in Arabic… The hierarchy of the Arab boys creates a very violent environment. … I have filmed the particularly vile bullying of a Somali boy. You can see the tears in his eyes. They are destroying him; it is very violent. “ — From a dissertation by Jalal El Derbas, Ph.D.
  • Danish teachers are the least respected and are spoken of in denigrating and humiliating terms.
  • “I am not saying that all the Arab children did ugly things, but we witnessed on a regular basis… using derogatory Arabic language towards Somalis and girls.” — Lise Egholm, former head of the Rådmandsgade school in Copenhagen.
  • Whether Danish parliamentarians wish to acknowledge this problem or not, they are up against far wider issues than that of religious incitement in mosques by radical preachers.

After the television documentary, “Sharia in Denmark“, embarrassed Danish authorities by revealing how widespread the preaching of sharia is in mosques in Denmark; the Danish government, in May, concluded a political agreement about “initiatives directed against religious preachers who seek to undermine Danish laws and values and who support parallel legal systems.”

“We are doing everything we can without compromising the constitution and international agreements,” Bertel Haarder, the Minister for Culture and Church, said about the political agreement.

The agreement centers on a number of initiatives, which are supposed to compensate for the detrimental effects of all the years in which sharia was allowed to spread in Denmark while most authorities paid only scant attention to what was happening. Part of the new effort, therefore, will be the mapping of all existing mosques in Denmark.

It will now be obligatory, according to the agreement, for all priests, imams and others who are not part of the Church of Denmark, and who wish to be able to perform weddings — as well as for foreign preachers who apply for residence permits — to learn about Danish family law, freedom and democracy. At the end of the course, all will have to sign a statement that they will accept Danish law, including freedom of speech and religion, gender equality, freedom of sexual orientation, non-discrimination and women’s rights.

The government will examine how to create more transparency in foreign donations to faith communities in Denmark, including controlling and, if necessary, preventing such donations. As part of this work, on May 4 the government presented a law making it a crime to receive funding from a terror organization to establish or run an institution in Denmark, including schools and mosques.

Another element in the political agreement is the establishment of national lists with the names of traveling foreign (non-EU) religious preachers who will be excluded from entry into Denmark on the grounds that they are a threat to public order in Denmark. These named preachers will not be granted an entry visa and will be denied entry at the border. In addition, a non-public list, containing the names of such preachers who are EU citizens, will be established. The purpose of this list is to create awareness of the existence of these preachers, as, due to EU rules on free movement, they cannot be denied entry.

The final component of the agreement is the criminalization of certain speech. According to the agreement, it will become illegal explicitly to support terrorism, murder, rape, violence, incest, pedophilia, the use of force and polygamy as part of religious training, and whether or not the speech was made in private or in public. Both the activities of religious preachers and the activities of others, who speak as part of religious training, are included in the criminalization.

The political agreement is expected to become law when the Danish parliament reconvenes after the summer vacation.

Danish parliamentarians are aware that it will be difficult to measure whether these initiatives have any effect — how do you measure whether religious preachers are indeed not explicitly supporting terrorism, murder, rape and pedophilia, unless you place them under constant surveillance? Butlawmakers are nevertheless confident that the new initiatives will have an effect. “This will have an impact on what people put up with from their religious leaders.” Culture and Church Minister Bertel Haarder says.

Another parliamentarian, Naser Khader, who appears more realistic, says,

“We are well aware that more initiatives are needed. But this stops hate preachers from coming to Denmark, preachers who only want to come here in order to sow discord between population groups and who encourage violence, incest and pedophilia.”


After the documentary “Sharia in Denmark” embarrassed Danish authorities, the government reached a new a political agreement, which Danish Member of Parliament Naser Khader supported, saying, “this stops hate preachers from coming to Denmark, preachers who only want to come here in order to sow discord between population groups and who encourage violence, incest and pedophilia.”

While Danish politicians have taken yet another step on an uncertain road that may or may not succeed in stemming the rise of sharia in Denmark, other problems abound, which compound the impression that this initiative will not amount to much more than a symbolic band-aid.

A recent Ph.D. dissertation by Jalal El Derbas, as reported by the Danish newspaper, Berlingske Tidende, shows that in several Danish schools with Arab students, the latter, mainly boys, use Arabic as a means to sexually and racially harass and bully other students as well as their teachers, especially girls, Somalis and ethnically Danish teachers, who do not understand the insults hurled at them in Arabic.

According to the article, El Derbas was shocked when he went through the video footage of 12- and 13-year-olds in two different Danish public schools with a majority of pupils with minority background. The purpose of his Ph.D. was to examine the possible causes of why bilingual boys — who speak both Danish and Arabic — continue to lag behind other Danish students. He wanted to see what those bilingual boys actually do in the classroom. The footage was taken over five months and it displayed a world characterized by hierarchy, sexual and religious harassment, bullying and racism, in which the first language of the students, Arabic, played a central and leading role. According to El Derbas:

“I could see that the students used Arabic as a secret code and they only used it negatively to disturb the schoolwork. If they did not want to do the work, they simply shifted to Arabic. The schools were very flexible and allowed the students to use Arabic both inside and outside the classroom. But all that this freedom accomplished was that the students shifted from Danish to Arabic if they were getting into a fight and if there was a teacher nearby whom they did not want to understand what they were saying.”

The video footage also revealed a hierarchy consisting of sexual harassment and racism, because the Arab boys consider themselves higher-ranking than girls and Somali students.

“All the bullying happens in Arabic. All the ugly and mean words are uttered in Arabic. The hierarchy of the Arab boys creates a very violent environment. I have video footage of severe sexual harassment against Arab girls and I have filmed the particularly vile bullying of a Somali boy. You can see the tears in his eyes. They are destroying him; it is very violent.”

According to El Derbas, Sunni and Shia Muslim strife is also imported into the grounds of these Danish schools. With the majority of the boys being Sunni Muslims, they look down on the Shia Muslim students and a teacher who is a Shia Muslim is called “Satan” or “witch”, whereas a Sunni Muslim teacher is addressed courteously as “uncle” or “aunt”. Danish teachers are the least respected, and are spoken of in denigrating and humiliating terms.

El Derbas, stressed that the pupils come from ghetto areas, saying:

“Many of the teachers have given up on engaging the parents in any way, but if this is to change it has to happen through the parents. Maybe it would help if the parents took turns of being present in the classroom to see how their children behave. Most of them [the parents] are not working or studying anyway. I think that could lead to an improvement. Because no parents will accept that their children behave in this manner”.

The results of the dissertation come as no surprise to Lise Egholm, now retired, but who for 18 years, until 2013, was the head of Copenhagen’s Rådmandsgade school, which has many Arab students.

“I am not saying that all the Arab children did ugly things,” says Egholm, “but we witnessed on a regular basis exactly the phenomenon of using derogatory Arabic language towards Somalis and girls… Back then the biggest group of children in the school was Arabic speaking, and the words which in Arabic mean ‘whore’ and ‘f— your mother’ they all knew.”

In a written statement to Berlingske Tidende, Minister of Education, Ellen Trane Nørby, wrote,

“It is never all right to bully, whether this happens in Danish, Arabic, or in a third language. That is why I have initiated a large initiative, which has as its purpose to prevent and combat bullying. The teachers have to signal very strongly that there has to be room for all children and that you have to treat other pupils with respect. If some pupils do not understand this and speak in ‘code language’ or use a language that excludes and bullies other pupils, the schools must intervene. Danish is the language used for teaching in Denmark, and pupils should not be excluded or bullied because of parallel languages in school”.

However, what the minister of education fails to mention is that the problems with this kind of behavior are not likely to remain inside the school, but will inevitably spill into the streets. Then what? No amount of lists of radical religious preachers and laws is going to change that fact.

Whether Danish parliamentarians wish to acknowledge this problem or not, they are up against far wider issues than that of religious incitement in mosques by radical preachers. Notably, El Derbas’s findings have not caused any debate remotely resembling that, which was caused by the “Sharia in Denmark” documentary. They should.

end RUSSIAN AND MIDDLE EASTERN AFFAIRS

Goldman Sachs assists Malaysian embezzlers and are caught.  The USA seizes 1 billion dollars worth of ill gotten assets

(courtesy zero hedge)

US To Seize $1 Billion In Embezzled Malaysian Assets Which Goldman Sachs Helped Buy  

The last time we wrote about the long-running saga of the scandalous collapse and constant corruption at the Malaysian state wealth fund, 1MDB, which also happened to be an unconfirmed slush fund for president Najib, was a month ago when we learned that the NY bank regulator was looking into fundraising by the fund’s favorite bank, Goldman Sachs. Then overnight, the story which already seemed like it has every possible angle of crime and corruption covered for a series of Hollywood action-adventure blockbusters, got a new twist when the DOJ announced it would seek to seize some $1 billion in assets from individuals affiliated with the fun as part of one of the largest seizures in US history.

The expected asset seizures would be the U.S. government’s first action tied to the 1MDB investigation. Among the properties the US is looking to confiscate, are Van Gogh paintings, Beverly Hills properties, a private jet, ultra high end real estate in NYC and LA, and the rights to profits from the hit movie The Wolf of Wall Street.

The move by U.S. authorities to seize assets tied to an investment fund run by a foreign government would be a major escalation in Washington’s global efforts to fight corruption and block allegedly illegally obtained funds, facilitated by Goldman Sachs, from moving through the world’s financial system the WSJ adds.

The case represents the most detailed and sweeping allegations to be brought in the multinational probe into a global scheme to siphon more than $3.5bn from the Malaysian government fund.  As the FT adds, it is also the first time Malay prime minister, Najib Razak, has been officially tied to the scandal, and while he has not been by name in court documents the description of “Malaysian Official 1” matches his biography and job responsibilities. In what may develop into a major diplomatic row, the DOJ states that that “official” received funds misappropriated from 1MDB, prosecutors say. Najib has repeatedly denied any wrongdoing.

The actions by U.S. authorities also threaten to upend the country’s relationship with Malaysia, a moderate Muslim nation that has long been an important U.S. ally in Southeast Asia, and may force Malaysia to enter China’s sphere of influence in exchange for protection from US retaliation. Malaysia has deep ties to the Middle East and has been seen as a bulwark against China, which has increasingly asserted its power across Asia. President Barack Obama cultivated a relationship with Mr. Najib, including playing golf together in Hawaii over the Christmas holidays in 2014, something we reported at the time.

Amid the controversy, the Malaysian leader now was likely to focus on his domestic political survival rather than retaliate against the Obama administration, said James Keith, US ambassador to Malaysia from 2007 to 2010. Malaysia is a key regional partner for the US, backing a proposed trans-Pacific trade deal and hosting a digital centre to counter Islamic State propaganda. “I don’t think this is unexpected from Najib’s perspective,” said Mr Keith. “His approach is: batten down the hatches; we’re going to survive this, no matter what. He’ll do everything he can just to pretend this didn’t happen.”

* * *

Political fallout notwithstanding, the case reveals just how extensive money-laundering by the fund, the Malay prime minister, and a handful of affiliated individuals, often with US bank assistance, has been ever since 1MDB was created in 2009 as a government-owned vehicle to promote economic development through global partnerships and foreign investment.

Ironically, it ended up anything but as funds intended to benefit the Malaysian people were instead diverted to buy real estate, works of art and jewellery, pay casino bills and hire musicians and celebrities for the conspirators’ “lavish lifestyles”,  the complaint says. More than $200m was spent on art alone, prosecutors allege.

As part of the complaint, US authorities accuse Malaysian officials and business executives with receiving laundered 1MDB funds through banks in Singapore, Switzerland, Luxembourg and New York.The Malaysian officials “treated this public trust as a personal bank account”, said Loretta Lynch, US attorney-general. The misappropriation occurred over four years beginning shortly after Mr Najib set up the fund, according to the complaint. According to the suit, in March 2013, $681m in proceeds from a 1MDB bond offering were transferred into an account belonging to the official matching Mr Najib’s description. Five months later, $620m of that amount was shifted to a different account to which a 1MDB official was an authorised signatory.

Officials at 1MDB and others began diverting money shortly after the fund was created in September 2009 under the guise of investing in a joint venture with a private Saudi oil extraction company, PetroSaudi International. More than $1bn was transferred to a Swiss bank account held by Good Star Ltd, which was owned by Mr Low, prosecutors allege. Andrew McCabe, deputy director of the FBI, told reporters in Washington: “The Malaysian people were defrauded on an enormous scale.”

There is more in the full complaint, and it revolves around the three main players who, aside from the prime minister,  were instrumental in the perpetuation of this grand fraud, including, Riza Aziz, stepson of Malaysian Prime Minister Najib Razak; Jho Low, a Malaysian financier; and Khadem Al Qubaisi, a former Abu Dhabi managing director of a sovereign-wealth fund.

Details about their involvement can be found in the WSJ.

* * *

Much of the above was already known, or implied, however this is the first official confirmation of just how vast the money-laundering scheme was and that it stretched to the very top. What is now also confirmed, is that at the heart of the fundraising operation was none other than Goldman Sachs.

According to the complaint, in 2012, 1MDB officials and others fraudulently diverted $1.4bn in proceeds from two bond offerings arranged by Goldman Sachs, according to the complaint. Representing almost 40 per cent of the total raised, the funds were transferred to a Swiss account controlled by a British Virgin Islands entity called Aabar Investments PJS Limited. Aabar had been named to suggest a relationship with an Abu Dhabi company, Aabar Investments PJS, an investment arm of the Abu Dhabi government. But funds diverted to the Swiss account ultimately ended up in a Singapore bank account.

In 2013, several officials including those from 1MDB diverted nearly $1.3bn from another $3bn Goldman bond offering. The money was supposed to be used to finance a joint venture known as the Abu Dhabi Malaysia Investment Co but was instead funnelled into a Singapore account controlled by Mr Low’s associate, the complaint says.

Where it becomes clear that Goldman had a special arrangement with the complicit issuer and the prime minister, is that Goldman earned $192.5m or nearly 11 per cent of the principal amount on one of the 2012 bond deals, a $1.75bn offering, according to court documents, which also said that the offering circular “contained misleading statements and omitted materials facts”. Considering that a typical fee for an emerging market sovereign or quasi-sovereign bond offering between $1bn-$5bn would be between 0.1 per cent and 0.3 per cent, according to Dealogic, this is nothing short of kickback to Goldman, and raises questions about why Goldman wilfully accepted such an overblown fee for a deal which any of its competitor banks would have done for a fraction of the cost.

This being Goldman, of course, the bank was not accused of any wrongdoing in today’s action. It may be in the future as per the DOJ’s parallel prove whether Goldman violated the Bank Secrecy Act in its handling of the proceeds of the securities offerings, but somehow the FBI was unable to link the bank to any crime conducted by the same people who were paying it exorbitant fees to keep the money flowing.

* * *

So once Goldman’s fundraising skills allowed corrupt Malaysian politicians and selected shady middlemen to have access to billion which they would then embezzle, what did they spend the money on? Perhaps a better question is what did they not spend on: among the purchases were Van Gogh paintings, a private jet, the rights to profits from the hit movie The Wolf of Wall Street, and real estate. Lots and lots of ultra high end real estate.

Here are some of the details from WSJ:

The properties allegedly bought with funds misappropriated from a Malaysian investment fund would make for a stunning house tour of high-end real estate in New York and Los Angeles. Besides flashy real estate, the U.S. government alleges that money from the fund, known as 1Malaysia Development Bhd. or 1MDB, was used to buy a $35 million private jet and a stake in EMI Music Publishing.

The assets that the government is trying to seize were purchased by three men who had close ties to 1MDB: Jho Low, a Malaysian deal maker; Riza Aziz, the stepson of Malaysian Prime Minister Najib Razak, and Khadem Al Qubaisi, a former Abu Dhabi managing director of a sovereign-wealth fund, and occasionally the men sold or gave assets to one another.

The properties range from a Beverly Hills mansion with a 120-foot-long pool to a string of Manhattan condos, including a seven-bedroom, five-bathroom duplex overlooking Central Park that cost $35 million.

 The complaints paint a picture of lavish spending on casinos and private jets and a taste for high-end real estate—an asset that has been an increasingly popular place for the world’s wealthy to stash their cash outside the banking system and inside stable countries. Mr. Low declined to comment. A representative for Mr. Al Qubaisi didn’t reply to requests for comment. Red Granite Pictures, a company owned by Mr. Aziz, said it and Mr. Aziz “did nothing wrong.”

Mr. Aziz’s New York duplex is by far the most expensive property in the Park Laurel building, a prominent luxury address near Lincoln Center and overlooking Central Park. Mr. Aziz has stayed in the apartment when he visits New York, according to a doorman there.

A home bought by Mr. Low is located in the so-called Bird Streets in Los Angeles’s Hollywood Hills—a quiet enclave of narrow, twisting roads named after different types of birds. The property on Oriole Drive is a 6-bedroom, 5-bathroom home with a swimming pool, spa and wine cellar, which Mr. Low bought in 2012 for $39 million, according to records. A tall, white wall surrounds the house.

The Los Angeles home owned by Mr. Aziz on North Hillcrest Road— a winding street just off Sunset Boulevard—was purchased in 2010 for $17.5 million. Security guards on the site Wednesday said that they had no idea who owned the property and that no federal agents had visited.

The Viceroy L’Ermitage Beverly Hills, the hotel Mr. Low purchased in 2009 through his family’s trust, sits discreetly on a tree-lined, residential street and features a rooftop pool and 116 newly renovated suites. Hotel staff said they hadn’t noticed any unusual activity Wednesday morning.

Mr. Low owns a majority stake in the Park Lane Hotel, a trophy property overlooking New York’s Central Park. He put up about $240 million of the $400 million of equity provided by the investors who bought the 46-story property in 2013 in a deal that valued it at about $850 million.

The investor group, led by New York developer Steve Witkoff, planned at the time to continue running the Park Lane as a hotel while studying the possibility of redeveloping the hotel into condominiums or a mixed-use property. But when news broke that Mr. Low was under investigation, those plans were stymied. Such a plan would require approval from the New York state attorney general’s office, an unlikely event when the property’s majority owner was being investigated.

* * *

And that kind of magnificent organized crime, dear New Yorkers, is why real estate in Manhattan has never been more expensive.

END

GLOBAL ISSUES

Brandon Smith illustrates 6 possible black swan events that may surface:

(courtesy Brandon Smith/AltMarket.com)

Submitted by Brandon Smith via Alt-Market.com,

We are a little over half way through 2016 and, at the current rate, it will be a miracle if the year finishes without outright catastrophe in half the nations of the world. Some might call these events “Black Swans,” some might call them completely engineered threats, others might call it all a simple “coincidence” or a tragedy of errors. I stand strictly by the position that most of the dangers we see today have been deliberately escalated, if not strategically implemented.

Here is the problem; international financiers and globalist nut-jobs are clearly operating on a timeline with the end goal of creating enough general chaos to convince the masses that complete centralized authority over every aspect of our lives is preferable to constant fear.

For a more in-depth analysis on the schemes of the elites, see my articles Are Globalists Evil Or Just Misunderstood and Globalists Are Now Openly Demanding New World Order Centralization.

In order to elicit this kind of thinking from the public, crisis events are required that will cause many human beings to act, for the most part, like rabid animals. How would this be accomplished? Well, what does history tell us about that which inspires people to sometimes sacrifice their moral code or to bow down to tyrants? Usually a loss of necessities is required — including a lack of employment, lack of production, lack of serviceable shelter, lack of ample food and clean water, lack of medical care, lack of overall security and a sense of safety, etc.

The question often arises: “Why would the elites need to create crisis at all; don’t they already have control of the world?”

The answer is no, not yet they don’t, and if you read my recent article The Reasons Why The Globalists Are Destined To Lose, you can see why they never will have total control. That said, just because the globalist plan for complete centralization is doomed to fail does not mean they will not do everything in their power to make the attempt.

Changes in mass psychology that might take decades to achieve can be accomplished in only a few short years if the public is placed under the right amount of duress. I find that younger people (and isolated people who spend all their time on the web) in particular just don’t understand how this works. Look at it this way; you may not think crisis would be all that useful in pushing the globalist agenda forward until you find your family threatened, your children at risk or your parents in dire need. Fear of losing those we love can open the door to great collective evils, even more so than the fear of harm to ourselves.

Those who have no concept of self defense or the will to prepare and fight are the easiest to manipulate in this way. Pacifists are an effortless meal for dedicated despots.  Hell, for some folks the simple threat of losing day-to-day comforts can cause them to make terrible choices and support destructive leaders and policies.

Chaos is NOT the end game, it is only a tool by which the elites gain psychological leverage over the masses so that people willingly give up their rights to self determination and hand more power to the establishment.

A perfect example would be the recent Brexit referendum, the effects of which have not even begun to rise to the economic surface yet. In light of this event, numerous political puppets and banking moguls have declared an outright need for financial centralization of all nations in order to avoid a calamity.

Investors have been lured into a false sense of safety as equities do not yet reflect the fiscal downturn taking place in every other sector of the global economy, but time grows short nonetheless. The political can negatively affect the financial and vice versa.  Here are just a few of the latest trigger events that are piling up atop an already precarious year…

Italian Banking Crisis

Globalists continue to warn that the effects of the Brexit are coming soon, and that they will bring frightening instability. The latest warning comes again from the IMF, which argues that in the wake of the Brexit a banking crisis in Italy is now imminent and will initiate a “global contagion” in markets. The IMF is not wrong – probably because it had a hand in creating the crisis in the first place.

Italy is the third largest economy in the EU. Current estimates project at least $400 billion in toxic debts tied to Italy’s insolvent banks (this obviously does not include the bulk of derivatives). The stock of Banca Monte dei Paschi di Siena (MPS), the world’s oldest bank and Italy’s most vulnerable lender, has dropped by a staggering 43 percent. Most of the EU is inexorably chained to Italian finance through various debt obligations, bond holdings, long term investments, etc. A breakdown in Italy would indeed be a “Lehman moment” for Europe.

In response, the Italian government and the Italian banking sector is seeking taxpayer bailouts from the EU under extraneous circumstances, but EU officials are questioning whether or not this is even legal under EU charter.

They are also hoping that international banks like JP Morgan will successfully form a bailout response for distressed Italian assets and save Italian banks from a hard landing.

It is doubtful that any bailout plan will be enough to stall the shock wave from an Italian bank crisis. I do not believe the elites even intend to defuse such a crisis. With Italy’s own constitutional referendum coming this fall, a political shakeup may result. If a banking disaster is mixed into this shift, the potential for Italy to exit the EU becomes more plausible. A refusal by the EU to save Italian banks would seal the deal.

In my pre-Brexit articles outlining why I believed the Brexit vote would pass, I predicted that numerous instabilities in the global economy would be allowed to turn volatile and that the Brexit would be blamed for nearly all of them. Not surprisingly, the Italian finance minister is already placing the blame for Italy’s impending bank implosion on the Brexit vote.

This is the economic event that no one in the mainstream is paying much attention to. Again, as long as stocks remain in the green, the mainstream is oblivious to the underlying dangers. By the time equities begin to plummet, it will be too late for most people to do much to hedge their bets or prepare.

“Failed” Coup In Turkey

Maybe you thought 2016 was already getting weird, but this ugly party is just beginning. In what amounted to a half-day coup against Turkish president Recep Erdogen, Turkey went from corrupt cronyism to outright fascism overnight.

I am not so sure that this short lived coup actually “failed”; in fact, I think it achieved exactly what it was supposed to achieve.  I am not surprised in the slightest that some believe that Erdogen fabricated the entire conflict in order to provide an excuse to root out his political opponents. The Turkish government has targeted at least 50,000 people so far, including judges, teachers, and political opposition, all in the name of combating “treason”. Erdogen has been sliding into ruin for years with failed policies and an increasing penchant for human rights and free speech violations and now he has free reign to go full totalitarian.

That said, I think the claims of an Erdogen false flag are missing the bigger picture.

First, the coup was clearly staged. Anyone who knows anything about successful coups in history knows that you either imprison or kill the existing leadership of a government before you try to take it over militarily. Reports indicate that military insurgents had Erdogen’s plane in their sights and could have easily turned him into a cloud of flaming vapor, but for some reason did not fire.

My instincts told me upon first hearing of the fleeting momentum of the coup that the whole event was not really about Erdogen. Rather, the event was about NATO, or a rationale for dividing NATO and weakening the West. Rather predictably, Erdogen’s government is now blaming the U.S. in particular for the coup attempt, as the Obama administration and the U.N. warn of civil rights violations by Erdogen.  John Kerry has openly suggested removing Turkey from NATO membership.

At this time, Erdogen has allowed U.S. military operations at Incirlik Air Base to continue, but the prospect remains that this is a temporary condition.

It is interesting that as the situation develops it is becoming obvious that whether the coup succeeded or failed the end result would be a rationalization for Turkey to break ranks with NATO and, in particular, America.  Turkey is a vital pivot point for NATO in dealing with the Middle East and Russia. To lose Turkish aid would mean a considerable weakening of NATO operations and open a path to more volatile confrontation between Eastern and Western powers.  Take note that no matter the ultimate outcome of the coup fiasco, the most probable result will be a Turkish break from the West.  If the latest coup is exposed as an Erdogen “false flag”, this process will progress very quickly.

I will be watching this situation carefully over the next few weeks, but I suspect that tensions between Erdogen and the U.S. are slated to expand and that Erdogen is about to go full-despot with human rights violations of the worst kind. I also suspect that Erdogen will begin drafting proposals for greater cooperation with Russia in the near term.

The instability in Turkey is an advantage for the globalists. They can use it to undermine NATO operations if they wish. They can flood the EU with even MORE refugees and blame Turkey in the process. They can even help their Frankenstein monster, ISIS, by allowing Turkey to shut down U.S. operations out of Incirlik (as if the U.S. government had any intention of actually stopping ISIS anyway). This could be used as an impetus for a resurgence of ISIS activities.

To summarize, a crisis in Turkey is not only good for Erdogen, it is also good for the globalists. Watch for this trigger event to continue mutating.

Race War In The U.S.

I have covered extensively the efforts by globalists, and George Soros specifically, to create open wounds in the American social structure and divide the public along racial lines. This has been done by promoting, and in some cases funding, operations of social justice groups (cultural Marxists) and black racist organizations. Black Lives Matter has so far been the vehicle Soros has used to lure useful idiots into championing a race war that has no basis in reality.

While there is in fact a legitimate cause for concern over the militarization of state police, police abuses are in no way limited to any single race. I wrote about the best possible solution to constitutional violations by police organizations in my article The ‘Thin Blue Line’ Serves No Purpose. In it, I outlined why state police, funded by federal cash, should not exist all and that their duties should be by taken over by elected sheriff’s offices and neighborhood watches. This removes the gasoline from the fire and undermines attempts by cultural Marxists to incite race violence.

Of course, this will never happen. Both Republicans and Democrats are calling for even MORE federalization of police in response to the continued shootings of random LEO’s by black activists. The Democrats want more federalization because they think it will reign in violent cops. The Republicans want more federalization because they think it will reign in violent BLM activists. Notice that no other solution is being offered other than more federal presence on American streets.

Keep in mind that the shooting of random police officers is becoming an active trend and it is only going to get worse as we close in on the November elections. Watch for officers to be killed not only while on duty, but also while off duty, perhaps even in their homes.

The goal here is to create an excuse for martial law without necessarily declaring martial law outright. That is to say, the government will enact the conditions of martial law incrementally. This will likely include anonymity of LEO identities — meaning ski masks, hidden badge numbers and zero public accountability, all in the name of “protecting police lives.” Groups like BLM and the social justice cultists that exploit them as a weapon are not a real threat to the public overall and could be crushed in an instant by an angry white majority and militarized police unrestrained by the constitution. But this is not the point.

The militarization and federalization of the police will end in totalitarianism in the U.S. if it receives wide support by conservatives, or widespread civil war if it does not. Police need to refuse to act in an unconstitutional manner even in the face of violence directed against them, otherwise, they risk starting a fight with liberty groups as well. Black Lives Matter would be the least of their worries at that point.

Quick Mention – 28 Page 9/11 Report Release: If you want my in-depth look at the growing rift between Saudi Arabia and the U.S., read my article ‘One More Casualty Of The 9/11 Farce – The Petrodollar’.  I am giving this a quick mention because we have yet to hear the full Saudi response to the release of this report.  The original threat was that they would dump their U.S. treasury holdings and depeg their currency from the dollar.  This would officially end the petro-status of the dollar and eventually end the dollar’s world reserve status as well.  I believe that if the Saudi’s do take this action, they will do it quietly before bond markets and oil markets realize what is happening.  It is likely that a Saudi break from the U.S. will occur quickly in the event of a Trump presidency.

Quick Mention – South China Sea Build Up: A prelude to WWIII?  Maybe, maybe not.  China and the U.S. have been sparring politically over the South China Sea for some time.   An international ruling has argued that China has no legitimate claims to the waters nor any territorial history.  This has led to greater tensions.  The latest build up of naval units in the region is concerning, but there has not yet been a true catalyst to instigate a war.  This is another scenario which may not materialize until next year, if it materializes at all.

The overall purpose of these events, I believe, is first to conjure mass confusion. The globalists are turning up the heat on the citizenry much faster than ever before, and it is time to take stock of our position and response. The best defense, as I have always stated, is personal preparedness and self sufficiency, organization with friends and family, then organization of the like-minded within your neighborhood and if possible your town. Most people are self-isolated and thus weak in their defensive position. Anyone effectively organized will have far reaching advantages in the midst of social breakdown. Anyone who is organized with solid planning will become the point to which everyone else gravitates. You can either be a pillar of strength or a victim, it is your choice.

Rest assured, there is more shock and awe to come in 2016. Now is the time to prepare if you have not done so already.

END

 

Why oil was fall

(courtesy Nick Cunningham/Oil Price.com)

  Why Another Oil Price Downturn Is A Distinct Possibility

Submitted by Nick Cunningham via OilPrice.com,

In June 2015, oil prices surged to $60 per barrel, raising hopes that the oil price downturn would have been brief and the recovery swift. But by July, oil prices were heading back down, the beginning of a deeper slump that would continue for months.

A year later, a similar pattern could be playing out, or at least, that is what oil producers are fearing. After hitting a low point in February of this year, oil prices began a four-month rally, rising from $26 to $51 per barrel by June, the third year in a row in which the month of June saw a relative peak for oil prices. Now, July could once again mark a renewed nose-dive.

This time around, an array of oil producers are not taking any chances. According to Bloomberg, more and more E&Ps are hedging their production, protecting themselves against a crash in prices. Earlier this month, Laredo Petroleum Inc., for instance, hedged more than 2 million barrels of its 2017 production. “The producers have sold the hell out of this rally,” Stephen Schork, president of Schork Group Inc., told Bloomberg. “The companies that did survive, they’ve been hedging into this rally. And they’re counting their blessings.”

Hedging even began before prices rallied. Reuters surveyed shale firms earlier this month, finding that 17 out of 30 had increased their hedging in the first quarter when oil prices were at a low point. Even though they locked in at low prices, doing so offered some stability and certainty in their revenue projections.

But it was also an indication of the level of anxiety with which E&Ps were approaching 2016. The rally since February has buoyed spirits, but with oil prices back to $45 per barrel, negative sentiment once again pervades the market. For the week ending on July 12, oil traders increased their short bets by 1.6 percent, the third week in a row that shorts climbed.

The logic is straightforward. Production is falling but global supplies are still elevated. Worse, inventories are only coming down slowly from record highs. Then there is the possibility of new drilling – the rig count rose again last week, with the industry adding 6 oil rigs and 1 natural gas rig, according to Baker Hughes. On the other hand, although drillers could get back to work, the markets are likely overestimating the impact of a few dozen rigs coming back into operation.

Meanwhile, the botched coup attempt in Turkey barely registered in oil. Supply disruptions through the Bosporus, where 3 percent of global crude travels, were certainly plausible, but the straits were reopened only hours after the overthrow failed. “The market is looking past the coup,” Ric Spooner, chief market analyst at Sydney’s CMC Markets, told Reuters.

At this point, the very large overhang of refined products weighing on the market is one of the most important indicators to watch, a glut that will take time to work through. The rapid buildup in storage levels of gasoline and diesel this year have taken the markets by surprise, and could ultimately delay what everyone thought would be a rebalance in the next few months.

“The rising inventories of gasoline have got the markets’ attention,” John Kilduff, partner at Again Capital LLC, said in an interview with Bloomberg. “The oil market is getting ready to break.”

The one bullish factor for oil prices is India, which has taken over from China as the main driver of demand growth. India just grew at its fastest three-month period in the past decade, the most recent data shows. “We think India is roaring right now and will be a key driver of demand,” Helima Croft, managing director and Global Head of Commodity Strategy at RBC Capital Markets, told CNBC’s “Futures Now” in a recent interview. Despite all the negative factors pointing to ongoing oversupply, RBC still thinks that crude prices could close out the year in the mid$50s per barrel, largely because of India.

But another downturn in prices is also a distinct possibility, and one that looks a bit more likely than it did a month ago. At the very least, it will take quite a bit of time before a serious price rally arrives. “Fundamental headwinds are growing, supply-demand rebalancing is likely still a mid-2017 event, but tail risks are admittedly large in both directions, as geopolitics add to uncertainty,” Morgan Stanley concluded in a recent report.

 

end

Your early morning currency/gold and silver pricing/Asian and European bourse movements/ and interest rate settings/THURSDAY morning 7:00 am

Euro/USA   1.1017 UP .0002 (STILL  REACTING TO BREXIT/

USA/JAPAN YEN 106.36  DOWN 0.812(Abe’s new negative interest rate (NIRP), a total DISASTER/SIGNALS U TURN WITH INCREASED NEGATIVITY IN NIRP/JAPAN OUT OF WEAPONS TO FIGHT ECONOMIC DISASTER/KURODA:  HELICOPTER MONEY NOT ON THE TABLE

GBP/USA 1.3194 DOWN .0050(MORE STIMULUS PLANNED)

USA/CAN 1.3066 DOWN .0003

Early THIS THURSDAY morning in Europe, the Euro ROSE by 2 basis points, trading now JUST above the important 1.08 level RISING to 1.1012; Europe is still reacting to Gr Britain BREXIT,deflation, announcements of massive stimulation (QE), a proxy middle east war, and the ramifications of a default at the Austrian Hypo bank, an imminent default of Greece, Glencore, Nysmark and the Ukraine, along with rising peripheral bond yield further stimulation as the EU is moving more into NIRP, and NOW THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE / Last night the Shanghai composite  CLOSED UP 11.11 POINTS OR 0.37%   / Hang SanG CLOSED UP 118.01 OR 54% /AUSTRALIA IS HIGHER BY .41%/ EUROPEAN BOURSES ARE ALL IN THE RED   as they start their morning

We are seeing that the 3 major global carry trades are being unwound. The BIGGY is the first one;

1. the total dollar global short is 9 trillion USA and as such we are now witnessing a sea of red blood on the streets as derivatives blow up with the massive rise in the rise in the dollar against all paper currencies and especially with the fall of the yuan carry trade. The emerging market which house close to 50% of the 9 trillion dollar short is feeling the massive pain as their debt is quite unmanageable.

2, the Nikkei average vs gold carry trade ( NIKKEI blowing up and the yen carry trade HAS BLOWN up/and now NIRP)

3. Short Swiss franc/long assets blew up ( Eastern European housing/Nikkei etc.

These massive carry trades are terribly offside as they are being unwound. It is causing global deflation ( we are at debt saturation already) as the world reacts to lack of demand and a scarcity of debt collateral. Bourses around the globe are reacting in kind to these events as well as the potential for a GREXIT>

The NIKKEI: this THURSDAY morning: closed UP 128.23 OR 0.77% 

Trading from Europe and Asia:
1. Europe stocks ALL IN THE RED AS THEY START THE DAY

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 118.01 OR 0.54%  ,Shanghai CLOSED UP 11.11 OR 0.37%   / Australia BOURSE IN THE GREEN: /Nikkei (Japan) CLOSED UP 128.33 OR 0.77%/India’s Sensex IN THE RED  

Gold very early morning trading: $1318.90.00

silver:$19.37 

Early THURSDAY morning USA 10 year bond yield: 1.588% !!! UP 1 in basis points from WEDNESDAY night in basis points and it is trading WELL BELOW resistance at 2.27-2.32%. The 30 yr bond yield RISES to 2.308 UP 1 in basis points from WEDNESDAY night. (SPREAD GOES AGAINST THE BANKS)

USA dollar index early THURSDAY morning: 97.02 DOWN 13 CENTS from WEDNESDAY’s close.

This ends early morning numbers THURSDAY MORNING

END

 

And now your closing THURSDAY NUMBERS

Portuguese 10 year bond yield:  3.05% DOWN 2 in basis points from WEDNESDAY  (does not buy the rally)

JAPANESE BOND YIELD: -0.216% DOWN 2  in   basis points from WEDNESDAY

SPANISH 10 YR BOND YIELD: 1.12%  DOWN 4 IN basis points from WEDNESDAY( this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 1.25 par IN basis points from WEDNESDAY (again totally nuts/)

the Italian 10 yr bond yield is trading 13 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: -.017% DOWN 1 IN  BASIS POINTS ON THE DAY

END

 

IMPORTANT CURRENCY CLOSES FOR THURSDAY

Closing currency crosses for THURSDAY night/USA DOLLAR INDEX/USA 10 YR BOND YIELD/3:30 PM

 

Euro/USA 1.1020 UP .0004 (Euro =UP 4 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 105.71 DOWN 1.405(Yen UP 141 basis points/HELICOPTER MONEY OFF THE TABLE )

Great Britain/USA 1.3201 DOWN 0.0041 ( Pound DOWN 41 basis points/BREXIT DECISION AFFIRMATIVE/QE TO START AGAIN/UK DOWNGRADED/NEW PRIME MINISTER T. MAY/

USA/Canada 1.3092-UP 0.00231 (Canadian dollar DOWN 23 basis points AS OIL FELL (WTI AT $44.67). Canada keeps rate at 0.5% and does not cut!

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This afternoon, the Euro was UP by 4 basis points to trade at 1.1020

The Yen ROSE to 105.71 for a GAIN of 141 basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY NOW OFF THE TABLE

The POUND was DOWN 41 basis points, trading at 1.3201 AS PRIME MINISTER THERESA MAY TAKES OFFICE/CONCERNS ON BREXIT

The Canadian dollar FELL by 23 basis points to 1.3092, WITH WTI OIL AT:  $44.67

CANADIAN RATES WERE NOT CUT

The USA/Yuan closed at 6.6745

the 10 yr Japanese bond yield closed at -.216% DOWN 2  IN BASIS  points in yield/

Your closing 10 yr USA bond yield: DOWN 2 IN basis points from WEDNESDAY at 1.557% //trading well below the resistance level of 2.27-2.32%)

USA 30 yr bond yield: 2.294 PAR  in basis points on the day 

BANKS NEED THE LONGER BOND HIGHER IN YIELD: INSTEAD THE SPREAD LESSENS.

Your closing USA dollar index, 96.98 DOWN 21 CENTS  ON THE DAY/4 PM 

Your closing bourses for Europe and the Dow along with the USA dollar index closing and interest rates for THURSDAY

 

London:  CLOSED DOWN 29.10 OR 0.43%
German Dax :CLOSED UP  14.20 OR  0.14%
Paris Cac  CLOSED DOWN 3.51  OR 0.09%
Spain IBEX CLOSED UP 8.10 OR 0.09%
Italian MIB: CLOSED UP 41.58 OR 0.254%

The Dow was DOWN 77.80 points or 0.42%

NASDAQ  DOWN 16.03 points or 0.31%
WTI Oil price; 44.62 at 4:30 pm;

Brent Oil: 46.10

USA DOLLAR VS RUSSIAN ROUBLE CROSS:  64.37 (ROUBLE DOWN  54/100 ROUBLES PER DOLLAR FROM TUESDAY) 

TODAY THE GERMAN YIELD FALLS TO -.017%  FOR THE 10 YR BOND

END

This ends the stock indices, oil price, currency crosses and interest rate closes for today

Closing Price for Oil, 5 pm/and 10 year USA interest rate:

WTI CRUDE OIL PRICE 5 PM:44.57

BRENT: 46.06

USA 10 YR BOND YIELD: 1.554% 

USA DOLLAR INDEX: 96.90 down 26 cents

The British pound at 5 pm: Great Britain Pound/USA: 1.32338 down .0019 or 19 basis pts.

German 10 yr bond yield at 5 pm: -.017%

END

And now your more important USA stories which will influence the price of gold/silver

Trading Today in Graph form;  VERY IMPORTANT FOR YOU TO VIEW ALL THE CHARTS TODAY

 

Americans Stunned As Stocks… Fall  

Seemed appropriate…

As Ryan Detrick (@RyanDetrick) noted, The Dow is up nine straight days. Going back 20 years this has happened only twice. Both times it was up day 10… So today is a historic #fail… Leaving Dow Futs at crucial support… with VIX surging back to a shocking 13 level before it was quickly squelched into the close… “off the lows”

 

Stocks had their worst day since Brexit today… Trannies were clubbed like a baby-seal out of the gate and no bounce (SouthWest)…and when Europe closed things got worse…

 

Leaving The Dow, S&P, and Small Caps unchanged-ish for the day…

 

Of course this is merely “the pause that refreshes” or the “healthy correction” that leads to the next leg higher. Although we note that the S&P is at record richness to The Fed balance sheet…

 

But global central banks saved the world (for US stock investors) – but note the last 2 weeks have seen central bank balance sheets shrink in USD terms…

And S&P valuations are at 14 year highs… “it’s probably nothing”

 

Elon Musk is losing his touch…

 

Bank stocks have recovered mightily off the Brexit lows BUT…Citi and JPM are unch from Brexit

 

But financials remain full of exuberance relative to the yield curve…

 

Energy stocks began to catch down to crude..

 

Post-Brexit, Gold remains the biggest winner and bonds overtook stocks again today…

 

And off the Brexit bounce..

 

The decoupling continues in credit land as HY spreads are nowhere near record lows as stocks push ever higher…(note the break began when The Fed started to taper QE3)…

 

Treasury yields tumbled from the US open… 4th day in a row of Treasury selling into the US open, but notable bond buying after Draghi disappointed… the belly of the curve is at Turkey coup low yields…

 

FX markets were volatile with the USD index drifting lower amid Kuroda and Draghi comments…

 

As USDJPY dropped 1% –  the most in a month… (after Kuroda spoiled the helicopter money party)

 

Commodities were mixed today with PMs rallying after Draghi and Kuroda disappointed, crude weaker and copper flat to modestly higher…

 

Slamming WTI to 3-month lows…

 

As 2015 analogs move to top of mind…

 

And finally, yesterday’s PM plunge was entirely reversed today…

 

Charts: Bloomberg

Bonus Chart: Fool me once, shame on you; Fool me twice, shame on me, Fool me a third time, I must be a bloody idiot…

end

The Philly mfg index slumped to a 6th month low totally negated last month’s rise.  The Chicago national manufacturing activity remains in negative territory for the 17th straight month:

(courtesy zero hedge)

Philly Fed Slumps To 6-Month Lows As National Activity Index Jumps To 6-Month Highs

In the first wave of macro data today, initial claims beat expectations, dropping to 253k near record lows (but remains wildly divergent from tumbling consumer confidence). Following June’s rebound in Philly Fed, July missed expectations tumbling to six-month lows, back to a contractionary -2.9 (against expectations of a flat print of +4.5). Finally, Chicago Fed’s National Activity Index surged unexpectedly to six-month highs (+0.16 vs -0.20 exp) but the smoother 3-month avg remains in contraction for its 17th straight month.

If the jobs market is so awesome, judging by initial claims near historic lows, then why is US consumer’s economic confidence collapsing?

Philly Fed’s bounce into the green in June is over with July printing back to its lowest since Jan 2016…

Which is odd given that almost all the subindices improved…

And finally The Chicago Fed’s National Activity Index surged back into positive territory (the highest since January) but the 3-month average remains in negative territory for 17 months…

So take your pick – bias confirming data abounds.

Charts: Bloomberg

end

This may turn out to be very interesting as Johnson is HSBC’s key FX trader and commodity trader.  Even though he was “cleared” of its own internal probe, the USA has an iron clad case against HSBC for front running and causing damage to its client.  This is a criminal action:

(courtesy zero hedge)

Arrested HSBC FX Trader Had Been Cleared In Bank’s Own Internal Probe

While Wall Street was shocked yesterday after the announcement that HSBC’s global head of cash FX trading, Mark Johnson, was arrested at JFK on charges of frontrunning a Cairn Energy trade of $3.5 billion pounds, perhaps nobody was more surprised than his employer, HSBC. According to Bloomberg, the Johnson was about to move to the U.S. to take
up a broader position in the firm’s trading division. His arrest therefore, came as a shock to HSBC which wanted to promote the arrested trader to head of the bank’s foreign exchange and
commodities business for the Americas.

The reason for HSBC’s surprised was revealed by the FT earlier, which reported that according to HSBC’s own internal “investigation” three years ago into a $3.5bn currency trade that US prosecutors now believe was criminally fraudulent, it found nothing wrong with the transaction.


Mark Johnson, HSBC global head of forex cash trading

The HSBC review, conducted in the wake of a sweeping foreign exchange rigging scandal that erupted in 2013, was led by an external lawyer and found no breach of its code of conduct. HSBC declined to comment. The bank was on Thursday reviewing its own investigation of the $3.5bn forex trade to decide whether to support Mark Johnson, its global head of forex cash trading, who was arrested on Tuesday evening at New York’s John F Kennedy airport.

As the FT adds, a solicitor for Mr Scott in London strongly denied the allegations on behalf of her client, who is UK-based. While a warrant for Mr Scott has been issued, US authorities are yet to apply formally for his extradition.

HSBC reviewed its $3.5bn purchase of sterling for Cairn Energy in 2011 along with many other forex trades as part of an internal remediation exercise that it carried out at the request of regulators when the wider forex rigging scandal erupted in 2013.

People briefed on the matter said the bank’s internal investigation found no breach of its code of conduct when it reviewed the trade carried out for Cairn by Mr Johnson and Mr Scott.

How unexpected: a bank looked at its own trades, and found nothing strange despite clear evidence, as revealed by US authorities, showing that Johnson had an explicit intention of frontrunning the client order. It took a DOJ review three years later to stubmel on the smoking gun. As a reminder, the DOJ alleged the traders used a technique known as “ramping” that caused the price of pounds to spike. That spike benefited the bank’s trading book at the expense of the client, who then paid a higher price for the sterling.

When Cairn challenged HSBC about spikes in sterling ahead of the trade, an unnamed supervisor, working with the bankers, then allegedly misled the client by blaming the price increase on a “Russian” bank in the market. The complaint adds that Mr Johnson was surprised Cairn went ahead with the transaction. When told of the company’s commitment, he responded “Ohhh, f***ing Christmas,” using an expletive as an adjective.

Meanwhile, HSBC thought the storm had passed. After banks paid $10bn in fines to US and UK authorities, they complained that spot forex was not included at the time within the UK’s criminal market-abuse regime. A decision by the UK’s Serious Fraud Office earlier this year to drop its criminal investigation into forex-rigging seemed to bolster that argument. However, the Justice Department is accusing the pair of breaching a far more sweeping law: that of wire fraud. The authorities basically accuse them of deceiving their clients for gain. The evidence appears to confirm this allegation.

Roger Burlingame, a former chief prosecutor at the New York office that is bringing the case, and who is now based at law firm Kobre & Kim, explained: “The defendants are charged with wire fraud. This simply means the government has alleged that they’ve used an electronic communication in the US to commit a fraud. “The statute uses the broad, standard definition of fraud; it’s not a technical scheme targeting market abuse in particular. The same statute is used to prosecute any kind of fraud that involves email, phone calls or texts.”

The allegedly criminal trade also slipped through the fingers of the UK’s SFO: “a person familiar with the SFO’s thinking told the FT that the agency had not looked at the $3.5bn trade for Cairn and instead was focused on more generalised collusion and rigging within the $5tn-a-day forex market.”

Legal experts said that even under UK law, if a bank acting as an agent for its clients can be proven to have defrauded them through deceit then this would be illegal in the UK too. That is important as in order to extradite Mr Scott, the US must persuade a UK court that the alleged wrongdoing was illegal both in the UK and the US at the time.

What are the implications of this arrest for HSBC? The FT concludes that there is a chance it could “cause reputational damage to the global bank’s forex trading business and fuel more calls for HSBC to face full criminal charges. The DoJ has already been criticised for failing to prosecute HSBC after it paid $2bn in 2012 over laundering billions of dollars for Mexican and Colombian drug gangs.”

On the other hand considering current HSBC’s reputation, this doesn’t seem like much of a risk. More importantly, since the alleged wrongdoing happened before it signed a deferred prosecution agreement in 2012 bank insiders think it is unlikely to put it in breach of the deal to avoid prosecution that is due to expire next year.

In other words, while a trial of Johnson may or may not happen, and he may ultimately be found guilty – of wire fraud – the real message here is that perhaps it is time to stop the farce that is internal bank “self reviews” of alleged fraud, which as this incident confirms are merely a waste of time and shareholder funds.

end

 

Well that is all for today

I will see you on Saturday to deliver the Friday night commentary.

all the best

h


jULY 19

Thu, 07/21/2016 - 01:33
JULY 19/SILVER COMEX RECORDS ITS HIGHEST EVER OPEN INTEREST AND YET SILVER REMAINS 29 DOLLARS BELOW ITS ALL TIME HIGH!/GOLD RISES AND REMAINS ROBUST DESPITE HIGH USA DOLLAR/SILVER FALLS SLIGHTLY/CHINA VICE CHAIRMAN TELLS HIS TROOPS TO PREPARE FOR WAR/TURKEY’S ERDOGAN FIRES ALL UNIVERSITY DEANS/FIRES 21,000 PRIVATE SCHOOL TEACHERS/EXPLOSION IN ANKARA/TURKISH STOCK MARKET PLUMMETS/ALSO TURKISH LIRA FALTERS BADLY/ July 19, 2016 · by  · in Uncategorized · Leave a comment ·Edit

Gold:1331.50 UP $3.10

Silver 19.98  DOWN 7 cents

 

In the access market 5:15 pm

Gold: 1331.50

Silver: 19.92

.

 

For the July gold contract month,  we had a small 10 notices served upon for 1,000 ounces. The total number of notices filed so far for delivery:  5060 for 506,000 oz or 15.738 tonnes

In silver we had 239 notices served upon for 1,195,000 oz.  The total number of notices filed so far this month for delivery:  2068 for 10,340,000 oz

 

I wrote this yesterday and it certainly holds for today:

“It sure looks to me like the bankers are trapped in silver.  The OI continues to either stay constant or rise. ”

Silver today at the comex recorded an all time record for open interest and yet the price is 29 dollars cheaper. It defies commodity law!

Let us have a look at the data for today

.

Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 307.70 tonnes for a gain of 5  tonnes over that period

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In silver, the total open interest ROSE BY 1597 contracts UP to 219,101, AND A NEW ALL TIME RECORD. THE OI ROSE IN CONTRAST TO THE  PRICE OF SILVER WHICH FELL BY 5 CENTS IN YESTERDAY’S TRADING.In ounces, the OI is still represented by just over 1 BILLION oz i.e. 1.095 BILLION TO BE EXACT or 157% of annual global silver production (ex Russia &ex China).

In silver we had 239 notices served upon for 1,195,000 oz.

In gold, the total comex gold ROSE BY 1,662 contracts as gold rose in price YESTERDAY to the tune of $0.10. The total gold OI stands at 614,667 contracts.

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With respect to our two criminal funds, the GLD and the SLV:

GLD

we had no changes in gold inventory./

 

Total gold inventory rest tonight at: 965.22 tonnes

SLV

we had no changes into the SILVER INVENTORY TO THE SLV

Inventory rests at 348.580 million oz.

First, here is an outline of what will be discussed tonight:

1. Today, we had the open interest in silver ROSE by 1597 contracts UP to 219,101 as the price of silver FELL BY 5 cents with YESTERDAY’S trading. The gold open interest ROSE by 1662 contracts up to 614,667 as  the price of gold ROSE by $0.10  YESTERDAY.

(report Harvey).

 

2 a) Gold/silver trading overnight Europe, Goldcore

(Mark OByrne/zerohedge

3. ASIAN AFFAIRS

 i)Late  MONDAY night/TUESDAY morning: Shanghai closed DOWN 6.97 POINTS OR 0.23%/ /Hang Sang closed DOWN 161.89 OR 0.57%. The Nikkei closed UP 225.46 OR 1.37%/  Australia’s all ordinaires  CLOSED DOWN 0.25% Chinese yuan (ONSHORE) closed UP at 6.6919 ON A LITTLE REVALUATION /Oil FELL to 45.51 dollars per barrel for WTI and 47.26 for Brent. Stocks in Europe ALL IN THE RED. Offshore yuan trades  6.7189 yuan to the dollar vs 6.6919 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE WIDENS CONSIDERABLY AS  MORE USA DOLLARS LEAVES THEIR SHORES. 

REPORT ON JAPAN  SOUTH KOREA AND CHINA a) REPORT ON JAPAN

Today’s stock market rises is mainly due to the the higher: USA/Yen cross.  This carry trade is due to investors borrowing yen knowing it will fail and buying assets like the S and p

( zero hedge)

b) REPORT ON CHINA

Chinese Vice Chairman tells its troops to get ready for combat.This sounds ominous

(courtesy xinhua/Bloomberg/zero hedge)

4 EUROPEAN AFFAIRS

i)European confidence crashes to 4 yr lows:

( zero hedge)

ii)S and P lowers the boom on Deutsche bank as they cut their outlook to negative due top challenging operating conditions in the banking environment.  These guys are the largest derivative player in the world:

( zero hedge)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

Turkey:

i)Turkey is like a bank:  Too big to fail!!

( zero hedge)

 

ii)Tens of thousands more have been purged as Turkey “concentrates” on extraditing Gulen. Interesting enough, Turkey now blames the downing of the Russian planes on Gulen:

( zero hedge)

iii)This is far more worrisome, as the Turkish lira plummets to below levels Friday night, when it was first announced of a coup. The markets are stating that Erdogan went way too far and they are punishing the country:

( zero hedge)

iv)My goodness!!  Erdogan just fired all university deans and then sacked 21,000 private school teachers.  Turkey is going back into the early middle ages as he wants conditions similar to a caliphate and he is that leader:

( zero hedge)

6.GLOBAL ISSUES

none today

7.OIL ISSUES

Oil slides into the 44 dollar column after unexpected gasoline buildup

( zero hedge)

 

8.EMERGING MARKETS

VENEZUELA

Venezuela opens up its border with Columbia and watch the result as citizens flock over to get the necessary items to survive:

(courtesy zero hedge)

9.PHYSICAL STORIES

i)It now seems that Britons are now warming to gold as a safe haven because of the BREXIT vote:

( Reuters/GATA)

ii)A sensational piece and I agree 100% of what Butler asserts:

( Ted Butler)

 

iii)I would not put much emphasis in data from the world gold council except for mine supply only;

( Douglas McIntrye/247WallSt.com

10.USA STORIES WHICH MAY INFLUENCE THE PRICE OF GOLD/SILVER

i)The real data in housing suggests that housing starts dropped .2% year over year

( zero hedge)

ii)The real state of the uSA economy:

( David Stockman/ContraCorner) Let us head over to the comex: The total gold comex open interest  ROSE TO AN OI level of 614,667 for a  GAIN of 1662 contracts AS  THE PRICE OF GOLD ROSE BY $0.10 with respect to YESTERDAY’S TRADING We are now in the non active month of July. Somebody big is continually standing for the gold metal as July is generally a poor delivery month. The open interest for the front July contract stands at 69 for a LOSS of 7 contracts. We had 68 notices filed on yesterday, so we gained 61 contracts or an additional 6100 gold ounces that will stand for delivery in this non active month of July. We  are again witnessing the same scenario as in May and June whereby the front delivery month increases in OI standing for metal or a slight contraction.  The next big active contract month is August and here the OI FELL by 10,597 contracts down to 306,757  as this month continues its wind down until first day notice for the August contract, Friday,July 29/2016: less than  2 weeks away.  The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was fair at 175,309. The confirmed volume  yesterday (which includes the volume during regular business hours + access market sales the previous day was FAIR at 194,574 contracts.The comex is not in backwardation. Today, we had 10 notices filed for 1000 oz in gold

And now for the wild silver comex results. Total silver OI ROSE by 1597 contracts from  218504  up to 219,101.  We are now at an all time record high for silver open interest set today (219,101). The front active delivery month is July and here the OI fell BY 118 contracts down to 667. We had 49 notices served on YESTERDAY so we lost 69 contracts or 345,000 additional silver ounces that will not stand for delivery.The next non active month of August saw it’s OI fall by 23 contracts down to 467. The next big active month is September and here the OI ROSE by 1179 contracts UP to 158,895. The volume on the comex today (just comex) came in at 45,752 which is very good. The confirmed volume yesterday (comex + globex) was EXCELLENT at 55,267. Silver is not in backwardation. London is in backwardation for several months.

We had 239 notices filed for 1,195,000 oz. in silver JULY contract month

:INITIAL standings for JULY

July 19. Gold Ounces Withdrawals from Dealers Inventory in oz   nil OZ Withdrawals from Customer Inventory in oz  nil NIL HSBC Deposits to the Dealer Inventory in oz NIL Deposits to the Customer Inventory, in oz   64,300.000 oz SCOTIA 2000 KILOBARS No of oz served (contracts) today 10 notices  1,000 oz No of oz to be served (notices) 59 contracts 5900 oz Total monthly oz gold served (contracts) so far this month 5060 contracts (506,00o oz) (15.738 tonnes) Total accumulative withdrawals  of gold from the Dealers inventory this month   NIL Total accumulative withdrawal of gold from the Customer inventory this month   561,853.6 OZ Today we had 0 dealer DEPOSIT total dealer deposit: NIL   0z Today we had 0 dealer withdrawals: total dealer withdrawals:  nil oz ANOTHER ABSURD TRANSACTIONS: We had 1 customer deposit: ii) Into Scotia; 64,300.000 oz ( 2,000 kilobars) Total customer deposit: 64,300.000 Today we had 0 customer withdrawal: Total customer withdrawals NIL   oz Today we had 0  adjustments: Today, 0 notices was issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 10 contracts of which 0 notices was stopped (received) by JPMorgan dealer and 5 notices was stopped (received)  by JPMorgan customer account.  To calculate the initial total number of gold ounces standing for the JULY contract month, we take the total number of notices filed so far for the month (5060) x 100 oz  or 506,000 oz , to which we  add the difference between the open interest for the front month of JULY  (69 CONTRACTS) minus the number of notices served upon today (10) x 100 oz   x 100 oz per contract equals 511,900 oz, the number of ounces standing in this active month.    Thus the INITIAL standings for gold for the JULY. contract month: No of notices served so far (5060) x 100 oz  or ounces + {OI for the front month (69) minus the number of  notices served upon today (10) x 100 oz which equals 511,900 oz standing in this non   active delivery month of JULY  (15.922 tonnes). We  gained 6100 gold ounces that will stand for metal in this non active month of July. Since the comex allows GLD shares to be used for settling, it may take quite a while for the physical gold to enter the comex vaults.  So far I have seen little evidence of any settling of contracts but I will continue to monitor it for you.    We now have partial evidence of gold settling for last months deliveries We now have  +  6.889 TONNES FOR MAY + 49.09 TONNES FOR JUNE +  15.732 TONNES FOR JULY + 12.3917 tonnes (April) +2.2311 tonnes (March) + 7.99 (total Feb)- .940 (probable delivery on March 1) tonnes -.0434 tonnes (March 11,12,17,18) + March 31: 1.2470 and then  April 1,2: – .0006 tonnes  and last week April 16.3203 and April 22 .(0009 tonnes) + april 29  .205 tonnes + May 5:  3.799 and May 6: 1.607 tonnes –MAY 12 .0003- May 18: 1.5635 tonnes-May 19/   2.535 tonnes-May 27 .0185 – .024 TONNES MAY 31 -jUNE 4: .5044 ; june 10 -.0008 / June 22:0.48 tonnes /June 23: 0489 tonnes, June 24..018; june 29 .036 tonnes; JUNE 30 2.49 /july 1 17.78 tonnes = 45.774 tonnes still standing against 47.653 tonnes available.  Total dealer inventor 1,532,061.922 tonnes or 47.653 tonnes Total gold inventory (dealer and customer) =9,892,580.993 or 307.700 tonnes    Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 307.70 tonnes for a  gain of 5  tonnes over that period.    THE GOLD COMEX IS AN ABSOLUTE FRAUD. THE USE OF KILOBARS AND EXACT WEIGHTS MAKES THE DATA TOTALLY ABSURD AND FRAUDULENT!!      end GOOD ACTIVITY AGAIN INSIDE THE SILVER COMEX And now for silver   JULY INITIAL standings  July 19.2016 Silver Ounces Withdrawals from Dealers Inventory NIL Withdrawals from Customer Inventory  20,119.47 OZ (HSBC) Deposits to the Dealer Inventory 595,200.05 oz BRINKS Deposits to the Customer Inventory  594,021.058 OZ BRINKS No of oz served today (contracts) 239 CONTRACTS  (1,195,000 OZ) No of oz to be served (notices) 428 contracts 2,140,000 oz) Total monthly oz silver served (contracts) 2068 contracts (10,340,000 oz) Total accumulative withdrawal of silver from the Dealers inventory this month  NIL oz Total accumulative withdrawal  of silver from the Customer inventory this month  5,055,509.2 oz today we had 1 deposit into the dealer account i) Into Brinks:  595,200.05 oz total dealer deposit :595,200.05 oz we had 0 dealer withdrawal: : total dealer withdrawals:  NIL oz we had 1 customer withdrawals: i)Out of HSBC: 20,119.47 oz Total customer withdrawals: 20,119.47 oz We had 1 customer deposit: i)Into brinks: 594,021.958 oz : total customer withdrawals:594,021.958. oz        we had 2 adjustments i) Out of CNT:  595,066.440 oz was adjusted out of the customer and this landed into the dealer account of CNT ii out of Delaware:  10,537.245 oz was adjusted out of the dealer and this landed into the customer account of Delaware The total number of notices filed today for the JULY contract month is represented by 239 contracts for 1,195,000  oz. To calculate the number of silver ounces that will stand for delivery in JULY., we take the total number of notices filed for the month so far at (2068) x 5,000 oz  = 10,340,000 oz to which we add the difference between the open interest for the front month of JULY (667) and the number of notices served upon today (239) x 5000 oz equals the number of ounces standing    Thus the initial standings for silver for the JULY contract month:  2068(notices served so far)x 5000 oz +(667 OI for front month of JULY ) -number of notices served upon today (239)x 5000 oz  equals  12,480,000 oz  of silver standing for the JULY contract month. We lost 69 contracts or 345,000 additional oz that will not stand for delivery in this active month of July.   Total dealer silver:  28.360 million (close to record low inventory   Total number of dealer and customer silver:   153.877 million oz (close to a record low) The total open interest on silver is NOW AT its all time high with the record of 219,101 being set July 19.2016.  The registered silver (dealer silver) is NOW NEAR  multi year lows as silver is being drawn out at both dealer and customer levels and heading to China and other destinations. The shear movement of silver into and out of the vaults signify that something is going on in silver. END And now the Gold inventory at the GLD July 19/no change in gold inventory at the GLD/Inventory rests at 965.22 tonnes July 18./ a good sized deposit of 2.37 tonnes of gld into GLD/this is a paper gold entry/inventory rests at 965.22 tonnese July 15./no change in gold inventory at the GLD/Inventory rests at 962.85 tonnes July 14/a good sized withdrawal of 2.37 tonnes from the GLD/this would be a “paper withdrawal”/inventory rests tonight at 962.85 tonnes.. July 13/ we had a huge paper withdrawal of 15.98 tonnes of gold from the GLD/inventory rests at 965.22 tonnes. July 12/we had no changes in gold inventory at the GLD/Inventory rests at 981.20 tonnes July 11/no changes in gold inventory at the GLS/Inventory rests at 981.20 tonnes JULY 8/ A  good sized deposit of 2.91 tonnes into the GLD/Inventory rests at 981.20 July 7/a good sized withdrawal of 4.15 tonnes from the GLD/Inventory rests at 978.29 tonnes (this was nothing but a paper entry/no physical moved) JULY 6/WHAT A FRAUD!! A MASSIVE 28.53 TONNES OF PAPER GOLD ADDED INTO THE GLD July 5/no change in inventory/rests tonight at 982.44 July 1/a huge change in the gold inventory/ a deposit of 3.86 tonnes/rests tonight at 953.91 tonnes JUNE 30/no change in gold inventory /inventory rests tonight at 950.05 tonnes June 29/ a good sized deposit of 2.67 tonnes/inventory rests at 950.05 tonnes June 28/ a huge deposit of 13.067 tonnes into inventory/new inventory rests so far at 947.38 tonnes.  This was a paper addition June 27/a huge deposit of 18.415 tonnes into the GLD inventory/the new inventory rests at 934.313 tonnes.  The addition was a paper addition and not physical xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx July 19 / Inventory rests tonight at 965.22 tonnes

end

Now the SLV Inventory July 19/no change in silver inventory at the SLV/Inventory rests at 348.580 million oz July 18/no change in silver inventory at he SLV/inventory restss at 348.580 million oz July 15/ no change in  silver inventory at the SLV/Inventory rests at 348.580 million oz July 14/no changes in silver inventory at the SLV/Inventory rests at 348.580 million oz/ July 13./ a huge addition of 5.187 million oz into silver inventory at the SLV/ this is a paper addition as inventory rests at 348.580 million oz July 12/ a huge addition of 1.94 million oz into silver inventory at the SLV/a “paper” addition/inventory rests at 343.393 million oz July 11/no changes in silver inventory/rests tonight at 341.453 million oz JULY 8/no change in silver inventory/rests tonight at 341.453 million oz July 7./no change in silver inventory/inventory rests at 341.453 million oz JULY 6/AND ANOTHER FRAUD!! A MASSIVE 7.909 MILLION OZ ADDED INTO THE SLV/INVENTORY RESTS AT 341.453 MILLION OZ july 5/no change in silver inventory/inventory rests at 333.554 milllion oz july 1/no change in silver inventory/inventory rests at 333.544 million oz JUNE 30/no changes in silver inventory/inventory rests at 333.544 million oz June 29/ a small deposit of 760,000 oz/Inventory rests tonight at 333.544 million oz/ June 28/no change in silver inventory/rests tonight at 332.784 million oz June 27/ a small deposit of 570,000 oz in the SLV inventory/Inventory rests at 332.784 million oz . July 19.2016: Inventory 348.580 million oz end NPV for Sprott and Central Fund of Canada 1. Central Fund of Canada: traded at Negative 4.4 percent to NAV usa funds and Negative 4.4% to NAV for Cdn funds!!!!  (the discount is starting to disappear) Percentage of fund in gold 58.8% Percentage of fund in silver:40.0% cash .+1.2%( July 19/2016).  2. Sprott silver fund (PSLV): Premium falls  to +0.11%!!!! NAV (July19/2016)  3. Sprott gold fund (PHYS): premium to NAV  falls TO  0.46% to NAV  ( July 19/2016) Note: Sprott silver trust back  into POSITIVE territory at +.11% /Sprott physical gold trust is back into positive territory at +0.46%/Central fund of Canada’s is still in jail.      

end

 

And now your overnight trading in gold,MONDAY MORNING and also physical stories that may interest you: Trading in gold and silver overnight in Asia and Europe Mark O’Byrne/David Russell (Goldcore) Gold Holds Near Two-Week Low as Risk Appetite Rises on U.S. Data by GoldCore Jul 19, 2016 7:24 AM 5 SHARES

Gold has consolidated near the low of the past two weeks following on from its Brexit rally.

Having increased by 25% since the beginning of the year the pause in its’ rally comes as Barnabas Gan, an economist at Singapore-based Oversea-Chinese Banking Corp observes that “Market risk-on sentiment seems to have gone back” on the table, as reported by Bloomberg today.

Recent positive economic data out of the U.S. including positive retails sales, consumer prices and employment statistics have lured investors back in to the equity markets and trimmed the rally in gold. However, this recent positive economic news needs to be viewed against the backdrop of it being an election year in the U.S. and the desire of the White House to create a connection between positive economic sentiment and the democratic administration.

You can read the full article here 

 

Gold and Silver Bullion – News and Prices

Gold holds on to overnight losses; central bank policies in focus (Reuters)

Gold Daily and Silver Weekly Charts – Same Old (24hgold)

Investors Pull Most Money Out of SPDR Gold in Eight Months (Bloomberg)

Gold holds on to overnight losses as risk-on mood drags (Reuters)

SP 500 and NDX Futures Daily Charts – The Dog Days of Summer (24hgold)

A warning from Turkey for emerging-market investors (Moneyweek)

The Greatest Lie Ever Told (Silverseek)

No U.S. rate hike until 2018 — and it’s the consumer to blame, Morgan Stanley says (Marketwatch)

Gold Prices (LBMA AM)

19 July: USD 1,332.20, EUR 1,203.376 & GBP 1,009.042 per ounce
18 July: USD 1,326.15, EUR 1,200.298 & GBP 1,000.050 per ounce
15 July: USD 1,330.50, EUR 1,194.789 & GBP 994.150 per ounce
14 July: USD 1,325.705, EUR 1,192.99 & GBP 1,001.96 per ounce
13 July: USD 1,340.25, EUR 1,211.45 & GBP 1,009.74 per ounce
12 July: USD 1,352.85, EUR 1,217.84 & GBP 1,029.11 per ounce
11 July: USD 1,358.25, EUR 1,231.66 & GBP 1,059.95 per ounce

Silver Prices (LBMA)

19 July: USD 19.99, EUR 18.07 & GBP 15.18 per ounce
18 July: USD 19.72, EUR 17.83 & GBP 14.89 per ounce
15 July: USD 20.14, EUR 18.08 & GBP 15.06 per ounce
14 July: USD 20.25, EUR 18.23 & GBP 15.15 per ounce
13 July: USD 20.29, EUR 18.31 & GBP 15.25 per ounce
12 July: USD 20.35, EUR 18.35 & GBP 15.47 per ounce
11 July: USD 20.47, EUR 18.53 & GBP 15.78 per ounce

Recent Market Updates

– Gold, Trump and Rates: Bank That Foresaw Rally Flags $1,500
– Gold Lower After Central Bank’s Surprise Move
– “We Are On the Cusp of an Explosion in the Silver Price” – John Embry

– Stocks Rally – Is Brexit Systemic Risks Contained?
– Britain has a new prime minister – here’s what that means for you
– Metals Caught Between Global Gloom, U.S. Job Gains as Gold Slips
– Central Bank Resumes Monthly Gold Buying in Bid to Diversify Reserves
– Property Fund Turmoil in the UK has Eerie Echoes of Bear Stearns
– “In Gold We Trust” Annual Report – New Bull Market “Emerging”
– 3 Charts Show “How Precious Brexit Is” for Gold and Silver Bullion
– Gold, Silver Best Performing Assets In H1, 2016 – Up 26% & 38%

end

 

It now seems that Britons are now warming to gold as a safe haven because of the BREXIT vote:

(courtesy Reuters/GATA)

After Brexit, ordinary Britons warm to gold as safe haven

Submitted by cpowell on Mon, 2016-07-18 19:25. Section: 

By Clara Denna
Reuters
Monday, July 18, 2016

LONDON — When Britain voted to leave the European Union, the thoughts of Yorkshire teacher Grace Hall immediately turned to her family’s bottom line.

Three days later, as UK stocks and sterling plummeted, she put those thoughts into action and deposited part of her life savings — 25,000 pounds — into gold.

“My husband and I are both worried about bank failures and our cash getting swallowed up,” she said. “I’m also worried about our kids’ jobs and their future.”

Hall was not alone. Dealers are seeing an unprecedented amount of interest in gold, much of it from first-time buyers, to take advantage of its role as a safe haven in times of stress or unexpected “black swan” events like Brexit. …

The surge in gold buying is in contrast with Brexit’s effect on the London property market, considered an ironclad bet for the past 20 years. More than 18 billion pounds of property funds aimed at retail investors was frozen in early July following a tide of redemption requests after the Brexit vote. …

… For the remainder of the report:

http://www.reuters.com/article/us-britain-eu-gold-retail-insight-idUSKCN…

 

END

 

I would not put much emphasis in data from the world gold council except for mine supply only;

(courtesy Douglas McIntrye/247WallSt.com

 

20 COUNTRIES THAT OWN 88% OF WORLD’S GOLD

By  July 18, 2016 8:46 am EDT

Just 20 countries control 88% of the world’s gold.

According to the World Gold Council:

Gold demand reached 1,290 tonnes Q1 2016, a 21% increase year-on-year, making it the second largest quarter on record. This increase was driven by huge inflows into exchange traded funds (ETFs) – 364t – fuelled by concerns around the shifting global economic and financial landscape. Higher prices and industrial action in India pushed global demand for jewellery down (-19%), while total bar and coin demand was marginally higher (+1%). Central banks remained strong buyers, purchasing 109t in the quarter. Total supply increased 5% to 1,135t. Hedging by producers (40t) supported an increase of 56t in mine supply, although countered by a marginal decline in recycling.

The key findings from the report for the first quarter of 2016 are as follows:

  • Overall demand for Q1 2016 increased by 21% to 1,290t, up from 1,070t in Q1 2015.
  • Total consumer demand was 736t down 13% compared to 849t in Q1 2015.
  • Global investment demand was 618t, up 122% from 278t in the same period last year.
  • Global jewellery demand fell 19% to 482t versus 597t in the first quarter of 2015.
  • Central bank demand dipped slightly to 109t in Q1 2016, compared to 112t in the same period last year.
  • Demand in the technology sector fell 3% to 81t in Q1 2016.
  • Total supply was up 5% to 1,135t in Q1 2016, from 1,081t in the first quarter of 2015. Mine supply was up 8% to 774t.

Source: courtesy of Karus Chains end

A great piece from ted Butler and I agree 100% of what he asserts:

(courtesy Ted Butler/)

The Greatest Lie Ever Told

Theodore Butler

|

July 18, 2016 – 11:25am

Granted, if you are going to label something as the greatest lie ever, it must involve something important, both in substance and in terms of who told the lie. In this case, the lie involves what’s at the heart of the silver manipulation and happens to be the issue that I consider the key factor for its price. Importantly, the lie came from the federal regulator overseeing the silver market, the CFTC.  The good news is that you will be able to decide for yourself if my assertion is correct, given that the proof is nearly incontrovertible. The best news is that as the lie is more widely recognized, it should have a positive impact on the price of silver.

The key factor in silver is the concentrated short position on the COMEX, which also happens to be the current key factor in gold. Not only am I convinced that the concentrated short position in COMEX silver is the central issue, I am also convinced that wider awareness of its existence will bring about a freeing of the silver price. If the growing numbers of those who’ve discovered the importance of the COT reports and market structure to the price of gold and silver take one additional small step and incorporate the concentration data in their thinking, I believe the impact could be profound.

First, let me describe concentration as it applies to gold and silver and why it is so important and then touch on the history and status of the greatest lie ever. In review, if many different traders held very large short positions in COMEX silver and gold futures contracts, then no problem – that’s the way free markets are structured – with many different buyers and sellers.  And you may not realize this, but quite literally, you wouldn’t be reading this if no short side concentration existed. That’s because I would never have started and continued to write publicly about silver if a short side concentration didn’t exist.

The problem is that there are not many traders short COMEX silver in terms of market structure. Only eight traders hold, effectively, the entire net short position in COMEX silver and those traders are mostly banks.  Further, the concentrated silver short position, represents more in terms of real world production and inventories than the concentrated positions in any other commodity, with the comparisons with other commodities looking impossibly distorted. For instance, the concentrated short positions in corn and crude oil are the equivalent of a few days of world production, with silver’s concentrated short position amounting to more than two hundred days world production. Most remarkable is that so few silver miners are hedging that the entire concentrated short position is speculative on its face.

It’s important to understand that there is a big difference between a large short (or long) position held by many different traders and a large position held by a few traders. It’s impossible for hundreds or thousands of different traders to intentionally conspire to manipulate prices. Crowds may be irrational at times, but that’s far removed from deliberate price manipulation.  Only a few traders conspiring together make manipulation possible and US commodity law recognizes that. That’s why the CFTC monitors and publishes concentration data. Of course, monitoring and publishing are different from preventing manipulation or busting it up when it exists.

The concept of preventing concentration is common in the body of all antitrust and anti-monopoly law and, in fact, is the basis for such law. And while simple in concept, it takes some effort to grasp why the concentrated short position is at the center of the silver manipulation.

In my case, the lightbulb that went off in my head when I first uncovered the COMEX silver manipulation 30 years ago had to do with the size of the total open interest in COMEX silver being so out of whack with all other commodities in terms of world production. It was years later, in the mid-1990’s, that I uncovered that the key feature was not just the size of the open interest, but in how few in number were the traders who were short. That’s the key and because I began to press the CFTC on the specific issue of concentration on the short side of COMEX silver, this is what led to greatest lie in the history of market regulation.

Because the issue of concentration is at the core of market regulation, whenever I wrote to the agency about the matter, particularly if great numbers of readers joined in, the CFTC was, in essence, forced to respond. In fact, not only did the agency respond to my concerns about the short side concentration in COMEX silver on more than one occasion, it also did so in public releases, both in May of 2004 and 2008 in separate 15 page letters. Of course, the CFTC vehemently denied on both occasions that there was any manipulation as a result of a short side concentration in COMEX silver futures.

Far from resolving the matter, the issue of concentration has never been more important than it is today, because the concentrated short position in silver (and gold) has never been larger than it is currently. But let me deal with the greatest lie ever first. In the 2008 public letter, the CFTC lied through its teeth. It took me a year and a half to uncover the lie because there was not sufficient data available to know that at the time.  I try to avoid+ incessant linking to past articles, but this one won’t take very long. (Embedded in the article is the link to the CFTC’s 2008 public letter).

http://www.investmentrarities.com/ted_butler_comentary12-21-09.shtml

Let me summarize what the CFTC wrote and why it was a lie. The subject of the letter was the activity of large short traders in COMEX silver and the agency took great pains to dismiss any and all concerns of a short concentration causing any price manipulation or potential clearing failure. But check the timeline and the facts as we all have come to know them to be. The CFTC’s letter was dated May 13, 2008, nearly two months after Bear Stearns, who we now know was the largest concentrated short in COMEX silver and gold, went under, with its massive concentrated short position passed along to JPMorgan at the urging of banking authorities.

Read the CFTC’s letter and tell me if you see any reference to the largest COMEX silver short needing to be rescued just as silver prices were establishing near 30 year highs just two months prior. Remember, the CFTC was responding to the specific issue of a short concentration and left out completely the fact that the largest concentrated short went under just as silver and gold prices were surging to their highest levels in decades, creating margin calls of roughly $2 billion, which Bear Stearns, obviously, couldn’t meet. Yet, in 16 pages, the agency didn’t see fit to even footnote the matter. I ask you, what other word, aside from lie, would you assign to an attempt to evade the clearest proof of what could and did go wrong with a large concentrated position, than the biggest failure ever by a concentrated short seller and leading clearing (guaranteeing) member?

If anything, my description of the CFTC telling the greatest lie ever in 2008 is understated. That’s because the lie is still being told. For weeks, the concentrated short positions in COMEX silver and gold have risen to new historical extremes, yet the CFTC ignores the obvious price manipulation and dangerous market structure created by concentration. Again, it’s not so much that the short positions in COMEX gold and silver are so high; it is much more that the huge short positions are held by so few traders. A big short (or long) position isn’t necessarily manipulative on its face, but a highly concentrated position contains the necessary elements of manipulation, requiring it to be thoroughly examined.

The CFTC can’t and won’t thoroughly examine this matter because it has painted itself into a corner. After coming out on so many past occasions and forcefully denying even the slightest possibility of a silver manipulation, there is no way for the Commission to turn around and enforce the law now, no matter how extreme the concentration grows. It’s more than being laughed out of existence, such an about face would likely doom the agency to losing its independence and being folded into the SEC. Let’s face it – the continued existence of the silver market manipulation by means of a concentrated short position is a failure of the agency’s prime mission. It’s like the Department of Defense not defending us from foreign invasion.

For this reason, I have no intention of petitioning the agency to change its ways because I know it can’t. Despite that, I am convinced the short concentration remains the key feature to silver and gold and the proper attention to it could break the backs of the concentrated shorts. There is an ocean of world investment money looking for alternatives to zero percent interest rates and it will not take much more than a handful of big investment funds to stumble upon the issue of the short concentration and how little physical silver is available for purchase to end the COMEX scam.

Any objective investigation into the matter, moreover, will confirm that not only is the total net short position in COMEX silver (and gold) held by too few traders, those traders have no real economic reason to be short in the first place. There are no silver mining producers represented by the 8 big shorts and aside from JPMorgan, none of the big shorts hold big quantities of physical silver (unless they are hiding it on the moon, because it isn’t on earth). The big shorts are just banks and other financial firms speculating their butts off – just as Bear Stearns did. Talk about a double whammy – eight big shorts hold the entire net silver short position and not one of them has legitimate economic reason to be short, save for trying to zoom the technical funds. Any big investor learning of these facts would buy all the silver available (which isn’t much to begin with).

Until the physical market overwhelms the COMEX concentrated short scam, the big shorts may continue to prevail, although they have been seriously underwater of late, for the first time ever. Being the key factor in silver and gold, it will be the resolution and eventual dissolution of the concentrated short position that will drive silver prices in the future. Since the more observers that recognize the real nature of concentration the quicker it might get dissolved, I want to do what I can to steer attention to the matter.

Particularly for those already writing about the extreme COT market structure, recognizing the concentrated nature of the short side in silver and gold, as well as its eventual resolution should come easily. After all, there is now near universal coverage of how large the commercial net short positions are in COMEX gold and silver that considering just how concentrated those large positions are should be a snap. We all know that the resolution of the current extreme positioning will affect prices greatly, even if we can’t be sure of the timing and short term outcome of the resolution. By superimposing the concentration data onto the extreme market structure, the true extent of price manipulation and potential disorderly market conditions is amplified greatly. That’s because only the few can engineer a manipulation, not the masses.

For those seeking to determine concentration levels on your own, here’s how to do it. Take any long form futures only COT report and go to the concentration data at the bottom of each commodity.  Take the percentage listed under the net short positions of the 4 and 8 largest traders and multiply the total open interest given on top to the left to get the concentration in numbers of contracts. It changes every week, but for this reporting week in COMEX silver (July 5), the percent held net short by 4 or less traders was 32.4% and the percentage held by the 8 largest traders was 46.4%, which given a total open interest of 211,347 contracts results in the 4 largest shorts holding 68,476 net contracts short and the 8 largest traders holding 98,065 contracts net short. In silver ounces, these short positions come to 342.4 million oz and 490.3 million oz respectively.

http://www.cftc.gov/files/dea/cotarchives/2016/futures/other_lf070516.htm

These are the largest concentrated short positions in history and as such take on a much deeper meaning than if 500 million oz were held short by hundreds or thousands of traders. I suppose one could make a case that a silver short position of half a billion ounces was no big deal if held by hundreds of independent traders, but that supposition is impossible when the number of traders is eight or fewer. Why would so few traders dare to be that heavily short in silver on any legitimate basis?

Ironically, the CFTC asked that same question, in different words, in its 2008 letter. In its own words, it noted that the advocates alleging manipulation (me) failed to explain how the manipulators might profit and what could possibly be their motive in a long term manipulation. Failed to explain? How about the manipulators never taking a loss when adding short positions and the desperate economic survival motive of adding to shorts to prevent prices from rising after full short positions were established? Illegitimate profit and financial survival at all costs sound like sufficient motives for a crime to me. Isn’t this what motivates all financial crime?

The issue of concentration on the short side has been my main focus for decades and it is truly a shame it hasn’t been embraced fully. As and when it is embraced, the silver manipulation is not likely to continue. I encourage all to dig into this issue and would only ask for proper citation if it results in public commentary.

Ted Butler

July 18, 2016

end

Your early TUESDAY morning currency, Asian stock market results,  important USA/Asian currency crosses, gold/silver pricing overnight along with the price of oil Major stories overnight    

:

1 Chinese yuan vs USA dollar/yuan UP to 6.6919 (  SMALL REVALUATION NORTHBOUND  /CHINA UNHAPPY TODAY CONCERNING USA DOLLAR RISE/MORE $ USA DOLLARS LEAVE CHINA/OFFSHORE YUAN WIDENS TO 6.7189) / Shanghai bourse  DOWN 6.97 OR 0.23%   / HANG SANG CLOSED DOWN 161.89 OR 0.57% 

2 Nikkei closed /USA: YEN RISES TO 106.23

3. Europe stocks opened ALL IN THE RED    /USA dollar index UP to 96.93/Euro DOWN to 1.1031

3b Japan 10 year bond yield: REMAINS AT  -.226%     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 106.23

3c Nikkei now WELL BELOW 17,000

3d USA/Yen rate now well below the important 120 barrier this morning

3e WTI::  45.51  and Brent: 47.26

3f Gold UP  /Yen DOWN

3g Japan is to buy the equivalent of 108 billion uSA dollars worth of bond per month or $1.3 trillion. Japan’s GDP equals 5 trillion usa.

Japan to buy 100% of all new Japanese debt and by 2018 they will have 25% of all Japanese debt. Fifty percent of Japanese budget financed with debt.

3h Oil DOWN for WTI and DOWN for Brent this morning

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund FALLS to -.039%   German bunds BASICALLY negative yields from  10+ years out

 Greece  sees its 2 year rate RISE to 8.07%/: 

3j Greek 10 year bond yield RISE to  : 7.94%   (YIELD CURVE NOW  FLAT)

3k Gold at $1331.20/silver $19.90(7:45 am est)   SILVER FINAL RESISTANCE AT $18.50 BROKEN 

3l USA vs Russian rouble; (Russian rouble DOWN 18/100 in  roubles/dollar) 63.02-

3m oil into the 45 dollar handle for WTI and 47 handle for Brent/

3n Higher foreign deposits out of China sees huge risk of outflows and a currency depreciation  (already upon us). This can spell financial disaster for the rest of the world/China forced to do QE!! as it lowers its yuan value to the dollar/GOT a SMAL REVALUATION UPWARD from POBC.

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 106.23 DESTROYING WHATEVER IS LEFT OF OUR YEN CARRY TRADERS

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning .9876 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0878 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

3p BRITAIN VOTES AFFIRMATIVE BREXIT

3r the 10 Year German bund now NEGATIVE territory with the 10 year FALLS to  -.039%

/German 10+ year rate  negative%!!!

3s The Greece ELA NOW a 71.4 billion euros,AND NOW THE ECB WILL ACCEPT GREEK BONDS (WHAT A DISASTER)

The bank withdrawals were causing massive hardship to the Greek bank. the Greek referendum voted overwhelming “NO”.  Next step for Greece will be the recapitalization of the banks and that will be difficult.

4. USA 10 year treasury bond at 1.550% early this morning. Thirty year rate  at 2.269% /POLICY ERROR)

5. Details Ransquawk, Bloomberg, Deutsche bank/Jim Reid.

(courtesy Jim Reid/Bloomberg/Deutsche bank/zero hedge)

HELICOPTER MONEY COMING! US Futures Dip, European Stocks Slide After EU Court Slams Italian Bank Bailout Plans

After a head-scratching S&P500 rally – which not even Goldman has been able to justify – pushed stocks to new all time highs with seemingly daily record highs regardless of fundamentals or geopolitical troubles, overnight US equity futures dipped modestly, tracking weak European stocks as demand for safe haven assets including U.S. Treasuries and gold rises. Asian stocks outside Japan fall. Crude oil trades near $45 a barrel.

Europe’s Stoxx 600 Index slid 0.9% following equity declines in Hong Kong and Singapore. The Aussie tumbled 1 percent as the Reserve Bank of Australia said the jobs market was losing momentum amid weak inflation. The kiwi lost ground against all 31 major peers after policy makers moved to rein in the nation’s housing boom, clearing an obstacle to lowering borrowing costs. Treasuries gained as Morgan Stanley predicted the yield on 10-year debt will sink to 1 percent in the first quarter of 2017.

Some of the European weakness was due to a ruling by the European Union’s top court which backed EU guidelines designed to prevent taxpayers from footing the bill for bailing out stricken lenders, strengthening the hand of Brussels regulators as Italy fights to shield some bondholders caught up in the nation’s banking crisis. As Bloomberg reports, Tuesday’s decision is a show of support for the European Commission, which updated its crisis rules for banks in 2013 as part of a shift from taxpayer-funded bailouts to bail-in, the practice of imposing losses on investors before public money can flow.

“Burden-sharing by shareholders and subordinated creditors as a prerequisite for the authorization, by the commission, of state aid to a bank with a shortfall is not contrary to EU law,” according to the EU Court of Justice. The Luxembourg-based court’s decision is binding and can’t be appealed. The European Commission, which checks whether state aid violates EU rules, welcomed the ruling, which it said “confirms the commission’s current case practice and application of EU state aid rules to the banking sector.” The ruling also made the case for a bailout as opposed to a bail in more difficult and Italian banks dropped after the decision with Banca Monte dei Paschi declining as much as 7.1%. UniCredit SpA slipped 3.2% in early trading, while Intesa Sanpaolo SpA decreased 2.5%.

In addition to Italy’s banking slump, European mining companies led losses with Rio Tinto Group sliding 2.1% in London after reporting that second-quarter iron-ore production rose a weaker-than-expected 7 percent. Worse-than-estimated quarterly results from Akzo Nobel and Trelleborg dragged European stocks lower.

European weakness dragged down US equities, with futures on the S&P 500 Index dropping 0.4% after another all time high close yesterday.

As a result, some wondered if the hopium inspired rally is finally coming to an end: “The market is taking a pause,” said Tony Farnham, a strategist at Paterson Securities in Sydney. “There isn’t much of a catalyst out there. People are starting to question if there’s still value in the market following the post-Brexit rally.”

Others chime in: “There is a lot of hope built into U.K. share prices currently – hope on economic growth and hope on the political side,” said Robert Parkes, HSBC’s head of European equity strategy. “There is an unprecedented level of uncertainty on both of those issues. U.K. shares, including the FTSE 100, are in for a bumpy ride over the course of the next few months – in a downward direction.”

Some expressed outright skepticism: “On current sentiment it seems likely that any pullbacks will be shallow and a buying opportunity,” said Chris Weston, chief market strategist at IG Ltd. in Melbourne. “We will need to see good earnings, or the market is at risk of rolling over.

Still, for now the prevailing sentiment is that all dips are to be bought until proven otherwise by algos. This won’t happen, however, if central banks finally unleash the much-jawboned additional stimulus, especially now that the IMF is also in the fray. As Bloomberg adds, policy makers are under pressure to unleash stimulus as the global economic outlook shows signs of worsening. The IMF is set to update its projections for world growth on Tuesday and Managing Director Christine Lagarde warned last week that estimates may be cut. Nonetheless, global equities have recovered to above where they were at the time of the U.K.’s vote to leave the European Union and the U.S. earnings season has so far delivered more positive surprises than negative ones.

Elsewhere, the MSCI Asia Pacific excluding Japan Index fell 0.4%, with benchmark gauges in Hong Kong and Singapore losing at least 0.5%. Japan’s Topix index rose 1.1% from Friday’s close, buoyed by Monday’s slide in the yen. SoftBank Group Corp. tumbled 10%, its biggest loss since 2012, after agreeing to pay $32 billion for ARM Holdings Plc. The U.K-listed chipmaker was little changed after soaring 41% on Monday.

The modest unwind in risk-on positions, meant that 10Y U.S. Treasuries gained for the first time in four days, pushing their yield down by three basis points to 1.56 percent. The yield reached 1.60 percent in the last session, the highest it’s been since June 24, when the Brexit vote count was announced.

Market Snapshot

  • S&P 500 futures down 0.4% to 2153
  • Stoxx 600 down 0.9% to 335
  • MSCI Asia Pacific up less than 0.1% to 134
  • US 10-yr yield down 4bps to 1.54%
  • Dollar Index up 0.16% to 96.71
  • WTI Crude futures down 0.3% to $45.12
  • Brent Futures down 0.4% to $46.79
  • Gold spot up 0.4% to $1,334
  • Silver spot down 0.4% to $19.97

Top Global News

  • Turkey’s central bank will likely slow the pace of interest rate cuts after the failed coup attempt triggered a selloff in TRY and sovereign debt
  • Turkey Baa3 Ratings May Be Cut to Junk by Moody’s
  • U.K. inflation accelerated more than economists forecast in June boosted by airfares on trips to continental Europe
  • German ZEW investor sentiment deteriorates in Brexit aftermath
  • New Zealand’s central bank is moving to quell the country’s housing boom by restricting the amount of money property investors can borrow, paving the way for another cut in interest rates
  • Honda Audit Finds Takata Engineers Manipulated Air-Bag Data: Takata engineers gave ‘prettier shortened version’ to Honda
  • Oil Trades Near $45 Amid Speculation U.S. Output May Climb: Nationwide supplies to decline by 2.1 million barrels: survey
  • U.K. Inflation Rate Rises More Than Forecast on Airfare Surge: Rate rose to 0.5 percent from 0.3 percent in May, partly due to Euro 2016 football championship in France
  • Investor Challenges Baidu on Sale of Video Service to CEO: Hedge fund urges Chairman Robin Li to withdraw iQiyi bid
  • Morgan Stanley Says Year of the Bull Will Push U.S. Yield to 1%: Hornbach says yield will fall to 1% in 1Q 2017, more bullish than any of 61 economists surveyed
  • Netflix Stumbles on Path to World Domination With Price Hike: Results show subscribers more sensitive to costs than thought
  • Murray Energy Working to Renegotiate Credit Terms: Reuters
  • Thrive Capital Said to Have Raised $700m for Fifth Fund: NYT
  • Lufthansa Said to Join Airbus, Honeywell on Runway System: WSJ

Looking at regional markets, Asian stocks outside Japan fell from their highest levels in almost nine months as commodity producers led losses.  4 out of 10 sectors fall with industrials, energy underperforming and telcos, financials outperforming.  The MSCI Asia Pacific was up less than 0.1% to 134, unmoved by the latest Nikkei 225 jump 1.4% higher to 16723. Elsehwere the Hang Seng down 0.6% to 21673, while the Shanghai Composite was down modestly by 0.2% to 3037 and the S&P/ASX 200 down 0.1% to 5451

Top Asian News

  • Son Invokes Yoda of Star Wars on SoftBank Debt as Bonds Fall: SoftBank 5.375% bond yield jumped most since issuance Monday
  • Asia Embraces Bullet Trains as Singapore, Malaysia Sign Deal: Singapore-KL link will follow projects in Indonesia, India
  • Vietnam Faults as ‘Untruthful’ China Media Reports on Sea Ruling: China claims nations support its stance on South China Sea
  • India to Inject $3.4 Billion to Boost Capital of 13 State Banks: State Bank of India, Indian Overseas Bank among lenders
  • Bank of East Asia Shares Fall After Elliott’s Legal Action: action escalates battle against BEA management
  • China Said to Create Immigration Office to Lure Overseas Talent: First-of-its-kind agency could be set up before year’s end

Over in Europe, the Stoxx Europe 600 Index retreated 0.4 percent as of 8:12 a.m. in London, following equity declines in Hong Kong and Singapore. The Aussie tumbled 1 percent as the Reserve Bank of Australia said the jobs market was losing momentum amid weak inflation. The kiwi lost ground against all 31 major peers after policy makers moved to rein in the nation’s housing boom, clearing an obstacle to lowering borrowing costs. Treasuries gained as Morgan Stanley predicted the yield on 10-year debt will sink to 1 percent in the first quarter of 2017, lower than any of the 61 estimates in a Bloomberg survey.

Top European News

  • Airbus Said to Cut in Half A400M Deliveries for 2016 to Germany: Planemaker grappling with gearbox, engine, fuselage faults
  • EU State-Aid Rules for Banks in Crisis Backed by Top Court: Decision comes as Italy and EU seek solution on investor burden-sharing
  • Ericsson Plans More Cost Cuts as Revenue Trails Estimates: Network maker to reduce research on Internet products as demand for wireless gear falling in Europe, Russia, Brazil
  • Volvo Cuts North American Market Outlook as Orders Slump: Truck orders in North America fell 29% in second quarter
  • Akzo Signals Europe Paint Demand Slowed, Marring Profit Run: Slowdown in U.K. paint sales has yet to recover, customers are reporting increased volatility in order patterns

In FX, the Aussie slipped 1 percent to 75.16 U.S. cents, after strengthening in each of the last seven weeks. Minutes published Tuesday from the RBA’s July 5 policy meeting showed that the central bank estimated the economy to have slowed last quarter and policy makers were concerned about currency appreciation. The likelihood of an August rate cut has increased to 56 percent from 45 percent over the past week, derivatives indicate.  New Zealand’s dollar dropped 1.3 percent. The central bank said it will require property investors buying housing in the nation to have a deposit of at least 40 percent from Sept. 1, compared with an existing requirement that such buyers in Auckland have at least a 30 percent deposit. Swaps traders are pricing in a 77 percent chance of an RBNZ rate cut on Aug. 11, compared with 39 percent a week ago. The yen strengthened 0.1 percent to 106.10 versus the greenback, after sliding 1.2 percent in the last session. It was trading at about 106 prior before the outcome of the Brexit vote. The currency tumbled 4.1 percent last week as Japanese Prime Minister Shinzo Abe outlined plans for a “bold”stimulus package in the wake of an election victory. Poland’s zloty led losses among emerging-market currencies, weakening by 0.4 percent. Malaysia’s ringgit fell 0.3 percent. China’s yuan was among the best performers with a 0.1 percent gain.

In commodities, crude oil fluctuated around $45 a barrel. It slid 1.6 percent on Monday after a failed coup attempt in Turkey failed to disrupt shipments through the country, a vital conduit for moving from Russia and Iraq to the Mediterranean Sea. Gold rose from a two-week low, while copper declined 0.1 percent in London.

Bulletin Headline Summary from RanSquawk and Bloomberg

  • Treasuries higher in overnight trading as global equities drop with oil and gold rises. Today’s data includes housing starts and building permits.
  • Morgan Stanley’s Matthew Hornbach called this year’s Treasury market rally. Now he’s revising his forecasts and is more bullish than just about anyone else, calling for 10Y U.S. yields to fall to 1% in the first quarter of 2017
  • Republican Party approved a platform Monday that ostensibly calls for breaking up the biggest banks by reinstating the Glass-Steagall Act
  • German investor confidence deteriorated in July on concern that Britain’s decision to leave the European Union could weaken the region’s fragile economic recovery
  • The EU’s top court backed EU guidelines designed to prevent taxpayers from footing the bill for bailing out stricken lenders, strengthening the hand of Brussels regulators as Italy fights to shield some bondholders caught up in the nation’s banking crisis
  • China’s cabinet fueled speculation that the nation is pressing ahead with debt-to-equity swaps that would give lenders stakes in some companies as part of tackling a build-up in corporate leverage and bad loans
  • Sales of London homes under construction slumped 34 percent in the second quarter as the prospect of a vote to leave the European Union damped demand already hurt by higher taxes

* * *

DB’s Jim Reid concludes the overnight wrap

The hot weather seemed to make for bit of a lethargic session in markets yesterday, although some M&A activity in the tech space and also another better than expected earnings report in the bank sector – this time from BofA – helped stocks eke out modest gains. The S&P 500 finished +0.24% by the time the closing bell came around with the Nasdaq (+0.52%) up a little more. The intraday high-to-low range for the former has not exceeded 0.65% in the last four sessions, a sign perhaps that we’re finally starting to see a little bit of consolidation in markets ahead of the summer lull. Treasury yields also inched a few basis points higher although rate hike expectations actually dipped ever so slightly. The European session was a little more mixed, although again moves were fairly modest for the most part. The Stoxx 600 ended +0.23%, while the DAX (-0.04%) nudged slightly into the red. Turkish equities plummeted over 7% following the failed coup late on Friday although that was about the extent of the fallout with markets elsewhere fairly resilient.

That M&A activity we mention came in the form of Japanese telecom group Softbank’s takeover of the UK’s semiconductor designer ARM Holdings in a bumper £24.3bn deal. The deal would be one of the largest European technology deals and SoftBank’s largest acquisition to date. Much of the chatter is that this would likely be seen as a bit of post-Brexit confidence for deal activity in the UK although it’s worth noting that ARM derives the vast majority of its revenues outside the UK (mainly Asia and North America) and would likely have been relatively immune from Brexit. On the face of it the roughly 11% fall for Sterling (vs. the Yen) would also make the deal more attractive although this has been more than offset by the c.16% move higher for ARM’s shares since the vote to Friday’s close. Yesterday ARM’s share price rallied 41% following the news.

Meanwhile, on the earnings front Bank of America continued what’s been a fairly decent start for US bank earnings after reporting Q2 results ahead of both earnings and revenue expectations, with better than expected fixed income trading revenues again being a big driver of that as we saw with JPM and Citi. It’s worth noting however that while BofA’s Q2 EPS of 0.36c was above the 0.32c expected, that Bloomberg consensus forecast was at 0.36c just two week ago, so another good example of how last minute analyst revisions can help to boost the initial headline numbers.

Away from this the tech sector also kicked off with a few earnings reports of its own. Coming after the closing bell, the slide in IBM’s revenue was not quite as bad as feared, although another quarter of negative revenue growth made it 17 consecutive quarters that revenue has fallen in YoY terms. Meanwhile Yahoo’s results were a bit more mixed, while Netflix disappointed on subscriber numbers, sending shares down some 17% in extended trading at one stage.

Switching over to Asia this morning, Japan aside the bulk of bourses are trading with a weaker tone as we go to print. The Hang Seng (-0.59%), Shanghai Comp (-0.60%), Kospi (-0.41%) and ASX (-0.21%) are all in the red, with a second consecutive daily decline for Oil weighing slightly. In Japan the Nikkei (+0.47%) is up although is playing catch up somewhat having just reopened from a public holiday. That performance is more impressive given the 10% slide in SoftBank shares this morning. Elsewhere US equity index futures are also slightly in the red following those earnings last night after the bell. In FX the Aussie Dollar is -0.85% after the RBA meeting minutes came across as slightly dovish, while the Kiwi Dollar is -1.08% after the RBNZ announced its intention to tighten existing LVR restrictions on residential mortgage lending from September.

Moving on. Over in credit markets yesterday one headline which caught our eye came from the Canadian Imperial Bank of Commerce (CIBC) which became the first non-German and non-CBPP3 eligible EUR benchmark to issue a covered bond with a negative yield. Indeed the €1.25bn 6y bond was issued at -0.009% according to Bloomberg. Another incredible statistic from the current era of negative rates.
Staying with credit, yesterday the ECB released its holdings from its CSPP program for the first time. There didn’t appear to be any surprises on the list but there was confirmation that they’ve purchased split IG rated names like Telecom Italia and Lufthansa which shows they’re happy to buy what are effectively HY names in index terms. By also buying Glencore they’ve shown that they’re not afraid to buy names that have been under pressure and are not sticking strictly to Eurozone only entities. So it’s confirmation that we expect them to take a rules based approach over a credit selection process.

In terms of run rate, their holdings as of 15 July 2016 were €10.427bn. This implies net purchases settled last week of €1.953bn with an average daily run rate of €391m. This compares favourably with an average daily run of €401m since the program started. So there has been no real sign of let up in their buying in July in spite of holiday season starting. August might be trickier and then the run rate in the autumn might depend on the volume of new issuance as secondary will get increasingly more challenging as the easy looser bonds are purchased.

In data terms the calendar was relatively quiet yesterday with a 1pt fall in the NAHB housing market index in the US to 59 (vs. 60 expected) the only data of note. There was a bit of chatter over at the BoE however where we heard from the MPC’s Martin Weale. The committee member said with regards to the uncertainty stemming from Brexit, that ‘this uncertainty points to the argument that we should wait for firmer evidence before making any policy change and least in the absence of any strong arguments for an immediate change’. It’s worth highlighting that the post-Brexit data flow is limited still although this Friday we will get the flash July PMI’s in the UK where expectations are for a decent leg lower.

ASIAN AFFAIRS

 

i)Late  MONDAY night/TUESDAY morning: Shanghai closed DOWN 6.97 POINTS OR 0.23%/ /Hang Sang closed DOWN 161.89 OR 0.57%. The Nikkei closed UP 225.46 OR 1.37%/  Australia’s all ordinaires  CLOSED DOWN 0.25% Chinese yuan (ONSHORE) closed UP at 6.6919 ON A LITTLE REVALUATION /Oil FELL to 45.51 dollars per barrel for WTI and 47.26 for Brent. Stocks in Europe ALL IN THE RED. Offshore yuan trades  6.7189 yuan to the dollar vs 6.6919 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE WIDENS CONSIDERABLY AS  MORE USA DOLLARS LEAVES THEIR SHORES. 

FIRST  REPORT ON JAPAN  SOUTH KOREA AND CHINA a) JAPAN ISSUES b) REPORT ON CHINA

Chinese Vice Chairman tells its troops to get ready for combat.This sounds ominous

(courtesy xinhua/Bloomberg/zero hedge)

Chinese Military Vice Chairman Urges Troops to Get Ready For Combat: Xinhua

While it is unclear how much of it is populist bluster, how much is posturing, and how much an actual, objective caution, Bloomberg points out an article by China’s news agency Xingua posted on the website of the Ministry of National Defense, in which Fan Changlong, vice chairman of China’s Central Military Commission (which is chaired by Xi Jinping himself) “urges Chinese troops to get prepared for combat by improving planning, equipment and logistical support in order” to be ready to “win the war.”

Bloomberg adds that Fan made the comments in recent inspection tour of China’s Southern Theater Command. The warning comes days after China officially warned the US that its patrols in the South China Sea – which despite last week’s decision by the Hague tribunal – deems as its own, could end in “disaster.”

 

 

A quick bio of Fan Changlong:

Fan Changlong (born 1947) is a general in the People’s Liberation Army (PLA) of the People’s Republic of China. He is a Vice Chairman of the Central Military Commission, and formerly served as commander of the Jinan Military Region.

 

Fan was born in Dandong, Liaoning Province. He joined the PLA and the Communist Party of China in 1969. He became a major general in 1995, a lieutenant general in 2002, and general on July 15, 2008. Fan has been an alternate member of the 16th Central Committee of the Communist Party of China, and a full member of the 17th Central Committee. In 2012, ahead of the 18th Party Congress, he was appointed Vice Chairman of the Central Military Commission.

 

In mid-April 2016, he paid a visit to the disputed Spratly Islands in the South China Sea, according to the country’s Ministry of National Defense, which reported the visit on Friday 15 April 2016. Gen. Fan Changlong was said to have been the highest-ranking People’s Liberation Army officer ever to visit the Spratly Islands. General Fan led a delegation to the “relevant Nansha Islands to offer good wishes to officers and personnel stationed there, and also to understand the construction of facilities on the islands,” said a brief statement from the Ministry of National Defense. His tour appeared intended to show China’s determination to ward off any challenges to its claims over the islands, which are also the subject of claims by the Philippines, Malaysia, Vietnam, Brunei and Taiwan.

* * *

And here is the full article as it appeared on the Chinese Ministry of National Defense., google translated.

* * *

CPC Central Committee, Central Military Commission Vice-Chairman Fan Changlong emphasized recently in the southern theater forces research, to earnestly study and implement President Xi major strategic thinking and decision-making important instructions, adhere to the party’s absolute leadership over the army, firmly grasp the Party in the new situation strong military target under the full implementation of the political army reform and a strong army, in army stepping up preparations for military struggle, strengthen the combat of military training, and constantly improve deterrence and combat capability, and resolutely obey the Central military Commission and President Xi command, and resolutely safeguard national sovereignty, security and development interests.

Central Military Commission, commander of the Air Force Ma Xiaotian, CMC member and rocket forces commander Wei Feng and were about to participate in research.

Fan Changlong stressed the need to deeply understand the complexity of the grim situation facing the security, stepping up preparations for military struggle of the work to ensure that the order, be able to have to go win the war. Focus on the difficult situation to deal with complex, targeted research warfare countermeasures, revision and improvement plan program, deepen all aspects of preparation of personnel, equipment, security and so on. Depth specializing in refining and confrontational drills used in efforts to build a critical moment, to play a key role in the “dagger” forces, improve military and emergency response capabilities assault capability. Strengthen combat duty, well-organized air and sea patrol, firmly secure disposal of various contingencies, to ensure air safety side of the sea. We must resolutely implement the Party Central Committee and President Xi instructions requirements, support local flood prevention work to do, to protect people’s lives and property, to restore normal production and life order to contribute.

Fan Changlong pointed out that we should always put ideological and political construction in the first place the construction efforts in enhancing political awareness, the overall sense of core consciousness, awareness on par with efforts to lay a solid command of the Party’s ideological and political foundation. Should study and implement President Xi “July” important speech as a major political task, a thorough understanding of speech grasp the profound meaning and spirit, enhance crack army building, the actual ability to reform and preparations for military struggle puzzle. To continue thoroughly implement the spirit of the ancient Tianquan Jun political union, a strong push forward the reform of military education campaign and the “two learning to do a” study and education, a view to achieving real results.

Fan Changlong stressed the need to pay attention to changes in military research and external environment, the test of reform and adjustment of interests, arduous task forces and other factors soldiers thought to bring stability to focus on the grassroots level, unify ideological work fell to the grass roots, and create hold people’s hearts by undertaking internal environment, so that the officers and men have to realize the value of life and to get a sense of accomplishment. Strengthen military management, to maintain security and stability forces. Perseverance strengthen style building, completely eliminate Guo, Xu due to potential regulatory pernicious habits and promote overall improvement troops atmosphere, enhance the cohesion of combat troops to stimulate positive energy Army-strong army.

EUROPEAN AFFAIRS

European confidence crashes to 4 yr lows:

(courtesy zero hedge)

“Whatever It Takes” Has Failed – European Economic Confidence Crashes To 4-Year Lows

If the premise of central-banking largesse is to maintain (or inspire) economic confidence, then Mario Draghi’s smoke and mirrors have officially failed. This morning’s ZEW data on German and European Consumer confidence is a disaster. Both the current situation and expectations for Germany tumbled but most worryingly, the ‘hope’ for European economic growth has crashed to its lowest since Draghi promised to do “whatever it takes” in the summer of 2012.

How long before “whatever it takes” morphs into shock and awe “helicopter money”? How else will Europe afford all the immigrants?

end

 

S and P lowers the boom on Deutsche bank as they cut their outlook to negative due top challenging operating conditions in the banking environment.  These guys are the largest derivative player in the world:

(courtesy zero hedge)

 

S&P Cuts Deutsche Bank Outlook To Negative On “Challenging Operating Conditions”

 

It has been a while since investors focused their attention on the world’s “most systematically risky” bank, Deutsche Bank. Moments ago, S&P made sure to remind us that nothing is fixed, when it released a report saying that “Operating Conditions May Challenge Strategy Execution” but keeping the bank at a BBB+ rating.

The full report below:

Deutsche Bank Outlook Revised To Negative As Operating Conditions May Challenge Strategy Execution; Ratings Affirmed

  • We believe the difficult operating environment may challenge Deutsche Bank as it undertakes a material restructuring of its business model and balance sheet.
  • We are revising our outlook on Deutsche Bank to negative from stable.
  • We are affirming our ‘BBB+/A-2’ issuer credit ratings on Deutsche Bank.
  • The negative outlook reflects the possibility that we may lower the long-term issuer credit rating if market conditions challenge Deutsche Bank’s ability to preserve its capital and maintain its franchise while implementing its restructuring plans.

LONDON (S&P Global Ratings) July 19, 2016–S&P Global Ratings said today that it revised the outlook on Germany-based Deutsche Bank AG to negative from stable. The ‘BBB+/A-2’ global scale, ‘cnA+’ Greater China regional scale, and ‘trAAA/trA-1’ Turkey national scale issuer credit ratings were affirmed.

At the same time, we revised the outlook on certain Deutsche Bank branches and subsidiaries to negative from stable (see rating list for details). The ratings on these entities were affirmed.

In addition, we affirmed the issue ratings on Deutsche Bank AG’s long-term senior unsecured debt at ‘BBB+’, short-term senior unsecured debt at ‘A-2’, dated nondeferrable Tier 2 regulatory capital instruments at ‘BB+’, and perpetual Tier 1 instruments at ‘B+’.

The outlook revision reflects our view that the unfavorable operating environment poses particular challenges to Deutsche Bank as it implements its 2016-2020 strategic plan (known as Strategy 2020). Although market conditions may recover somewhat from the weak first quarter of 2016, ultra-low interest rates and generally subdued client trading activity may persist for the foreseeable future. These pressures affect the entire sector but we believe they are particularly unhelpful for Deutsche Bank as it seeks to strengthen capital and maintain its franchise while fundamentally restructuring its business model and balance sheet. We note that Deutsche Bank is still in the early stages of its plan and we expected from the outset that 2016 would be the peak restructuring year. Where possible, we expect it will seek to accelerate planned cuts in costs and regulatory risk-weighted assets (RWAs) to mitigate lower revenues. Nevertheless, although it is not our current base-case scenario, we see a risk that the achievement of Deutsche Bank’s targets under Strategy 2020 may be challenged if operating conditions remain adverse.

More specifically, the negative outlook reflects the potential removal of the one-notch positive adjustment that we currently include in the ‘BBB+’ long-term issuer credit rating. This adjustment reflects our view that, if it executes Strategy 2020 well, Deutsche Bank would transition toward improved stand-alone creditworthiness over the medium term if it achieves a more stable and predictable operating model. Key elements of Strategy 2020 include significant reductions in RWAs and leverage exposure; a far-reaching cost cutting program; and exits from unprofitable countries, products, and markets. These initiatives are intended to strengthen the fully-loaded Common Equity Tier 1 (CET1) and leverage ratios to at least 12.5% and 4.5%, respectively, in 2018 and beyond. We could remove the one-notch positive adjustment from the rating if we believe Deutsche Bank appears likely to fall short of these objectives. If the Strategy 2020 measures prove insufficient, we believe it would be difficult for Deutsche Bank to extend cost and RWA cuts without harming its core businesses. The bank has already cancelled equity dividends in respect of the 2015-2016 financial years, which reduces flexibility to respond to unexpected capital events.

We have affirmed the ratings because, in addition to the one-notch positive adjustment, the anchor and bank-specific factors are also unchanged. Our risk-adjusted capital ratio was 8.6% at year-end 2015 and we expect it to be in the 8.5%-9.0% range at year-end 2017. This projection assumes relatively weak earnings in the near term, a significant reduction in RWAs, and further material litigation charges. We consider that the bank’s principal capital constraint will occur in 2019-2020 when the Basel Committee’s RWA reforms are due to be implemented and Deutsche Bank’s minimum regulatory requirement will be a 12.25% fully-loaded CET1 ratio. The bank expects to meet this hurdle by steadily strengthening retained earnings in the coming years as its restructuring measures take effect and litigation charges ease. The scope and timing of the RWA reforms remain highly uncertain and an easing of the ultimate requirements would benefit Deutsche Bank’s transition process.

The U.K.’s recent vote to leave the EU (Brexit) is a consideration in the outlook revision, but not a prominent one. We consider that Deutsche Bank should not be materially affected if the U.K. were to lose access to the EU financial services passporting arrangement, although it may need to relocate some activities from its large London branch. We assume Deutsche Bank’s trading revenues received a boost from Brexit-related market volatility but, in the longer term, we see Brexit as a factor that may prolong the current period of ultra-low global interest rates and depressed business volumes.

The negative outlook reflects our view of the execution challenges facing Deutsche Bank over our two-year rating horizon as it restructures its business model and balance sheet. We regard 2016-2017 as the most demanding phase of Strategy 2020 and we see a risk that generally unfavorable operating conditions could challenge the achievement of its goals. In assessing Deutsche Bank’s progress, we intend to focus on its capital generation prospects for 2017 and beyond, its performance versus peers, and its ability to defend its market position in its core businesses.

We could lower the long-term issuer credit and senior unsecured issue ratings if we consider that Deutsche Bank is falling behind its announced schedule for strengthening its business position and risk position. In that scenario, we would likely remove the one-notch positive adjustment that we currently include in the ‘BBB+’ long-term rating. Higher-than-expected litigation charges or material losses on disposal of non-core businesses could also lead to a downgrade if they materially erode capital.

If we were to lower the long-term rating to ‘BBB’, we would likely maintain the short-term rating at ‘A-2’ due to Deutsche Bank’s satisfactory liquidity profile. The issue ratings on Additional Tier 1 and Tier 2 regulatory capital instruments would be unaffected if the stand-alone credit profile (the starting point for these ratings) remains ‘bbb’.

We could revise the outlook to stable if Deutsche Bank executes Strategy 2020 well, maintains a resilient business position, and demonstrates progress toward its balance sheet targets.

RUSSIAN AND MIDDLE EASTERN AFFAIRS

TURKEY

Turkey is like a bank:  Too big to fail!!

(courtesy zero hedge)

Piling On To The “Surreal” Response To Turkish Turmoil: Here Comes The Central Bank

Update: Turkey’s central bank indeed cut, and by 25 bps, in line with expectations:

  • Turkey central bank cuts top end of its rates corridor 25bps to 8.75%, as expected
  • Holds benchmark repo rate at 7.5%, as expected
  • Holds overnight borrowing rate at 7.25%, as expected

* * *

In less than half an hour, the Turkish central bank will steal the public spotlight, if only very briefly, from Erdogan when it announces whether it will cut rates by 50 bps, 25 bps, (or – less likely – it won’t cut at all). But in light of the recent stunning transformation in the country’s political landscape, does this decision really matter? According to the market yes; according to Bloomberg’s Richard Breslow, it is simply one more indication of how surreal the response to the Turkish turmoil has become.

Here is his full note.

Turkey Shouldn’t Be Confused With a Penny Stock

Much of the response to the turmoil in Turkey has been surreal, to say the least. While President Erdogan was rounding up thousands of alleged plotters, shuttering media, closing down a bank and accusing the U.S. of harboring the ringleader there has been a lively debate whether this means the central bank should cut 50bps today or only 25.

Do we possibly think it will make a difference? Apparently a lot of people do. In this age of monetary policy uber alles, every setback somehow gets sold as a buying opportunity. There are no long-term ramifications ascribed to anything.

“Valuations look cheap. Yields look attractive.” Forget that the tourist industry will be toast. That business and consumer sentiment are likely to tank. The news cycle will pass. After all there’s great sports on the television.

There was no shortage of assurances that the impact was localized and no reason this couldn’t be a “risk-on” day for the rest of us. No reason to worry about the European banks that have been betting heavily on Turkey. And just wait until Europe gets a freshly topped-up bill for the Syrian refugee deal.

Moody’s and Fitch immediately warned on the country’s ratings, citing instability. Can’t have that. IMF Managing Director Lagarde countered that “quick action” by the CBRT has calmed markets. Move along, nothing to see here.

So what if the war on terror just got more difficult, they’re a member of NATO. Oh wait, didn’t U.S. Secretary of State Kerry warn that Turkey’s behavior may make it unsuitable to be part of that organization? Tough words. But when this stress test is evaluated they’ll be deemed systemically important and too big to fail. Erdogan is counting on it. Someone had better tell ISIS.

Monetary policy can cure many ills. Sort of. But to think it can eliminate all geopolitical risk and societal failings is a dip too far to buy.

end

Tens of thousands more have been purged as Turkey “concentrates” on extraditing Gulen. Interesting enough, Turkey now blames the downing of the Russian planes on Gulen:

(courtesy zero hedge)

Turkey Latest: Tens Of Thousands Purged; “Gulenist Media” Shut Down; Pilots Behind Russian Jet Downing Arrested

Turkish president Erdogan continues his witch hunt purge for the third day, and as of this morning the office of the Turkish prime minister removed from duty 257 staff suspected of being linked to the failed coup Reuters cites a source in the PM’s team as saying Tuesday. The number of those suspended from duty in the PM’s office has reached 10 percent of the estimated 2,600 total personnel of Prime Minister Binali Yildirim’s staff.

The crackdown is also impacting the army, where the state-run Anadolu news agency reported that President Recep Tayyip Erdogan’s Air Force adviser, Lt. Col. Erkan Kivrak, has been detained at a hotel in the Serik district of Turkey’s southern province of Antalya. It says Kivrak was detained while on vacation. Following processing by the Antalya police, he has been transferred to Ankara. Additionally courts have ordered 85 generals and admirals jailed pending trial over their roles in a botched coup attempt. Dozens of others were still being questioned.

Additionally, about 100 employees of Turkey’s National Intelligence Organization have been suspended from work over alleged ties to the coup of July 15, reports Haber Turk newspaper.

Anadolu Agency said Tuesday that those formally arrested include former air force commander Gen. Akin Ozturk, alleged to be the ringleader of the July 15 uprising (we documented the surprising flip-flop in his narrative yesterday) as well as Gen. Adem Hududi, commander of Turkey’s 2nd Army, which is charge of countering possible threats to Turkey from Syria, Iran and Iraq.

And then there are the teachers: moments ago Anadolu also reported that the Turkey education ministry has suspended 15,200 staff and adds that Turkey has asked for the resignation of all university deans.

Summarizing the latest purge we get the following numbers:

  • 15,200 educators
  • 8,000 police officers
  • 3,500 soldiers
  • 3,000 judges
  • 492 clerics
  • 257 in PM’s office
  • 120 generals and admirals

While the west has been largely oblivious of the Turkish purges, they have been noticed at the U.N. whose human rights chief expressed alarm about “the mass suspension or removals of judges in Turkey.”  Zeid Ra’ad al-Hussein also decried comments from some officials that the death penalty could be reinstated, saying such a move would be “a big step in the wrong direction” and violate Turkey’s responsibilities under international law.

Yet even as the arrests continue, Turkey vowed on Tuesday to root out allies of the U.S.-based cleric, Fethullah Gulen, it blames for a failed coup attempt last week, after an already deep purge of the army, police and judiciary, and said it had sent Washington evidence of his wrongdoing. Prime Minister Binali Yildirim accused Washington, which said it will only consider extradition if clear evidence is provided, of double standards in its fight against terrorism.

“We have more than enough evidence, more than you could ask for, on Gulen,” Justice Minister Bekir Bozdag told reporters outside parliament. “There is no need to prove the coup attempt, all evidence shows that the coup attempt was organized on his will and orders.”

Earlier today, Turkey’s deputy prime minister says dossiers containing details of activities of Gulen have been sent to the U.S. Numan Kurtulmus says Tuesday he can’t go into the details of the files but said they include the past actions of the group led by Fethullah Gulen. They may also include new evidence that emerges from the current investigation.

There are conflicting reports about whether Turkey has sent an official extradition request to the US, with AP reported that this has not yet happened, however FT saying that it has indeed happened:

Turkey has sent the US four dossiers on the alleged activities of Pennsylvania-based Islamic cleric Fethullah Gulen, following up on a demand for his immediate extradition that threatens to derail relations between the two Nato allies.

But as Turkish demands get louder, the US stance — that any request for extradition should go through a judicial review — has angered Turkish politicians, including Prime Minister Binali Yildirim, who told reporters on Monday that “we will be a little bit disappointed if our friends say ‘show us the evidence’ while there are members of this organisation which is trying to destroy a state and a person who instructs it”.

“Even questioning our friendship may be brought to the agenda here,” he added.

But the request does not include any evidence of Mr Gulen’s actions related to the coup, said Bekir Bozdag, the justice minister, noting the complexity of an ongoing investigation. Instead, a Turkish official said, the dossiers include the results of Turkish prosecutors’ long-running probes into Mr Gulen’s actions.

Meanwhile, as Turkey continues to pursue every domestic trace of Gulen, moments ago Turkey’s radio-TV watchdog RTUK unanimously voted to cancel all broadcast rights and licenses of radio and TV stations that are linked to Gulenist “FETO/PDY” organization, it says in statement on website.

Names of outlets, whose broadcast rights and licenses are canceled, according to state-run Anadolu Agency: STV, Samanyolu Haber, Samanyolu Haber Radyo, Can Erzincan TV, Kanal 124, Yumurcak TV, Hira TV, MC TV, Dunya TV, Kanal Turk, Bugun TV, Mehtap TV, Berfin FM, Kanal Turk Radyo, Burc FM, Samanyolu Haber Radyosu, Radyo Mehtap, Haber Radyo Ege, Dunya Radyo, Radyo Kure, Merkur TV, Esra Radyo, Tuna Shoping TV, Samanyolu Haber Radyo Anadolu

* * *

But in what may be the most surprising development, Turkish officials on Tuesday also blamed Gulen’s followers for shooting down a Russian Su-24 in November. That incident brought Russian president Vladimir Putin’s wrath on Turkish president Recep Tayyip Erdogan and Turkey’s economy, in the form of travel bans for tourists and curbs on Turkish exports. The pilots were rounded up on Saturday, as part of what has become a wide-ranging purge of supposed plotters.

“Two Turkish pilots who shot down a Russian Su-24 near the Syrian border were taken into custody, according to a senior Turkish official speaking on condition of anonymity,” Bloomberg reports, citing a high-level Turkish official.

In other words, the only reason Turkey could not hand over the two pilots to Putin is because – until Friday – they hadn’t made clear their intentions of overthrowing Erdogan. Sounds legit.

Putin and Mr Erdogan are expected to meet in August for the first time since the jet was downed, indicating a mending of fences with Russia just as Turkey bristles at Washington for harbouring a man Mr Erdogan once considered a friend, but now describes as a terrorist.

 

end

 

This is far more worrisome, as the Turkish lira plummets to below levels Friday night, when it was first announced of a coup. The markets are stating that Erdogan went way too far and they are punishing the country:

(courtesy zero hedge)

Erdogan Goes Too Far, Market Warns As Lira, Turkish ETF Suddenly Tumble

While so far the Western diplomatic response to Erdogan’s unprecedented putsch has been mostly stunned silence (with just the U.N. human rights chief expressing alarm about the mass suspension or removals of judges so far), the market is starting to get concerned, and moments ago the Turkish Lira suddenly tumbled, sliding below Friday’s closing level, while at the same time the MSCI Turkish ETF plunged as well.

This is not in response to speculation of another military coup; it is, however, in reaction to market concerns that the Erdogan regime counter-coup has now gone too far, and as a result not only the Turkish economy, but its capital markets, and society, will all be impacted unless somehow the Turkish president’s unprecedented scramble for power is somehow contained.

We have truly entered a new normal if capital markets are supposed to keep corrupt, conflicted “democratic” politicians honest.

 

end

 

My goodness!!  Erdogan just fired all university deans and then sacked 21,000 private school teachers.  Turkey is going back into the early middle ages as he wants conditions similar to a caliphate and he is that leader:

(courtesy zero hedge)

Erdogan Unleashes Unprecedented Crackdown: Fires All University Deans; Suspends 21,000 Private School Teachers

Over the weekend, after the initial reports of the purge unleashed by Erdogan against Turkey’s public,we previewed the upcoming, far more dangerous counter-coup as follows: “it was the next step that is the critical one: the one where Erdogan – having cracked down on his immediate military and legal opponents – took his crusade against everyone else, including the press and the educational system.

But while Turkey’s press is already mostly under Erdogan’s control, it is the educational witch hunt fallout that is far more troubling, and just as expected over the past hour we have gotten a glimpse of just how extensive the Turkish’s president cleansing of secular society will be, when the state-run Anadolu news agency reported that Turkey’s ministry of education has sacked 15,200 personnel for alleged involvement with a group the government claims is responsible for Friday’s failed coup.

Even more shocking, Anadolu reports that Turkey’s Board of Higher Education has requested the resignations of all 1,577 university deans, effectively dismissing them.  Of the deans dismissed, 1,176 worked in public universities and 401 in private institutions.

The National Education Ministry said Tuesday that the staff are in both urban and rural establishments, and that an investigation has been launched against them.

It didn’t stop there, and as Turkey’s Ysafak reports, the country has just canceled the license of some 21,000 private school teachers.

And just like that, In one move, Turkey’s authoritarian ruler just eliminated both the middle and higher educational system of the country.

While there is still no response from the distinguished western “democratic” powers, the market has already opined on how this ends, and as we showed moments ago, its conclusion is simple: badly.

Why is Erdogan doing all of this? Simple: he is doing everything in his power to undo the last traces of secularism in the Turkish state and to propel himself to the role of undisputed, “democratically elected” despot, without any internal opposition.

Somewhere, Mustafa Kemal Ataturk is spinning in his grace.

 

end

 

Then  at 7 pm Turkish time (12 noon our time: a massive explosion reported in Ankara:

(courtesy zero hedge)

Massive Explosion Reported In Turkey’s Capital Ankara

Moments ago Turkish assets took another leg lower following local press reports of a massive explosion rocking Turkey’s capital Ankara. According to initial unconfirmed reports, the explosion may have taken place at a local TV station.

招きネコに小判♡ @manekicat_koban

Large explosion hits Turkish capital Ankara – reportshttps://www.rt.com/news/352094-large-explosion-ankara-turkey/ …

11:18 AM – 19 Jul 2016 GlobalIntelInsight @global_awar

 Black clouds imerge as a huge explosion rocked the city of

11:18 AM – 19 Jul 2016

View image on Twitter

Amichai Stein @AmichaiStein1

: Large explosion hits Turkish capital 

11:06 AM – 19 Jul 2016

Çok feci dumanlar yükseliyor #Ankara da neler oluyor ate?ler buradan gözüküyor!pic.twitter.com/WVkFEOseOC

— Beneyna K. (@beneyna_) July 19, 2016

Amichai Stein @AmichaiStein1

: Explosion in . Smoke seen in the area

11:09 AM – 19 Jul 2016

View image on Twitter

Lü @clitoran

Explosion à Ankara 

11:18 AM – 19 Jul 2016

The Turkish currency, already weaker on the day, has tumbled more, and is approaching post-coup lows.

Developing story

END

 

EMERGING MARKETS

VENEZUELA

 

Venezuela opens up its border with Columbia and watch the result as citizens flock over to get the necessary items to survive:

(courtesy zero hedge)

This Is What Hyperinflationary Collapse Looks Like

There was some good news for citizens of Venezuela yesterday, when the government – having mostly given up on trying to provide its citizens’ with even the most basic food needs – announced it has opened its border with Colombia for the second time this month to allow people to buy food and medicine unavailable at home in their country’s collapsing economy. Colombia’s government said 44,000 people crossed on Saturday to buy food, medicine and cleaning products and said it expected that number to almost double on Sunday.

Bus terminals were packed and hotels filled to capacity in the border town of San Antonio, with many traveling hundreds of miles to shop.

The result of the scramble to obtain much needed staples is shown in the photos below.


Venezuelan citizens waiting to cross into Colombia to buy supplies


More than 100,000 Venezuelans crossed into Colombia over the weekend in
search for food and medicine.


Venezuelan women buy food staples at a local shop in Cucuta, Colombia


Tebie Gonzalez holds a wad of Bolivar bills as she exchanges what remains of 
her  and her husband’s savings.


Crowds of people flooded the bridge that links to the Colombian city of Cucuta 
to cross the border on foot


Activists handed out anti-government pamphlets, looking to galvanize the 
frustration that has characterized food riots


The border was heavily packed by Venezuelan troops, the crowds were mostly 
orderly amin and atmosphere of tense excitement

According to Reuters, last week, over 35,000 people crossed over for the first time since the governor of Venezuela’s state of Tachira, opened the border.  Socialist President Nicolas Maduro shut the border last year in an effort to crack down on smuggling of subsidised products.

Venezuela’s product shortages have since worsened, creating further incentives to buy goods in Colombia and bring them back. Venezuelans routinely spend hours in lines at home seeking items ranging from corn flour to cancer medication to car parts. Shoppers complain of violence in lines, and looting is on the rise.

* * *

That was the good news. The bad news for ordinary Venezuelans is that unless they can permanently move to Colombia or any other country, their plight is only going to get worse.  The reason is that according to the IMF, Venezuela’s consumer-price inflation is forecast to hit 480% this year and top 1,642% in 2017, according to the International Monetary Fund.  At that point it will proceed into suborbital hyperinflationary territory, hitting 2,880% in 2018 before “plateauing” at 3,500% in 2019.

While it has been speculated that the insolvent nation will soon have to ask the IMF for a bailout, Venezuela, whose government severed ties with the IMF nearly a decade ago under its former socialist autocratic leader, Hugo Chávez,  hasn’t tried to restore relations with the world’s emergency lender. Cited by the WSJ,  IMF spokesman Gerry Rice said that “there has been no change in Venezuela’s relationship with the fund. The Venezuelan authorities have not contacted us.”

China, seeking to take advantage of poor political relations that many African and Latin American nations have with the U.S. and Western-based institutions like the IMF, has been giving Venezuela and other commodity exporters cheap loans to help tide them through the commodity slump. Last year, the country supposedly secured $10 billion in cheap credit to help keep it afloat. The problem is that that loan was pledged by oil at much higher prices, which means that now Venezuela has to pump overtime just to meet its obligations to Beijing, as we explained previously.

While those loans may keep the state budget limping along, including massive costly subsidy programs, and strengthen political ties to Beijing, they don’t require the deep policy overhauls many economists say are vital to repairing the broken economy.

Meanwhile, Venezuela’s problem is simple: a lack of credible currency as the value of the Bolivar has imploded as a result of the policies of Maduro, leading to a collapse in the economy.

“A lack of hard currency has led to scarcity of intermediate goods and to widespread shortages of essential goods—including food—exacting a tragic toll.” –IMF Western Hemisphere chief, Alejandro Werner, “Latin America and the Caribbean in 2016: Adjusting to a Harsher Reality”

The bottom line is that even the IMF appears to have given up: “we have dire forecasts…predicated on very limited information that we have.” Gian Maria Milesi-Ferretti, Deputy Director, Research Department, IMF, at the October 2015 World Economic Outlook press conference.

So for those who are curious what modern-day, runaway hyperinflation looks like, here is the IMF’s forecast of Venezuela’s inflation over the next three years. We can’t help but chuckle that even in this dire case the IMF chooses to put a positive spin on events, and predicts that instead of exponential inflationary growth, somehow the country’s CPI will “taper” by 2019. Good luck.

 

END OIL MARKETS/OIL ISSUES

Oil slides into the 44 dollar column after unexpected gasoline buildup

(courtesy zero hedge)

 

Oil Slides After Unexpected Gasoline Inventory Build

Following last week’s surprise distillates build (and lower than expected crude draw) API reported inventories largely in line with expectations (-2.3mm vs -2mm exp. This nevertheless managed to pump and dump crude futures before drifting slightly lower as Gasoline showed a bigger than expected build (+800k vs -500k exp.).

 

API

  • Crude -2.3mm (-2mm exp)
  • Cushing -84k (-100k exp)
  • Gasoline +805k (-500k exp)
  • Distillates -484k

This is the 9th weekly daw in crude in a row… and Gasoline showed a major build vs expected draw…

 

 

The reaction was chaos in crude with stops ripped lower and higher before drifting lower..

 

Charts: Bloomberg

 

END

Your early morning currency/gold and silver pricing/Asian and European bourse movements/ and interest rate settings/TUESDAY morning 7:00 am

Euro/USA   1.1031 DOWN .0037 (STILL  REACTING TO BREXIT/

USA/JAPAN YEN 106.23  UP 0.068(Abe’s new negative interest rate (NIRP), a total DISASTER/SIGNALS U TURN WITH INCREASED NEGATIVITY IN NIRP/JAPAN OUT OF WEAPONS TO FIGHT ECONOMIC DISASTER/NOW WILL INITIATE HELICOPTER MONEY

GBP/USA 1.3145 DOWN .01156(MORE STIMULUS PLANNED)

USA/CAN 1.3014 UP .0058

Early THIS TUESDAY morning in Europe, the Euro FELL by 37 basis points, trading now JUST above the important 1.08 level RISING to 1.1054; Europe is still reacting to Gr Britain BREXIT,deflation, announcements of massive stimulation (QE), a proxy middle east war, and the ramifications of a default at the Austrian Hypo bank, an imminent default of Greece, Glencore, Nysmark and the Ukraine, along with rising peripheral bond yield further stimulation as the EU is moving more into NIRP, and NOW THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE / Last night the Shanghai composite  CLOSED DOWN 1-.73 POINTS OR 0.35%   / Hang Sang CLOSED DOWN 6.97 PTS OR 0.23% /AUSTRALIA IS LOWER BY 25%/ EUROPEAN BOURSES ARE ALL IN THE RED   as they start their morning

We are seeing that the 3 major global carry trades are being unwound. The BIGGY is the first one;

1. the total dollar global short is 9 trillion USA and as such we are now witnessing a sea of red blood on the streets as derivatives blow up with the massive rise in the rise in the dollar against all paper currencies and especially with the fall of the yuan carry trade. The emerging market which house close to 50% of the 9 trillion dollar short is feeling the massive pain as their debt is quite unmanageable.

2, the Nikkei average vs gold carry trade ( NIKKEI blowing up and the yen carry trade HAS BLOWN up/and now NIRP)

3. Short Swiss franc/long assets blew up ( Eastern European housing/Nikkei etc.

These massive carry trades are terribly offside as they are being unwound. It is causing global deflation ( we are at debt saturation already) as the world reacts to lack of demand and a scarcity of debt collateral. Bourses around the globe are reacting in kind to these events as well as the potential for a GREXIT>

The NIKKEI: this TUESDAY morning: closed UP 225.46 OR 1.37% 

Trading from Europe and Asia:
1. Europe stocks ALL  IN THE RED AS  THEY START THEIR DAY

2/ CHINESE BOURSES / : Hang Sang CLOSED DOWN 161.89 OR 0.57%  ,Shanghai CLOSED DOWN 6.97 OR 0.23%   / Australia BOURSE IN THE RED: /Nikkei (Japan) CLOSED UP 225.46 OR 1.37%/India’s Sensex IN THE GREEN  

Gold very early morning trading: $1331.60

silver:$19.94 

Early TUESDAY morning USA 10 year bond yield: 1.550% !!! DOWN 2 in basis points from MONDAY night in basis points and it is trading WELL BELOW resistance at 2.27-2.32%. The 30 yr bond yield RISES to 2.269 DOWN 1 in basis points from MONDAY night. (SPREAD GOES AGAINST THE BANKS)

USA dollar index early TUESDAY morning: 96.93 UP 37 CENTS from MONDAY’s close.

This ends early morning numbers TUESDAY MORNING

END

 

And now your closing TUESDAY NUMBERS

 

Portuguese 10 year bond yield:  3.09% DOWN 4 in basis points from MONDAY  (does not buy the rally)

JAPANESE BOND YIELD: -0.225% DOWN 1/10  in   basis points from MONDAY

SPANISH 10 YR BOND YIELD: 1.19%  DOWN 4 IN basis points from MONDAY( this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 1.24 DOWN 1 IN basis points from MONDAY (again totally nuts/)

the Italian 10 yr bond yield is trading 5 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: -.030% UP  4 IN  BASIS POINTS ON THE DAY

END

 

IMPORTANT CURRENCY CLOSES FOR TUESDAY

Closing currency crosses for TUESDAY night/USA DOLLAR INDEX/USA 10 YR BOND YIELD/3:30 PM

 

Euro/USA 1.1014 DOWN .0054 (Euro =DOWN 54 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 106.06 DOWN 0.119(Yen DOWN 12 basis points/HELICOPTER MONEY )

Great Britain/USA 1.3025 UP 0.01744 ( Pound DOWN 175 basis points/BREXIT DECISION AFFIRMATIVE/QE TO START AGAIN/UK DOWNGRADED/NEW PRIME MINISTER T. MAY/

USA/Canada 1.3025-UP 0.0068 (Canadian dollar UP 9 basis points AS OIL FELL (WTI AT $45.43). Canada keeps rate at 0.5% and does not cut!

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

This afternoon, the Euro was DOWN by 54 basis points to trade at 1.1014

The Yen ROSE to 106.06 for a GAIN of 12 basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY TO COMMENCE

The POUND was DOWN 175 basis points, trading at 1.3087 AS PRIME MINISTER THERESA MAY TAKES OFFICE/CONCERNS ON BREXIT

The Canadian dollar FELL by 68 basis points to 1.3025, WITH WTI OIL AT:  $44.63

CANADIAN RATES WERE NOT CUT

The USA/Yuan closed at 6.6940

the 10 yr Japanese bond yield closed at -.225% DOWN 1/10  IN BASIS  points in yield/

Your closing 10 yr USA bond yield: DOWN 3 IN basis points from MONDAY at 1.554% //trading well below the resistance level of 2.27-2.32%)

USA 30 yr bond yield: 2.271 DOWN 5  in basis points on the day 

BANKS NEED THE LONGER BOND HIGHER IN YIELD: INSTEAD THE SPREAD LESSENS.

Your closing USA dollar index, 97.07 UP 50 CENTS  ON THE DAY/4 PM 

Your closing bourses for Europe and the Dow along with the USA dollar index closing and interest rates for TUESDAY

London:  CLOSED UP 1.95 OR 0.03%
German Dax :CLOSED DOWN  81.89 OR  0.81%
Paris Cac  CLOSED DOWN 27.61  OR 0.63%
Spain IBEX CLOSED DOWN 39.20 OR 0.46%
Italian MIB: CLOSED UP 88.96 OR 0.53%

The Dow was UP 25.96  points or 0.14%

NASDAQ down 19.41 points or 0.38%
WTI Oil price; 44.62 at 4:30 pm;

Brent Oil: 46.69

USA DOLLAR VS RUSSIAN ROUBLE CROSS:  63.64 (ROUBLE DOWN  80/100 ROUBLES PER DOLLAR FROM TUESDAY) 

TODAY THE GERMAN YIELD FALLS TO +.030%  FOR THE 10 YR BOND

END

This ends the stock indices, oil price, currency crosses and interest rate closes for today

Closing Price for Oil, 5 pm/and 10 year USA interest rate:

WTI CRUDE OIL PRICE 5 PM:44.57

BRENT: 46.69

USA 10 YR BOND YIELD: 1.552% 

USA DOLLAR INDEX: 97.03 up 47 cents

The British pound at 5 pm: Great Britain Pound/USA: 1.31028 down .0158 or 158 basis pts.

German 10 yr bond yield at 5 pm: -.030%

END

And now your more important USA stories which will influence the price of gold/silver

Trading Today in Graph form;  VERY IMPORTANT FOR YOU TO VIEW ALL THE CHARTS TODAY

Last-Minute Algo-Driven VIX-Crash Lifts Dow Green For 8th Straight Day

It was a cliffhanger today… 8 straight up days for the Dow… or a DOWN DAY!!!

 

The answer… simple – a VIX-crushing algo did the job…

 

Smashing VIX to its lowest close since Jul 30, 2015…down for the 6th straight day…

 

Only The Dow closed green today… DOW INDUSTRIALS RISE FOR EIGHTH STRAIGHT SESSION, LONGEST STREAK SINCE MARCH 2013

 

As Nasdaq ave back most of yesterday’s M&A exuberance….

 

Some context for what is happening… off the Brexit lows…

 

But gold and Bonds are still leading the way post-Brexit…

 

Treasury yields fell on the day with the long-end outperforming (more curve flattening)…

 

The USD index rose notably today (and JPY strengthened)… (biggest jump in DXY since Brexit)

 

Pushing DXY above 97.00 and its 200-day moving-average – back to 4-month highs…

 

Commodities were very mixed with Crude tumbling in USD strength, gold ignoring it and copper loving it…

 

Pushing crude to 2-month lows…

 

It’s probably nothing…

 

Definitely nothing… (thanks to ECB corporate bond buying)

 

Also, probably nothing…

 

Charts: Bloomberg

end

The real data in housing suggests that housing starts dropped .2% year over year

(courtesy zero hedge)

Housing Starts Decline Year-Over-Year Amid Downward Revisions

Thanks to generous downward revisions, June’s Housing Starts ‘jump’ of 4.8% MoM suggests everything is awesome. However, year-over-year Starts dropped 0.2%, the second annual drop in 3 months. Both single- and multi-family starts rose MoM but rental unit starts fell notably YoY (-22% versus a 13% rise for single-family). Overall permits rose 1.5% MoM (slightly better than expected) but multi-family permits rose more than single-family permits (+2.5% MoM vs +1.0% MoM) as Rental Nation USA continues to gather pace.

Both single- and multi-family Starts rose MoM…

But, the growth in housing starts is slowing…

As Permits bounce back with single-family nearing cycle highs…

Rental Nation USA continues but one has to wonder if everything is so awesome, why are builders slowing their starts year-over-year? Especially amid constant whining about supply from the realtors?

 

end

The real state of the uSA economy: (courtesy David Stockman/ContraCorner) THIS ‘MARKET’ DISCOUNTS NOTHING EXCEPT MONETARY COCAINE by  • July 18, 2016

Another one of the Hedge Fund high rollers, Marc Lasry of Avenue Capital, recently confessed on bubblevision that 2200 on the S&P 500 doesn’t make sense to him, either.

But his reasoning went right to the crux of the bubble implosion lurking just ahead. According to Lasry, the market may be discounting a “stronger-than-expected” economic rebound and thus only appears to be ahead of itself:

The U.S. stock market, making a string of recent record highs, “doesn’t make much sense,” distressed debt specialist Marc Lasry told CNBC Monday, sharing the view of fellow billionaire investment titan Larry Fink.

 “Everyone is a bit surprised,” said Lasry, co-founder of Avenue Capital, which has $11.3 billion of assets under management. “But the market is telling us what’s going to happen next year [or] the next two years.”

While questioning the advance in stocks, Lasry said on “Squawk Box” the market may be signaling a stronger-than-expected U.S. economy, with a growth rate somewhere in the 2 to 3 percent range….”

Ah, the hoary myth of a market that processes information, discovers price and discounts the future. Apparently, no one told Lasry what the bereavers for free markets and honest money had long ago confessed. To wit, “Mr. Market, we hardly knew ya”.

So the singular change in relevant information from the post-Brexit low has nothing to do with the outlook for economic growth or corporate profits; it’s just another excited rave in the casino after the latest batch of monetary cocaine—-helicopter money—-was passed all around.

But these revelers are going to need something stronger than the hope for “helicopter money” to avoid annihilation when the long-running central bank con job finally collapses. Indeed, that denouement lies directly ahead because helicopter money is a bridge too far.

As we demonstrated last week, there is really nothing to it except more of the same aggressive monetization of the public debt that has been going on for nearly two decades. That is, whether the central banks buy public debt from the inventories of the 23 prime dealers and other market speculators or directly from the US treasury makes no technical difference whatsoever.

The end state of “something for nothing” finance is the same in both cases. In fact, “helicopter money” is just a desperate scam emanating from the world’s tiny fraternity of central bankers who have walked the financial system to the brink, and are now trying to con the casino into believing they have one more magic rabbit to pull out of the hat.

They don’t. That’s because it takes two branches of the state to tango in the game of helicopter money. The unelected monetary central planners can run the digital printing presses at whim, and continuously “surprise” and gratify the casino gamblers with another unexpected batch of the monetary drugs.

That has been exactly the pattern of multiple rounds of QE and the unending invention of excuses to prolong ZIRP into its 90th month. The resulting rises in the stock averages, of course, were the result of fresh liquidity injections and the associated monetary high, not the discounting of new information about economics and profits.

By contrast, helicopter money requires the peoples’ elected representatives to play. That is, the Congress and White House must generate large incremental expansions of the fiscal deficit—so that the central bankers can buy it directly from the US treasury’s shelf, and then credit the government’s Fed accounts with credits conjured from thin air.

To be sure, the cynics would say—–no problem! When have politicians ever turned down an opportunity to borrow and spend themselves silly, and to than be applauded, not chastised, for the effort?

But that assumes we still have a functioning government and that today’s politicians have been 100% cured of their atavistic fears of the public debt.

Alas, what is going to cause helicopter money to be a giant dud—-at least in the US——is that neither of these conditions are extant.

Regardless of whether the November winner is Hillary or the Donald, there is one thing certain. There will be no functioning government come 2017. Washington will be the site of a political brawl of deafening and paralyzing aspect—–like none in modern US history, or ever.

At the same time, the existing budget deficit is already reversing, and will end the current year at more than $600 billion. That’s baked into the cake already based on the recent sharp slowdown in revenue collections, and means that the FY 2016 deficit will be one-third higher than last year’s $450 billion.

Moreover, when the new Congress convenes next February the forward budget projections will make a scary truth suddenly undeniable. That is, the nation is swiftly heading back toward trillion dollar annual deficits under existing policy and even before the impact of a serious recessionary decline.

The reality of rapidly swelling deficits even before enactment of a massive helicopter money fiscal stimulus program will scare the wits out of conservative politicians, and much of the electorate, too.  And the prospect that the resulting huge issuance of treasury bonds will be purchased directly by the Fed will only compound the fright.

What fools like Bernanke haven’t reckoned with is that sheer common sense has not yet been extirpated from the land. In fact, outside of the groupthink of few dozen Keynesian academics and central bankers, the very idea of helicopter money strikes most sensible people as preposterous, offensive and scary.

Even if Wall Street talks it up, there will be massive, heated, extended and paralyzing debate in Congress and the White House about it for months on end. There is virtually no chance that anything which even remotely resembles the Bernanke version of helicopter money could be enacted into law and become effective before CY 2018.

Will the boys and girls still in the casino after the upcoming election gong show patiently wait for their next fix from a beltway governance process that is in sheer pandemonium and indefinitely paralyzed?

Than again, why would anyone think the stock market is actually discounting an economic recovery. Reported LTM earnings of the S&P 500 are $87 per share, and even if there is no further deterioration from this quarter’s 5% decline during the balance of the year, CY 2016 earnings will come in at barely $89 per share.

That means the market closed today at 24X the S&P 500’s prospective earnings for 2016. So what, therefore, if GDP grows at 2-3% next year?

Even if that were to happen, and notwithstanding the self-evident headwinds in China, Japan, the eurozone, the middle east, the faltering oil market and countless more, how does that cause an earnings rebound that is remotely close to the “17x/$130” being suddenly ballyhooed on the Wall Street as the reason for the helicopter money high now underway?

After all, that’s a 30% gain from even the ex-items “operating earnings” version of profits recorded for the last 12 months of $100 per share.

Nominal GDP is growing at 3.5% annually at best—-even in the absence of an eventual recessionary slump. In fact, since CY 2012 the nominal GDP growth rate has averaged just 3.3%.

So baring some massive breakout in profit margins, there is no way for next year’s GAAP earnings to hit even $95 per share, which is still 23X.

Yet that would still be discounting what would be a 102 month old business expansion by year-end 2017. Even that unlikely outcome, given that the business cycle has now been outlawed, would absolutely end in recession and a cyclical collapse in earnings not long thereafter.

But here’s the thing. There is no “discounting” involved in the madness currently swirling in the stock market because there is not a remote chance of a margin break-out that could possibly compensate for the tepid growth of GDP and sales.

To wit, even if S&P 500 earnings hit the current consensus for Q2, operating margins will end up at the tippy top of the historic trend. According to Howard Silverblatt’s latest estimates, the Q2 operating margin will come in at 9.9%.

But that’s the second highest quarterly margin in the last decade, 15% higher than the 8.6% average since 2006, and 30% higher than the long-run average.

In short, the market is not trading on a rebound in GDP, revenue growth or a breakout of already elevated profit margins. It’s just high on one more dose of monetary cocaine that in short order will prove to have been not even that.

 

end

 

It is getting real bad in the states.  another police officer shot and he is in critical condition

(courtesy zero hedge)

Police Officer Shot In Kansas City

Another day, another police officer shot. Moments ago KSHB reoprted that A Kansas City police officer has been shot, according to the police chief. Chief Terry Zeigler tweeted that an officer had been shot at 22nd and Haskell.

Terry Zeigler @KCKPDChief

We have an officer shot at 22nd & Haskell. Start prayers, unknown condition.

3:02 PM – 19 Jul 2016

According to police, officers responded to a shots fired call at about 1:30 p.m. at Second and Edgerton. One person was taken into custody. As an officer pursued more suspects, more shots were fired, and the officer was hit. The officer was taken to a hospital and is in critical condition.

Police continue to search for the other suspects.

end Wait until they see the gold/silver manipulation as Deutsche bank is providing the data to our class actions lawyers Berger, Montague (courtesy Bloomberg) Fed Bars Ex-UBS Trader Gardiner Over Currency Manipulation Tom Schoenberg Tschoenberg22 David McLaughlin damclaugh July 19, 2016 — 3:30 PM EDTUpdated on July 19, 2016 — 4:12 PM EDT

http://www.bloomberg.com/api/embed/iframe?id=kLBeA0slRXi_rh8gzmJ3gg” />

Why the Fed Banned Former UBS Trader Matthew Gardiner

The U.S. Federal Reserve has given a lifetime ban from the banking industry to former UBS Group AG trader Matthew Gardiner saying he rigged currency benchmarks.

Gardiner used electronic chat rooms to facilitate the manipulation of foreign exchange benchmarks and to disclose confidential customer information to traders at other banks, the Fed said in astatement Tuesday.

Gardiner has been helping U.S. prosecutors who are trying to build currency-rigging cases against individuals, two people familiar with the matter told Bloomberg News in April. He hasn’t been publicly charged and it isn’t clear if he has been granted immunity for cooperation. A lawyer for Gardiner didn’t immediately respond to an e-mail seeking comment.

Bloomberg reported in April that U.S. officials were on track to charge individuals over currency-rate manipulation as soon as this summer.

Gardiner participated in The Cartel instant-messaging group, which was at the heart ofguilty pleasthe U.S. government wrung from five global banks last year.

Announcing the bank convictions in May 2015, the U.S. said traders working for the institutions — UBS, JPMorgan Chase & Co., Citigroup Inc., Royal Bank of Scotland Group Plc and Barclays Plc — had conspired to fix currency benchmarks using the instant-messaging group, which participants also referred to as The Mafia.

The Fed brought enforcement actions in 2015 against UBS and Barclays Plc, where Gardiner also previously worked, over currency manipulation. Those actions resulted in UBS and Barclays paying a total of $684 million in penalties, the Fed said.

Before it’s here, it’s on the Bloomberg Terminal.LEARN MORE end That is all for today I will see you tomorrow night h.

jULY 20

Thu, 07/21/2016 - 01:31
JULY 20/SILVER OI SETS ANOTHER RECORD HIGH AT 219,206 DESPITE SILVER’S FALL YESTERDAY/GOLD OPEN INTEREST RISES TO 617,069 FOR A GAIN OF 2402 CONTRACTS/ AGAIN THE FRONT JULY MONTH SEES A HUGE AMOUNT OF GOLD STANDING AT 16.808 TONNES/TURKISH LIRA CRASHES AS ERDOGAN EMBARKS ON A NEW 3 MONTH EMERGENCY/ S & P DOWNGRADES TURKEY TO BB WITH NEGATIVE OUTLOOK/HSBC’S HEAD OF GLOBAL TRADING IN FX ARRESTED IN NY (CRIMINAL PROBE ON MANIPULATION OF LIBOR) July 20, 2016 · by  · in Uncategorized · Leave a comment ·Edit

Gold:1318.80 down $12.70

Silver 19.58  DOWN 40 cents

In the access market 5:15 pm

 

Gold: 1315.80

Silver: 19.40

.

For the July gold contract month,  we had a huge 269 notices served upon for 26,900 ounces. The total number of notices filed so far for delivery:  5329 for 532,900 oz or 16.575 tonnes

In silver we had 38 notices served upon for 190,000 oz.  The total number of notices filed so far this month for delivery:  2106 for 10,530,000 oz

Silver today at the comex recorded an all time record for open interest and yet the price is 29 dollars cheaper. It defies commodity law!

 

Last night, I was up in the early hours when I saw the raid orchestrated by our crooks.  I took a look at the daily bulletin which is an estimated OI and then I knew the reason for the raid:

  1. the high open interest for silver (and a record high) despite silver being 29 dollars cheaper when it had its former high OI in 2011.
  2. the front July contract month in gold saw a huge gain in an amount standing.  Now we have close to 17 tonnes standing in this a non active month. I wonder what August will bring…

and that is the reason for today’s raid!

 

Today no doubt was the beginning of options expiry week where we will see continual pelting of gold/silver until the end of the month.

 

I would like to urge you, investors not to play the comex as it is a crooked casino. However if you do play, you must take physical delivery. If everybody takes delivery on these crooks, the game will be over in a hurry.

Let us have a look at the data for today

.

Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 307.70 tonnes for a gain of 5  tonnes over that period

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

In silver, the total open interest ROSE BY 1597 contracts UP to 219,206, AND A NEW ALL TIME RECORD. THE OI ROSE IN CONTRAST TO THE  PRICE OF SILVER WHICH FELL BY 7 CENTS IN YESTERDAY’S TRADING.In ounces, the OI is still represented by just over 1 BILLION oz i.e. 1.096 BILLION TO BE EXACT or 157% of annual global silver production (ex Russia &ex China).

In silver we had 38 notices served upon for 140,000 oz.

In gold, the total comex gold ROSE BY 2,402 contracts as gold rose in price YESTERDAY to the tune of $3.10. The total gold OI stands at 617,069 contracts.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

With respect to our two criminal funds, the GLD and the SLV:

GLD

we had no changes in gold inventory./

Total gold inventory rest tonight at: 965.22 tonnes

SLV

we had no changes into the SILVER INVENTORY TO THE SLV

Inventory rests at 348.580 million oz.

First, here is an outline of what will be discussed tonight:

1. Today, we had the open interest in silver ROSE by 105 contracts UP to 219,206 as the price of silver FELL BY 7 cents with YESTERDAY’S trading. The gold open interest ROSE by 2402 contracts up to 617,069 as  the price of gold ROSE by $3.10  YESTERDAY.

(report Harvey).

 

2 a) Gold/silver trading overnight Europe, Goldcore

(Mark OByrne/zerohedge

3. ASIAN AFFAIRS

 i)Late  TUESDAY night/WEDNESDAY morning: Shanghai closed DOWN 8.69 POINTS OR 0.29%/ /Hang Sang closed UP 209.28 OR 0.97%. The Nikkei closed DOWN 41.42 OR 0.25%/  Australia’s all ordinaires  CLOSED UP 0.58% Chinese yuan (ONSHORE) closed UP at 6.6755 ON A LITTLE REVALUATION /Oil FELL to 44.64 dollars per barrel for WTI and 46.70 for Brent. Stocks in Europe ALL IN THE GREEN. Offshore yuan trades  6.68161 yuan to the dollar vs 6.6755 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS CONSIDERABLY 

REPORT ON JAPAN  SOUTH KOREA AND CHINA a) REPORT ON JAPAN

In a delayed reaction, the USA/Yen shoots up to 107.28 as Kyodo plans on a 20 trilion yen stimulus plan.  And gold goes down on this money printing!

( zero hedge)

b) REPORT ON CHINA 4 EUROPEAN AFFAIRS

The IMF are now called “clowns” after they now admit that England will grow much faster with a BREXIT

( zero hedge)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

i)The total of Turkish civilians now total 50,000 as Turkey is set to unveil ’emergency measures today:

( zero hedge)

ii)a The Turkish lira is crashing to 3.04 to the dollar accompanied by a high risk of default as witnessed by the credit default swaps: Turmoil in Turkey

( zero hedge)

iib) Then S & P lowered the boom on Turkey by downgrading the country to BB with a negative outlook; the Turkish lira then tumbled to a new all time low:

(courtesy zero hedge)

iii)This is a little terrifying:  American nukes are just not safe in Turkey anymore!

( FP/Jeffery Lewis)

iv)Here is another odd inconsistency with regards to the staged coup:

The official Turkish story has it that the rebels launched an attack on Erdogan’s  vacation spot at the exact time that he was addressing the nation at the Istanbul airport. Now do you believe us when we say that this event was staged ( zero hedge)

v)And with that new 3 month state of emergency, the Lira crashes to 3.10

( zero hedge) 6.GLOBAL ISSUES

i)Now we have the first arrest in the USA:  the global head of FX trading trading fro HSBC: Mark Johnson.  You can bet that gold and silver rigging is part of the rigging!

( zerohedge)

 

ii)A must read from egon Von Greyerz on the six major events that will change history!

( Von Greyerz)

7.OIL ISSUES

More unexpected gasoline inventory build on top of huge production rise as well as buildup in Cushing causes havoc in WTI

(courtesy zero hedge)

8.EMERGING MARKETS 9.PHYSICAL STORIES

BMG exposes the weakness of “paper gold ”

( GATA/)

ii) The Japanese TOCOM goes physical:

(courtesy Dave Kranzler/IRD)

10.USA STORIES WHICH MAY INFLUENCE THE PRICE OF GOLD/SILVER

i)An excellent Bellwether :  trucking in the uSA

( Mish Shedlock/Mishtalk)

Let us head over to the comex: The total gold comex open interest  ROSE TO AN OI level of 617,069 for a  GAIN of 2402 contracts AS  THE PRICE OF GOLD ROSE BY $3.10 with respect to YESTERDAY’S TRADING We are now in the non active month of July. Somebody big is continually standing for the gold metal as July is generally a poor delivery month. The open interest for the front July contract stands at 344 for a GAIN of 275 contracts. We had 10 notices filed on yesterday, so we gained 285 contracts or an additional 28,500 gold ounces that will stand for delivery in this non active month of July. We  are again witnessing the same scenario as in May and June whereby the front delivery month increases in OI standing for metal or a slight contraction.  The next big active contract month is August and here the OI FELL by 12,019 contracts down to 294,738  as this month continues its wind down until first day notice for the August contract, Friday,July 29/2016: less than  2 weeks away.  The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was very good at 324,748. The confirmed volume  yesterday (which includes the volume during regular business hours + access market sales the previous day was FAIR at 190,172 contracts.The comex is not in backwardation. Today, we had a huge 269 notices filed for 26,900 oz in gold

And now for the wild silver comex results. Total silver OI ROSE by 105 contracts from 219101  up to 219206.  We are now at an all time record high for silver open interest set today (219,206). The front active delivery month is July and here the OI fell BY 239 contracts down to 428. We had 239 notices served on YESTERDAY so we neither lost nor gained any silver  contracts that will  stand for delivery. The next non active month of August saw it’s OI rise by 10 contracts up to 477. The next big active month is September and here the OI ROSE by 249 contracts UP to 159,144. The volume on the comex today (just comex) came in at 61,060 which is excellent. The confirmed volume yesterday (comex + globex) was fair at 37,995. Silver is not in backwardation. London is in backwardation for several months.

We had 38 notices filed for 190,000 oz. in silver JULY contract month

:INITIAL standings for JULY

July 20. Gold Ounces Withdrawals from Dealers Inventory in oz   nil OZ Withdrawals from Customer Inventory in oz  nil 1,318.15  oz SCOTIA Deposits to the Dealer Inventory in oz NIL Deposits to the Customer Inventory, in oz   36.050.000 oz SCOTIA BRINKS INCL 500 KILOBARS No of oz served (contracts) today 269 notices  26,900 oz No of oz to be served (notices) 75 contracts 7500 oz Total monthly oz gold served (contracts) so far this month 5329 contracts (532,90o oz) (16.575 tonnes) Total accumulative withdrawals  of gold from the Dealers inventory this month   NIL Total accumulative withdrawal of gold from the Customer inventory this month   563,171.8 OZ Today we had 0 dealer DEPOSIT total dealer deposit: NIL   0z Today we had 0 dealer withdrawals: total dealer withdrawals:  nil oz We had 3 customer deposit: i) Into Scotia; 16,075.000 oz ( 500 kilobars) ii) Into Brinks:  19,975.000 oz ??? not divisible by 32.15 and not kilobars/one complete farce! Total customer deposit: 36,050.000 Today we had 1 customer withdrawal: i) Out of Scotia:  1318.15 oz Total customer withdrawals 1818.15   oz Today we had 0  adjustments: Today, 0 notices was issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 269 contracts of which 0 notices was stopped (received) by JPMorgan dealer and 255 notices was stopped (received)  by JPMorgan customer account.  To calculate the initial total number of gold ounces standing for the JULY contract month, we take the total number of notices filed so far for the month (5329) x 100 oz  or 532,900 oz , to which we  add the difference between the open interest for the front month of JULY  (344 CONTRACTS) minus the number of notices served upon today (269) x 100 oz   x 100 oz per contract equals 540,400 oz, the number of ounces standing in this active month.    Thus the INITIAL standings for gold for the JULY. contract month: No of notices served so far (5329) x 100 oz  or ounces + {OI for the front month (344) minus the number of  notices served upon today (269) x 100 oz which equals 540,400 oz standing in this non   active delivery month of JULY  (16.808 tonnes). We  gained 6100 gold ounces that will stand for metal in this non active month of July. SOMEBODY WAS IN URGENT NEED OF PHYSICAL GOLD TODAY. Since the comex allows GLD shares to be used for settling, it may take quite a while for the physical gold to enter the comex vaults.  So far I have seen little evidence of any settling of contracts but I will continue to monitor it for you.    We now have partial evidence of gold settling for last months deliveries We now have  +  6.889 TONNES FOR MAY + 49.09 TONNES FOR JUNE +  15.732 TONNES FOR JULY + 12.3917 tonnes (April) +2.2311 tonnes (March) + 7.99 (total Feb)- .940 (probable delivery on March 1) tonnes -.0434 tonnes (March 11,12,17,18) + March 31: 1.2470 and then  April 1,2: – .0006 tonnes  and last week April 16.3203 and April 22 .(0009 tonnes) + april 29  .205 tonnes + May 5:  3.799 and May 6: 1.607 tonnes –MAY 12 .0003- May 18: 1.5635 tonnes-May 19/   2.535 tonnes-May 27 .0185 – .024 TONNES MAY 31 -jUNE 4: .5044 ; june 10 -.0008 / June 22:0.48 tonnes /June 23: 0489 tonnes, June 24..018; june 29 .036 tonnes; JUNE 30 2.49 /july 1 17.78 tonnes = 46.85 tonnes still standing against 47.653 tonnes available.  Total dealer inventor 1,532,061.922 tonnes or 47.653 tonnes Total gold inventory (dealer and customer) =9,927312.843 or 308.800 tonnes    Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 308.80 tonnes for a  gain of 6  tonnes over that period.    THE GOLD COMEX IS AN ABSOLUTE FRAUD. THE USE OF KILOBARS AND EXACT WEIGHTS MAKES THE DATA TOTALLY ABSURD AND FRAUDULENT!!      end GOOD ACTIVITY AGAIN INSIDE THE SILVER COMEX And now for silver   JULY INITIAL standings  July 20.2016 Silver Ounces Withdrawals from Dealers Inventory NIL Withdrawals from Customer Inventory  187,312.290 OZ (JPM,SCOTIA) Deposits to the Dealer Inventory nil Deposits to the Customer Inventory  600,407.24 OZ HSBC No of oz served today (contracts) 38 CONTRACTS  (140,000 OZ) No of oz to be served (notices) 390 contracts 1,950,000 oz) Total monthly oz silver served (contracts) 2106 contracts (10,340,000 oz) Total accumulative withdrawal of silver from the Dealers inventory this month  NIL oz Total accumulative withdrawal  of silver from the Customer inventory this month  5,242,821.3 oz today we had 0 deposit into the dealer account total dealer deposit NIL oz we had 0 dealer withdrawal: : total dealer withdrawals:  NIL oz we had 2 customer withdrawals: i)Out of JPM: 150,004.400oz II) OUT OF SCOTIA: 37,308.290 Total customer withdrawals: 187,312.29 oz We had 1 customer deposit: i)Into HSBC: 600,407.24 oz : total customer withdrawals:600,407.24. oz        we had 0 adjustments The total number of notices filed today for the JULY contract month is represented by 239 contracts for 1,195,000  oz. To calculate the number of silver ounces that will stand for delivery in JULY., we take the total number of notices filed for the month so far at (2106) x 5,000 oz  = 10,530,000 oz to which we add the difference between the open interest for the front month of JULY (428) and the number of notices served upon today (38) x 5000 oz equals the number of ounces standing    Thus the initial standings for silver for the JULY contract month:  2106(notices served so far)x 5000 oz +(428 OI for front month of JULY ) -number of notices served upon today (38)x 5000 oz  equals  12,480,000 oz  of silver standing for the JULY contract month. We neither lost not gained any silver ounces standing in this active month of July.   Total dealer silver:  28.360 million (close to record low inventory   Total number of dealer and customer silver:   154.290 million oz (close to a record low) The total open interest on silver is NOW AT its all time high with the record of 219,206 being set July 20.2016.  The registered silver (dealer silver) is NOW NEAR  multi year lows as silver is being drawn out at both dealer and customer levels and heading to China and other destinations. The shear movement of silver into and out of the vaults signify that something is going on in silver. END And now the Gold inventory at the GLD July 20./no changes in gold inventory at the GLD/Inventory rests at 965.22 tonese July 19/no change in gold inventory at the GLD/Inventory rests at 965.22 tonnes July 18./ a good sized deposit of 2.37 tonnes of gld into GLD/this is a paper gold entry/inventory rests at 965.22 tonnese July 15./no change in gold inventory at the GLD/Inventory rests at 962.85 tonnes July 14/a good sized withdrawal of 2.37 tonnes from the GLD/this would be a “paper withdrawal”/inventory rests tonight at 962.85 tonnes.. July 13/ we had a huge paper withdrawal of 15.98 tonnes of gold from the GLD/inventory rests at 965.22 tonnes. July 12/we had no changes in gold inventory at the GLD/Inventory rests at 981.20 tonnes July 11/no changes in gold inventory at the GLS/Inventory rests at 981.20 tonnes JULY 8/ A  good sized deposit of 2.91 tonnes into the GLD/Inventory rests at 981.20 July 7/a good sized withdrawal of 4.15 tonnes from the GLD/Inventory rests at 978.29 tonnes (this was nothing but a paper entry/no physical moved) JULY 6/WHAT A FRAUD!! A MASSIVE 28.53 TONNES OF PAPER GOLD ADDED INTO THE GLD July 5/no change in inventory/rests tonight at 982.44 July 1/a huge change in the gold inventory/ a deposit of 3.86 tonnes/rests tonight at 953.91 tonnes JUNE 30/no change in gold inventory /inventory rests tonight at 950.05 tonnes June 29/ a good sized deposit of 2.67 tonnes/inventory rests at 950.05 tonnes June 28/ a huge deposit of 13.067 tonnes into inventory/new inventory rests so far at 947.38 tonnes.  This was a paper addition June 27/a huge deposit of 18.415 tonnes into the GLD inventory/the new inventory rests at 934.313 tonnes.  The addition was a paper addition and not physical xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx July 20 / Inventory rests tonight at 965.22 tonnes

end

Now the SLV Inventory July 20/no change in silver inventory at the SLV/Inventory rests at 348.580 million oz July 19/no change in silver inventory at the SLV/Inventory rests at 348.580 million oz July 18/no change in silver inventory at he SLV/inventory restss at 348.580 million oz July 15/ no change in  silver inventory at the SLV/Inventory rests at 348.580 million oz July 14/no changes in silver inventory at the SLV/Inventory rests at 348.580 million oz/ July 13./ a huge addition of 5.187 million oz into silver inventory at the SLV/ this is a paper addition as inventory rests at 348.580 million oz July 12/ a huge addition of 1.94 million oz into silver inventory at the SLV/a “paper” addition/inventory rests at 343.393 million oz July 11/no changes in silver inventory/rests tonight at 341.453 million oz JULY 8/no change in silver inventory/rests tonight at 341.453 million oz July 7./no change in silver inventory/inventory rests at 341.453 million oz JULY 6/AND ANOTHER FRAUD!! A MASSIVE 7.909 MILLION OZ ADDED INTO THE SLV/INVENTORY RESTS AT 341.453 MILLION OZ july 5/no change in silver inventory/inventory rests at 333.554 milllion oz july 1/no change in silver inventory/inventory rests at 333.544 million oz JUNE 30/no changes in silver inventory/inventory rests at 333.544 million oz June 29/ a small deposit of 760,000 oz/Inventory rests tonight at 333.544 million oz/ June 28/no change in silver inventory/rests tonight at 332.784 million oz June 27/ a small deposit of 570,000 oz in the SLV inventory/Inventory rests at 332.784 million oz . July 20.2016: Inventory 348.580 million oz end NPV for Sprott and Central Fund of Canada 1. Central Fund of Canada: traded at Negative 5.5 percent to NAV usa funds and Negative 5.4% to NAV for Cdn funds!!!!  (the discount is starting to disappear) Percentage of fund in gold 58.9% Percentage of fund in silver:39.9% cash .+1.2%( July 20/2016).  2. Sprott silver fund (PSLV): Premium falls  to -0.21%!!!! NAV (July20/2016)  3. Sprott gold fund (PHYS): premium to NAV  falls TO  0.30% to NAV  ( July 20/2016) Note: Sprott silver trust back  into NEGATIVE territory at -.21% /Sprott physical gold trust is back into positive territory at +0.30%/Central fund of Canada’s is still in jail.      

end

 

And now your overnight trading in gold,WEDNESDAY MORNING and also physical stories that may interest you: Trading in gold and silver overnight in Asia and Europe Mark O’Byrne/David Russell (Goldcore) IMF Scraps Forecast for Global-Growth Pickup on Brexit Fallout by GoldCore Jul 20, 2016 8:26 AM

Following on from the Brexit vote last month the IMF have decided to re-evaluate their forecast for global growth.

Bloomberg  reports that they have revised their original 3.2% forecast down to 3.1% for 2016 and from 3.5% to 3.4% for 2017. While these feel like very modest revisions ,the IMF would not be known for radical changes of direction preferring slow and steady revisions.

Their new forecast is based on the assumption that British and EU officials reach new trade agreements that avoid a “large increase in economic barriers.” However, if talks break down, Britain will slip into recession as more financial institutions relocate to the euro area and consumption and investment contract more than expected, the fund said. In a “severe” scenario, global growth is seen sliding to 2.8 percent this year and next.

You can read the full article here 

 

Gold and Silver Bullion – News and Prices

Gold steady as rally in equities loses steam (Reuters)

Gold futures notch a nearly 1-week high (Marketwatch)

Gold Daily and Silver Weekly Charts (24hgold)

Gold Miners Set to Relax Death Grip on Spending as Caution Eases (Bloomberg)

Recession coming? Here’s how to find out (Marketwatch)

After Brexit, ordinary Britons warm to gold as safe haven (Reuters)

This is all you need to know about gold right now: it’s a bull market (Moneyweek)

Gold Prices (LBMA AM)

20 July: USD 1,325.60, EUR 1,204.308 & GBP 1,005.865 per ounce
19 July: USD 1,332.20, EUR 1,203.376 & GBP 1,009.042 per ounce
18 July: USD 1,326.15, EUR 1,200.298 & GBP 1,000.050 per ounce
15 July: USD 1,330.50, EUR 1,194.789 & GBP 994.150 per ounce
14 July: USD 1,325.705, EUR 1,192.99 & GBP 1,001.96 per ounce
13 July: USD 1,340.25, EUR 1,211.45 & GBP 1,009.74 per ounce
12 July: USD 1,352.85, EUR 1,217.84 & GBP 1,029.11 per ounce

Silver Prices (LBMA)

20 July: USD 19.70, EUR 17.88 & GBP 14.95 per ounce
19 July: USD 19.99, EUR 18.07 & GBP 15.18 per ounce
18 July: USD 19.72, EUR 17.83 & GBP 14.89 per ounce
15 July: USD 20.14, EUR 18.08 & GBP 15.06 per ounce
14 July: USD 20.25, EUR 18.23 & GBP 15.15 per ounce
13 July: USD 20.29, EUR 18.31 & GBP 15.25 per ounce
12 July: USD 20.35, EUR 18.35 & GBP 15.47 per ounce

Recent Market Updates

– Gold Holds Near Two-Week Low as Risk Appetite Rises on U.S. Data
– Gold, Trump and Rates: Bank That Foresaw Rally Flags $1,500
– Gold Lower After Central Bank’s Surprise Move
– “We Are On the Cusp of an Explosion in the Silver Price” – John Embry

– Stocks Rally – Is Brexit Systemic Risks Contained?
– Britain has a new prime minister – here’s what that means for you
– Metals Caught Between Global Gloom, U.S. Job Gains as Gold Slips
– Central Bank Resumes Monthly Gold Buying in Bid to Diversify Reserves
– Property Fund Turmoil in the UK has Eerie Echoes of Bear Stearns
– “In Gold We Trust” Annual Report – New Bull Market “Emerging”
– 3 Charts Show “How Precious Brexit Is” for Gold and Silver Bullion
– Gold, Silver Best Performing Assets In H1, 2016 – Up 26% & 38%

 

end

 

BMG exposes the weakness of “paper gold’

(courtesy GATA/)

 

BMG commercial exposes weakness of ‘paper gold’

Submitted by cpowell on Tue, 2016-07-19 18:30. Section: 

2:28p ET Tuesday, July 19, 2016

Dear Friend of GATA and Gold:

In the end it’s a commercial for gold dealer Bullion Management Group in Canada, but getting there is half the fun as it makes the point that “paper gold” really isn’t gold at all. “In case of fire,” the commercial asks, “which would you rather have — a fire extinguisher or a picture of one?” The commercial is 3 minutes and 48 seconds long and it’s posted at YouTube here:

https://www.youtube.com/watch?v=3vAGG6ghUvA

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org

 

END

 

The Tocom is going to physical gold:

(courtesy Dave Kranzler/IRD)

 

JAPAN IS SIGNALLING THE END-GAME FOR THE U.S. July 20, 2016Financial MarketsGoldMarket ManipulationPrecious MetalsU.S. Economy

On a side-note, it’s important to know that late July/early August is seasonally the most quiet part of the year for the biggest eastern hemisphere gold accumulators. And we’re going into the “roll” period, when the bulk of the massive blob of August paper gold “rolls” into December, the next “front month” for Comex Paper gold. Having said that, China has actually slightly increased its gold imports this month. India has been in hibernation since March 1 but it’s biggest seasonal buying period starts in about four weeks. Unless smuggled gold into India is significantly greater in volume than anyone understands, India’s demand will be somewhat price inelastic and its elephantine appetite for gold will have a big impact on the price of gold.

This leads us to Japan. Curiously, Japan announced announced last week that its TOCOMcommodity exchange (Japan’s less corrupted CME-equivalent) would begin trading physical gold – like the Shanghai Gold Exchange – on July 25th – TOCOM Physical Gold.  It also announced that it would be introducing a delivery-at-settlement option for its current-month gold futures contract. That is, TOCOM gold futures buyers will now have the ability to take delivery of physical gold via TOCOM’s paper gold.

The news of this event was largely muted in the western financial media and even the alternative media blogosphere largely seems to have overlooked the news release. But this is a highly significant development because it signals a subtle shift in Japan’s economic and monetary focus from west to east.  It will also create an big upward price-readjustment in gold and silver.

The significance of Japan’s TOCOM exchange shifting from all fiat paper contracts to a physical gold trading and settlement operation is reinforced by the fact that two days ahead of the announcement it was reported that Tanaka Kikinzoku Group – Japan’s leading precious metals trader, refiner and manufacturer – acquired Swiss-based Metalor Group, one of the world’s largest refiners and supplier of precious metals-related products – Tanaka Buys Metalor.   Furthermore, in March 2015, Japan’s Asahi Holdings – a collector and refiner of precious metals – closed its acquisition of Johnson Matthey’s gold and silver refining business.  JM is one of the leading producers of refined precious metals products, including LBMA-quality 400 oz gold bars.

Now that Asia and Russia are no longer funding the U.S. Treasury debt printing press, the Fed will be forced to begin hyperinflating the money supply to keep the Government funded.  This fact is underscored by the Cleveland Fed President’s – Loretta Mester, a voting member of the FOMC –  recent comment about “helicopter money.”

While the Japanese continue to endorse the U.S. Government’s  use of the yen as a de facto printing press which enables the Fed to manipulate the U.S. stock market and to fund U.S. Treasury’s unrestricted  issuance of debt, they see the proverbial writing on the wall for the western monetary and financial system.  Japan has been quietly pivoting economically toward China for a couple years.

This abrupt transition into the physical precious metals market signals Japan’s move to integrate its financial markets and economic system into the developing eastern bloc monetary system, which appears as if it might eventually be seeded in gold.  It likely signals the end-game for the United States.

 

end Your early WEDNESDAY morning currency, Asian stock market results,  important USA/Asian currency crosses, gold/silver pricing overnight along with the price of oil Major stories overnight    

:

1 Chinese yuan vs USA dollar/yuan UP to 6.6755 (  SMALL REVALUATION NORTHBOUND  /CHINA UNHAPPY TODAY CONCERNING USA DOLLAR RISE/MORE $ USA DOLLARS LEAVE CHINA/OFFSHORE YUAN NARROWS TO 6.6755) / Shanghai bourse  DOWN 8.69 OR 0.29%   / HANG SANG CLOSED UP 209.25 OR 0.97% 

2 Nikkei closed /USA: YEN RISES TO 106.54

3. Europe stocks opened ALL IN THE GREEN    /USA dollar index UP to 97.09/Euro DOWN to 1.1012

3b Japan 10 year bond yield: FALLS AT  -.232%     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 106.54

3c Nikkei now WELL BELOW 17,000

3d USA/Yen rate now well below the important 120 barrier this morning

3e WTI::  44.60  and Brent: 46.70

3f Gold DOWN  /Yen DOWN

3g Japan is to buy the equivalent of 108 billion uSA dollars worth of bond per month or $1.3 trillion. Japan’s GDP equals 5 trillion usa.

Japan to buy 100% of all new Japanese debt and by 2018 they will have 25% of all Japanese debt. Fifty percent of Japanese budget financed with debt.

3h Oil DOWN for WTI and DOWN for Brent this morning

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund RISES to +.002%   German bunds BASICALLY negative yields from  10+ years out

 Greece  sees its 2 year rate RISE to 8.37%/: 

3j Greek 10 year bond yield RISE to  : 7.96%   (YIELD CURVE NOW  FLAT)

3k Gold at $1320.00/silver $19.60(7:45 am est)   SILVER FINAL RESISTANCE AT $18.50 BROKEN 

3l USA vs Russian rouble; (Russian rouble DOWN 13/100 in  roubles/dollar) 63.37-

3m oil into the 44 dollar handle for WTI and 46 handle for Brent/

3n Higher foreign deposits out of China sees huge risk of outflows and a currency depreciation  (already upon us). This can spell financial disaster for the rest of the world/China forced to do QE!! as it lowers its yuan value to the dollar/GOT a BIG REVALUATION UPWARD from POBC.

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 106.54 DESTROYING WHATEVER IS LEFT OF OUR YEN CARRY TRADERS

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning .9871 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0870 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

3p BRITAIN VOTES AFFIRMATIVE BREXIT

3r the 10 Year German bund now POSITIVE territory with the 10 year RISES to  +.002%

/German 10+ year rate BASICALLY  negative%!!!

3s The Greece ELA NOW a 71.4 billion euros,AND NOW THE ECB WILL ACCEPT GREEK BONDS (WHAT A DISASTER)

The bank withdrawals were causing massive hardship to the Greek bank. the Greek referendum voted overwhelming “NO”.  Next step for Greece will be the recapitalization of the banks and that will be difficult.

4. USA 10 year treasury bond at 1.572% early this morning. Thirty year rate  at 2.287% /POLICY ERROR)

5. Details Ransquawk, Bloomberg, Deutsche bank/Jim Reid.

(courtesy Jim Reid/Bloomberg/Deutsche bank/zero hedge)

HELICOPTER MONEY COMING! US Futures Rise To Session Highs, Set For Another Record Open; Global Stocks Jump

After yesterday’s positive close in the Dow Jones, which hasn’t had a losing day since July 7 and which took the series of consecutive green closes to 8 in a row – the longest stretch since 2013 – the index will look to lock in its 9th green day in a row with futures currently trading well in the green. It’s not just the US – equities edged higher in Asia and Europe as positive earnings results from some of the world’s biggest companies countered concern the global economy is losing steam. The dollar strengthened while gold retreated.

The MSCI All Country World Index held near an eight-month high as a gauge of Hong Kong shares was poised to enter a bull market. The yuan had its biggest intra-day jump in a month on speculation the PBOC won’t allow the critical 6.70 barrier to be breached, even as rising odds of a U.S. interest-rate lifted the Bloomberg Dollar Spot Index to its highest since May. Oil extended losses below $45 a barrel as gold dropped to this month’s low. The Turkish lira advanced, after earlier sinking to within 0.5 percent of it weakest level on record, before Turkey’s president makes an announcement in the wake of a failed coup.

A three-week run that’s boosted the combined worth of global shares by more than $4.5 trillion has pushed valuations to the highest level in 11 months. Investors are assessing corporate earnings amid concern sluggish global growth will persist after the International Monetary Fund scrapped its forecast for a pickup in the pace of expansion this year. Goldman Sachs Group Inc. and Microsoft Corp. on Tuesday announced quarterly profits that surpassed analysts’ estimates, something achieved by 77% of the S&P 500 members to have reported so far.

“The rally is losing some momentum as the reporting season heats up,” said Niv Dagan, executive director at Peak Asset Management LLC in Melbourne. “We’re staying cautious and taking a little bit of profit off the table. With the equity rebound stalling, we are really looking for positive momentum from the reporting season” for the next leg up in stocks, he said.

While the reason behind the recent relentless rally remains mostly elusive, with the median stock according to Goldman now trading in its 99% valuation percentile, some have noted familiar catalysts: “expectations for more stimulus has been supportive of equities,” Angus Nicholson of IG Markets told Bloomberg. “Asian markets have been resilient as they’ve been benefiting from capital inflows since the Brexit vote. Hong Kong has been one of the most unloved markets here so it’s catching up. It’s very cheap.”

Following a lackluster Asian session, which saw the MSCI Asia Pacific Index gain 0.1% after earlier falling as much as 0.4%  with the MSCI Hong Kong Index rising 0.8% and has now rebounded more than 20 percent from a three-year low recorded in January, Europe started off on the right foot, with Stoxx Europe 600 up 0.9%, after falling 0.4% in the last session.  BHP Billiton Ltd. dropped 2.9 percent in Sydney after the world’s biggest mining company said iron-ore production fell 7 percent from a year earlier during the last quarter. Futures on the S&P 500 Index were 0.4% higher after the U.S. gauge slipped from an all-time high in the last session. The Dow Jones Industrial Average advanced for an eighth day, its longest rally in three years, and Microsoft rallied in after-hours trading following the release of its results.

In a session with little economic data, all eyes will be on today’s earnings with Morgan Stanley, Intel and American Express among U.S. companies announcing results on Wednesday.

Market Snapshot

  • S&P 500 futures up 0.4% to 2166
  • Stoxx 600 up 0.9% to 340
  • FTSE 100 up 0.4% to 6726
  • DAX up 0.7% to 10049
  • German 10Yr yield down 1bp to -0.04%
  • Italian 10Yr yield up less than 1bp to 1.24%
  • Spanish 10Yr yield down less than 1bp to 1.19%
  • S&P GSCI Index up less than 0.1% to 355.4
  • FTSE 100 up 0.4% to 6726
  • DAX up 0.7% to 10049
  • German 10Yr yield down 1bp to -0.04%
  • Italian 10Yr yield up less than 1bp to 1.24%
  • Spanish 10Yr yield down less than 1bp to 1.19%
  • S&P GSCI Index up less than 0.1% to 355.4
  • MSCI Asia Pacific up less than 0.1% to 134
  • US 10-yr yield up less than 1bp to 1.56%
  • Dollar Index up 0.1% to 97.16
  • WTI Crude futures up less than 0.1% to $44.66
  • Brent Futures up 0.4% to $46.83
  • Gold spot down 0.4% to $1,327
  • Silver spot down 0.7% to $19.77

Top Global Headlines

  • Pimco Names Man Group’s Chief Emmanuel Roman as Its New CEO: Roman to replace Doug Hodge, Man Group names Luke Ellis as CEO
  • U.S. Seeks to Seize $1 Billion Assets Tied to 1MDB, NYT Says: Asset seizure may be largest confiscation by Justice Dept
  • Unilever to Buy Dollar Shave in Deal Said Valued at $1 Billion: Dollar Shave founder, CEO Dubin to remain at helm of company
  • Fox Said to Be Negotiating Exit Terms With News Chief Ailes: Talks follow filing of sex harassment case against executive
  • PBOC Seen Overriding Yuan Market Moves to Limit Depreciation: Currency rises most in two weeks on bets China defending 6.7
  • KKR’s Kravis Sees Market Volatility Amid Negative Rates, Brexit: Predicts 20% of London’s financial sector to leave city
  • Trump Goes on Offense as Republicans Try to Move Past Missteps
  • Musk Expects Majority of Holders to Support SolarCity Deal: WSJ
  • Investors Said to Pull $600m From Ackman Funds in 1H: Fortune
  • Brazil’s Supreme Court Overturns WhatsApp Ban
  • Amazon June Comp Sales Up 11.6%, Ebay Up 3.8%: ChannelAdvisor

Looking at regional markets, we start in Asia which traded lower for much of the session, amid a lack of tier-1 data and key speakers in the region, following the choppy trade seen across US indices. Nikkei 225 (-0.2%) suffered from a delayed reaction to its Asian counterparts and caught up with losses following the country’s long weekend, however did find some support and is off its worst levels, as a firmer JPY weighed on exporters. Conversely, ASX 200 (+0.7%) took the impetus from a lacklustre open trade in the green, despite gains being capped by the materials sector after BHP missed on iron ore output estimates. Elsewhere, China’s Hang Seng (+1.0%) is underpinned by broad based gains across the index and saw property developers buoyed by measures to boost borrowing, while significant gains continued to be stifled in the Shanghai Comp (-0.3%) following another mild liquidity injection. Finally, 10yr JGBs traded with slightly higher despite the absence of risk-appetite in Japan whilst a JPY 1.1trl JGB auction saw lower than prior laic and a lower average yield.

Asian Top News

  • Singapore Seeks U.S. Chapter 11 Prowess in Bankruptcy Reform: Includes automatic stay, pre-pack and super-priority lien
  • Fastest-Growing India Fund Says RBI Dove Needed to Sustain Rally: Global holdings of rupee-denominated bonds have jumped in July
  • China’s Curious Craze for Stock Dividends Survives Market Slump: >200 Shenzhen firms have announced stock payouts
  • Emerging Currencies Weaken in Asia on Global Growth Concern: Turkish lira approaches record low as post-coup purge expands

European equities trade in the green this morning (Euro stoxx +1.2%) with price action largely initially dictated by the latest spate of earnings, most notably from the likes of SAP (4.5%) which has subsequently helped the DAX rise above the 10,000 level. However, gains across the region were extended after an improvement in sentiment after the upbeat UK jobs report. In fixed income, Bunds kicked off the session higher with notable underperformance in the short-end ahead of the launch of the 5-yr Bobl auction. However the German benchmark failed to hold onto their gains in the wake of the aforementioned auction, with the weak take up weighing on German paper across the board to see Bunds fall back below 166.50 and into negative territory on the day.

European Top News

  • U.K. Unemployment Declines Below 5% for First Time Since 2005: Employment in March-May rose 176,000 to record high level, unemployment rate fell to 4.9%
  • SAP Profit Tops Estimates as Clients Move to New Software: European revenue grew strongly despite Brexit concerns
  • ASML Sales Rise as Orders for New Machines Begin to Materialize: Chip-machine maker trying to get clients to upgrade factories
  • Nordea CEO Says Turning Point Reached as Outlook Improves: CEO says bank will meet higher CET1 requirement due end 2016

In FX, the lira was 0.2 percent stronger at 3.0355 per dollar, after earlier sinking as much as 0.7 percent. The currency has tumbled about 5 percent since a failed coup attempt on Friday as authorities purged state institutions, the central bank lowered interest rates and Moody’s Investors Service said it may lower the country’s credit rating to junk. President Recep Tayyip Erdogan is due to make an announcement on Wednesday that an official said would boost social cohesion and Turkey’s democratic credentials. The Bloomberg Dollar Spot Index added 0.1 percent, after advancing 0.5 percent to a six-week high in the last session as a report showed new-home construction in the U.S. rose more than economists forecast in June. A Citigroup gauge that tracks the degree to which American data are exceeding projections is at an 18-month high and futures put the chance of a Federal Reserve rate increase this year at 43 percent, up from 9 percent at the start of this month. “The market will recalibrate on Fed rate-hike expectations to price in at least one” this year, said Charlie Lay, a foreign-exchange strategist in Singapore at Commerzbank AG. “That should support the dollar.” The yuan jumped as much as 0.28 percent to 6.6780 per dollar amid speculation China’s central bank is trying to prevent the currency from weakening beyond 6.70, a threshold that was breached this week for the first time since 2010. The People’s Bank of China raised its daily reference rate for its currency on Wednesday, even after the greenback strengthened overnight.

In commodities, crude oil fell 0.3 percent to $44.52 a barrel in New York, after sliding 2.8 percent over the last two trading days. While government data Wednesday is forecast to show supplies fell for a ninth week, stockpiles will still be more than 100 million barrels above the five-year seasonal average. Nickel dropped as much as 1.7 percent in London, retreating from its highest close since October. Copper lost 0.7 percent as China released data showing it boosted output by 7.6 percent in the first half and Barclays Plc forecast there will be a worldwide surplus of the metal every year until 2020.

There’s no major data out in the US today although. Earnings will continue to be a big focus with 21 S&P companies due to report. Morgan Stanley (prior to the open), EBay, American Express and Intel (all after the close) are the highlights while over in Europe we’ve got 10 Stoxx 600 companies due to release their latest numbers

Bulletin Headline Summary from RanSquawk and Bloomberg

  • A strong UK jobs report sees GBP/USD move back towards 1.3200 and the USD pare earlier gains
  • Equities trade firmly in the green, with Bunds in negative territory, weighed on further by a soft German 5y auction
  • Treasuries trading slightly lower and within narrow ranges while European equities rise amid better-than-expected German PPI and U.K. unemployment dropped to 4.9% in the period before the Brexit vote, lowest since 3Q 2005.
  • SocGen’s bond team recently tweaked a longstanding macro model that now shows there’s less than a 1 percent chance U.S. 10-year yields fall below 1.1 percent, especially with the Federal Reserve still intent on raising interest rates
  • Komal S. Sri-Kumar, the economist who predicted the 2016 Treasury market rally when the consensus was for a selloff, says benchmark yields may fall to a record 0.9 percent by the end of the year
  • The yuan advanced the most in two weeks, with the central bank’s daily fixing adding to signs that China’s authorities are prepared to overrule the market to control the currency’s moves
  • Two recent observations by the ECB on output and employment highlight how monetary policy is far from an exact science, underlining the challenge that the institution’s president and his colleagues will face in their two-day meeting starting Wednesday
  • Iran is exploring a return to international debt markets for the first time since 2002, a senior government official said, as the Islamic Republic seeks to finance an economic recovery a year after a historic nuclear deal that offered it a route out of isolation
  • Highlights today include DoE U.S. Crude Oil Inventories and earnings from Intel, QUALCOMM, Morgan Stanley and eBay

* * *

DB’s Jim Reid concludes the overnight wrap

Earnings and holiday apathy seem to be holding back markets a bit this week ahead of Draghi and the ECB meeting tomorrow. European equities were soft from the off yesterday with the Stoxx 600 and DAX eventually closing -0.41% and -0.81% respectively albeit with summer holiday-esque volumes which were 25% below the usual average. A soft German ZEW survey which included a four-year low for the expectations component didn’t help, while banks were also under pressure after the EU’s highest court backed the EU guidelines preventing taxpayers from bailing out lenders. More on this below.

The afternoon session also saw US equities spend most of it in the red. The S&P 500 eventually closed -0.14% (which believe it or not was the worst performance since July 5th) and had its smallest range for the year in both percentage (0.26%) and points (5.6pts) terms. The Nasdaq (-0.38%) weakened a little bit more with those weak Netflix numbers weighing, although the Dow (+0.14%) did manage to eke out a modest gain into the close after better than expected Johnson & Johnson numbers helped. The other notable earnings report released yesterday came from Goldman Sachs which continued the trend of US Banks exceeding expectations this quarter with the bright spot once again being better than expected performance in fixed income trading. Again though, the beat was amplified by another big cut in analyst expectations leading into the release. While EPS for the quarter came in at $3.72 versus the $3.05 market consensus, this was revised lower from as much as $3.60 in April and $3.80 in March.

There was a bit of focus on the IMF too yesterday after the Fund downgraded its global growth forecast this year and next by one-tenth to 3.1% and 3.4% respectively from the April forecasts. The Fund highlighted that the new forecast assumes that UK and EU officials negotiate a deal that does not lead to a large increase in economic barriers. A severe scenario where talks break down could result in growth slumping to 2.8% in both years. Unsurprisingly then it was the UK which bore the brunt of the downgrade. The Fund has pencilled in growth this year at 1.7% (from 1.9% in the previous forecast) and growth of just 1.3% in 2017, having previously pencilled in 2.2%. This makes for an interesting contrast to something our European equity team highlighted yesterday. They pointed out that UK four-week net earnings revisions (defined as upgrades minus downgrades) have just turned positive for the first time since early 2013 on the back of weaker Sterling. They note that the GBP trade-weighted index is down 9% since the UK referendum and that 65% of UK revenues come from abroad.

Refreshing our screens this morning it’s been a fairly mixed start for bourses in Asia. Losses are being led by markets in Japan with the Nikkei currently -0.72%, while the Shanghai Comp (-0.18%) and Kospi (-0.28%) are also down. On the other hand the Hang Seng (+0.77%) and ASX (+0.55%) are stronger despite the minimal newsflow. Commodity markets are little changed with WTI Oil (-0.02%) in particular holding steady having closed below $45/bbl. Elsewhere there’s big news to come from the US Presidency race where Donald Trump has officially been crowned the Republican presidential candidate at the convention in Cleveland.

Moving on. Yesterday we saw the results of the latest ECB Bank Lending Survey that demonstrated a continued easing of lending conditions in Q2 2016, along with further loosening expected in Q3. In a Credit Bite published just before this email we analysed these results alongside some other important default indicators. We find that while the lending survey does not point towards elevated defaults, there are other lead indicators that are more worrying on this front.

Staying in Europe, as we highlighted earlier yesterday the EU’s highest court ruled that the losses imposed on creditors during Slovenia’s banking rescue in 2013 were legal when the nation imposed ‘burden-sharing’ on private investors. That rescue had resulted in €600m of junior bondholder’s debt being wiped out at the time, although significantly the ruling also stated that burden-sharing wasn’t a pre-requisite for state aid. The court said that ‘burden sharing by shareholders and subordinated creditors as a prerequisite for the authorization, by the commission, of state aid to a bank with a shortfall is not contrary to EU law’. Clearly this ruling comes at an interesting time given the focus on Italian lenders at present, with the nation looking to recap or restructure its banking system. EU competition commissioner Margrethe Vestager said following the ruling that the decision will not change the EU’s talks with Italy’s government and that an agreement may be ‘quite close’. Italian banks were generally down 1-3% yesterday by the close.

In terms of that data yesterday, the standout was the decline in the German ZEW survey this month with the current situation component falling 4.7pts and more than expected to 49.8 (vs. 51.8 expected). That was just the second sub-50 reading (the other coming in April) since February last year. More telling though was the weakness in the expectations component which plummeted 26pts to -6.8 (vs. +9 expected) and to the lowest level since November 2012. It’s worth noting that the survey period was July 4th-18th and so post-Brexit. Meanwhile in the UK the inflation report for June was largely in line to a little bit firmer than expected. CPI printed at +0.2% mom as expected, with the YoY rate creeping up two-tenths to +0.5% as a result. The core also rose two-tenths to +1.4% yoy.

Meanwhile across the pond the latest housing market data showed housing starts as rising more than expected in June (+4.8% mom vs. +0.5% expected). The less volatile permits data rose +1.5% mom and also a little more than expected (+1.2% mom expected). Our US economists noted yesterday that starts and permits remain well below their previous-cycle levels by a wide margin, however the latest data confirms that the ongoing grinding improvement in the sector likely has further room to run.

Looking at the day ahead, it’s fairly quiet data-wise in Europe this morning with German PPI the early release, followed by the latest UK employment report where current expectations is for the ILO unemployment rate to hold steady at 5%. There’s no data out in the US this afternoon, although we will receive the European Commission’s flash consumer confidence reading for July along with China’s Conference Board leading economic index for June. Earnings will continue to be a big focus with 21 S&P companies due to report. Morgan Stanley (prior to the open), EBay, American Express and Intel (all after the close) are the highlights while over in Europe we’ve got 10 Stoxx 600 companies due to release their latest numbers

ASIAN AFFAIRS

 

i)Late  TUESDAY night/WEDNESDAY morning: Shanghai closed DOWN 8.69 POINTS OR 0.29%/ /Hang Sang closed UP 209.28 OR 0.97%. The Nikkei closed DOWN 41.42 OR 0.25%/  Australia’s all ordinaires  CLOSED UP 0.58% Chinese yuan (ONSHORE) closed UP at 6.6755 ON A LITTLE REVALUATION /Oil FELL to 44.64 dollars per barrel for WTI and 46.70 for Brent. Stocks in Europe ALL IN THE GREEN. Offshore yuan trades  6.68161 yuan to the dollar vs 6.6755 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS CONSIDERABLY 

FIRST  REPORT ON JAPAN  SOUTH KOREA AND CHINA a) JAPAN ISSUES

In a delayed reaction, the USA/Yen shoots up to 107.28 as Kyodo plans on a 20 trilion yen stimulus plan.  And gold goes down on this money printing!

(courtesy zero hedge)

USDJPY Surges In Delayed Reaction To News That Japan Is Considering An Expanded JPY20 Trillion Stimulus Plan

In what we can only attribute to a delayed reaction to a news story that hit earlier in Japan’s Kyodo, according to which Japan was now considering a JPY20 trillion stimulus package, double what had been previously speculated, moments ago the USDJPY surged on now concurrent news, spiking by 0.5% and hitting the highest level since June 7.

For those who missed the Kyodo report, it said that Japan’s newly mulled JPY20 TRN package will be more than than an initial plan for just over 10 trillion yen to counter possible effects of the U.K.’s decision to leave the European Union.

  • New plan will include projects for FY2017 and beyond; increase low-interest “zaito” loans by 6t yen
  • Size may be increased further
  • Govt to seek cabinet approval of plan in early August
  • Package partly funded by extra budget for FY2016
  • 8.3t yen for infrastructure, including 3t yen for Osaka maglev train extension
  • Govt plans to lend dollar funds to cos. to counter Brexit impact
  • Govt to provide 3t yen from FX reserves to JBIC for lending to Japanese cos.
  • 3.4t yen to be allocated for cos. building infrastructure overseas
  • Funds also going toward improving disaster resilience of buildings and supporting farm exports

END

b) REPORT ON CHINA EUROPEAN AFFAIRS

The IMF are now called “clowns” after they now admit that England will grow much faster with a BREXIT

(courtesy zero hedge)

IMF Called “Clowns” After Admitting They Fabricated Brexit Doom And Gloom

“The IMF has serious credibility problems. It has been seriously wrong for years. I hope that one of the things that the new government does is push to have some credible people running this institution… rather than the clowns currently running it,” exclaimed UKIP MP Douglas Carswell, pointing out Lagarde’s legion of fools flip-flop that the British economy will grow faster than Germany and Francein the next two years – only weeks after its doom-laden warnings about Brexit.

As The Daily Mail reportsafter saying that leaving the European Union could trigger a UK recession, the International Monetary Fund now expects the British economy to grow by 1.7 per cent this year and 1.3 per cent next year.

That is weaker than the 1.9 and 2.2 per cent growth forecasts before the referendum, but the UK is still set to be the second-fastest growing economy in the Group of Seven industrialised nations this year – behind the United States – and third-fastest next year, behind the US and Canada.

Of course, this is not the first time The IMF has unleashed comedic genius on the world

But the new UK forecasts represent a climbdown for the global financial watchdog after it issued a string of doom-laden warnings over the damage Brexit would do.

Ahead of the referendum, IMF managing director Christine Lagarde, an ally of former chancellor George Osborne, said Brexit would be ‘pretty bad, to very, very bad’ for the UK.

But the latest forecasts – and an admission that a recession is now unlikely – suggest the outlook is not as bleak as the watchdog claimed.

And again, as The Mail notes,it is not the first time the IMF has had to row back from damaging comments about the UK economy. In April 2013, the fund’s then chief economist Olivier Blanchard said Britain was ‘playing with fire’ by pressing ahead with austerity at a time of ‘very low growth’. But the IMF was quickly forced into a dramatic volte face as the UK economy sprang into life, forcing Mrs Lagarde to admit ‘we got it wrong’.

The IMF’s new chief economist Maury Obstfeld said yesterday there were ‘promising signs’ for the global economy in the first half of 2016, but added: ‘Brexit has thrown a spanner in the works.’

John Longworth, who was ousted as director general of the British Chambers of Commerce after backing Brexit, said: ‘Talk of Armageddon seems to be receding.

‘This is not surprising. If the Government adopts the right policies, we will be in a position where all the doom and gloom that was predicted simply disappears.’

A Treasury spokesman said: ‘Our country remains open for business. We are the same outward-looking, globally-minded, big-thinking country we have always been.’

Still, we are sure The IMF’s new forecast will be spot on this time and the mainstream media will spin it as gospel enough reason to buy stocks…

END RUSSIAN AND MIDDLE EASTERN AFFAIRS TURKEY

The total of Turkish civilians now total 50,000 as Turkey is set to unveil ’emergency measures today:

(courtesy zero hedge)

As Erdogan’s Historic Purge Claims 50,000, Turkey Set To Unveil “Emergency Measures”

Erdogan’s historic purge of dissidents and adversaries – many of which curiously are to be found in the country’s educational system – continues, and according to the latest count, a total of around 50,000 soldiers, police, judges, civil servants and teachers have been suspended or detained since the coup attempt, stirring tensions across the country of 80 million which borders Syria’s chaos and is a Western ally against Islamic State.

The ongoing cleansing has also spooked Turkish investors sending local markets and the currency sliding on concerns Erdogan is going to far with his retribution.

In response, Turkey said it would announce emergency measures on Wednesday to try “to shore up stability and prevent damage to the economy” which is paradoxically reeling as a result not so much of the coup as Turkey’s reaction to it. According to Reuters, Erdogan has vowed to clean the “virus” responsible for the plot from all state institutions. The depth and scale of the purges have raised concern among Western allies that Erdogan is trying to suppress all dissent, and that opponents unconnected with the plot will be caught in the net.

He will chair meetings in his palace on Wednesday of the cabinet and the National Security Council, after which a series of emergency measures are expected to be announced.

Not surprisingly, government ministers and top officials have not been briefed in advance of the meetings. “The cabinet meeting is classified at the highest level for national security reasons. The palace will give ministers a dossier just beforehand,” one senior official told Reuters.

“Ministers do not yet know what is going to be discussed.” Perhaps because as Turkey regresses back to a sultanate, ministers become redundant.

Deputy Prime Minister Mehmet Simsek told Reuters a priority in the measures to be discussed on Wednesday would be preventing damage to the economy. He also said on Twitter they would be “market-friendly” and would prioritize structural reform. We are confident some measure against “market speculators” will be implemented shortly.

Among the latest announcements, around a third of Turkey’s roughly 360 serving generals have been detained since the coup bid, a second senior official said, with 99 charged pending trial and 14 more being held. Additionally, academics were banned from traveling abroad on Wednesday in what a Turkish official said was a temporary measure to prevent the risk of alleged coup plotters in universities from fleeing. State TRT television said 95 academics had been removed from their posts at Istanbul University alone. “Universities have always been crucial for military juntas in Turkey and certain individuals are believed to be in contact with cells within the military,” the official said.

Meanwhile, Erdogan continues to focus the public’s attention on his hand-picked scapegoat for the attempted, if perhaps staged, coup. “This parallel terrorist organization will no longer be an effective pawn for any country,” Prime Minister Binali Yildirim said, referring to what the government has long alleged is a state within a state controlled by followers of Fethullah Gulen. “We will dig them up by their roots,” he told parliament.

Erdogan blames the network of U.S.-based cleric Fethullah Gulen for Friday night’s attempted coup, in which more than 230 people were killed as soldiers commandeered fighters jets, military helicopters and tanks to try to overthrow the government. On Tuesday, authorities shut down media outlets deemed to be supportive of the cleric.

Seventy-five-year-old Gulen, who lives in self-imposed exile in Pennsylvania but has a network of supporters within Turkey, has condemned the abortive coup and denied any role in it. A former ally-turned critic of Erdogan, he suggested the president staged it as an excuse for a crackdown after a steady accumulation of control during 14 years in power.

Obama discussed the status of Gulen in a telephone call with Erdogan on Tuesday, the White House said, urging Ankara to show restraint as it pursues those responsible for the coup attempt. In parallel talks, U.S. Defense Secretary Ash Carter and his Turkish counterpart discussed the importance of Turkey’s Incirlik Air Base in the campaign against Islamic State in Syria and Iraq, the Pentagon said. The base, which is used by Turkish and U.S. forces in the air campaign against Islamic State, has been without power in the days since the failed coup.

In an amusing twist, Prime Minister Yildirim accused Washington, which has said it will consider Gulen’s extradition only if clear evidence is provided, of double standards in its fight against terrorism.

Yildirim said the justice ministry had sent a dossier to U.S. authorities on Gulen, whose religious movement blends conservative Islamic values with a pro-Western outlook and who has a network of supporters within Turkey. “We have more than enough evidence, more than you could ask for, on Gulen,” Justice Minister Bekir Bozdag told reporters outside parliament. “There is no need to prove the coup attempt, all evidence shows that the coup attempt was organized on his will and orders.”

White House spokesman Josh Earnest confirmed Ankara had filed materials
in electronic form with the U.S. government, which officials were
reviewing. Any extradition request from Turkey, once submitted, would be
evaluated under the terms of a treaty between the two countries, he
added.

This treaty excludes offences “of a political character” although it does cover those “committed or attempted against a head of state or a head of government”.

Any extradition request would face legal and political hurdles in the United States. Even if approved by a judge, it would still have to go to Secretary of State John Kerry, who can consider non-legal factors, such as humanitarian arguments.

“I urge the U.S. government to reject any effort to abuse the extradition process to carry out political vendettas,” Gulen said on Tuesday in a statement issued by the Alliance for Shared Values, a group associated with the cleric.

* * *

Amusingly the real “double standard” has nothing to do with the US (un)willingness to extradite an old man who certainly had nothing to do with the staged coup, and everything to do with the western treatment of what is now a historic putsch for a “democratic” country.

As Reuters concludes, “Turkey’s Western allies have expressed solidarity with the government over the coup attempt but have also voiced increasing alarm at the scale and swiftness of the response, urging it to adhere to democratic values.”

Since 50,000 purged is clearly not enough for Western allies to do anything more than “voice increasing alarm”, we wonder what number will trigger actual action: 100,000? 1 Million? More?

 

END

 

The Turkish lira is crashing to 3.04 to the dollar accompanied by a high risk of default as witnessed by the credit default swaps: Turmoil in Turkey

(courtesy zero hedge)

Currency Tumbles, Credit Risk Spikes As Turkey Considers ‘State of Emergency’

Following yesterday’s market ‘warning’ that Erdogan may have taken things too far, Turkey’s currency and credit risk markets are in further disarray today as Turkey’s National Security Council will consider calling for a state of emergency according to ruling AK Party deputy head Cevdet Yilmaz.

The Lira is crashing back near record lows…

Some context for the Lira’s progress…

And Turkish sovereign credit risk is soaring…

As we noted yesterday, it is truly a bizarre time when the only thing keeping corrupt, conflicted “democratic” politicians honest are FX and credit market ‘threats’.

end

 

Then S & P lowered the boom on Turkey by downgrading the country to BB with a negative outlook; the Turkish lira then tumbled to a new all time low:

(courtesy zero hedge)

S&P Downgrades Turkey To BB, Outlook Negative; Lira Tumbles To New All Time Low

Moments ago the Turkish LIra took another leg lower following what many had anticipated in the aftermath of this weekend’s events: a downgrade by a rating agency, in this case S&P. which just cut the country to BB from BB+, outlook negative.

Full report:

Republic of Turkey Foreign Currency Ratings Lowered To ‘BB/B’; Outlook Negative

OVERVIEW

  • Following the attempted coup in the Republic of Turkey on July 15, we believe the polarization of Turkey’s political landscape has further eroded its institutional checks and balances.
  • In addition, we expect a period of heightened unpredictability that could constrain capital inflows into Turkey’s externally leveraged economy.
  • As a result, we are lowering our foreign and local currency sovereign credit ratings on Turkey to ‘BB/B’ and ‘BB+/B’, respectively, from ‘BB+/B’and ‘BBB-/A-3’.
  • The negative outlook reflects our view that Turkey’s economic, fiscal, and debt metrics could deteriorate beyond what we expect, if political  uncertainty contributed to further weakening in the investment  environment, potentially intensifying balance-of-payment pressures.

RATING ACTION

On July 20, 2016, S&P Global Ratings lowered its unsolicited foreign currency long- and short-term sovereign credit ratings on the Republic of Turkey to ‘BB/B’ from ‘BB+/B’. At the same time, we lowered our unsolicited local currency long- and short-term sovereign credit ratings on Turkey to ‘BB+/B’ from ‘BBB-/A-3’. The outlook is negative.

We also revised the transfer and convertibility (T&C) assessment on Turkey to ‘BBB-‘ from ‘BBB’. In addition, we lowered our unsolicited long-term Turkey national scale rating to ‘trAA+’ from ‘trAAA’ and affirmed the ‘trA-1’ short-term rating.

As a “sovereign rating” (as defined in EU CRA Regulation 1060/2009 “EU CRA Regulation”), the ratings on the Republic of Turkey are subject to certain publication restrictions set out in Art 8a of the EU CRA Regulation, includingpublication in accordance with a pre-established calendar (see “Calendar Of 2016 EMEA Sovereign, Regional, And Local Government Rating Publication Dates,”published Dec. 22, 2015, on RatingsDirect). Under the EU CRA Regulation, deviations from the announced calendar are allowed only in limited circumstances and must be accompanied by a detailed explanation of the reasonsfor the deviation.

In this case, the reason for the deviation is our view that following the attempted coup on July 15, 2016, Turkey’s institutional effectiveness has beenfurther eroded, raising risks to its externally leveraged economy. We believe these events will make rolling over Turkey’s substantial short-term external debt more challenging.

The next rating publication on Turkey is scheduled for Nov. 4, 2016, accordingto our calendar.

RATIONALE

The downgrade reflects our view that following the attempted coup on July 15, Turkey’s political landscape has fragmented furtherWe believe this will undermine Turkey’s investment environment, growth, and capital inflows into its externally leveraged economy. In the aftermath of the failed coup, we believe that the risks to Turkey’s ability to roll over its external debt have increased. We estimate that it has to roll over nearly 42% of its total external debt–amounting to over US$170 billion (5x usable reserves; 24% of estimated 2016 GDP)–over the next 12 months. In addition, we expect that given the political uncertainty, Turkey’s policymakers will likely stray from their commitment to enact reforms intended to wean the economy away from its dependence on foreign financing.

Since the attempted coup, we understand that, so far, an estimated 45,000, largely government officials, have either been suspended or removed from theirposts, with the education and judiciary sectors most affected. A further 14,000 police officers and soldiers have either been suspended or detained. Wehad already expected heightened political uncertainty in 2015–due to escalating domestic violence following the ending of the peace process with Kurdish militants, two general elections, and instability along Turkey’s southeastern border–to spill over into 2016. However, the attempted coup and our expectation about the associated fallout on the real economy, through weakening capital inflows, is beyond what we factored into our previous base-case scenario. Turkey’s net foreign exchange reserves–at an estimated $32 billion–provide coverage for only about two months of current account payments, suggesting limited buffers to offset external pressures.

Mitigating its external vulnerabilities to some degree, Turkey has deep local-currency capital markets that have facilitated its access to and cost offinancing. Two-thirds of government debt is funded in local currency and at fixed rates. Furthermore, we view the treasury’s policy of meeting net public-sector financing needs by issuing in local currency at longer maturities as a positive rating factor.

OUTLOOK

The negative outlook reflects our view that Turkey’s economic, fiscal, and debt metrics could deteriorate beyondwhat we expect, if political uncertainty contributed to further weakening in the investment environment, potentially intensifying balance-of-payment pressures. We could also lower the ratings if we assessed Turkey’s monetary policy credibility as deteriorating due to government intervention.

We could revise our outlook on Turkey to stable if the government’s fiscal deficits remained modest and the independence of key institutions was not eroded.

 

end And with that new 3 month state of emergency, the Lira crashes to 3.10 (courtesy zero hedge) Erdogan Declares Three Month “State Of Emergency”, Warns S&P “Don’t Mess With Turkey”

Having warned earlier of the possibility, Turkish President Erdogan moments ago during a live broadcast address, announced a 3-month “state of emergency” across his nation to “effectively tackle the Gulen movement,” as Erdogan stated that there might be more plans to continue coup attempts. The decision has immediately raised fears of more arbitrary arrests, killings and disappearances.

Erdogan added that “citizens should have no concerns for democracy,” and warned ratings agency S&P “not to mess with Turkey” and comforted his citizens that a “state of emergency does not mean military rule” and that the decision was not against the constitution.

But most amusingly, Erdogan promptly warned S&P, which earlier today downgraded Turkey to BB,“not to mess with Turkey” and that the decision to downgrade the country was political; he did that ashe warned Europe to mind its own business.

  • ERDOGAN: STATE OF EMERGENCY DOESN’T MEAN MILITARY RULE
  • TURKEY’S ERDOGAN: CITIZENS SHOULD HAVE NO CONCERN ON DEMOCRACY
  • TURKEY’S ERDOGAN SAYS WILL WORK AS PRESIDENT AND COMMANDER IN CHIEF WITH ARMED FORCES TO CLEANSE “VIRUS” FROM MILITARY
  • TURKEY’S ERDOGAN: STATE OF EMERGENCY AIMS TO PROTECT VALUES
  • TURKEY’S ERDOGAN SAYS S&P `SHOULD NOT MESS WITH TURKEY’
  • TURKEY’S ERDOGAN: WHAT’S S&P GOT TO DO WITH TURKEY?
  • TURKEY’S ERDOGAN: WE HAD CUT OUR TIES W/ S&P BEFORE
  • TURKEY’S ERDOGAN: S&P DECISION IS POLITICAL
  • ERDOGAN SAYS TURKEY WILL CONTINUE ITS INVESTMENTS  
  • ERDOGAN SAYS THERE WON’T BE ANY LIQUIDITY SHORTAGE IN MARKET
  • ERDOGAN SAYS TURKEY WON’T STEP BACK FROM FISCAL DISCIPLINE
  • ERDOGAN: TURKEY MILITARY TO BE UNDER COMMAND OF GOVERNORS
  • ERDOGAN: TURKISH MILITARY IS AT THE SERVICE OF ITS GOVERNMENT
  • ERDOGAN: AS COMMANDER-IN-CHIEF WE’LL WIPE OUT VIRUSES IN ARMY
  • ERDOGAN: PROCESS TO WIPE OUT VIRUSES IN INSTITUTIONS TO GO ON

View image on Twitter

CNN Türk ENG @CNNTURK_ENG

BREAKING Turkish President Erdoğan declares “state of emergency” in Turkey after .

4:28 PM – 20 Jul 2016

And The Lira has crashed to 3.10 – a record low against the USD…

end Here is another odd inconsistency with regards to the staged coup: The official Turkish story has it that the rebels launched an attack on Erdogan’s  vacation spot at the exact time that he was addressing the nation at the Istanbul airport. Now do you believe us when we say that this event was staged (courtesy zero hedge) The Oddly “Inconsistent” Event That Has Turkey Wondering If The Entire Coup Was Staged

The question marks around the failed Turkish “coup” continue to pile up.

Several days ago we reported that in one of the most glaring inconsistencies surrounding the failed military attempt to overthrow the Turkish president, at the height of the attempt to overthrow Turkish President Tayyip Erdogan, the rebel pilots of two F-16 fighter jets had Erdogan’s plane in their sights. And yet he was able to fly on.

“At least two F-16s harassed Erdogan’s plane while it was in the air and en route to Istanbul. They locked their radars on his plane and on two other F-16s protecting him,” a former military officer with knowledge of the events told Reuters. “Why they didn’t fire is a mystery,” he said.

Now a new mystery that just does not add up has emerged.

According to the government’s official narrative, rushed together in the days after the coup, there was an attack on Saturday morning by helicopter-borne commandos against a resort hotel in Marmaris. President Recep Tayyip Erdogan was meant to be staying there. But the attack took placenearly an hour after every news channel in Turkey beamed images of Mr Erdogan addressing the nation from the airport in Istanbul, some 750km away.


As even the FT skeptically reportsthat episode is one of many inconsistencies and strange occurrences in a coup whose amateurish — almost kamikaze — nature preordained its failure and is now providing rich fodder for conspiracy theories. That Turkey is so polarised — roughly split between those who love and hate Mr Erdogan — has only added to the froth.”

As a result of the gaping holes in the story, even the central issue of who was behind the coup is now contested reality. According to a snap poll a third of Turks believe Erdogan himself, who says his own life was threatened, was behind the coup. (The poll, by London-based Streetbees, queried about 2,800 Turks, two-thirds via mobile apps, and a third in person.)

However, that helicopter raid, along with reports that Mr Erdogan’s plane was pursued by two fighter jets that never opened fire, some argue, is evidence that his life was never in any real danger.

To be sure, voices have quickly emerged slamming any such allegations as “preposterous” conspiracy theories. “Turks, like a lot of people around the world are given to conspiracy theories — simplistic explanations for complex events for things they don’t fully understand,” said Ross Wilson, a former US ambassador to Ankara now at the Atlantic Council. “Did Erdogan secretly engineer this, which is preposterous, or did the United States engineer this, which is equally preposterous?”

However for the locals, who have extensive experience with “conspiracy theories” that end up becoming conspiracy fact, especially when it comes to the government, things are not quite so clear cut. Those seeking holes in the government’s version of events about the coup are particularly focused on an offhand comment made by Mr Erdogan on Saturday, where he called the coup “a gift from god to fully cleanse the army.”

And, as we have repeatedly reported, the zeal with which his government has since seized upon their opponents, firing or detaining as many as 20,000 people within two days, has raised questions as to whether the failed coup has simply provided him with the opportunity to pursue longstanding aims.

Of course, Turkish officials furiously reject that notion. They say that the lists of those arrested were a long time in the making, the result of investigations that mapped their networks, but failed to detect the coup itself.

In an highly amusing quip, Ibrahim Kalin, the president’s spokesman said that “it’s funny that people still talk about this. Those who accuse us [in Turkey] of conspiracy theories are now presenting this nonsensical stuff as political analysis and commentary. If this was not a coup, what is a coup?” Well, a coup – for starters – is one where there is no military raid on a presidential vacation spot hours after he has left it.

But his punchline was most damning: “It’s comparable to the claim that 9/11 was orchestrated by the US.” So once it is confirmed, one way or another, that Erdogan directly or indirectly blessed the coup, will that mean that 9/11 was orchestrated by the US… with Saudi Arabia’s kind help?

Meanwhile, skepticism continues to grow: Both online, and in personal interviews, Turks who believe Mr Erdogan staged the coup himself say that its failure is proof enough — the military in this country knows how to topple a government, having done so several times before.

“Why people believe this conspiracy is that it has more to do with the blueprint to the coup,” said Sinan Ulgen, a former Turkish diplomat and chairman of Istanbul’s Centre for Economics and Foreign Policy Studies, “People in this country remember past coups. They already have a frame of reference of what a coup should look like, and this didn’t fit.”

What does fit, however, is Erdogan’s response to the coup, real or faked: the authoritarian president is on his way to cementing all power in the country while eliminating all political, military, educational and press opposition.

 

end

This is a little terrifying:  American nukes are just not safe in Turkey anymore!

(courtesy FP/Jeffery Lewis)

America’s Nukes Aren’t Safe in Turkey Anymore

But is there anywhere else in Europe that would take them?

Among the candidates for most iconic image of this past weekend’s attempted coup in Turkey has to be the many videos of Turkish F-16s, hijacked by the mutineers, flying low over Istanbul and Ankara. Eventually, those planes seem to have bombed the parliament. There were rumors that they considered shooting down the plane of President Recep Tayyip Erdogan.

What’s clear is that mutineers managed to keep the F-16s in the air only because they were able torefuel them mid-flight using at least one tanker aircraft operated out of Incirlik Air Base. Eventually Turkish authorities closed the airspace over Incirlik and cut power to it. The next day, the security forces loyal to the government arrested the Turkish commander at the base. (The images of him being escorted away in handcuffs are in the contest to qualify as the weekend’s most iconic.)

In retrospect, it is understandable why the Turkish government closed the airspace over Incirlik, even if it did temporarily disrupt air operations against the Islamic State in Syria. But that is in retrospect. In the moment, it raised a disquieting thought. There are a few dozen U.S. B61 nuclear gravity bombs stored at Incirlik. Does it seem like a good idea to station American nuclear weapons at an air base commanded by someone who may have just helped bomb his own country’s parliament?

To be sure, coups have occurred in other countries where the United States stores nuclear weapons. Turkey, Greece, and South Korea have all seen military juntas seize control while U.S. nuclear weapons were present on their soil.

Counterintuitive as it might seem, nuclear weapons have tended not to be a primary target of coup plotters. This has been true for countries that host U.S. nuclear weapons stationed abroad, but also for coup attempts in France and the Soviet Union. My friend Bruno Tertrais found the French case so peculiar that he wrote a great little paper about it.

The weapons at Incirlik are stored in vaults in the floor of the protective aircraft shelters. The shelters are inside a security perimeter. The United States and its NATO allies recently invested $160 million on security upgrades for nuclear weapons, the most visible aspect of which is new security perimeter at Incirlik visible in satellite images. And, of course, if the coup plotters have accessed a weapon, it would require someone to enter a code to arm it. It would not be a simple thing to snatch and use a U.S. nuclear weapon. Coup plotters generally have other things to worry about.

At the same time, if a hostile junta were to seize control of a country with U.S. nuclear weapons stationed in it, things might be dicier. An airbase is a not a fortress; it is not intended to withstand a siege by the host government any more than an embassy might. Use control devices such as “Permissive Action Links” can prevent someone from easily using a stolen weapon, but may eventually be bypassed. There has long been talk about developing security features that would render a lost or stolen weapon a “paperweight” but that’s mostly been just that — talk.

So while the precautions to protect U.S. nuclear weapons at Incirlik are reasonable, they are based on a series of assumptions about the stability and friendliness of the country. The sight of the Incirlik base commander being frog-marched off the base is disquieting precisely because it undermines such assumptions.

The security situation in Turkey has been deteriorating for some time. Earlier this year, the Department of Defense evacuated military and civilian familiesfrom Incirlik, citing concerns about terrorist threats. Then, in April, two goons from a local right-wing group attempted to “sack” a U.S. airman on base. (Sacking is just that — throwing a sack over someone’s head, in this case retaliation for a perceived slight against Turkish soldiers.) This occurred about one kilometer from the weapons perimeter. And now an official in the Erdogan government insinuated that the United States may have played a role in the coup, largely on the basis that a cleric named Fethullah Gulen, who has a large number of followers in Turkey, resides in exile in the United States.

Given the general climate of instability, you might ask why U.S. nuclear weapons are even stored in Turkey in the first place. That’s especially relevant because one of the peculiar things about U.S. gravity bombs in Turkey is that there are no planes available to deliver them. In other NATO states with U.S. nuclear weapons, the host nation maintains so-called dual capable aircraft that, in theory, would be provided with U.S. nuclear weapons to use in a crisis. (Stop guffawing, it’s unseemly.) But unlike Belgium, Germany, Italy, or the Netherlands, there are no aircraft in Turkey certified to carry nuclear weapons. And the U.S. only rotates combat aircraft through Incirlik, so there are no U.S. aircraft certified to carry nuclear weapons there either. In other words, Incirlik is a glorified storage depot.

I humbly submit that we could find a more stable location to serve as such a depot.

There’s nothing stopping the United States from immediately removing the weapons from Turkey, just as it pulled them out of Greece in 2001 once it was clear the weapons there were not safely protected. Those weapons could come back to the United States.

Some analysts argue this is not the time to reduce the number of U.S. nuclear weapons deployed to NATO member states, not with the recent downturn in relations with Russia. Fine; if they are so important, then they could go to another NATO member state. The United States has built plenty of nuclear weapons storage vaults in nearby European countries.

Who should get the honor? Scratch Belgium and the Netherlands off the list, even if you like the chocolate. The local security at those bases is crap, with activists repeatedly having breachedsecurityat them. Incirlik and Aviano Air Base in Italy, by contrast, are U.S.-operated air bases with U.S. forces providing security for the nuclear weapons stored there. They recently got new security perimeters, paid for by NATO states including the United States. Aviano could potentially take some of Incirlik’s nuclear weapons, but it has only a moderate number of available vaults.

That leaves U.S.-operated air bases in the United Kingdom (Lakenheath) and Germany (Ramstein). Though these locations are not without drawbacks. Neither appears to currently host nuclear weapons and would require security upgrades. The Germans are increasingly skeptical of American nuclear strategy. And my British friends keep wittily saying they aren’t sure that the United Kingdom counts as a politically stable country anymore. But, obviously, either country would seem to be a better choice for the nuclear weapons currently sitting in Turkey. During the coup, there were reports that Erdogan sought asylum in Germany but was rejected. Maybe Chancellor Angela Merkel would consider asylum for the bombs, instead.

There is, of course, another reason that Incirlik is a depot for U.S. nuclear weapons. Even if there are no planes to deliver the bombs, some U.S. officials felt that having nuclear weapons deployed outside of Europe and on Iran’s doorstep helps deter Tehran from using any nuclear weapon it might acquire, thus reassuring America’s allies and partners in the Middle East.

In theory, the Iran deal (formally the Joint Comprehensive Plan of Action) manages the problem of an Iranian bomb. In practice, though, Washington clearly feels it needs to reassure allies and partnerswho are more frightened by the fact that it made a diplomatic agreement with Tehran than they were by Iran’s unconstrained nuclear program. While I find that reasoning bizarre, I accept that withdrawing nuclear weapons to Germany or the U.K. might unnerve some partners in the Middle East. But, after the events of the past weekend, leaving them in place seems positively terrifying.

end

GLOBAL ISSUES

Now we have the first arrest in the USA:  the global head of FX trading trading fro HSBC: Mark Johnson.  You can bet that gold and silver rigging is part of the rigging!

(courtesy zerohedge)

HSBC Global Head Of FX Cash Trading Arrested At JFK Airport

A historic event took place moments ago when Mark Johnson, the global head of cash FX at HSBC was arrested at JFK airport for his role in a “conspiracy to rig currency benchmarks”, and specifically for frontrunning customer orders. He is the first person charged by the US in the ongoing FX rigging probe.

As Bloomberg reports, a “senior manager at HSBC Holdings Plc was arrested in New York for his role in a conspiracy to rig currency benchmarks, according to two people familiar with the matter, becoming the first person to be charged in the Justice Department’s three-year investigation into foreign-exchange rigging at global banks.”

From Johnson’s bio:

Johnson is global head of foreign exchange cash trading at HSBC, based in London. Prior to joining HSBC in 2010, he was founding managing partner and chief investment officer at Johnson Stewart Partners. Before that, he was global head of trading at Deutsche Bank.

More details:

Mark Johnson, HSBC’s global head of foreign exchange cash trading in London, was taken into custody at John F. Kennedy International Airport Tuesday and is scheduled to appear before a judge in federal court in Brooklyn Wednesday morning, said the people, who asked not to be named because the case hasn’t been made public. He’s charged with conspiracy to commit wire fraud, the people said.

According to Bloomberg, Johnson’s arrest comes more than a year after five global banks pleaded guilty to charges related to the rigging of currency benchmarks. HSBC, which wasn’t part of those criminal cases, in November 2014 agreed to pay $618 million in penalties to U.S. and British regulators to resolve currency manipulation allegations. HSBC, which still faces investigations by the Justice Department and other authorities for the conduct, has set aside $1.3 billion for possible settlements, according to an August filing.

Rob Sherman, an HSBC spokesman, and Peter Carr, a Justice Department spokesman, declined to comment.

Also on Tuesday, the U.S. Federal Reserve banned former UBS Group AG trader Matthew Gardiner from the banking industry for life for his role rigging currency benchmarks.  Gardiner used electronic chat rooms, with names including The Cartel and The Mafia, to facilitate the rigging of foreign-exchange benchmarks and to disclose confidential customer information to traders at other banks, the Fed said in astatement Tuesday. That matter is separate from the one involving Johnson, the people said.

Recall that DOJ unwillingness to prosecute HSBC was the ultimate catalyst that prompted former AG Eric Holder to admit that some banks are “too big to prosecute.” Perhaps with this arrest things are slowly starting to change.

Now, if frontrunning clients is officially an arrest-worthy offense, we can’t wait for the DOJ to unleash a crackdown on criminal HFT algos whose only purpose in “life” is to do just that.

 

end

 

A must read from egon Von Greyerz on the six major events that will change history!

(courtesy Von Greyerz)

 

Six Major Events That Will Change History

By Egon von Greyerz

Investors globally have never faced risk of the magnitude that the we are now exposed to. But sadly very few are aware of the unprecedented risks the world is facing. For the ones who understand risk and take the right decisions, it will “lead to fortune”. Only very few will choose that route. Instead most investors will continue to live in the hope that current trends will go on forever but sadly these people will end up “in shallows and in miseries”.

Risk is now staring us all right in our face but very few people can actually see it.

Let’s just be clear what some of the events that will change the face of the earth are:

    1. No Sovereign state will ever repay their debt – That is an irrefutable statement and anyone who doesn’t understand that lives in denial.Sovereign debt has increased exponentially in the last couple of decades and governments neither can nor have the intention of ever paying their creditors. They can’t even afford to pay the interest and this is why an ever increasing number of countries have negative interest rates. So not only will they not repay the capital but investors now pay bankrupt nations for the privilege of holding their worthless paper. It is incomprehensible that investors are prepared to hold nearer $100 trillion of debt with no yield or negative yield and no chance of getting their money back. No one worries about the return OF their money and now it seems that investors don’t even worry about getting a return ON their money. This is a shocking state of affairs that eventually will lead to a total collapse of all sovereign debt.
    1. No bank will ever give depositors their money back – I know that very few believe this statement. Because, if bank depositors did, they would not hold around $200 trillion of assets in the financial system plus another $1.5 quadrillion derivatives in the banking system. Bank stocks in Europe, whether it is Deutsche Bank in Germany or bank Monte Paschi in Italy are continuing to crash to new lows. As I stated in a recent article, the share price of most European banks as well as many US banks like Citigroup or Bank of America have collapsed 70-95% since 2006 and they are on their way to ZERO. Consumer borrowing is still growing exponentially. Student loans in the US is now $1.4 trillion up a MERE 3x since 2006. And the delinquency rate is increasing exponentially as most students can’t find a job.
    2. Stock markets will fall 90% or more – I know that most investors will think that this is a sensational statement from someone totally deranged. But let me just remind investors that when the Dow crashed 90% between 1929 and 1932, the economic conditions in the USA and the rest of the world were far superior to the ones we are experiencing currently. Economic conditions are deteriorating fast worldwide but stock markets are continuing to go up to dizzy levels. Investors are putting their faith in funny or printed money. S&P earnings have declined for 5 straight quarters. The Dow is now valued at a dizzy 24x GAAP earnings. And sales revenue, adjusted for share buybacks is down 1/3rd since 2006. Yes, governments worldwide will this year launch the most massive money printing programme in history. But that will be like pushing on a string and will have zero effect on the world economy. The time when the misconceived Keynesian methods of creating prosperity by printing worthless pieces of paper (or electronic money) is now passed. The printed money will only exacerbate the debt problem. And the world will soon learn that you cannot solve a problem by applying the same methods that caused the problem in the first place.
    1. Property markets will collapse – Low interest rates and speculative frenzy have created bubble property markets worldwide. We had the first warning signal in 2006 but through massive money printing and guarantees to the extent of US$25 trillion, governments and central banks managed to postpone the inevitable. Since then global debt has increased by 2/3rd and interest rates have declined from around 6% to zero or negative. In Switzerland a 15-year mortgage now costs 1.25% and in Sweden you don’t need to ever amortise your mortgage. And in the UK, 6 major commercial property funds have now frozen redemptions. That represents 50% of the commercial property funds and is a grave sign that should be taken as seriously as the 2006 subprime crisis. China with its $34 trillion debt and many ghost towns and empty properties will also have massive problems.
    2. Currencies will go to ZERO – The deficit spending of most countries and ensuing debt explosion will put continues pressure on all currencies. Most currencies have lost 97-99% in real terms in the last 100 years. The last 2-3% fall will probably take place in the next 4-7 years. But the problem is that this last fall is 100% from now. This means that all currencies will go to their intrinsic value of ZERO in the next few years. So any cash savings will be worthless.
  1. Geopolitical risk, terrorism and social unrest – These risks are higher than ever in history whether it is in the Middle East, between the US and Russia, China etc or civil unrest in Europe, the US, China or the rest of the world. Social unrest, terrorism and civil war will also become part of normal life in many countries. What has happened in Paris, Brussels, Nice, Orlando, Baton Rouge and Turkey is just the beginning of a trend that will spread across the globe. It will lead to a much less safe world for many years. It will also reduce tourism and commercial flights dramatically. In a less secure environment, people will choose to stay at home.

The above sounds to many like a prophecy of doom and gloom. For investors who want the good news, they can just listen to any TV channel or read the newspapers. There are very few places where risk is spelt out properly. I obviously hope that my forecasts above are totally wrong. But I fear that I will be right. And therefore I believe that it is essential for investors as well as people who don’t have much to protect to take whatever measures they can.

Gold and silver will not solve all the potential problems or catastrophes that the world will encounter in the next few years. But it is probably the best insurance that investors can hold to protect capital against the potentially biggest destruction of wealth that the world has ever encountered. Naturally it must be physical gold and silver and it must be held outside of the financial system.

Egon von Greyerz

Founder and Managing Partner
Matterhorn Asset Management AG
matterhorn.gold
goldswitzerland.com

OIL ISSUES

More unexpected gasoline inventory build on top of huge production rise as well as buildup in Cushing causes havoc in WTI

(courtesy zero hedge)

Unexpected Gasoline Inventory Build, Production Rise Spark Crude Chaos

Following last week’s surprise Distillates build (and bounce in production) and API’s overnight surprise Gasoline build, DOE data this morning was mixed confirming the 2.3mm draw in overall crude inventories (9th weekin a row) but surpringly large builds in both Cushing and Gasoline inventories (expectations were for draws). Oil prices were chaotic – running stops high and low – as algos noted crude production also rose (for the 2nd week in a row).

API

  • Crude -2.3mm (-2mm exp)
  • Cushing -84k (-100k exp)
  • Gasoline +805k (-500k exp)
  • Distillates -484k

DOE

  • Crude  -2.3mm (-2mm exp)
  • Cushing +189k (-100k exp)
  • Gasoline  +911k (-500k exp)
  • Distillates -214k

This is the 9th straight week of crude inventory drawdowns…

Gasoline stocks, the biggest wildcard of the summer season are refiners are forced to shut runs, rose 0.9 million to 241 million.

Gasoline stocks are now 25 million higher than at the same time last year, and the Y/Y surplus continues to grow.

Following last week’s bounce (as Alaska came back on line), crude production rose for the 2nd week in a row.

Crude was extending losses early on USD strength – AUG16 dropping below $44 for the first time in 2 months – but was panic bid into the DOE data… then went into full stop-running panic-mode (just as it did after API) following the print…

“The overall sentiment is going more hand-in-hand with the eurodollar move at the moment,”said Gerrit Zambo, trader at BayernLB

Charts: Bloomberg, Reuters

end

Your early morning currency/gold and silver pricing/Asian and European bourse movements/ and interest rate settings/WEDNESDAY morning 7:00 am

Euro/USA   1.1012 DOWN .0009 (STILL  REACTING TO BREXIT/

USA/JAPAN YEN 106.54  UP 0.435(Abe’s new negative interest rate (NIRP), a total DISASTER/SIGNALS U TURN WITH INCREASED NEGATIVITY IN NIRP/JAPAN OUT OF WEAPONS TO FIGHT ECONOMIC DISASTER/NOW WILL INITIATE HELICOPTER MONEY

GBP/USA 1.3167 UP .0064(MORE STIMULUS PLANNED)

USA/CAN 1.3054 UP .0030

Early THIS WEDNESDAY morning in Europe, the Euro FELL by 9 basis points, trading now JUST above the important 1.08 level RISING to 1.1012; Europe is still reacting to Gr Britain BREXIT,deflation, announcements of massive stimulation (QE), a proxy middle east war, and the ramifications of a default at the Austrian Hypo bank, an imminent default of Greece, Glencore, Nysmark and the Ukraine, along with rising peripheral bond yield further stimulation as the EU is moving more into NIRP, and NOW THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE / Last night the Shanghai composite  CLOSED DOWN 8.69 POINTS OR 0.29%   / Hang Sang CLOSED UP 209.28 POINTS OR .97% /AUSTRALIA IS HIGHER BY .58%/ EUROPEAN BOURSES ARE ALL IN THE GREEN   as they start their morning

We are seeing that the 3 major global carry trades are being unwound. The BIGGY is the first one;

1. the total dollar global short is 9 trillion USA and as such we are now witnessing a sea of red blood on the streets as derivatives blow up with the massive rise in the rise in the dollar against all paper currencies and especially with the fall of the yuan carry trade. The emerging market which house close to 50% of the 9 trillion dollar short is feeling the massive pain as their debt is quite unmanageable.

2, the Nikkei average vs gold carry trade ( NIKKEI blowing up and the yen carry trade HAS BLOWN up/and now NIRP)

3. Short Swiss franc/long assets blew up ( Eastern European housing/Nikkei etc.

These massive carry trades are terribly offside as they are being unwound. It is causing global deflation ( we are at debt saturation already) as the world reacts to lack of demand and a scarcity of debt collateral. Bourses around the globe are reacting in kind to these events as well as the potential for a GREXIT>

The NIKKEI: this WEDNESDAY morning: closed DOWN 41.42 OR 0.25% 

Trading from Europe and Asia:
1. Europe stocks ALL IN THE GREEN AS THEY START THE DAY

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 209.28 OR 0.97%  ,Shanghai CLOSED DOWN 8.69 OR 0.29%   / Australia BOURSE IN THE GREEN: /Nikkei (Japan) CLOSED DOWN 41.42 OR 0.25%/India’s Sensex IN THE GREEN  

Gold very early morning trading: $1323.00

silver:$19.69 

Early WEDNESDAY morning USA 10 year bond yield: 1.572% !!! UP 2 in basis points from TUESDAY night in basis points and it is trading WELL BELOW resistance at 2.27-2.32%. The 30 yr bond yield RISES to 2.287 UP 1 in basis points from TUESDAY night. (SPREAD GOES AGAINST THE BANKS)

USA dollar index early WEDNESDAY morning: 97.09 UP 4 CENTS from TUESDAY’s close.

This ends early morning numbers WEDNESDAY MORNING

END

 

And now your closing WEDNESDAY NUMBERS

Portuguese 10 year bond yield:  3.07% DOWN 2 in basis points from TUESDAY  (does not buy the rally)

JAPANESE BOND YIELD: -0.237% DOWN 2  in   basis points from TUESDAY

SPANISH 10 YR BOND YIELD: 1.16%  DOWN 3 IN basis points from TUESDAY( this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 1.24 par IN basis points from TUESDAY (again totally nuts/)

the Italian 10 yr bond yield is trading 8 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: -.011% UP  2 IN  BASIS POINTS ON THE DAY

END

IMPORTANT CURRENCY CLOSES FOR TUESDAY

Closing currency crosses for WEDNESDAY night/USA DOLLAR INDEX/USA 10 YR BOND YIELD/3:30 PM

Euro/USA 1.1007 DOWN .0006 (Euro =DOWN 6 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 106.82 UP 0.713(Yen DOWN 71 basis points/HELICOPTER MONEY )

Great Britain/USA 1.3152 UP 0.0049 ( Pound UP 49 basis points/BREXIT DECISION AFFIRMATIVE/QE TO START AGAIN/UK DOWNGRADED/NEW PRIME MINISTER T. MAY/

USA/Canada 1.3056-UP 0.0031 (Canadian dollar DOWN 31 basis points AS OIL FELL (WTI AT $44.85). Canada keeps rate at 0.5% and does not cut!

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

This afternoon, the Euro was DOWN by 6 basis points to trade at 1.1007

The Yen ROSE to 106.82 for a LOSS of 71 basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY TO COMMENCE

The POUND was UP 49 basis points, trading at 1.3056 AS PRIME MINISTER THERESA MAY TAKES OFFICE/CONCERNS ON BREXIT

The Canadian dollar FELL by 31 basis points to 1.3056, WITH WTI OIL AT:  $44.85

CANADIAN RATES WERE NOT CUT

The USA/Yuan closed at 6.6760

the 10 yr Japanese bond yield closed at -.237% DOWN 2  IN BASIS  points in yield/

Your closing 10 yr USA bond yield: UP 2 IN basis points from TUESDAY at 1.576% //trading well below the resistance level of 2.27-2.32%)

USA 30 yr bond yield: 2.294 UP 2  in basis points on the day 

BANKS NEED THE LONGER BOND HIGHER IN YIELD: INSTEAD THE SPREAD LESSENS.

Your closing USA dollar index, 97.17 UP 12 CENTS  ON THE DAY/4 PM 

Your closing bourses for Europe and the Dow along with the USA dollar index closing and interest rates for WEDNESDAY

London:  CLOSED UP 31.62 OR 0.47%
German Dax :CLOSED UP  160.71 OR  1.61%
Paris Cac  CLOSED UP 49.63  OR 1.15%
Spain IBEX CLOSED UP 78.00 OR 0.92%
Italian MIB: CLOSED UP 90.65 OR 0.54%

The Dow was UP 36.02  points or 0.19%

NASDAQ  up 6.78 points or 0.13%
WTI Oil price; 44.85 at 4:30 pm;

Brent Oil: 47.03

USA DOLLAR VS RUSSIAN ROUBLE CROSS:  63.79 (ROUBLE DOWN  60/100 ROUBLES PER DOLLAR FROM TUESDAY) 

TODAY THE GERMAN YIELD FALLS TO -.011%  FOR THE 10 YR BOND

END

This ends the stock indices, oil price, currency crosses and interest rate closes for today

Closing Price for Oil, 5 pm/and 10 year USA interest rate:

WTI CRUDE OIL PRICE 5 PM:44.85

BRENT: 47.12

USA 10 YR BOND YIELD: 1.578% 

USA DOLLAR INDEX: 97.09 up 4 cents

The British pound at 5 pm: Great Britain Pound/USA: 1.32146 up .0113 or 113 basis pts.

German 10 yr bond yield at 5 pm: -.011%

END

And now your more important USA stories which will influence the price of gold/silver

Trading Today in Graph form;  VERY IMPORTANT FOR YOU TO VIEW ALL THE CHARTS TODAY

Stocks Went Up…Again

Learning?

 

Dow and S&P surged off overnight weakness back to record highs…

 

Trannies dropped into the red for the week though as Nasdaq surged…

 

9th straight day up for The Dow… the longest streak since March 2013…

 

“Shorts” dared to short stocks yesterday… and were monkey-hammered today…

 

VIX was crushed to 2-year lows… VIX was jammed after the plunge in stocks to get momentum going again BUT note the blue and red shaded regions where the correlation regime for VIX and stocks has flipped…

 

VIX term structure nears record steeps…

 

As all of a sudden, oil matters… #BlackGoldMatters

 

Gold remains the winner post-Brexit… as stocks catch up to bonds…

 

Treasury yields rose on the day, erasing all bond gains post-coup…

 

Despite the USD Index ending the day practically unch, FX markets were chaotic…

 

With USDJPY retracing all the Brexit losses… the last 8 days have seen the biggest plunge in JPY since The BoJ unleashed QQE2 in Nov 2014…

 

And Cable spiking on no slowdown suggesting no rate cut coming soon…

 

PMs were hit hard today and slammed into the close. Copper faded but Crude soared magically…

 

Gold and Silver are fading but remain way ahead post-Brexit…

 

And finally this is what happened to crude today…

 

Charts: Bloomberg

 

end

 

An excellent Bellwether :  trucking in the uSA

(courtesy Mish Shedlock/Mishtalk)

Another Bad Month For Truck Shipping

Submitted by Michael Shedlock via MishTalk.com,

Truck shipments were up in June from May. So were expenditures.

That sounds pretty good, but it really isn’t. Shipments are normally up in June and the Cass Freight Index report from which I get numbers is not seasonally adjusted.

The best way to compare June is to prior years, and that picture isn’t pretty.

Cass Freight Index

Shipments

Expenditures

Truck shipments and expenditures are below the June level of 2015, 2014, and 2013.

Cass notes

“The June freight shipments index climbed 1.7 percent. This was 4.3 percent below last year and 7.6 percent lower than June 2014. Stores are already stocking school supplies, which accounts for some of the rise. … June’s shipments are in step with patterns that have been observed in the past few years, but are still well below the volume in the last two years.July usually sees a dip in the number of freight shipments, but the first part of July seems to be fairly robust.”

 

“Total freight expenditures jumped 3.9 percent in June—the second largest increase this year. Most of this increase can be attributed to the growth in shipments. June 2016 is still 8.8 percent below June 2015.”

 end Well that about does it for tonight I will see you tomorrow. I will probably not do my commentary on Friday, but I will switch it to Saturday. h.

July 19/Silver comex records its highest ever open interest and yet silver remains 29 dollars below its all time high!/Gold rises and remains robust despite high USA dollar/silver falls slightly/China Vice Chairman tells his troops to prepare for war...

Tue, 07/19/2016 - 18:50

Gold:1331.50 UP $3.10

Silver 19.98  DOWN 7 cents

 

In the access market 5:15 pm

Gold: 1331.50

Silver: 19.92

.

 

For the July gold contract month,  we had a small 10 notices served upon for 1,000 ounces. The total number of notices filed so far for delivery:  5060 for 506,000 oz or 15.738 tonnes

In silver we had 239 notices served upon for 1,195,000 oz.  The total number of notices filed so far this month for delivery:  2068 for 10,340,000 oz

 

I wrote this yesterday and it certainly holds for today:

“It sure looks to me like the bankers are trapped in silver.  The OI continues to either stay constant or rise. ”

Silver today at the comex recorded an all time record for open interest and yet the price is 29 dollars cheaper. It defies commodity law!

Let us have a look at the data for today

.

Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 307.70 tonnes for a gain of 5  tonnes over that period

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

In silver, the total open interest ROSE BY 1597 contracts UP to 219,101, AND A NEW ALL TIME RECORD. THE OI ROSE IN CONTRAST TO THE  PRICE OF SILVER WHICH FELL BY 5 CENTS IN YESTERDAY’S TRADING.In ounces, the OI is still represented by just over 1 BILLION oz i.e. 1.095 BILLION TO BE EXACT or 157% of annual global silver production (ex Russia &ex China).

In silver we had 239 notices served upon for 1,195,000 oz.

In gold, the total comex gold ROSE BY 1,662 contracts as gold rose in price YESTERDAY to the tune of $0.10. The total gold OI stands at 614,667 contracts.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

With respect to our two criminal funds, the GLD and the SLV:

GLD

we had no changes in gold inventory./

 

Total gold inventory rest tonight at: 965.22 tonnes

SLV

we had no changes into the SILVER INVENTORY TO THE SLV

Inventory rests at 348.580 million oz.

First, here is an outline of what will be discussed tonight:

1. Today, we had the open interest in silver ROSE by 1597 contracts UP to 219,101 as the price of silver FELL BY 5 cents with YESTERDAY’S trading. The gold open interest ROSE by 1662 contracts up to 614,667 as  the price of gold ROSE by $0.10  YESTERDAY.

(report Harvey).

 

2 a) Gold/silver trading overnight Europe, Goldcore

(Mark OByrne/zerohedge

3. ASIAN AFFAIRS

 i)Late  MONDAY night/TUESDAY morning: Shanghai closed DOWN 6.97 POINTS OR 0.23%/ /Hang Sang closed DOWN 161.89 OR 0.57%. The Nikkei closed UP 225.46 OR 1.37%/  Australia’s all ordinaires  CLOSED DOWN 0.25% Chinese yuan (ONSHORE) closed UP at 6.6919 ON A LITTLE REVALUATION /Oil FELL to 45.51 dollars per barrel for WTI and 47.26 for Brent. Stocks in Europe ALL IN THE RED. Offshore yuan trades  6.7189 yuan to the dollar vs 6.6919 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE WIDENS CONSIDERABLY AS  MORE USA DOLLARS LEAVES THEIR SHORES. 

REPORT ON JAPAN  SOUTH KOREA AND CHINA a) REPORT ON JAPAN

Today’s stock market rises is mainly due to the the higher: USA/Yen cross.  This carry trade is due to investors borrowing yen knowing it will fail and buying assets like the S and p

( zero hedge)

b) REPORT ON CHINA

Chinese Vice Chairman tells its troops to get ready for combat.This sounds ominous

(courtesy xinhua/Bloomberg/zero hedge)

4 EUROPEAN AFFAIRS

i)European confidence crashes to 4 yr lows:

( zero hedge)

ii)S and P lowers the boom on Deutsche bank as they cut their outlook to negative due top challenging operating conditions in the banking environment.  These guys are the largest derivative player in the world:

( zero hedge)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

Turkey:

i)Turkey is like a bank:  Too big to fail!!

( zero hedge)

 

ii)Tens of thousands more have been purged as Turkey “concentrates” on extraditing Gulen. Interesting enough, Turkey now blames the downing of the Russian planes on Gulen:

( zero hedge)

iii)This is far more worrisome, as the Turkish lira plummets to below levels Friday night, when it was first announced of a coup. The markets are stating that Erdogan went way too far and they are punishing the country:

( zero hedge)

iv)My goodness!!  Erdogan just fired all university deans and then sacked 21,000 private school teachers.  Turkey is going back into the early middle ages as he wants conditions similar to a caliphate and he is that leader:

( zero hedge)

6.GLOBAL ISSUES

none today

7.OIL ISSUES

Oil slides into the 44 dollar column after unexpected gasoline buildup

( zero hedge)

 

8.EMERGING MARKETS VENEZUELA 

Venezuela opens up its border with Columbia and watch the result as citizens flock over to get the necessary items to survive:

(courtesy zero hedge)

9.PHYSICAL STORIES

i)It now seems that Britons are now warming to gold as a safe haven because of the BREXIT vote:

( Reuters/GATA)

ii)A sensational piece and I agree 100% of what Butler asserts:

( Ted Butler)

 

iii)I would not put much emphasis in data from the world gold council except for mine supply only;

( Douglas McIntrye/247WallSt.com

10.USA STORIES WHICH MAY INFLUENCE THE PRICE OF GOLD/SILVER

i)The real data in housing suggests that housing starts dropped .2% year over year

( zero hedge)

ii)The real state of the uSA economy:

( David Stockman/ContraCorner) Let us head over to the comex: The total gold comex open interest  ROSE TO AN OI level of 614,667 for a  GAIN of 1662 contracts AS  THE PRICE OF GOLD ROSE BY $0.10 with respect to YESTERDAY’S TRADING We are now in the non active month of July. Somebody big is continually standing for the gold metal as July is generally a poor delivery month. The open interest for the front July contract stands at 69 for a LOSS of 7 contracts. We had 68 notices filed on yesterday, so we gained 61 contracts or an additional 6100 gold ounces that will stand for delivery in this non active month of July. We  are again witnessing the same scenario as in May and June whereby the front delivery month increases in OI standing for metal or a slight contraction.  The next big active contract month is August and here the OI FELL by 10,597 contracts down to 306,757  as this month continues its wind down until first day notice for the August contract, Friday,July 29/2016: less than  2 weeks away.  The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was fair at 175,309. The confirmed volume  yesterday (which includes the volume during regular business hours + access market sales the previous day was FAIR at 194,574 contracts.The comex is not in backwardation. Today, we had 10 notices filed for 1000 oz in gold And now for the wild silver comex results. Total silver OI ROSE by 1597 contracts from  218504  up to 219,101.  We are now at an all time record high for silver open interest set today (219,101). The front active delivery month is July and here the OI fell BY 118 contracts down to 667. We had 49 notices served on YESTERDAY so we lost 69 contracts or 345,000 additional silver ounces that will not stand for delivery.The next non active month of August saw it’s OI fall by 23 contracts down to 467. The next big active month is September and here the OI ROSE by 1179 contracts UP to 158,895. The volume on the comex today (just comex) came in at 45,752 which is very good. The confirmed volume yesterday (comex + globex) was EXCELLENT at 55,267. Silver is not in backwardation. London is in backwardation for several months. We had 239 notices filed for 1,195,000 oz. in silver JULY contract month :INITIAL standings for JULY July 19. Gold Ounces Withdrawals from Dealers Inventory in oz   nil OZ Withdrawals from Customer Inventory in oz  nil NIL HSBC Deposits to the Dealer Inventory in oz NIL Deposits to the Customer Inventory, in oz   64,300.000 oz SCOTIA 2000 KILOBARS No of oz served (contracts) today 10 notices  1,000 oz No of oz to be served (notices) 59 contracts 5900 oz Total monthly oz gold served (contracts) so far this month 5060 contracts (506,00o oz) (15.738 tonnes) Total accumulative withdrawals  of gold from the Dealers inventory this month   NIL Total accumulative withdrawal of gold from the Customer inventory this month   561,853.6 OZ Today we had 0 dealer DEPOSIT total dealer deposit: NIL   0z Today we had 0 dealer withdrawals: total dealer withdrawals:  nil oz ANOTHER ABSURD TRANSACTIONS: We had 1 customer deposit: ii) Into Scotia; 64,300.000 oz ( 2,000 kilobars) Total customer deposit: 64,300.000 Today we had 0 customer withdrawal: Total customer withdrawals NIL   oz Today we had 0  adjustments: Today, 0 notices was issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 10 contracts of which 0 notices was stopped (received) by JPMorgan dealer and 5 notices was stopped (received)  by JPMorgan customer account.  To calculate the initial total number of gold ounces standing for the JULY contract month, we take the total number of notices filed so far for the month (5060) x 100 oz  or 506,000 oz , to which we  add the difference between the open interest for the front month of JULY  (69 CONTRACTS) minus the number of notices served upon today (10) x 100 oz   x 100 oz per contract equals 511,900 oz, the number of ounces standing in this active month.    Thus the INITIAL standings for gold for the JULY. contract month: No of notices served so far (5060) x 100 oz  or ounces + {OI for the front month (69) minus the number of  notices served upon today (10) x 100 oz which equals 511,900 oz standing in this non   active delivery month of JULY  (15.922 tonnes). We  gained 6100 gold ounces that will stand for metal in this non active month of July. Since the comex allows GLD shares to be used for settling, it may take quite a while for the physical gold to enter the comex vaults.  So far I have seen little evidence of any settling of contracts but I will continue to monitor it for you.    We now have partial evidence of gold settling for last months deliveries We now have  +  6.889 TONNES FOR MAY + 49.09 TONNES FOR JUNE +  15.732 TONNES FOR JULY + 12.3917 tonnes (April) +2.2311 tonnes (March) + 7.99 (total Feb)- .940 (probable delivery on March 1) tonnes -.0434 tonnes (March 11,12,17,18) + March 31: 1.2470 and then  April 1,2: – .0006 tonnes  and last week April 16.3203 and April 22 .(0009 tonnes) + april 29  .205 tonnes + May 5:  3.799 and May 6: 1.607 tonnes –MAY 12  .0003- May 18: 1.5635 tonnes-May 19/   2.535 tonnes-May 27 .0185 – .024 TONNES MAY 31 -jUNE 4: .5044 ; june 10 -.0008 / June 22:0.48 tonnes /June 23: 0489 tonnes, June 24..018; june 29 .036 tonnes; JUNE 30 2.49 /july 1 17.78 tonnes = 45.774 tonnes still standing against 47.653 tonnes available.  Total dealer inventor 1,532,061.922 tonnes or 47.653 tonnes Total gold inventory (dealer and customer) =9,892,580.993 or 307.700 tonnes    Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 307.70 tonnes for a  gain of 5  tonnes over that period.    THE GOLD COMEX IS AN ABSOLUTE FRAUD. THE USE OF KILOBARS AND EXACT WEIGHTS MAKES THE DATA TOTALLY ABSURD AND FRAUDULENT!!      end GOOD ACTIVITY AGAIN INSIDE THE SILVER COMEX And now for silver   JULY INITIAL standings  July 19.2016 Silver Ounces Withdrawals from Dealers Inventory NIL Withdrawals from Customer Inventory  20,119.47 OZ (HSBC) Deposits to the Dealer Inventory 595,200.05 oz BRINKS Deposits to the Customer Inventory  594,021.058 OZ BRINKS No of oz served today (contracts) 239 CONTRACTS  (1,195,000 OZ) No of oz to be served (notices) 428 contracts 2,140,000 oz) Total monthly oz silver served (contracts) 2068 contracts (10,340,000 oz) Total accumulative withdrawal of silver from the Dealers inventory this month  NIL oz Total accumulative withdrawal  of silver from the Customer inventory this month  5,055,509.2 oz today we had 1 deposit into the dealer account i) Into Brinks:  595,200.05 oz total dealer deposit :595,200.05 oz we had 0 dealer withdrawal: : total dealer withdrawals:  NIL oz we had 1 customer withdrawals: i)Out of HSBC: 20,119.47 oz Total customer withdrawals: 20,119.47 oz We had 1 customer deposit: i)Into brinks: 594,021.958 oz : total customer withdrawals:594,021.958. oz        we had 2 adjustments i) Out of CNT:  595,066.440 oz was adjusted out of the customer and this landed into the dealer account of CNT ii out of Delaware:  10,537.245 oz was adjusted out of the dealer and this landed into the customer account of Delaware The total number of notices filed today for the JULY contract month is represented by 239 contracts for 1,195,000  oz. To calculate the number of silver ounces that will stand for delivery in JULY., we take the total number of notices filed for the month so far at (2068) x 5,000 oz  = 10,340,000 oz to which we add the difference between the open interest for the front month of JULY (667) and the number of notices served upon today (239) x 5000 oz equals the number of ounces standing    Thus the initial standings for silver for the JULY contract month:  2068(notices served so far)x 5000 oz +(667 OI for front month of JULY ) -number of notices served upon today (239)x 5000 oz  equals  12,480,000 oz  of silver standing for the JULY contract month. We lost 69 contracts or 345,000 additional oz that will not stand for delivery in this active month of July.   Total dealer silver:  28.360 million (close to record low inventory   Total number of dealer and customer silver:   153.877 million oz (close to a record low) The total open interest on silver is NOW AT its all time high with the record of 219,101 being set July 19.2016.  The registered silver (dealer silver) is NOW NEAR  multi year lows as silver is being drawn out at both dealer and customer levels and heading to China and other destinations. The shear movement of silver into and out of the vaults signify that something is going on in silver. END And now the Gold inventory at the GLD July 19/no change in gold inventory at the GLD/Inventory rests at 965.22 tonnes July 18./ a good sized deposit of 2.37 tonnes of gld into GLD/this is a paper gold entry/inventory rests at 965.22 tonnese July 15./no change in gold inventory at the GLD/Inventory rests at 962.85 tonnes July 14/a good sized withdrawal of 2.37 tonnes from the GLD/this would be a “paper withdrawal”/inventory rests tonight at 962.85 tonnes.. July 13/ we had a huge paper withdrawal of 15.98 tonnes of gold from the GLD/inventory rests at 965.22 tonnes. July 12/we had no changes in gold inventory at the GLD/Inventory rests at 981.20 tonnes July 11/no changes in gold inventory at the GLS/Inventory rests at 981.20 tonnes JULY 8/ A  good sized deposit of 2.91 tonnes into the GLD/Inventory rests at 981.20 July 7/a good sized withdrawal of 4.15 tonnes from the GLD/Inventory rests at 978.29 tonnes (this was nothing but a paper entry/no physical moved) JULY 6/WHAT A FRAUD!! A MASSIVE 28.53 TONNES OF PAPER GOLD ADDED INTO THE GLD July 5/no change in inventory/rests tonight at 982.44 July 1/a huge change in the gold inventory/ a deposit of 3.86 tonnes/rests tonight at 953.91 tonnes JUNE 30/no change in gold inventory /inventory rests tonight at 950.05 tonnes June 29/ a good sized deposit of 2.67 tonnes/inventory rests at 950.05 tonnes June 28/ a huge deposit of 13.067 tonnes into inventory/new inventory rests so far at 947.38 tonnes.  This was a paper addition June 27/a huge deposit of 18.415 tonnes into the GLD inventory/the new inventory rests at 934.313 tonnes.  The addition was a paper addition and not physical xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx July 19 / Inventory rests tonight at 965.22 tonnes

end

Now the SLV Inventory July 19/no change in silver inventory at the SLV/Inventory rests at 348.580 million oz July 18/no change in silver inventory at he SLV/inventory restss at 348.580 million oz July 15/ no change in  silver inventory at the SLV/Inventory rests at 348.580 million oz July 14/no changes in silver inventory at the SLV/Inventory rests at 348.580 million oz/ July 13./ a huge addition of 5.187 million oz into silver inventory at the SLV/ this is a paper addition as inventory rests at 348.580 million oz July 12/ a huge addition of 1.94 million oz into silver inventory at the SLV/a “paper” addition/inventory rests at 343.393 million oz July 11/no changes in silver inventory/rests tonight at 341.453 million oz JULY 8/no change in silver inventory/rests tonight at 341.453 million oz July 7./no change in silver inventory/inventory rests at 341.453 million oz JULY 6/AND ANOTHER FRAUD!! A MASSIVE 7.909 MILLION OZ ADDED INTO THE SLV/INVENTORY RESTS AT 341.453 MILLION OZ july 5/no change in silver inventory/inventory rests at 333.554 milllion oz july 1/no change in silver inventory/inventory rests at 333.544 million oz JUNE 30/no changes in silver inventory/inventory rests at 333.544 million oz June 29/ a small deposit of 760,000 oz/Inventory rests tonight at 333.544 million oz/ June 28/no change in silver inventory/rests tonight at 332.784 million oz June 27/ a small deposit of 570,000 oz in the SLV inventory/Inventory rests at 332.784 million oz . July 19.2016: Inventory 348.580 million oz end NPV for Sprott and Central Fund of Canada 1. Central Fund of Canada: traded at Negative 4.4 percent to NAV usa funds and Negative 4.4% to NAV for Cdn funds!!!!  (the discount is starting to disappear) Percentage of fund in gold 58.8% Percentage of fund in silver:40.0% cash .+1.2%( July 19/2016).  2. Sprott silver fund (PSLV): Premium falls  to +0.11%!!!! NAV (July19/2016)  3. Sprott gold fund (PHYS): premium to NAV  falls TO  0.46% to NAV  ( July 19/2016) Note: Sprott silver trust back  into POSITIVE territory at +.11% /Sprott physical gold trust is back into positive territory at +0.46%/Central fund of Canada’s is still in jail.      

end

 

And now your overnight trading in gold,TUESDAY MORNING and also physical stories that may interest you: Trading in gold and silver overnight in Asia and Europe Mark O’Byrne/David Russell (Goldcore) Gold Holds Near Two-Week Low as Risk Appetite Rises on U.S. Data by GoldCore Jul 19, 2016 7:24 AM 5 SHARES

Gold has consolidated near the low of the past two weeks following on from its Brexit rally.

Having increased by 25% since the beginning of the year the pause in its’ rally comes as Barnabas Gan, an economist at Singapore-based Oversea-Chinese Banking Corp observes that “Market risk-on sentiment seems to have gone back” on the table, as reported by Bloomberg today.

Recent positive economic data out of the U.S. including positive retails sales, consumer prices and employment statistics have lured investors back in to the equity markets and trimmed the rally in gold. However, this recent positive economic news needs to be viewed against the backdrop of it being an election year in the U.S. and the desire of the White House to create a connection between positive economic sentiment and the democratic administration.

You can read the full article here 

 

Gold and Silver Bullion – News and Prices

Gold holds on to overnight losses; central bank policies in focus (Reuters)

Gold Daily and Silver Weekly Charts – Same Old (24hgold)

Investors Pull Most Money Out of SPDR Gold in Eight Months (Bloomberg)

Gold holds on to overnight losses as risk-on mood drags (Reuters)

SP 500 and NDX Futures Daily Charts – The Dog Days of Summer (24hgold)

A warning from Turkey for emerging-market investors (Moneyweek)

The Greatest Lie Ever Told (Silverseek)

No U.S. rate hike until 2018 — and it’s the consumer to blame, Morgan Stanley says (Marketwatch)

Gold Prices (LBMA AM)

19 July: USD 1,332.20, EUR 1,203.376 & GBP 1,009.042 per ounce
18 July: USD 1,326.15, EUR 1,200.298 & GBP 1,000.050 per ounce
15 July: USD 1,330.50, EUR 1,194.789 & GBP 994.150 per ounce
14 July: USD 1,325.705, EUR 1,192.99 & GBP 1,001.96 per ounce
13 July: USD 1,340.25, EUR 1,211.45 & GBP 1,009.74 per ounce
12 July: USD 1,352.85, EUR 1,217.84 & GBP 1,029.11 per ounce
11 July: USD 1,358.25, EUR 1,231.66 & GBP 1,059.95 per ounce

Silver Prices (LBMA)

19 July: USD 19.99, EUR 18.07 & GBP 15.18 per ounce
18 July: USD 19.72, EUR 17.83 & GBP 14.89 per ounce
15 July: USD 20.14, EUR 18.08 & GBP 15.06 per ounce
14 July: USD 20.25, EUR 18.23 & GBP 15.15 per ounce
13 July: USD 20.29, EUR 18.31 & GBP 15.25 per ounce
12 July: USD 20.35, EUR 18.35 & GBP 15.47 per ounce
11 July: USD 20.47, EUR 18.53 & GBP 15.78 per ounce

Recent Market Updates

– Gold, Trump and Rates: Bank That Foresaw Rally Flags $1,500
– Gold Lower After Central Bank’s Surprise Move
– “We Are On the Cusp of an Explosion in the Silver Price” – John Embry

– Stocks Rally – Is Brexit Systemic Risks Contained?
– Britain has a new prime minister – here’s what that means for you
– Metals Caught Between Global Gloom, U.S. Job Gains as Gold Slips
– Central Bank Resumes Monthly Gold Buying in Bid to Diversify Reserves
– Property Fund Turmoil in the UK has Eerie Echoes of Bear Stearns
– “In Gold We Trust” Annual Report – New Bull Market “Emerging”
– 3 Charts Show “How Precious Brexit Is” for Gold and Silver Bullion
– Gold, Silver Best Performing Assets In H1, 2016 – Up 26% & 38%

end

 

It now seems that Britons are now warming to gold as a safe haven because of the BREXIT vote:

(courtesy Reuters/GATA)

After Brexit, ordinary Britons warm to gold as safe haven

Submitted by cpowell on Mon, 2016-07-18 19:25. Section:

By Clara Denna
Reuters
Monday, July 18, 2016

LONDON — When Britain voted to leave the European Union, the thoughts of Yorkshire teacher Grace Hall immediately turned to her family’s bottom line.

Three days later, as UK stocks and sterling plummeted, she put those thoughts into action and deposited part of her life savings — 25,000 pounds — into gold.

“My husband and I are both worried about bank failures and our cash getting swallowed up,” she said. “I’m also worried about our kids’ jobs and their future.”

Hall was not alone. Dealers are seeing an unprecedented amount of interest in gold, much of it from first-time buyers, to take advantage of its role as a safe haven in times of stress or unexpected “black swan” events like Brexit. …

The surge in gold buying is in contrast with Brexit’s effect on the London property market, considered an ironclad bet for the past 20 years. More than 18 billion pounds of property funds aimed at retail investors was frozen in early July following a tide of redemption requests after the Brexit vote. …

… For the remainder of the report:

http://www.reuters.com/article/us-britain-eu-gold-retail-insight-idUSKCN…

 

END

 

I would not put much emphasis in data from the world gold council except for mine supply only;

(courtesy Douglas McIntrye/247WallSt.com

 

20 Countries That Own 88% of World’s Gold

Just 20 countries control 88% of the world’s gold.

According to the World Gold Council:

Gold demand reached 1,290 tonnes Q1 2016, a 21% increase year-on-year, making it the second largest quarter on record. This increase was driven by huge inflows into exchange traded funds (ETFs) – 364t – fuelled by concerns around the shifting global economic and financial landscape. Higher prices and industrial action in India pushed global demand for jewellery down (-19%), while total bar and coin demand was marginally higher (+1%). Central banks remained strong buyers, purchasing 109t in the quarter. Total supply increased 5% to 1,135t. Hedging by producers (40t) supported an increase of 56t in mine supply, although countered by a marginal decline in recycling.

The key findings from the report for the first quarter of 2016 are as follows:

  • Overall demand for Q1 2016 increased by 21% to 1,290t, up from 1,070t in Q1 2015.
  • Total consumer demand was 736t down 13% compared to 849t in Q1 2015.
  • Global investment demand was 618t, up 122% from 278t in the same period last year.
  • Global jewellery demand fell 19% to 482t versus 597t in the first quarter of 2015.
  • Central bank demand dipped slightly to 109t in Q1 2016, compared to 112t in the same period last year.
  • Demand in the technology sector fell 3% to 81t in Q1 2016.
  • Total supply was up 5% to 1,135t in Q1 2016, from 1,081t in the first quarter of 2015. Mine supply was up 8% to 774t.

Source: courtesy of Karus Chains end

A great piece from ted Butler and I agree 100% of what he asserts:

(courtesy Ted Butler/)

The Greatest Lie Ever Told

Theodore Butler

|

July 18, 2016 – 11:25am

Granted, if you are going to label something as the greatest lie ever, it must involve something important, both in substance and in terms of who told the lie. In this case, the lie involves what’s at the heart of the silver manipulation and happens to be the issue that I consider the key factor for its price. Importantly, the lie came from the federal regulator overseeing the silver market, the CFTC.  The good news is that you will be able to decide for yourself if my assertion is correct, given that the proof is nearly incontrovertible. The best news is that as the lie is more widely recognized, it should have a positive impact on the price of silver.

The key factor in silver is the concentrated short position on the COMEX, which also happens to be the current key factor in gold. Not only am I convinced that the concentrated short position in COMEX silver is the central issue, I am also convinced that wider awareness of its existence will bring about a freeing of the silver price. If the growing numbers of those who’ve discovered the importance of the COT reports and market structure to the price of gold and silver take one additional small step and incorporate the concentration data in their thinking, I believe the impact could be profound.

First, let me describe concentration as it applies to gold and silver and why it is so important and then touch on the history and status of the greatest lie ever. In review, if many different traders held very large short positions in COMEX silver and gold futures contracts, then no problem – that’s the way free markets are structured – with many different buyers and sellers.  And you may not realize this, but quite literally, you wouldn’t be reading this if no short side concentration existed. That’s because I would never have started and continued to write publicly about silver if a short side concentration didn’t exist.

The problem is that there are not many traders short COMEX silver in terms of market structure. Only eight traders hold, effectively, the entire net short position in COMEX silver and those traders are mostly banks.  Further, the concentrated silver short position, represents more in terms of real world production and inventories than the concentrated positions in any other commodity, with the comparisons with other commodities looking impossibly distorted. For instance, the concentrated short positions in corn and crude oil are the equivalent of a few days of world production, with silver’s concentrated short position amounting to more than two hundred days world production. Most remarkable is that so few silver miners are hedging that the entire concentrated short position is speculative on its face.

It’s important to understand that there is a big difference between a large short (or long) position held by many different traders and a large position held by a few traders. It’s impossible for hundreds or thousands of different traders to intentionally conspire to manipulate prices. Crowds may be irrational at times, but that’s far removed from deliberate price manipulation.  Only a few traders conspiring together make manipulation possible and US commodity law recognizes that. That’s why the CFTC monitors and publishes concentration data. Of course, monitoring and publishing are different from preventing manipulation or busting it up when it exists.

The concept of preventing concentration is common in the body of all antitrust and anti-monopoly law and, in fact, is the basis for such law. And while simple in concept, it takes some effort to grasp why the concentrated short position is at the center of the silver manipulation.

In my case, the lightbulb that went off in my head when I first uncovered the COMEX silver manipulation 30 years ago had to do with the size of the total open interest in COMEX silver being so out of whack with all other commodities in terms of world production. It was years later, in the mid-1990’s, that I uncovered that the key feature was not just the size of the open interest, but in how few in number were the traders who were short. That’s the key and because I began to press the CFTC on the specific issue of concentration on the short side of COMEX silver, this is what led to greatest lie in the history of market regulation.

Because the issue of concentration is at the core of market regulation, whenever I wrote to the agency about the matter, particularly if great numbers of readers joined in, the CFTC was, in essence, forced to respond. In fact, not only did the agency respond to my concerns about the short side concentration in COMEX silver on more than one occasion, it also did so in public releases, both in May of 2004 and 2008 in separate 15 page letters. Of course, the CFTC vehemently denied on both occasions that there was any manipulation as a result of a short side concentration in COMEX silver futures.

Far from resolving the matter, the issue of concentration has never been more important than it is today, because the concentrated short position in silver (and gold) has never been larger than it is currently. But let me deal with the greatest lie ever first. In the 2008 public letter, the CFTC lied through its teeth. It took me a year and a half to uncover the lie because there was not sufficient data available to know that at the time.  I try to avoid+ incessant linking to past articles, but this one won’t take very long. (Embedded in the article is the link to the CFTC’s 2008 public letter).

http://www.investmentrarities.com/ted_butler_comentary12-21-09.shtml

Let me summarize what the CFTC wrote and why it was a lie. The subject of the letter was the activity of large short traders in COMEX silver and the agency took great pains to dismiss any and all concerns of a short concentration causing any price manipulation or potential clearing failure. But check the timeline and the facts as we all have come to know them to be. The CFTC’s letter was dated May 13, 2008, nearly two months after Bear Stearns, who we now know was the largest concentrated short in COMEX silver and gold, went under, with its massive concentrated short position passed along to JPMorgan at the urging of banking authorities.

Read the CFTC’s letter and tell me if you see any reference to the largest COMEX silver short needing to be rescued just as silver prices were establishing near 30 year highs just two months prior. Remember, the CFTC was responding to the specific issue of a short concentration and left out completely the fact that the largest concentrated short went under just as silver and gold prices were surging to their highest levels in decades, creating margin calls of roughly $2 billion, which Bear Stearns, obviously, couldn’t meet. Yet, in 16 pages, the agency didn’t see fit to even footnote the matter. I ask you, what other word, aside from lie, would you assign to an attempt to evade the clearest proof of what could and did go wrong with a large concentrated position, than the biggest failure ever by a concentrated short seller and leading clearing (guaranteeing) member?

If anything, my description of the CFTC telling the greatest lie ever in 2008 is understated. That’s because the lie is still being told. For weeks, the concentrated short positions in COMEX silver and gold have risen to new historical extremes, yet the CFTC ignores the obvious price manipulation and dangerous market structure created by concentration. Again, it’s not so much that the short positions in COMEX gold and silver are so high; it is much more that the huge short positions are held by so few traders. A big short (or long) position isn’t necessarily manipulative on its face, but a highly concentrated position contains the necessary elements of manipulation, requiring it to be thoroughly examined.

The CFTC can’t and won’t thoroughly examine this matter because it has painted itself into a corner. After coming out on so many past occasions and forcefully denying even the slightest possibility of a silver manipulation, there is no way for the Commission to turn around and enforce the law now, no matter how extreme the concentration grows. It’s more than being laughed out of existence, such an about face would likely doom the agency to losing its independence and being folded into the SEC. Let’s face it – the continued existence of the silver market manipulation by means of a concentrated short position is a failure of the agency’s prime mission. It’s like the Department of Defense not defending us from foreign invasion.

For this reason, I have no intention of petitioning the agency to change its ways because I know it can’t. Despite that, I am convinced the short concentration remains the key feature to silver and gold and the proper attention to it could break the backs of the concentrated shorts. There is an ocean of world investment money looking for alternatives to zero percent interest rates and it will not take much more than a handful of big investment funds to stumble upon the issue of the short concentration and how little physical silver is available for purchase to end the COMEX scam.

Any objective investigation into the matter, moreover, will confirm that not only is the total net short position in COMEX silver (and gold) held by too few traders, those traders have no real economic reason to be short in the first place. There are no silver mining producers represented by the 8 big shorts and aside from JPMorgan, none of the big shorts hold big quantities of physical silver (unless they are hiding it on the moon, because it isn’t on earth). The big shorts are just banks and other financial firms speculating their butts off – just as Bear Stearns did. Talk about a double whammy – eight big shorts hold the entire net silver short position and not one of them has legitimate economic reason to be short, save for trying to zoom the technical funds. Any big investor learning of these facts would buy all the silver available (which isn’t much to begin with).

Until the physical market overwhelms the COMEX concentrated short scam, the big shorts may continue to prevail, although they have been seriously underwater of late, for the first time ever. Being the key factor in silver and gold, it will be the resolution and eventual dissolution of the concentrated short position that will drive silver prices in the future. Since the more observers that recognize the real nature of concentration the quicker it might get dissolved, I want to do what I can to steer attention to the matter.

Particularly for those already writing about the extreme COT market structure, recognizing the concentrated nature of the short side in silver and gold, as well as its eventual resolution should come easily. After all, there is now near universal coverage of how large the commercial net short positions are in COMEX gold and silver that considering just how concentrated those large positions are should be a snap. We all know that the resolution of the current extreme positioning will affect prices greatly, even if we can’t be sure of the timing and short term outcome of the resolution. By superimposing the concentration data onto the extreme market structure, the true extent of price manipulation and potential disorderly market conditions is amplified greatly. That’s because only the few can engineer a manipulation, not the masses.

For those seeking to determine concentration levels on your own, here’s how to do it. Take any long form futures only COT report and go to the concentration data at the bottom of each commodity.  Take the percentage listed under the net short positions of the 4 and 8 largest traders and multiply the total open interest given on top to the left to get the concentration in numbers of contracts. It changes every week, but for this reporting week in COMEX silver (July 5), the percent held net short by 4 or less traders was 32.4% and the percentage held by the 8 largest traders was 46.4%, which given a total open interest of 211,347 contracts results in the 4 largest shorts holding 68,476 net contracts short and the 8 largest traders holding 98,065 contracts net short. In silver ounces, these short positions come to 342.4 million oz and 490.3 million oz respectively.

http://www.cftc.gov/files/dea/cotarchives/2016/futures/other_lf070516.htm

These are the largest concentrated short positions in history and as such take on a much deeper meaning than if 500 million oz were held short by hundreds or thousands of traders. I suppose one could make a case that a silver short position of half a billion ounces was no big deal if held by hundreds of independent traders, but that supposition is impossible when the number of traders is eight or fewer. Why would so few traders dare to be that heavily short in silver on any legitimate basis?

Ironically, the CFTC asked that same question, in different words, in its 2008 letter. In its own words, it noted that the advocates alleging manipulation (me) failed to explain how the manipulators might profit and what could possibly be their motive in a long term manipulation. Failed to explain? How about the manipulators never taking a loss when adding short positions and the desperate economic survival motive of adding to shorts to prevent prices from rising after full short positions were established? Illegitimate profit and financial survival at all costs sound like sufficient motives for a crime to me. Isn’t this what motivates all financial crime?

The issue of concentration on the short side has been my main focus for decades and it is truly a shame it hasn’t been embraced fully. As and when it is embraced, the silver manipulation is not likely to continue. I encourage all to dig into this issue and would only ask for proper citation if it results in public commentary.

Ted Butler

July 18, 2016

end

Your early TUESDAY morning currency, Asian stock market results,  important USA/Asian currency crosses, gold/silver pricing overnight along with the price of oil Major stories overnight    

:

1 Chinese yuan vs USA dollar/yuan UP to 6.6919 (  SMALL REVALUATION NORTHBOUND  /CHINA UNHAPPY TODAY CONCERNING USA DOLLAR RISE/MORE $ USA DOLLARS LEAVE CHINA/OFFSHORE YUAN WIDENS TO 6.7189) / Shanghai bourse  DOWN 6.97 OR 0.23%   / HANG SANG CLOSED DOWN 161.89 OR 0.57% 

2 Nikkei closed /USA: YEN RISES TO 106.23

3. Europe stocks opened ALL IN THE RED    /USA dollar index UP to 96.93/Euro DOWN to 1.1031

3b Japan 10 year bond yield: REMAINS AT  -.226%     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 106.23

3c Nikkei now WELL BELOW 17,000

3d USA/Yen rate now well below the important 120 barrier this morning

3e WTI::  45.51  and Brent: 47.26

3f Gold UP  /Yen DOWN

3g Japan is to buy the equivalent of 108 billion uSA dollars worth of bond per month or $1.3 trillion. Japan’s GDP equals 5 trillion usa.

Japan to buy 100% of all new Japanese debt and by 2018 they will have 25% of all Japanese debt. Fifty percent of Japanese budget financed with debt.

3h Oil DOWN for WTI and DOWN for Brent this morning

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund FALLS to -.039%   German bunds BASICALLY negative yields from  10+ years out

 Greece  sees its 2 year rate RISE to 8.07%/: 

3j Greek 10 year bond yield RISE to  : 7.94%   (YIELD CURVE NOW  FLAT)

3k Gold at $1331.20/silver $19.90(7:45 am est)   SILVER FINAL RESISTANCE AT $18.50 BROKEN 

3l USA vs Russian rouble; (Russian rouble DOWN 18/100 in  roubles/dollar) 63.02-

3m oil into the 45 dollar handle for WTI and 47 handle for Brent/

3n Higher foreign deposits out of China sees huge risk of outflows and a currency depreciation  (already upon us). This can spell financial disaster for the rest of the world/China forced to do QE!! as it lowers its yuan value to the dollar/GOT a SMAL REVALUATION UPWARD from POBC.

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 106.23 DESTROYING WHATEVER IS LEFT OF OUR YEN CARRY TRADERS

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning .9876 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0878 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

3p BRITAIN VOTES AFFIRMATIVE BREXIT

3r the 10 Year German bund now NEGATIVE territory with the 10 year FALLS to  -.039%

/German 10+ year rate  negative%!!!

3s The Greece ELA NOW a 71.4 billion euros,AND NOW THE ECB WILL ACCEPT GREEK BONDS (WHAT A DISASTER)

The bank withdrawals were causing massive hardship to the Greek bank. the Greek referendum voted overwhelming “NO”.  Next step for Greece will be the recapitalization of the banks and that will be difficult.

4. USA 10 year treasury bond at 1.550% early this morning. Thirty year rate  at 2.269% /POLICY ERROR)

5. Details Ransquawk, Bloomberg, Deutsche bank/Jim Reid.

(courtesy Jim Reid/Bloomberg/Deutsche bank/zero hedge)

HELICOPTER MONEY COMING! US Futures Dip, European Stocks Slide After EU Court Slams Italian Bank Bailout Plans

After a head-scratching S&P500 rally – which not even Goldman has been able to justify – pushed stocks to new all time highs with seemingly daily record highs regardless of fundamentals or geopolitical troubles, overnight US equity futures dipped modestly, tracking weak European stocks as demand for safe haven assets including U.S. Treasuries and gold rises. Asian stocks outside Japan fall. Crude oil trades near $45 a barrel. 

Europe’s Stoxx 600 Index slid 0.9% following equity declines in Hong Kong and Singapore. The Aussie tumbled 1 percent as the Reserve Bank of Australia said the jobs market was losing momentum amid weak inflation. The kiwi lost ground against all 31 major peers after policy makers moved to rein in the nation’s housing boom, clearing an obstacle to lowering borrowing costs. Treasuries gained as Morgan Stanley predicted the yield on 10-year debt will sink to 1 percent in the first quarter of 2017.

Some of the European weakness was due to a ruling by the European Union’s top court which backed EU guidelines designed to prevent taxpayers from footing the bill for bailing out stricken lenders, strengthening the hand of Brussels regulators as Italy fights to shield some bondholders caught up in the nation’s banking crisis. As Bloomberg reports, Tuesday’s decision is a show of support for the European Commission, which updated its crisis rules for banks in 2013 as part of a shift from taxpayer-funded bailouts to bail-in, the practice of imposing losses on investors before public money can flow.

“Burden-sharing by shareholders and subordinated creditors as a prerequisite for the authorization, by the commission, of state aid to a bank with a shortfall is not contrary to EU law,” according to the EU Court of Justice. The Luxembourg-based court’s decision is binding and can’t be appealed. The European Commission, which checks whether state aid violates EU rules, welcomed the ruling, which it said “confirms the commission’s current case practice and application of EU state aid rules to the banking sector.” The ruling also made the case for a bailout as opposed to a bail in more difficult and Italian banks dropped after the decision with Banca Monte dei Paschi declining as much as 7.1%. UniCredit SpA slipped 3.2% in early trading, while Intesa Sanpaolo SpA decreased 2.5%. 

In addition to Italy’s banking slump, European mining companies led losses with Rio Tinto Group sliding 2.1% in London after reporting that second-quarter iron-ore production rose a weaker-than-expected 7 percent. Worse-than-estimated quarterly results from Akzo Nobel and Trelleborg dragged European stocks lower.

European weakness dragged down US equities, with futures on the S&P 500 Index dropping 0.4% after another all time high close yesterday.

As a result, some wondered if the hopium inspired rally is finally coming to an end: “The market is taking a pause,” said Tony Farnham, a strategist at Paterson Securities in Sydney. “There isn’t much of a catalyst out there. People are starting to question if there’s still value in the market following the post-Brexit rally.”

Others chime in: “There is a lot of hope built into U.K. share prices currently – hope on economic growth and hope on the political side,” said Robert Parkes, HSBC’s head of European equity strategy. “There is an unprecedented level of uncertainty on both of those issues. U.K. shares, including the FTSE 100, are in for a bumpy ride over the course of the next few months – in a downward direction.”

Some expressed outright skepticism: “On current sentiment it seems likely that any pullbacks will be shallow and a buying opportunity,” said Chris Weston, chief market strategist at IG Ltd. in Melbourne. “We will need to see good earnings, or the market is at risk of rolling over.

Still, for now the prevailing sentiment is that all dips are to be bought until proven otherwise by algos. This won’t happen, however, if central banks finally unleash the much-jawboned additional stimulus, especially now that the IMF is also in the fray. As Bloomberg adds, policy makers are under pressure to unleash stimulus as the global economic outlook shows signs of worsening. The IMF is set to update its projections for world growth on Tuesday and Managing Director Christine Lagarde warned last week that estimates may be cut. Nonetheless, global equities have recovered to above where they were at the time of the U.K.’s vote to leave the European Union and the U.S. earnings season has so far delivered more positive surprises than negative ones.

Elsewhere, the MSCI Asia Pacific excluding Japan Index fell 0.4%, with benchmark gauges in Hong Kong and Singapore losing at least 0.5%. Japan’s Topix index rose 1.1% from Friday’s close, buoyed by Monday’s slide in the yen. SoftBank Group Corp. tumbled 10%, its biggest loss since 2012, after agreeing to pay $32 billion for ARM Holdings Plc. The U.K-listed chipmaker was little changed after soaring 41% on Monday.

The modest unwind in risk-on positions, meant that 10Y U.S. Treasuries gained for the first time in four days, pushing their yield down by three basis points to 1.56 percent. The yield reached 1.60 percent in the last session, the highest it’s been since June 24, when the Brexit vote count was announced.

Market Snapshot

  • S&P 500 futures down 0.4% to 2153
  • Stoxx 600 down 0.9% to 335
  • MSCI Asia Pacific up less than 0.1% to 134
  • US 10-yr yield down 4bps to 1.54%
  • Dollar Index up 0.16% to 96.71
  • WTI Crude futures down 0.3% to $45.12
  • Brent Futures down 0.4% to $46.79
  • Gold spot up 0.4% to $1,334
  • Silver spot down 0.4% to $19.97

Top Global News

  • Turkey’s central bank will likely slow the pace of interest rate cuts after the failed coup attempt triggered a selloff in TRY and sovereign debt
  • Turkey Baa3 Ratings May Be Cut to Junk by Moody’s
  • U.K. inflation accelerated more than economists forecast in June boosted by airfares on trips to continental Europe
  • German ZEW investor sentiment deteriorates in Brexit aftermath
  • New Zealand’s central bank is moving to quell the country’s housing boom by restricting the amount of money property investors can borrow, paving the way for another cut in interest rates
  • Honda Audit Finds Takata Engineers Manipulated Air-Bag Data: Takata engineers gave ‘prettier shortened version’ to Honda
  • Oil Trades Near $45 Amid Speculation U.S. Output May Climb: Nationwide supplies to decline by 2.1 million barrels: survey
  • U.K. Inflation Rate Rises More Than Forecast on Airfare Surge: Rate rose to 0.5 percent from 0.3 percent in May, partly due to Euro 2016 football championship in France
  • Investor Challenges Baidu on Sale of Video Service to CEO: Hedge fund urges Chairman Robin Li to withdraw iQiyi bid
  • Morgan Stanley Says Year of the Bull Will Push U.S. Yield to 1%: Hornbach says yield will fall to 1% in 1Q 2017, more bullish than any of 61 economists surveyed
  • Netflix Stumbles on Path to World Domination With Price Hike: Results show subscribers more sensitive to costs than thought
  • Murray Energy Working to Renegotiate Credit Terms: Reuters
  • Thrive Capital Said to Have Raised $700m for Fifth Fund: NYT
  • Lufthansa Said to Join Airbus, Honeywell on Runway System: WSJ

Looking at regional markets, Asian stocks outside Japan fell from their highest levels in almost nine months as commodity producers led losses.  4 out of 10 sectors fall with industrials, energy underperforming and telcos, financials outperforming.  The MSCI Asia Pacific was up less than 0.1% to 134, unmoved by the latest Nikkei 225 jump 1.4% higher to 16723. Elsehwere the Hang Seng down 0.6% to 21673, while the Shanghai Composite was down modestly by 0.2% to 3037 and the S&P/ASX 200 down 0.1% to 5451

Top Asian News

  • Son Invokes Yoda of Star Wars on SoftBank Debt as Bonds Fall: SoftBank 5.375% bond yield jumped most since issuance Monday
  • Asia Embraces Bullet Trains as Singapore, Malaysia Sign Deal: Singapore-KL link will follow projects in Indonesia, India
  • Vietnam Faults as ‘Untruthful’ China Media Reports on Sea Ruling: China claims nations support its stance on South China Sea
  • India to Inject $3.4 Billion to Boost Capital of 13 State Banks: State Bank of India, Indian Overseas Bank among lenders
  • Bank of East Asia Shares Fall After Elliott’s Legal Action: action escalates battle against BEA management
  • China Said to Create Immigration Office to Lure Overseas Talent: First-of-its-kind agency could be set up before year’s end

Over in Europe, the Stoxx Europe 600 Index retreated 0.4 percent as of 8:12 a.m. in London, following equity declines in Hong Kong and Singapore. The Aussie tumbled 1 percent as the Reserve Bank of Australia said the jobs market was losing momentum amid weak inflation. The kiwi lost ground against all 31 major peers after policy makers moved to rein in the nation’s housing boom, clearing an obstacle to lowering borrowing costs. Treasuries gained as Morgan Stanley predicted the yield on 10-year debt will sink to 1 percent in the first quarter of 2017, lower than any of the 61 estimates in a Bloomberg survey.

Top European News

  • Airbus Said to Cut in Half A400M Deliveries for 2016 to Germany: Planemaker grappling with gearbox, engine, fuselage faults
  • EU State-Aid Rules for Banks in Crisis Backed by Top Court: Decision comes as Italy and EU seek solution on investor burden-sharing
  • Ericsson Plans More Cost Cuts as Revenue Trails Estimates: Network maker to reduce research on Internet products as demand for wireless gear falling in Europe, Russia, Brazil
  • Volvo Cuts North American Market Outlook as Orders Slump: Truck orders in North America fell 29% in second quarter
  • Akzo Signals Europe Paint Demand Slowed, Marring Profit Run: Slowdown in U.K. paint sales has yet to recover, customers are reporting increased volatility in order patterns

In FX, the Aussie slipped 1 percent to 75.16 U.S. cents, after strengthening in each of the last seven weeks. Minutes published Tuesday from the RBA’s July 5 policy meeting showed that the central bank estimated the economy to have slowed last quarter and policy makers were concerned about currency appreciation. The likelihood of an August rate cut has increased to 56 percent from 45 percent over the past week, derivatives indicate.  New Zealand’s dollar dropped 1.3 percent. The central bank said it will require property investors buying housing in the nation to have a deposit of at least 40 percent from Sept. 1, compared with an existing requirement that such buyers in Auckland have at least a 30 percent deposit. Swaps traders are pricing in a 77 percent chance of an RBNZ rate cut on Aug. 11, compared with 39 percent a week ago. The yen strengthened 0.1 percent to 106.10 versus the greenback, after sliding 1.2 percent in the last session. It was trading at about 106 prior before the outcome of the Brexit vote. The currency tumbled 4.1 percent last week as Japanese Prime Minister Shinzo Abe outlined plans for a “bold”stimulus package in the wake of an election victory. Poland’s zloty led losses among emerging-market currencies, weakening by 0.4 percent. Malaysia’s ringgit fell 0.3 percent. China’s yuan was among the best performers with a 0.1 percent gain.

In commodities, crude oil fluctuated around $45 a barrel. It slid 1.6 percent on Monday after a failed coup attempt in Turkey failed to disrupt shipments through the country, a vital conduit for moving from Russia and Iraq to the Mediterranean Sea. Gold rose from a two-week low, while copper declined 0.1 percent in London.

Bulletin Headline Summary from RanSquawk and Bloomberg

  • Treasuries higher in overnight trading as global equities drop with oil and gold rises. Today’s data includes housing starts and building permits.
  • Morgan Stanley’s Matthew Hornbach called this year’s Treasury market rally. Now he’s revising his forecasts and is more bullish than just about anyone else, calling for 10Y U.S. yields to fall to 1% in the first quarter of 2017
  • Republican Party approved a platform Monday that ostensibly calls for breaking up the biggest banks by reinstating the Glass-Steagall Act
  • German investor confidence deteriorated in July on concern that Britain’s decision to leave the European Union could weaken the region’s fragile economic recovery
  • The EU’s top court backed EU guidelines designed to prevent taxpayers from footing the bill for bailing out stricken lenders, strengthening the hand of Brussels regulators as Italy fights to shield some bondholders caught up in the nation’s banking crisis
  • China’s cabinet fueled speculation that the nation is pressing ahead with debt-to-equity swaps that would give lenders stakes in some companies as part of tackling a build-up in corporate leverage and bad loans
  • Sales of London homes under construction slumped 34 percent in the second quarter as the prospect of a vote to leave the European Union damped demand already hurt by higher taxes

* * *

DB’s Jim Reid concludes the overnight wrap

The hot weather seemed to make for bit of a lethargic session in markets yesterday, although some M&A activity in the tech space and also another better than expected earnings report in the bank sector – this time from BofA – helped stocks eke out modest gains. The S&P 500 finished +0.24% by the time the closing bell came around with the Nasdaq (+0.52%) up a little more. The intraday high-to-low range for the former has not exceeded 0.65% in the last four sessions, a sign perhaps that we’re finally starting to see a little bit of consolidation in markets ahead of the summer lull. Treasury yields also inched a few basis points higher although rate hike expectations actually dipped ever so slightly. The European session was a little more mixed, although again moves were fairly modest for the most part. The Stoxx 600 ended +0.23%, while the DAX (-0.04%) nudged slightly into the red. Turkish equities plummeted over 7% following the failed coup late on Friday although that was about the extent of the fallout with markets elsewhere fairly resilient.

That M&A activity we mention came in the form of Japanese telecom group Softbank’s takeover of the UK’s semiconductor designer ARM Holdings in a bumper £24.3bn deal. The deal would be one of the largest European technology deals and SoftBank’s largest acquisition to date. Much of the chatter is that this would likely be seen as a bit of post-Brexit confidence for deal activity in the UK although it’s worth noting that ARM derives the vast majority of its revenues outside the UK (mainly Asia and North America) and would likely have been relatively immune from Brexit. On the face of it the roughly 11% fall for Sterling (vs. the Yen) would also make the deal more attractive although this has been more than offset by the c.16% move higher for ARM’s shares since the vote to Friday’s close. Yesterday ARM’s share price rallied 41% following the news.

Meanwhile, on the earnings front Bank of America continued what’s been a fairly decent start for US bank earnings after reporting Q2 results ahead of both earnings and revenue expectations, with better than expected fixed income trading revenues again being a big driver of that as we saw with JPM and Citi. It’s worth noting however that while BofA’s Q2 EPS of 0.36c was above the 0.32c expected, that Bloomberg consensus forecast was at 0.36c just two week ago, so another good example of how last minute analyst revisions can help to boost the initial headline numbers.

Away from this the tech sector also kicked off with a few earnings reports of its own. Coming after the closing bell, the slide in IBM’s revenue was not quite as bad as feared, although another quarter of negative revenue growth made it 17 consecutive quarters that revenue has fallen in YoY terms. Meanwhile Yahoo’s results were a bit more mixed, while Netflix disappointed on subscriber numbers, sending shares down some 17% in extended trading at one stage.

Switching over to Asia this morning, Japan aside the bulk of bourses are trading with a weaker tone as we go to print. The Hang Seng (-0.59%), Shanghai Comp (-0.60%), Kospi (-0.41%) and ASX (-0.21%) are all in the red, with a second consecutive daily decline for Oil weighing slightly. In Japan the Nikkei (+0.47%) is up although is playing catch up somewhat having just reopened from a public holiday. That performance is more impressive given the 10% slide in SoftBank shares this morning. Elsewhere US equity index futures are also slightly in the red following those earnings last night after the bell. In FX the Aussie Dollar is -0.85% after the RBA meeting minutes came across as slightly dovish, while the Kiwi Dollar is -1.08% after the RBNZ announced its intention to tighten existing LVR restrictions on residential mortgage lending from September.

Moving on. Over in credit markets yesterday one headline which caught our eye came from the Canadian Imperial Bank of Commerce (CIBC) which became the first non-German and non-CBPP3 eligible EUR benchmark to issue a covered bond with a negative yield. Indeed the €1.25bn 6y bond was issued at -0.009% according to Bloomberg. Another incredible statistic from the current era of negative rates.
Staying with credit, yesterday the ECB released its holdings from its CSPP program for the first time. There didn’t appear to be any surprises on the list but there was confirmation that they’ve purchased split IG rated names like Telecom Italia and Lufthansa which shows they’re happy to buy what are effectively HY names in index terms. By also buying Glencore they’ve shown that they’re not afraid to buy names that have been under pressure and are not sticking strictly to Eurozone only entities. So it’s confirmation that we expect them to take a rules based approach over a credit selection process.

In terms of run rate, their holdings as of 15 July 2016 were €10.427bn. This implies net purchases settled last week of €1.953bn with an average daily run rate of €391m. This compares favourably with an average daily run of €401m since the program started. So there has been no real sign of let up in their buying in July in spite of holiday season starting. August might be trickier and then the run rate in the autumn might depend on the volume of new issuance as secondary will get increasingly more challenging as the easy looser bonds are purchased.

In data terms the calendar was relatively quiet yesterday with a 1pt fall in the NAHB housing market index in the US to 59 (vs. 60 expected) the only data of note. There was a bit of chatter over at the BoE however where we heard from the MPC’s Martin Weale. The committee member said with regards to the uncertainty stemming from Brexit, that ‘this uncertainty points to the argument that we should wait for firmer evidence before making any policy change and least in the absence of any strong arguments for an immediate change’. It’s worth highlighting that the post-Brexit data flow is limited still although this Friday we will get the flash July PMI’s in the UK where expectations are for a decent leg lower.

ASIAN AFFAIRS

 

i)Late  MONDAY night/TUESDAY morning: Shanghai closed DOWN 6.97 POINTS OR 0.23%/ /Hang Sang closed DOWN 161.89 OR 0.57%. The Nikkei closed UP 225.46 OR 1.37%/  Australia’s all ordinaires  CLOSED DOWN 0.25% Chinese yuan (ONSHORE) closed UP at 6.6919 ON A LITTLE REVALUATION /Oil FELL to 45.51 dollars per barrel for WTI and 47.26 for Brent. Stocks in Europe ALL IN THE RED. Offshore yuan trades  6.7189 yuan to the dollar vs 6.6919 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE WIDENS CONSIDERABLY AS  MORE USA DOLLARS LEAVES THEIR SHORES. 

FIRST  REPORT ON JAPAN  SOUTH KOREA AND CHINA a) JAPAN ISSUES b) REPORT ON CHINA

Chinese Vice Chairman tells its troops to get ready for combat.This sounds ominous

(courtesy xinhua/Bloomberg/zero hedge)

Chinese Military Vice Chairman Urges Troops to Get Ready For Combat: Xinhua

While it is unclear how much of it is populist bluster, how much is posturing, and how much an actual, objective caution, Bloomberg points out an article by China’s news agency Xingua posted on the website of the Ministry of National Defense, in which Fan Changlong, vice chairman of China’s Central Military Commission (which is chaired by Xi Jinping himself) “urges Chinese troops to get prepared for combat by improving planning, equipment and logistical support in order” to be ready to “win the war.”

Bloomberg adds that Fan made the comments in recent inspection tour of China’s Southern Theater Command. The warning comes days after China officially warned the US that its patrols in the South China Sea – which despite last week’s decision by the Hague tribunal – deems as its own, could end in “disaster.”

 

 

A quick bio of Fan Changlong:

Fan Changlong (born 1947) is a general in the People’s Liberation Army (PLA) of the People’s Republic of China. He is a Vice Chairman of the Central Military Commission, and formerly served as commander of the Jinan Military Region.

 

Fan was born in Dandong, Liaoning Province. He joined the PLA and the Communist Party of China in 1969. He became a major general in 1995, a lieutenant general in 2002, and general on July 15, 2008. Fan has been an alternate member of the 16th Central Committee of the Communist Party of China, and a full member of the 17th Central Committee. In 2012, ahead of the 18th Party Congress, he was appointed Vice Chairman of the Central Military Commission.

 

In mid-April 2016, he paid a visit to the disputed Spratly Islands in the South China Sea, according to the country’s Ministry of National Defense, which reported the visit on Friday 15 April 2016. Gen. Fan Changlong was said to have been the highest-ranking People’s Liberation Army officer ever to visit the Spratly Islands. General Fan led a delegation to the “relevant Nansha Islands to offer good wishes to officers and personnel stationed there, and also to understand the construction of facilities on the islands,” said a brief statement from the Ministry of National Defense. His tour appeared intended to show China’s determination to ward off any challenges to its claims over the islands, which are also the subject of claims by the Philippines, Malaysia, Vietnam, Brunei and Taiwan.

* * *

And here is the full article as it appeared on the Chinese Ministry of National Defense., google translated.

* * *

CPC Central Committee, Central Military Commission Vice-Chairman Fan Changlong emphasized recently in the southern theater forces research, to earnestly study and implement President Xi major strategic thinking and decision-making important instructions, adhere to the party’s absolute leadership over the army, firmly grasp the Party in the new situation strong military target under the full implementation of the political army reform and a strong army, in army stepping up preparations for military struggle, strengthen the combat of military training, and constantly improve deterrence and combat capability, and resolutely obey the Central military Commission and President Xi command, and resolutely safeguard national sovereignty, security and development interests.

Central Military Commission, commander of the Air Force Ma Xiaotian, CMC member and rocket forces commander Wei Feng and were about to participate in research.

Fan Changlong stressed the need to deeply understand the complexity of the grim situation facing the security, stepping up preparations for military struggle of the work to ensure that the order, be able to have to go win the war. Focus on the difficult situation to deal with complex, targeted research warfare countermeasures, revision and improvement plan program, deepen all aspects of preparation of personnel, equipment, security and so on. Depth specializing in refining and confrontational drills used in efforts to build a critical moment, to play a key role in the “dagger” forces, improve military and emergency response capabilities assault capability. Strengthen combat duty, well-organized air and sea patrol, firmly secure disposal of various contingencies, to ensure air safety side of the sea. We must resolutely implement the Party Central Committee and President Xi instructions requirements, support local flood prevention work to do, to protect people’s lives and property, to restore normal production and life order to contribute.

Fan Changlong pointed out that we should always put ideological and political construction in the first place the construction efforts in enhancing political awareness, the overall sense of core consciousness, awareness on par with efforts to lay a solid command of the Party’s ideological and political foundation. Should study and implement President Xi “July” important speech as a major political task, a thorough understanding of speech grasp the profound meaning and spirit, enhance crack army building, the actual ability to reform and preparations for military struggle puzzle. To continue thoroughly implement the spirit of the ancient Tianquan Jun political union, a strong push forward the reform of military education campaign and the “two learning to do a” study and education, a view to achieving real results.

Fan Changlong stressed the need to pay attention to changes in military research and external environment, the test of reform and adjustment of interests, arduous task forces and other factors soldiers thought to bring stability to focus on the grassroots level, unify ideological work fell to the grass roots, and create hold people’s hearts by undertaking internal environment, so that the officers and men have to realize the value of life and to get a sense of accomplishment. Strengthen military management, to maintain security and stability forces. Perseverance strengthen style building, completely eliminate Guo, Xu due to potential regulatory pernicious habits and promote overall improvement troops atmosphere, enhance the cohesion of combat troops to stimulate positive energy Army-strong army.

EUROPEAN AFFAIRS

European confidence crashes to 4 yr lows:

(courtesy zero hedge)

“Whatever It Takes” Has Failed – European Economic Confidence Crashes To 4-Year Lows

If the premise of central-banking largesse is to maintain (or inspire) economic confidence, then Mario Draghi’s smoke and mirrors have officially failed. This morning’s ZEW data on German and European Consumer confidence is a disaster. Both the current situation and expectations for Germany tumbled but most worryingly, the ‘hope’ for European economic growth has crashed to its lowest since Draghi promised to do “whatever it takes” in the summer of 2012.

How long before “whatever it takes” morphs into shock and awe “helicopter money”? How else will Europe afford all the immigrants?

end

 

S and P lowers the boom on Deutsche bank as they cut their outlook to negative due top challenging operating conditions in the banking environment.  These guys are the largest derivative player in the world:

(courtesy zero hedge)

 

S&P Cuts Deutsche Bank Outlook To Negative On “Challenging Operating Conditions”

 

It has been a while since investors focused their attention on the world’s “most systematically risky” bank, Deutsche Bank. Moments ago, S&P made sure to remind us that nothing is fixed, when it released a report saying that “Operating Conditions May Challenge Strategy Execution” but keeping the bank at a BBB+ rating.

The full report below:

Deutsche Bank Outlook Revised To Negative As Operating Conditions May Challenge Strategy Execution; Ratings Affirmed

  • We believe the difficult operating environment may challenge Deutsche Bank as it undertakes a material restructuring of its business model and balance sheet.
  • We are revising our outlook on Deutsche Bank to negative from stable.
  • We are affirming our ‘BBB+/A-2’ issuer credit ratings on Deutsche Bank.
  • The negative outlook reflects the possibility that we may lower the long-term issuer credit rating if market conditions challenge Deutsche Bank’s ability to preserve its capital and maintain its franchise while implementing its restructuring plans.

LONDON (S&P Global Ratings) July 19, 2016–S&P Global Ratings said today that it revised the outlook on Germany-based Deutsche Bank AG to negative from stable. The ‘BBB+/A-2’ global scale, ‘cnA+’ Greater China regional scale, and ‘trAAA/trA-1’ Turkey national scale issuer credit ratings were affirmed.

At the same time, we revised the outlook on certain Deutsche Bank branches and subsidiaries to negative from stable (see rating list for details). The ratings on these entities were affirmed.

In addition, we affirmed the issue ratings on Deutsche Bank AG’s long-term senior unsecured debt at ‘BBB+’, short-term senior unsecured debt at ‘A-2’, dated nondeferrable Tier 2 regulatory capital instruments at ‘BB+’, and perpetual Tier 1 instruments at ‘B+’.

The outlook revision reflects our view that the unfavorable operating environment poses particular challenges to Deutsche Bank as it implements its 2016-2020 strategic plan (known as Strategy 2020). Although market conditions may recover somewhat from the weak first quarter of 2016, ultra-low interest rates and generally subdued client trading activity may persist for the foreseeable future. These pressures affect the entire sector but we believe they are particularly unhelpful for Deutsche Bank as it seeks to strengthen capital and maintain its franchise while fundamentally restructuring its business model and balance sheet. We note that Deutsche Bank is still in the early stages of its plan and we expected from the outset that 2016 would be the peak restructuring year. Where possible, we expect it will seek to accelerate planned cuts in costs and regulatory risk-weighted assets (RWAs) to mitigate lower revenues. Nevertheless, although it is not our current base-case scenario, we see a risk that the achievement of Deutsche Bank’s targets under Strategy 2020 may be challenged if operating conditions remain adverse.

More specifically, the negative outlook reflects the potential removal of the one-notch positive adjustment that we currently include in the ‘BBB+’ long-term issuer credit rating. This adjustment reflects our view that, if it executes Strategy 2020 well, Deutsche Bank would transition toward improved stand-alone creditworthiness over the medium term if it achieves a more stable and predictable operating model. Key elements of Strategy 2020 include significant reductions in RWAs and leverage exposure; a far-reaching cost cutting program; and exits from unprofitable countries, products, and markets. These initiatives are intended to strengthen the fully-loaded Common Equity Tier 1 (CET1) and leverage ratios to at least 12.5% and 4.5%, respectively, in 2018 and beyond. We could remove the one-notch positive adjustment from the rating if we believe Deutsche Bank appears likely to fall short of these objectives. If the Strategy 2020 measures prove insufficient, we believe it would be difficult for Deutsche Bank to extend cost and RWA cuts without harming its core businesses. The bank has already cancelled equity dividends in respect of the 2015-2016 financial years, which reduces flexibility to respond to unexpected capital events.

We have affirmed the ratings because, in addition to the one-notch positive adjustment, the anchor and bank-specific factors are also unchanged. Our risk-adjusted capital ratio was 8.6% at year-end 2015 and we expect it to be in the 8.5%-9.0% range at year-end 2017. This projection assumes relatively weak earnings in the near term, a significant reduction in RWAs, and further material litigation charges. We consider that the bank’s principal capital constraint will occur in 2019-2020 when the Basel Committee’s RWA reforms are due to be implemented and Deutsche Bank’s minimum regulatory requirement will be a 12.25% fully-loaded CET1 ratio. The bank expects to meet this hurdle by steadily strengthening retained earnings in the coming years as its restructuring measures take effect and litigation charges ease. The scope and timing of the RWA reforms remain highly uncertain and an easing of the ultimate requirements would benefit Deutsche Bank’s transition process.

The U.K.’s recent vote to leave the EU (Brexit) is a consideration in the outlook revision, but not a prominent one. We consider that Deutsche Bank should not be materially affected if the U.K. were to lose access to the EU financial services passporting arrangement, although it may need to relocate some activities from its large London branch. We assume Deutsche Bank’s trading revenues received a boost from Brexit-related market volatility but, in the longer term, we see Brexit as a factor that may prolong the current period of ultra-low global interest rates and depressed business volumes.

The negative outlook reflects our view of the execution challenges facing Deutsche Bank over our two-year rating horizon as it restructures its business model and balance sheet. We regard 2016-2017 as the most demanding phase of Strategy 2020 and we see a risk that generally unfavorable operating conditions could challenge the achievement of its goals. In assessing Deutsche Bank’s progress, we intend to focus on its capital generation prospects for 2017 and beyond, its performance versus peers, and its ability to defend its market position in its core businesses.

We could lower the long-term issuer credit and senior unsecured issue ratings if we consider that Deutsche Bank is falling behind its announced schedule for strengthening its business position and risk position. In that scenario, we would likely remove the one-notch positive adjustment that we currently include in the ‘BBB+’ long-term rating. Higher-than-expected litigation charges or material losses on disposal of non-core businesses could also lead to a downgrade if they materially erode capital.

If we were to lower the long-term rating to ‘BBB’, we would likely maintain the short-term rating at ‘A-2’ due to Deutsche Bank’s satisfactory liquidity profile. The issue ratings on Additional Tier 1 and Tier 2 regulatory capital instruments would be unaffected if the stand-alone credit profile (the starting point for these ratings) remains ‘bbb’.

We could revise the outlook to stable if Deutsche Bank executes Strategy 2020 well, maintains a resilient business position, and demonstrates progress toward its balance sheet targets.

RUSSIAN AND MIDDLE EASTERN AFFAIRS

TURKEY

Turkey is like a bank:  Too big to fail!!

(courtesy zero hedge)

Piling On To The “Surreal” Response To Turkish Turmoil: Here Comes The Central Bank

Update: Turkey’s central bank indeed cut, and by 25 bps, in line with expectations:

  • Turkey central bank cuts top end of its rates corridor 25bps to 8.75%, as expected
  • Holds benchmark repo rate at 7.5%, as expected
  • Holds overnight borrowing rate at 7.25%, as expected

* * *

In less than half an hour, the Turkish central bank will steal the public spotlight, if only very briefly, from Erdogan when it announces whether it will cut rates by 50 bps, 25 bps, (or – less likely – it won’t cut at all). But in light of the recent stunning transformation in the country’s political landscape, does this decision really matter? According to the market yes; according to Bloomberg’s Richard Breslow, it is simply one more indication of how surreal the response to the Turkish turmoil has become.

Here is his full note.

Turkey Shouldn’t Be Confused With a Penny Stock

Much of the response to the turmoil in Turkey has been surreal, to say the least. While President Erdogan was rounding up thousands of alleged plotters, shuttering media, closing down a bank and accusing the U.S. of harboring the ringleader there has been a lively debate whether this means the central bank should cut 50bps today or only 25.

Do we possibly think it will make a difference? Apparently a lot of people do. In this age of monetary policy uber alles, every setback somehow gets sold as a buying opportunity. There are no long-term ramifications ascribed to anything.

“Valuations look cheap. Yields look attractive.” Forget that the tourist industry will be toast. That business and consumer sentiment are likely to tank. The news cycle will pass. After all there’s great sports on the television.

There was no shortage of assurances that the impact was localized and no reason this couldn’t be a “risk-on” day for the rest of us. No reason to worry about the European banks that have been betting heavily on Turkey. And just wait until Europe gets a freshly topped-up bill for the Syrian refugee deal.

Moody’s and Fitch immediately warned on the country’s ratings, citing instability. Can’t have that. IMF Managing Director Lagarde countered that “quick action” by the CBRT has calmed markets. Move along, nothing to see here.

So what if the war on terror just got more difficult, they’re a member of NATO. Oh wait, didn’t U.S. Secretary of State Kerry warn that Turkey’s behavior may make it unsuitable to be part of that organization? Tough words. But when this stress test is evaluated they’ll be deemed systemically important and too big to fail. Erdogan is counting on it. Someone had better tell ISIS.

Monetary policy can cure many ills. Sort of. But to think it can eliminate all geopolitical risk and societal failings is a dip too far to buy.

end

Tens of thousands more have been purged as Turkey “concentrates” on extraditing Gulen. Interesting enough, Turkey now blames the downing of the Russian planes on Gulen:

(courtesy zero hedge)

Turkey Latest: Tens Of Thousands Purged; “Gulenist Media” Shut Down; Pilots Behind Russian Jet Downing Arrested

Turkish president Erdogan continues his witch hunt purge for the third day, and as of this morning the office of the Turkish prime minister removed from duty 257 staff suspected of being linked to the failed coup Reuters cites a source in the PM’s team as saying Tuesday. The number of those suspended from duty in the PM’s office has reached 10 percent of the estimated 2,600 total personnel of Prime Minister Binali Yildirim’s staff.

The crackdown is also impacting the army, where the state-run Anadolu news agency reported that President Recep Tayyip Erdogan’s Air Force adviser, Lt. Col. Erkan Kivrak, has been detained at a hotel in the Serik district of Turkey’s southern province of Antalya. It says Kivrak was detained while on vacation. Following processing by the Antalya police, he has been transferred to Ankara. Additionally courts have ordered 85 generals and admirals jailed pending trial over their roles in a botched coup attempt. Dozens of others were still being questioned.

Additionally, about 100 employees of Turkey’s National Intelligence Organization have been suspended from work over alleged ties to the coup of July 15, reports Haber Turk newspaper.

Anadolu Agency said Tuesday that those formally arrested include former air force commander Gen. Akin Ozturk, alleged to be the ringleader of the July 15 uprising (we documented the surprising flip-flop in his narrative yesterday) as well as Gen. Adem Hududi, commander of Turkey’s 2nd Army, which is charge of countering possible threats to Turkey from Syria, Iran and Iraq.

And then there are the teachers: moments ago Anadolu also reported that the Turkey education ministry has suspended 15,200 staff and adds that Turkey has asked for the resignation of all university deans.

Summarizing the latest purge we get the following numbers:

  • 15,200 educators
  • 8,000 police officers
  • 3,500 soldiers
  • 3,000 judges
  • 492 clerics
  • 257 in PM’s office
  • 120 generals and admirals

While the west has been largely oblivious of the Turkish purges, they have been noticed at the U.N. whose human rights chief expressed alarm about “the mass suspension or removals of judges in Turkey.”  Zeid Ra’ad al-Hussein also decried comments from some officials that the death penalty could be reinstated, saying such a move would be “a big step in the wrong direction” and violate Turkey’s responsibilities under international law.

Yet even as the arrests continue, Turkey vowed on Tuesday to root out allies of the U.S.-based cleric, Fethullah Gulen, it blames for a failed coup attempt last week, after an already deep purge of the army, police and judiciary, and said it had sent Washington evidence of his wrongdoing. Prime Minister Binali Yildirim accused Washington, which said it will only consider extradition if clear evidence is provided, of double standards in its fight against terrorism.

“We have more than enough evidence, more than you could ask for, on Gulen,” Justice Minister Bekir Bozdag told reporters outside parliament. “There is no need to prove the coup attempt, all evidence shows that the coup attempt was organized on his will and orders.”

Earlier today, Turkey’s deputy prime minister says dossiers containing details of activities of Gulen have been sent to the U.S. Numan Kurtulmus says Tuesday he can’t go into the details of the files but said they include the past actions of the group led by Fethullah Gulen. They may also include new evidence that emerges from the current investigation.

There are conflicting reports about whether Turkey has sent an official extradition request to the US, with AP reported that this has not yet happened, however FT saying that it has indeed happened:

Turkey has sent the US four dossiers on the alleged activities of Pennsylvania-based Islamic cleric Fethullah Gulen, following up on a demand for his immediate extradition that threatens to derail relations between the two Nato allies.

But as Turkish demands get louder, the US stance — that any request for extradition should go through a judicial review — has angered Turkish politicians, including Prime Minister Binali Yildirim, who told reporters on Monday that “we will be a little bit disappointed if our friends say ‘show us the evidence’ while there are members of this organisation which is trying to destroy a state and a person who instructs it”.

“Even questioning our friendship may be brought to the agenda here,” he added.

But the request does not include any evidence of Mr Gulen’s actions related to the coup, said Bekir Bozdag, the justice minister, noting the complexity of an ongoing investigation. Instead, a Turkish official said, the dossiers include the results of Turkish prosecutors’ long-running probes into Mr Gulen’s actions.

Meanwhile, as Turkey continues to pursue every domestic trace of Gulen, moments ago Turkey’s radio-TV watchdog RTUK unanimously voted to cancel all broadcast rights and licenses of radio and TV stations that are linked to Gulenist “FETO/PDY” organization, it says in statement on website.

Names of outlets, whose broadcast rights and licenses are canceled, according to state-run Anadolu Agency: STV, Samanyolu Haber, Samanyolu Haber Radyo, Can Erzincan TV, Kanal 124, Yumurcak TV, Hira TV, MC TV, Dunya TV, Kanal Turk, Bugun TV, Mehtap TV, Berfin FM, Kanal Turk Radyo, Burc FM, Samanyolu Haber Radyosu, Radyo Mehtap, Haber Radyo Ege, Dunya Radyo, Radyo Kure, Merkur TV, Esra Radyo, Tuna Shoping TV, Samanyolu Haber Radyo Anadolu

* * *

But in what may be the most surprising development, Turkish officials on Tuesday also blamed Gulen’s followers for shooting down a Russian Su-24 in November. That incident brought Russian president Vladimir Putin’s wrath on Turkish president Recep Tayyip Erdogan and Turkey’s economy, in the form of travel bans for tourists and curbs on Turkish exports. The pilots were rounded up on Saturday, as part of what has become a wide-ranging purge of supposed plotters.

“Two Turkish pilots who shot down a Russian Su-24 near the Syrian border were taken into custody, according to a senior Turkish official speaking on condition of anonymity,” Bloomberg reports, citing a high-level Turkish official.

In other words, the only reason Turkey could not hand over the two pilots to Putin is because – until Friday – they hadn’t made clear their intentions of overthrowing Erdogan. Sounds legit.

Putin and Mr Erdogan are expected to meet in August for the first time since the jet was downed, indicating a mending of fences with Russia just as Turkey bristles at Washington for harbouring a man Mr Erdogan once considered a friend, but now describes as a terrorist.

 

end

 

This is far more worrisome, as the Turkish lira plummets to below levels Friday night, when it was first announced of a coup. The markets are stating that Erdogan went way too far and they are punishing the country:

(courtesy zero hedge)

Erdogan Goes Too Far, Market Warns As Lira, Turkish ETF Suddenly Tumble

While so far the Western diplomatic response to Erdogan’s unprecedented putsch has been mostly stunned silence (with just the U.N. human rights chief expressing alarm about the mass suspension or removals of judges so far), the market is starting to get concerned, and moments ago the Turkish Lira suddenly tumbled, sliding below Friday’s closing level, while at the same time the MSCI Turkish ETF plunged as well.

This is not in response to speculation of another military coup; it is, however, in reaction to market concerns that the Erdogan regime counter-coup has now gone too far, and as a result not only the Turkish economy, but its capital markets, and society, will all be impacted unless somehow the Turkish president’s unprecedented scramble for power is somehow contained.

We have truly entered a new normal if capital markets are supposed to keep corrupt, conflicted “democratic” politicians honest.

 

end

 

My goodness!!  Erdogan just fired all university deans and then sacked 21,000 private school teachers.  Turkey is going back into the early middle ages as he wants conditions similar to a caliphate and he is that leader:

(courtesy zero hedge)

Erdogan Unleashes Unprecedented Crackdown: Fires All University Deans; Suspends 21,000 Private School Teachers

Over the weekend, after the initial reports of the purge unleashed by Erdogan against Turkey’s public, we previewed the upcoming, far more dangerous counter-coup as follows: “it was the next step that is the critical one: the one where Erdogan – having cracked down on his immediate military and legal opponents – took his crusade against everyone else, including the press and the educational system.

But while Turkey’s press is already mostly under Erdogan’s control, it is the educational witch hunt fallout that is far more troubling, and just as expected over the past hour we have gotten a glimpse of just how extensive the Turkish’s president cleansing of secular society will be, when the state-run Anadolu news agency reported that Turkey’s ministry of education has sacked 15,200 personnel for alleged involvement with a group the government claims is responsible for Friday’s failed coup.

Even more shocking, Anadolu reports that Turkey’s Board of Higher Education has requested the resignations of all 1,577 university deans, effectively dismissing them.  Of the deans dismissed, 1,176 worked in public universities and 401 in private institutions.

The National Education Ministry said Tuesday that the staff are in both urban and rural establishments, and that an investigation has been launched against them.

It didn’t stop there, and as Turkey’s Ysafak reports, the country has just canceled the license of some 21,000 private school teachers.

And just like that, In one move, Turkey’s authoritarian ruler just eliminated both the middle and higher educational system of the country.

While there is still no response from the distinguished western “democratic” powers, the market has already opined on how this ends, and as we showed moments ago, its conclusion is simple: badly.

Why is Erdogan doing all of this? Simple: he is doing everything in his power to undo the last traces of secularism in the Turkish state and to propel himself to the role of undisputed, “democratically elected” despot, without any internal opposition.

Somewhere, Mustafa Kemal Ataturk is spinning in his grace.

 

end

 

Then  at 7 pm Turkish time (12 noon our time: a massive explosion reported in Ankara:

(courtesy zero hedge)

Massive Explosion Reported In Turkey’s Capital Ankara

Moments ago Turkish assets took another leg lower following local press reports of a massive explosion rocking Turkey’s capital Ankara. According to initial unconfirmed reports, the explosion may have taken place at a local TV station.

招きネコに小判♡ @manekicat_koban

Large explosion hits Turkish capital Ankara – reportshttps://www.rt.com/news/352094-large-explosion-ankara-turkey/ …

11:18 AM – 19 Jul 2016

GlobalIntelInsight @global_awar

Black clouds imerge as a huge explosion rocked the city of

11:18 AM – 19 Jul 2016

View image on Twitter

Amichai Stein @AmichaiStein1

: Large explosion hits Turkish capital

11:06 AM – 19 Jul 2016

Çok feci dumanlar yükseliyor #Ankara da neler oluyor ate?ler buradan gözüküyor!pic.twitter.com/WVkFEOseOC

— Beneyna K. (@beneyna_) July 19, 2016

Amichai Stein @AmichaiStein1

: Explosion in . Smoke seen in the area

11:09 AM – 19 Jul 2016

View image on Twitter

Lü @clitoran

Explosion à Ankara

11:18 AM – 19 Jul 2016

The Turkish currency, already weaker on the day, has tumbled more, and is approaching post-coup lows.

Developing story

END

 

EMERGING MARKETS

VENEZUELA

 

 Venezuela opens up its border with Columbia and watch the result as citizens flock over to get the necessary items to survive:

(courtesy zero hedge)

This Is What Hyperinflationary Collapse Looks Like

There was some good news for citizens of Venezuela yesterday, when the government – having mostly given up on trying to provide its citizens’ with even the most basic food needs – announced it has opened its border with Colombia for the second time this month to allow people to buy food and medicine unavailable at home in their country’s collapsing economy. Colombia’s government said 44,000 people crossed on Saturday to buy food, medicine and cleaning products and said it expected that number to almost double on Sunday.

Bus terminals were packed and hotels filled to capacity in the border town of San Antonio, with many traveling hundreds of miles to shop.

The result of the scramble to obtain much needed staples is shown in the photos below.


Venezuelan citizens waiting to cross into Colombia to buy supplies


More than 100,000 Venezuelans crossed into Colombia over the weekend in
search for food and medicine.


Venezuelan women buy food staples at a local shop in Cucuta, Colombia


Tebie Gonzalez holds a wad of Bolivar bills as she exchanges what remains of
her  and her husband’s savings.


Crowds of people flooded the bridge that links to the Colombian city of Cucuta
to cross the border on foot


Activists handed out anti-government pamphlets, looking to galvanize the
frustration that has characterized food riots


The border was heavily packed by Venezuelan troops, the crowds were mostly
orderly amin and atmosphere of tense excitement

According to Reuters, last week, over 35,000 people crossed over for the first time since the governor of Venezuela’s state of Tachira, opened the border.  Socialist President Nicolas Maduro shut the border last year in an effort to crack down on smuggling of subsidised products.

Venezuela’s product shortages have since worsened, creating further incentives to buy goods in Colombia and bring them back. Venezuelans routinely spend hours in lines at home seeking items ranging from corn flour to cancer medication to car parts. Shoppers complain of violence in lines, and looting is on the rise.

* * *

That was the good news. The bad news for ordinary Venezuelans is that unless they can permanently move to Colombia or any other country, their plight is only going to get worse.  The reason is that according to the IMF, Venezuela’s consumer-price inflation is forecast to hit 480% this year and top 1,642% in 2017, according to the International Monetary Fund.  At that point it will proceed into suborbital hyperinflationary territory, hitting 2,880% in 2018 before “plateauing” at 3,500% in 2019.

While it has been speculated that the insolvent nation will soon have to ask the IMF for a bailout, Venezuela, whose government severed ties with the IMF nearly a decade ago under its former socialist autocratic leader, Hugo Chávez,  hasn’t tried to restore relations with the world’s emergency lender. Cited by the WSJ,  IMF spokesman Gerry Rice said that “there has been no change in Venezuela’s relationship with the fund. The Venezuelan authorities have not contacted us.”

China, seeking to take advantage of poor political relations that many African and Latin American nations have with the U.S. and Western-based institutions like the IMF, has been giving Venezuela and other commodity exporters cheap loans to help tide them through the commodity slump. Last year, the country supposedly secured $10 billion in cheap credit to help keep it afloat. The problem is that that loan was pledged by oil at much higher prices, which means that now Venezuela has to pump overtime just to meet its obligations to Beijing, as we explained previously.

While those loans may keep the state budget limping along, including massive costly subsidy programs, and strengthen political ties to Beijing, they don’t require the deep policy overhauls many economists say are vital to repairing the broken economy.

Meanwhile, Venezuela’s problem is simple: a lack of credible currency as the value of the Bolivar has imploded as a result of the policies of Maduro, leading to a collapse in the economy.

“A lack of hard currency has led to scarcity of intermediate goods and to widespread shortages of essential goods—including food—exacting a tragic toll.” –IMF Western Hemisphere chief, Alejandro Werner, “Latin America and the Caribbean in 2016: Adjusting to a Harsher Reality”

The bottom line is that even the IMF appears to have given up: “we have dire forecasts…predicated on very limited information that we have.” Gian Maria Milesi-Ferretti, Deputy Director, Research Department, IMF, at the October 2015 World Economic Outlook press conference.

So for those who are curious what modern-day, runaway hyperinflation looks like, here is the IMF’s forecast of Venezuela’s inflation over the next three years. We can’t help but chuckle that even in this dire case the IMF chooses to put a positive spin on events, and predicts that instead of exponential inflationary growth, somehow the country’s CPI will “taper” by 2019. Good luck.

 

END OIL MARKETS/OIL ISSUES

Oil slides into the 44 dollar column after unexpected gasoline buildup

(courtesy zero hedge)

 

Oil Slides After Unexpected Gasoline Inventory Build

Following last week’s surprise distillates build (and lower than expected crude draw) API reported inventories largely in line with expectations (-2.3mm vs -2mm exp. This nevertheless managed to pump and dump crude futures before drifting slightly lower as Gasoline showed a bigger than expected build (+800k vs -500k exp.).

 

API

  • Crude -2.3mm (-2mm exp)
  • Cushing -84k (-100k exp)
  • Gasoline +805k (-500k exp)
  • Distillates -484k

This is the 9th weekly daw in crude in a row… and Gasoline showed a major build vs expected draw…

 

 

The reaction was chaos in crude with stops ripped lower and higher before drifting lower..

 

Charts: Bloomberg

 

END

Your early morning currency/gold and silver pricing/Asian and European bourse movements/ and interest rate settings/TUESDAY morning 7:00 am

Euro/USA   1.1031 DOWN .0037 (STILL  REACTING TO BREXIT/

USA/JAPAN YEN 106.23  UP 0.068(Abe’s new negative interest rate (NIRP), a total DISASTER/SIGNALS U TURN WITH INCREASED NEGATIVITY IN NIRP/JAPAN OUT OF WEAPONS TO FIGHT ECONOMIC DISASTER/NOW WILL INITIATE HELICOPTER MONEY

GBP/USA 1.3145 DOWN .01156(MORE STIMULUS PLANNED)

USA/CAN 1.3014 UP .0058

Early THIS TUESDAY morning in Europe, the Euro FELL by 37 basis points, trading now JUST above the important 1.08 level RISING to 1.1054; Europe is still reacting to Gr Britain BREXIT,deflation, announcements of massive stimulation (QE), a proxy middle east war, and the ramifications of a default at the Austrian Hypo bank, an imminent default of Greece, Glencore, Nysmark and the Ukraine, along with rising peripheral bond yield further stimulation as the EU is moving more into NIRP, and NOW THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE / Last night the Shanghai composite  CLOSED DOWN 1-.73 POINTS OR 0.35%   / Hang Sang CLOSED DOWN 6.97 PTS OR 0.23% /AUSTRALIA IS LOWER BY 25%/ EUROPEAN BOURSES ARE ALL IN THE RED   as they start their morning

We are seeing that the 3 major global carry trades are being unwound. The BIGGY is the first one;

1. the total dollar global short is 9 trillion USA and as such we are now witnessing a sea of red blood on the streets as derivatives blow up with the massive rise in the rise in the dollar against all paper currencies and especially with the fall of the yuan carry trade. The emerging market which house close to 50% of the 9 trillion dollar short is feeling the massive pain as their debt is quite unmanageable.

2, the Nikkei average vs gold carry trade ( NIKKEI blowing up and the yen carry trade HAS BLOWN up/and now NIRP)

3. Short Swiss franc/long assets blew up ( Eastern European housing/Nikkei etc.

These massive carry trades are terribly offside as they are being unwound. It is causing global deflation ( we are at debt saturation already) as the world reacts to lack of demand and a scarcity of debt collateral. Bourses around the globe are reacting in kind to these events as well as the potential for a GREXIT>

The NIKKEI: this TUESDAY morning: closed UP 225.46 OR 1.37% 

Trading from Europe and Asia:
1. Europe stocks ALL  IN THE RED AS  THEY START THEIR DAY

2/ CHINESE BOURSES / : Hang Sang CLOSED DOWN 161.89 OR 0.57%  ,Shanghai CLOSED DOWN 6.97 OR 0.23%   / Australia BOURSE IN THE RED: /Nikkei (Japan) CLOSED UP 225.46 OR 1.37%/India’s Sensex IN THE GREEN  

Gold very early morning trading: $1331.60

silver:$19.94 

Early TUESDAY morning USA 10 year bond yield: 1.550% !!! DOWN 2 in basis points from MONDAY night in basis points and it is trading WELL BELOW resistance at 2.27-2.32%. The 30 yr bond yield RISES to 2.269 DOWN 1 in basis points from MONDAY night. (SPREAD GOES AGAINST THE BANKS)

USA dollar index early TUESDAY morning: 96.93 UP 37 CENTS from MONDAY’s close.

This ends early morning numbers TUESDAY MORNING

END

 

And now your closing TUESDAY NUMBERS

 

Portuguese 10 year bond yield:  3.09% DOWN 4 in basis points from MONDAY  (does not buy the rally)

JAPANESE BOND YIELD: -0.225% DOWN 1/10  in   basis points from MONDAY

SPANISH 10 YR BOND YIELD: 1.19%  DOWN 4 IN basis points from MONDAY( this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 1.24 DOWN 1 IN basis points from MONDAY (again totally nuts/)

the Italian 10 yr bond yield is trading 5 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: -.030% UP  4 IN  BASIS POINTS ON THE DAY

END

 

IMPORTANT CURRENCY CLOSES FOR TUESDAY

Closing currency crosses for TUESDAY night/USA DOLLAR INDEX/USA 10 YR BOND YIELD/3:30 PM

 

Euro/USA 1.1014 DOWN .0054 (Euro =DOWN 54 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 106.06 DOWN 0.119(Yen DOWN 12 basis points/HELICOPTER MONEY )

Great Britain/USA 1.3025 UP 0.01744 ( Pound DOWN 175 basis points/BREXIT DECISION AFFIRMATIVE/QE TO START AGAIN/UK DOWNGRADED/NEW PRIME MINISTER T. MAY/

USA/Canada 1.3025-UP 0.0068 (Canadian dollar UP 9 basis points AS OIL FELL (WTI AT $45.43). Canada keeps rate at 0.5% and does not cut!

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

This afternoon, the Euro was DOWN by 54 basis points to trade at 1.1014

The Yen ROSE to 106.06 for a GAIN of 12 basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY TO COMMENCE

The POUND was DOWN 175 basis points, trading at 1.3087 AS PRIME MINISTER THERESA MAY TAKES OFFICE/CONCERNS ON BREXIT

The Canadian dollar FELL by 68 basis points to 1.3025, WITH WTI OIL AT:  $44.63

CANADIAN RATES WERE NOT CUT

The USA/Yuan closed at 6.6940

the 10 yr Japanese bond yield closed at -.225% DOWN 1/10  IN BASIS  points in yield/

Your closing 10 yr USA bond yield: DOWN 3 IN basis points from MONDAY at 1.554% //trading well below the resistance level of 2.27-2.32%)

USA 30 yr bond yield: 2.271 DOWN 5  in basis points on the day 

BANKS NEED THE LONGER BOND HIGHER IN YIELD: INSTEAD THE SPREAD LESSENS.

Your closing USA dollar index, 97.07 UP 50 CENTS  ON THE DAY/4 PM 

Your closing bourses for Europe and the Dow along with the USA dollar index closing and interest rates for TUESDAY

London:  CLOSED UP 1.95 OR 0.03%
German Dax :CLOSED DOWN  81.89 OR  0.81%
Paris Cac  CLOSED DOWN 27.61  OR 0.63%
Spain IBEX CLOSED DOWN 39.20 OR 0.46%
Italian MIB: CLOSED UP 88.96 OR 0.53%

The Dow was UP 25.96  points or 0.14%

NASDAQ down 19.41 points or 0.38%
WTI Oil price; 44.62 at 4:30 pm;

Brent Oil: 46.69

USA DOLLAR VS RUSSIAN ROUBLE CROSS:  63.64 (ROUBLE DOWN  80/100 ROUBLES PER DOLLAR FROM TUESDAY) 

TODAY THE GERMAN YIELD FALLS TO +.030%  FOR THE 10 YR BOND

END

This ends the stock indices, oil price, currency crosses and interest rate closes for today

Closing Price for Oil, 5 pm/and 10 year USA interest rate:

WTI CRUDE OIL PRICE 5 PM:44.57

BRENT: 46.69

USA 10 YR BOND YIELD: 1.552% 

USA DOLLAR INDEX: 97.03 up 47 cents

The British pound at 5 pm: Great Britain Pound/USA: 1.31028 down .0158 or 158 basis pts.

German 10 yr bond yield at 5 pm: -.030%

END

And now your more important USA stories which will influence the price of gold/silver

Trading Today in Graph form;  VERY IMPORTANT FOR YOU TO VIEW ALL THE CHARTS TODAY

Last-Minute Algo-Driven VIX-Crash Lifts Dow Green For 8th Straight Day

It was a cliffhanger today… 8 straight up days for the Dow… or a DOWN DAY!!!

 

The answer… simple – a VIX-crushing algo did the job…

 

Smashing VIX to its lowest close since Jul 30, 2015…down for the 6th straight day…

 

Only The Dow closed green today… DOW INDUSTRIALS RISE FOR EIGHTH STRAIGHT SESSION, LONGEST STREAK SINCE MARCH 2013

 

As Nasdaq ave back most of yesterday’s M&A exuberance….

 

Some context for what is happening… off the Brexit lows…

 

But gold and Bonds are still leading the way post-Brexit…

 

Treasury yields fell on the day with the long-end outperforming (more curve flattening)…

 

The USD index rose notably today (and JPY strengthened)… (biggest jump in DXY since Brexit)

 

Pushing DXY above 97.00 and its 200-day moving-average – back to 4-month highs…

 

Commodities were very mixed with Crude tumbling in USD strength, gold ignoring it and copper loving it…

 

Pushing crude to 2-month lows…

 

It’s probably nothing…

 

Definitely nothing… (thanks to ECB corporate bond buying)

 

Also, probably nothing…

 

Charts: Bloomberg

end

The real data in housing suggests that housing starts dropped .2% year over year

(courtesy zero hedge)

Housing Starts Decline Year-Over-Year Amid Downward Revisions

Thanks to generous downward revisions, June’s Housing Starts ‘jump’ of 4.8% MoM suggests everything is awesome. However, year-over-year Starts dropped 0.2%, the second annual drop in 3 months. Both single- and multi-family starts rose MoM but rental unit starts fell notably YoY (-22% versus a 13% rise for single-family). Overall permits rose 1.5% MoM (slightly better than expected) but multi-family permits rose more than single-family permits (+2.5% MoM vs +1.0% MoM) as Rental Nation USA continues to gather pace.

Both single- and multi-family Starts rose MoM…

But, the growth in housing starts is slowing…

As Permits bounce back with single-family nearing cycle highs…

Rental Nation USA continues but one has to wonder if everything is so awesome, why are builders slowing their starts year-over-year? Especially amid constant whining about supply from the realtors?

 

end

The real state of the uSA economy: (courtesy David Stockman/ContraCorner) This ‘Market’ Discounts Nothing Except Monetary Cocaine by  • July 18, 2016

Another one of the Hedge Fund high rollers, Marc Lasry of Avenue Capital, recently confessed on bubblevision that 2200 on the S&P 500 doesn’t make sense to him, either.

But his reasoning went right to the crux of the bubble implosion lurking just ahead. According to Lasry, the market may be discounting a “stronger-than-expected” economic rebound and thus only appears to be ahead of itself:

The U.S. stock market, making a string of recent record highs, “doesn’t make much sense,” distressed debt specialist Marc Lasry told CNBC Monday, sharing the view of fellow billionaire investment titan Larry Fink.

 “Everyone is a bit surprised,” said Lasry, co-founder of Avenue Capital, which has $11.3 billion of assets under management. “But the market is telling us what’s going to happen next year [or] the next two years.”

While questioning the advance in stocks, Lasry said on “Squawk Box” the market may be signaling a stronger-than-expected U.S. economy, with a growth rate somewhere in the 2 to 3 percent range….”

Ah, the hoary myth of a market that processes information, discovers price and discounts the future. Apparently, no one told Lasry what the bereavers for free markets and honest money had long ago confessed. To wit, “Mr. Market, we hardly knew ya”.

So the singular change in relevant information from the post-Brexit low has nothing to do with the outlook for economic growth or corporate profits; it’s just another excited rave in the casino after the latest batch of monetary cocaine—-helicopter money—-was passed all around.

But these revelers are going to need something stronger than the hope for “helicopter money” to avoid annihilation when the long-running central bank con job finally collapses. Indeed, that denouement lies directly ahead because helicopter money is a bridge too far.

As we demonstrated last week, there is really nothing to it except more of the same aggressive monetization of the public debt that has been going on for nearly two decades. That is, whether the central banks buy public debt from the inventories of the 23 prime dealers and other market speculators or directly from the US treasury makes no technical difference whatsoever.

The end state of “something for nothing” finance is the same in both cases. In fact, “helicopter money” is just a desperate scam emanating from the world’s tiny fraternity of central bankers who have walked the financial system to the brink, and are now trying to con the casino into believing they have one more magic rabbit to pull out of the hat.

They don’t. That’s because it takes two branches of the state to tango in the game of helicopter money. The unelected monetary central planners can run the digital printing presses at whim, and continuously “surprise” and gratify the casino gamblers with another unexpected batch of the monetary drugs.

That has been exactly the pattern of multiple rounds of QE and the unending invention of excuses to prolong ZIRP into its 90th month. The resulting rises in the stock averages, of course, were the result of fresh liquidity injections and the associated monetary high, not the discounting of new information about economics and profits.

By contrast, helicopter money requires the peoples’ elected representatives to play. That is, the Congress and White House must generate large incremental expansions of the fiscal deficit—so that the central bankers can buy it directly from the US treasury’s shelf, and then credit the government’s Fed accounts with credits conjured from thin air.

To be sure, the cynics would say—–no problem! When have politicians ever turned down an opportunity to borrow and spend themselves silly, and to than be applauded, not chastised, for the effort?

But that assumes we still have a functioning government and that today’s politicians have been 100% cured of their atavistic fears of the public debt.

Alas, what is going to cause helicopter money to be a giant dud—-at least in the US——is that neither of these conditions are extant.

Regardless of whether the November winner is Hillary or the Donald, there is one thing certain. There will be no functioning government come 2017. Washington will be the site of a political brawl of deafening and paralyzing aspect—–like none in modern US history, or ever.

At the same time, the existing budget deficit is already reversing, and will end the current year at more than $600 billion. That’s baked into the cake already based on the recent sharp slowdown in revenue collections, and means that the FY 2016 deficit will be one-third higher than last year’s $450 billion.

Moreover, when the new Congress convenes next February the forward budget projections will make a scary truth suddenly undeniable. That is, the nation is swiftly heading back toward trillion dollar annual deficits under existing policy and even before the impact of a serious recessionary decline.

The reality of rapidly swelling deficits even before enactment of a massive helicopter money fiscal stimulus program will scare the wits out of conservative politicians, and much of the electorate, too.  And the prospect that the resulting huge issuance of treasury bonds will be purchased directly by the Fed will only compound the fright.

What fools like Bernanke haven’t reckoned with is that sheer common sense has not yet been extirpated from the land. In fact, outside of the groupthink of few dozen Keynesian academics and central bankers, the very idea of helicopter money strikes most sensible people as preposterous, offensive and scary.

Even if Wall Street talks it up, there will be massive, heated, extended and paralyzing debate in Congress and the White House about it for months on end. There is virtually no chance that anything which even remotely resembles the Bernanke version of helicopter money could be enacted into law and become effective before CY 2018.

Will the boys and girls still in the casino after the upcoming election gong show patiently wait for their next fix from a beltway governance process that is in sheer pandemonium and indefinitely paralyzed?

Than again, why would anyone think the stock market is actually discounting an economic recovery. Reported LTM earnings of the S&P 500 are $87 per share, and even if there is no further deterioration from this quarter’s 5% decline during the balance of the year, CY 2016 earnings will come in at barely $89 per share.

That means the market closed today at 24X the S&P 500’s prospective earnings for 2016. So what, therefore, if GDP grows at 2-3% next year?

Even if that were to happen, and notwithstanding the self-evident headwinds in China, Japan, the eurozone, the middle east, the faltering oil market and countless more, how does that cause an earnings rebound that is remotely close to the “17x/$130” being suddenly ballyhooed on the Wall Street as the reason for the helicopter money high now underway?

After all, that’s a 30% gain from even the ex-items “operating earnings” version of profits recorded for the last 12 months of $100 per share.

Nominal GDP is growing at 3.5% annually at best—-even in the absence of an eventual recessionary slump. In fact, since CY 2012 the nominal GDP growth rate has averaged just 3.3%.

So baring some massive breakout in profit margins, there is no way for next year’s GAAP earnings to hit even $95 per share, which is still 23X.

Yet that would still be discounting what would be a 102 month old business expansion by year-end 2017. Even that unlikely outcome, given that the business cycle has now been outlawed, would absolutely end in recession and a cyclical collapse in earnings not long thereafter.

But here’s the thing. There is no “discounting” involved in the madness currently swirling in the stock market because there is not a remote chance of a margin break-out that could possibly compensate for the tepid growth of GDP and sales.

To wit, even if S&P 500 earnings hit the current consensus for Q2, operating margins will end up at the tippy top of the historic trend. According to Howard Silverblatt’s latest estimates, the Q2 operating margin will come in at 9.9%.

But that’s the second highest quarterly margin in the last decade, 15% higher than the 8.6% average since 2006, and 30% higher than the long-run average.

In short, the market is not trading on a rebound in GDP, revenue growth or a breakout of already elevated profit margins. It’s just high on one more dose of monetary cocaine that in short order will prove to have been not even that.

 

end

 

It is getting real bad in the states.  another police officer shot and he is in critical condition

(courtesy zero hedge)

Police Officer Shot In Kansas City

Another day, another police officer shot. Moments ago KSHB reoprted that A Kansas City police officer has been shot, according to the police chief. Chief Terry Zeigler tweeted that an officer had been shot at 22nd and Haskell.

Terry Zeigler @KCKPDChief

We have an officer shot at 22nd & Haskell. Start prayers, unknown condition.

3:02 PM – 19 Jul 2016

According to police, officers responded to a shots fired call at about 1:30 p.m. at Second and Edgerton. One person was taken into custody. As an officer pursued more suspects, more shots were fired, and the officer was hit. The officer was taken to a hospital and is in critical condition.

Police continue to search for the other suspects.

end Wait until they see the gold/silver manipulation as Deutsche bank is providing the data to our class actions lawyers Berger, Montague (courtesy Bloomberg) Fed Bars Ex-UBS Trader Gardiner Over Currency Manipulation Tom Schoenberg Tschoenberg22 David McLaughlin damclaugh July 19, 2016 — 3:30 PM EDTUpdated on July 19, 2016 — 4:12 PM EDT

http://www.bloomberg.com/api/embed/iframe?id=kLBeA0slRXi_rh8gzmJ3gg” />

Why the Fed Banned Former UBS Trader Matthew Gardiner

The U.S. Federal Reserve has given a lifetime ban from the banking industry to former UBS Group AG trader Matthew Gardiner saying he rigged currency benchmarks.

Gardiner used electronic chat rooms to facilitate the manipulation of foreign exchange benchmarks and to disclose confidential customer information to traders at other banks, the Fed said in a statement Tuesday.

Gardiner has been helping U.S. prosecutors who are trying to build currency-rigging cases against individuals, two people familiar with the matter told Bloomberg News in April. He hasn’t been publicly charged and it isn’t clear if he has been granted immunity for cooperation. A lawyer for Gardiner didn’t immediately respond to an e-mail seeking comment.

Bloomberg reported in April that U.S. officials were on track to charge individuals over currency-rate manipulation as soon as this summer.

Gardiner participated in The Cartel instant-messaging group, which was at the heart ofguilty pleas the U.S. government wrung from five global banks last year.

Announcing the bank convictions in May 2015, the U.S. said traders working for the institutions — UBS, JPMorgan Chase & Co., Citigroup Inc., Royal Bank of Scotland Group Plc and Barclays Plc — had conspired to fix currency benchmarks using the instant-messaging group, which participants also referred to as The Mafia.

The Fed brought enforcement actions in 2015 against UBS and Barclays Plc, where Gardiner also previously worked, over currency manipulation. Those actions resulted in UBS and Barclays paying a total of $684 million in penalties, the Fed said.

Before it’s here, it’s on the Bloomberg Terminal.LEARN MORE end That is all for today I will see you tomorrow night h.

July 18/Turkish coup is definitely staged/USA warships in disputed China South Sea/War or words exchanged with China/Illinois health insurer closes doors leaving many stranded without coverage/Calpers just recorded its worst annual performance in years...

Mon, 07/18/2016 - 19:04

Gold:1328.40 UP $0.10

Silver 20.05  DOWN 5 cents

In the access market 5:15 pm

Gold: 1328.50

Silver: 20.06

.

And now for the July contract month

For the July gold contract month,  we had a small 76 notices served upon for 7,600 ounces. The total number of notices filed so far for delivery:  5050 for 505,000 oz or 15.732 tonnes

In silver we had 49 notices served upon for 245,000 oz.  The total number of notices filed so far this month for delivery:  1829 for 9,145,000 oz

It sure looks to me like the bankers are trapped in silver.  The OI continues to either stay constant or rise.  Today it rose despite the drubbing silver stock yesterday.Thus expect continue raids from our  bankers as they desperately try and lower their record high open interest shorfall in silver.  When silver last hit $49.00 the open interest in silver was 216,000. Today we have a higher OI and yet the price is 29 dollars lower.

 

Let us have a look at the data for today

.

Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 305.20 tonnes for a gain of 2  tonnes over that period

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

In silver, the total open interest ROSE BY 288 contracts UP to 217,504, AND STILL CLOSE TO AN  ALL TIME RECORD. THE OI ROSE IN CONTRAST TO THE  PRICE OF SILVER WHICH FELL BY 18 CENTS IN FRIDAY’S TRADING.In ounces, the OI is still represented by just over 1 BILLION oz i.e. 1.088 BILLION TO BE EXACT or 155% of annual global silver production (ex Russia &ex China).

In silver we had 49 notices served upon for 245,000 oz.

In gold, the total comex gold ROSE BY 3653 contracts despite gold’s FALL in price FRIDAY to the tune of $3.00. The total gold OI stands at 613,005 contracts.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

With respect to our two criminal funds, the GLD and the SLV:

GLD

we had a good sized deposit in gold inventory./ the deposit: 2,37 tonnes

the GLD is a massive fraud and a massive farce on investors!

Total gold inventory rest tonight at: 965.22 tonnes

SLV

we had no changes into the SILVER INVENTORY TO THE SLV

Inventory rests at 348.580 million oz.

First, here is an outline of what will be discussed tonight:

1. Today, we had the open interest in silver ROSE by 288 contracts UP to 217,504 as the price of silver FELL BY 18 cents with FRIDAY’S trading. The gold open interest ROSE by 3,653 contracts up to 613,005 as  the price of gold FELL by $3.00 ON FRIDAY.

(report Harvey).

 

2 a) Gold/silver trading overnight Europe, Goldcore

(Mark OByrne/zerohedge

3. ASIAN AFFAIRS

 i)Late  SUNDAY night/MONDAY morning: Shanghai closed DOWN 10.73 POINTS OR 0.35%/ /Hang Sang closed UP 143.93 OR 0.66%. The Nikkei closed FOR HOLIDAY/  Australia’s all ordinaires  CLOSED UP 0.53% Chinese yuan (ONSHORE) closed DOWN at 6.6738 ON BIG DEVALUATION /Oil FELL to 45.93 dollars per barrel for WTI and 47.36 for Brent. Stocks in Europe MOSTLY IN THE RED. Offshore yuan trades  6.7131 yuan to the dollar vs 6.67038 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE WIDENS CONSIDERABLY AS  MORE USA DOLLARS LEAVES THEIR SHORES. 

REPORT ON JAPAN  SOUTH KOREA AND CHINA a) REPORT ON JAPAN

Today’s stock market rises is mainly due to the the higher: USA/Yen cross.  This carry trade is due to investors borrowing yen knowing it will fail and buying assets like the S and p

( zero hedge)

b) REPORT ON CHINA

 a. This is scary! USA warships are surrounding the disputed Chinese waters. And as I have stated on many occasions:  China is the long on the comex in both gold and silver ready to pounce on a moments notice:

(courtesy Mac Slavo/SHTFPlan.com)

b. war of words continue unabated.  And you do not think that it is China that is standing for gold and silver at the comex

(courtesy zero hedge)

4 EUROPEAN AFFAIRS

Deutsche bank claims to love helicopter money.  I guess that the big inflation that is forthcoming will basically knock its debt to zero as the world hyperinflates:

(courtesy zero hedge)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

i)Sunday morning:  Erdogan’s arch enemy Gulen accuses him of staging the coup.  Gulen is absolutely correct when he states that the “coup” was staged!!

( zerohedge)

ii)Sunday: This is a major reason why everyone believes the coup was staged:  Two F 16 were staring at Erdogan’s plane as it was coming towards Istanbul and they did not fire!!

( zero hedge)

iii)Sunday: This is a major reason why everyone believes the coup was staged:  Two F 16 were staring at Erdogan’s plane as it was coming towards Istanbul and they did not fire!!

( zero hedge)

iv)Sunday afternoon:  Erodgan arrest 6,000 citizens in a purge.  Amazing how he prepared the list in a such a short time and knew who were the “perpetrators”.  In another both the all important Incirlik Airbase commander was detained

(courtesy zero hedge)

v)Sunday afternoon: John Kerry blasts Turkey for accusing the USA of orchestrating the”failed: coup.  He stated that he had no idea the coup was forthcoming: Erdogan demands Gulen to be extradicted!

( zero hedge)

vi)Monday morning: This morning 8,000 cops has been added to the list to people purged by Erdogan and the world is now very aware that the coup was staged:

(courtesy zero hedge)

vii)Late Monday morning:

Kerry threatens Turkey’s expulsion from NATO: however the threats look hollow. Europe remains silent as Turkey holds 2 million migrants in its country.  The USA is demanding the rule of law and no killing of the purged citizens!

( zero hedge)

viii)Late Monday morning;  What on earth is this madman planning?:Erdogan halts all public employees from travelling (so it is easier to hunt them down!)

PART A

( zero hedge)

 

Part B:  What on earth is this madman planning?:

(courtesy zerohedge)

ix)I do not think that this was centrally planned!   Turkish stocks crash by 10% ..the most in over 3 years!

( zero hedge)

 

x)Your scapegoat!  What a complete farce!!

( zero hedge)

6.GLOBAL ISSUES

none today

7.OIL ISSUES

Oil tumbles back to the into 45 dollar handle as the staged coup  (“failed” coup) does not hinder flows:

( zero hedge)

8.EMERGING MARKETS

none today

9. PHYSICAL STORIES

Bill Murphy interviewed by E. Johnson states that silver is holdup up quite well against huge suppression efforts:

( Bill Murphy/GATA/Finance liberty)

ii)DAVE is in my camp with respect to GLD and SLV as being complete frauds:

( Dave Kranzler/IRD)

10.USA STORIES WHICH MAY INFLUENCE THE PRICE OF GOLD/SILVER

i)The big non profit insurance Land of Lincoln is closing its doors leaving 49,000 policy holders in the dark. They will lose coverage in a couple of months.  It is the 16th co op to fail as it lost 90 million dollars due to the fact that premiums could not match payouts. Also Connecticut saw its only op op bite the dust.  Obamacare is one complete failure. Wait until November when the premiums are set to rise by 30 -50%.

( Mike Krieger)

ii)Big derivative underwriter Bank of America reports that its profit tumbles by 19%

( zero hedge/B of A)

iii)This ought to be good:  SEC reviewing potential fraud charges against Chrysler: for falsely reporting sales and number of vehicles sold.  No doubt if Chrysler is doing it then they all are:

( zerohedge)

 

iv)The largest uSA pension fund, CALPERS just recorded its worst annual return due to heavy loses in stocks  This will happen to many more hedge funds as the true value of stocks is well below what is trading right now:

( zero hedge)

v.After hours:

One of the 4 horsemen driving the USA markets is NETFLIX and it has been a “growth” story.  Well in after hours the company stated that the company is just not growing as fast as they would like.  The market agrees!

( zero hedge)

vi)This is huge:  the Republican platform calls for the return to Glass Steagall. This will bury the banks:

( zero hedge) Let us head over to the comex: The total gold comex open interest  ROSE TO AN OI level of 613,005 for a  GAIN of 3,653 contracts DESPITE  THE FACT THAT THE PRICE OF GOLD FELL BY $3.00 with respect to YESTERDAY’S TRADING. We are now in the non active month of July. Somebody big is continually standing for the gold metal as July is generally a poor delivery month. The open interest for the front July contract stands at 76 for a LOSS of 344 contracts. We had 352 notices filed on yesterday, so we gained 8 contracts or an additional 800 gold ounces that will stand for delivery in this non active month of July. We  are again witnessing the same scenario as in May and June whereby the front delivery month increases in OI standing for metal or a slight contraction.  The next big active contract month is August and here the OI FELL by 3,779 contracts down to 317,354  as this month continues its wind down until first day notice for the August contract, Friday,July 29/2016: less than  2 weeks away.  The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was  GOOD at 208,317. The confirmed volume  yesterday (which includes the volume during regular business hours + access market sales the previous day was GOOD at 221,196 contracts.The comex is not in backwardation. Today, we had 68 notices filed for 6800 oz in gold And now for the wild silver comex results. Total silver OI ROSE by 288 contracts from 217,216 UP TO 218504.  We are still close to the new all time record high for silver open interest set on June 24. The front active delivery month is July and here the OI fell BY 142 contracts down to 785. We had 190 notices served on YESTERDAY so we gained 48 contracts or 240,000 additional silver ounces that will stand for delivery.The next non active month of August saw it’s OI fall by 18 contracts down to 490. The next big active month is September and here the OI ROSE by 143 contracts UP to 157,716.   The volume on the comex today (just comex) came in at 60,744 which is excellent. The confirmed volume yesterday (comex + globex) was EXCELLENT at55,123. Silver is not in backwardation. London is in backwardation for several months. We had 49 notices filed for 245,000 oz. in silver JULY contract month :INITIAL standings for JULY July 18. Gold Ounces Withdrawals from Dealers Inventory in oz   nil OZ Withdrawals from Customer Inventory in oz  nil 335,352.414 oz HSBC Deposits to the Dealer Inventory in oz NIL Deposits to the Customer Inventory, in oz   351,419.640 oz JPMORGAN SCOTIA No of oz served (contracts) today 352 notices  35,200 oz No of oz to be served (notices) 68 contracts 6800 oz Total monthly oz gold served (contracts) so far this month 5050 contracts (505,00o oz) (15.707 tonnes) Total accumulative withdrawals  of gold from the Dealers inventory this month   NIL Total accumulative withdrawal of gold from the Customer inventory this month   561,853.6 OZ Today we had 0 dealer DEPOSIT total dealer deposit: NIL   0z Today we had 0 dealer withdrawals: total dealer withdrawals:  nil oz We had 2 customer deposit: i) Into JPM: 335,344.64 oz ii) Into Scotia; 26,075.000 oz ( 500 kilobars) Total customer deposit: 351,419.640 oz Today we had 1 customer withdrawal:  i) Out of HSBC: 335,352.415 oz Total customer withdrawals  335,352.415   oz Today we had 0  adjustments: Today, 0 notices was issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 18 contracts of which 0 notices was stopped (received) by JPMorgan dealer and 10 notices was stopped (received)  by JPMorgan customer account.  To calculate the initial total number of gold ounces standing for the JULY contract month, we take the total number of notices filed so far for the month (5050) x 100 oz  or 505,000 oz , to which we  add the difference between the open interest for the front month of JULY  (76 CONTRACTS) minus the number of notices served upon today (68) x 100 oz   x 100 oz per contract equals 505,800 oz, the number of ounces standing in this active month.    Thus the INITIAL standings for gold for the JULY. contract month: No of notices served so far (5050) x 100 oz  or ounces + {OI for the front month (76) minus the number of  notices served upon today (18) x 100 oz which equals 509900 oz standing in this non   active delivery month of JULY  (15.732 tonnes). We  gained 800 gold ounces that will stand for metal in this non active month of July. Since the comex allows GLD shares to be used for settling, it may take quite a while for the physical gold to enter the comex vaults.  So far I have seen little evidence of any settling of contracts but I will continue to monitor it for you.    We now have partial evidence of gold settling for last months deliveries We now have  +  6.889 TONNES FOR MAY + 49.09 TONNES FOR JUNE +  15.732 TONNES FOR JULY + 12.3917 tonnes (April) +2.2311 tonnes (March) + 7.99 (total Feb)- .940 (probable delivery on March 1) tonnes -.0434 tonnes (March 11,12,17,18) + March 31: 1.2470 and then  April 1,2: – .0006 tonnes  and last week April 16.3203 and April 22 .(0009 tonnes) + april 29  .205 tonnes + May 5:  3.799 and May 6: 1.607 tonnes –MAY 12  .0003- May 18: 1.5635 tonnes-May 19/   2.535 tonnes-May 27 .0185 – .024 TONNES MAY 31 -jUNE 4: .5044 ; june 10 -.0008 / June 22:0.48 tonnes /June 23: 0489 tonnes, June 24..018; june 29 .036 tonnes; JUNE 30 2.49 /july 1 17.78 tonnes = 45.584 tonnes still standing against 46.653 tonnes available.  Total dealer inventor 1,532,061.922 tonnes or 47.653 tonnes Total gold inventory (dealer and customer) =9812,280.993 or 305.700 tonnes    Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 305.70 tonnes for a  gain of 3  tonnes over that period.    THE GOLD COMEX IS AN ABSOLUTE FRAUD. THE USE OF KILOBARS AND EXACT WEIGHTS MAKES THE DATA TOTALLY ABSURD AND FRAUDULENT!!      end GOOD ACTIVITY AGAIN INSIDE THE SILVER COMEX And now for silver   JULY INITIAL standings  July 18.2016 Silver Ounces Withdrawals from Dealers Inventory NIL Withdrawals from Customer Inventory  475,868.286 OZ (BRINKS, CNT JPM) Deposits to the Dealer Inventory nil oz CNT Deposits to the Customer Inventory  482,662.700 OZ ,SCOTIA No of oz served today (contracts) 49 CONTRACTS  (245,000 OZ) No of oz to be served (notices) 737 contracts 3,685,000 oz) Total monthly oz silver served (contracts) 1829 contracts (9,145,000 oz) Total accumulative withdrawal of silver from the Dealers inventory this month  NIL oz Total accumulative withdrawal  of silver from the Customer inventory this month  5,035,389.7 oz today we had 0 deposit into the dealer account total dealer deposit :NIL oz we had 0 dealer withdrawal: : total dealer withdrawals:  NIL oz we had 3 customer withdrawals: i)  out of BRINKS: 4234.800 oz ii) out of Scotia: 90,783,03  oz iii) out of JPM: 300,012.700 oz iv)  out of CNT: 80,837.706 oz Total customer withdrawals: 475,868.286 oz We had 1 customer deposit: i)Into Scotia: 482,662.700 oz : total customer withdrawals:482,662.700. oz        we had 0 adjustment The total number of notices filed today for the JULY contract month is represented by 49 contracts for 245,000  oz. To calculate the number of silver ounces that will stand for delivery in JULY., we take the total number of notices filed for the month so far at (1829) x 5,000 oz  = 9,145,000 oz to which we add the difference between the open interest for the front month of JULY (785) and the number of notices served upon today (49) x 5000 oz equals the number of ounces standing    Thus the initial standings for silver for the JULY contract month:  9145(notices served so far)x 5000 oz +(785 OI for front month of JULY ) -number of notices served upon today (49)x 5000 oz  equals  12,825,000 oz  of silver standing for the JULY contract month. We gained 48 contracts or 240,000 additional oz that will  stand for delivery in this active month of July.   Total dealer silver:  27.180 million (close to record low inventory   Total number of dealer and customer silver:   152.708 million oz (close to a record low) The total open interest on silver is NOW NEAR its all time high with the record of 218,979 being set June 24.2016.  The registered silver (dealer silver) is NOW NEAR  multi year lows as silver is being drawn out at both dealer and customer levels and heading to China and other destinations. The shear movement of silver into and out of the vaults signify that something is going on in silver. END And now the Gold inventory at the GLD July 18./ a good sized deposit of 2.37 tonnes of gld into GLD/this is a paper gold entry/inventory rests at 965.22 tonnese July 15./no change in gold inventory at the GLD/Inventory rests at 962.85 tonnes July 14/a good sized withdrawal of 2.37 tonnes from the GLD/this would be a “paper withdrawal”/inventory rests tonight at 962.85 tonnes.. July 13/ we had a huge paper withdrawal of 15.98 tonnes of gold from the GLD/inventory rests at 965.22 tonnes. July 12/we had no changes in gold inventory at the GLD/Inventory rests at 981.20 tonnes July 11/no changes in gold inventory at the GLS/Inventory rests at 981.20 tonnes JULY 8/ A  good sized deposit of 2.91 tonnes into the GLD/Inventory rests at 981.20 July 7/a good sized withdrawal of 4.15 tonnes from the GLD/Inventory rests at 978.29 tonnes (this was nothing but a paper entry/no physical moved) JULY 6/WHAT A FRAUD!! A MASSIVE 28.53 TONNES OF PAPER GOLD ADDED INTO THE GLD July 5/no change in inventory/rests tonight at 982.44 July 1/a huge change in the gold inventory/ a deposit of 3.86 tonnes/rests tonight at 953.91 tonnes JUNE 30/no change in gold inventory /inventory rests tonight at 950.05 tonnes June 29/ a good sized deposit of 2.67 tonnes/inventory rests at 950.05 tonnes June 28/ a huge deposit of 13.067 tonnes into inventory/new inventory rests so far at 947.38 tonnes.  This was a paper addition June 27/a huge deposit of 18.415 tonnes into the GLD inventory/the new inventory rests at 934.313 tonnes.  The addition was a paper addition and not physical xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx July 18 / Inventory rests tonight at 965.22 tonnes

end

Now the SLV Inventory July 18/no change in silver inventory at he SLV/inventory restss at 348.580 million oz July 15/ no change in  silver inventory at the SLV/Inventory rests at 348.580 million oz July 14/no changes in silver inventory at the SLV/Inventory rests at 348.580 million oz/ July 13./ a huge addition of 5.187 million oz into silver inventory at the SLV/ this is a paper addition as inventory rests at 348.580 million oz July 12/ a huge addition of 1.94 million oz into silver inventory at the SLV/a “paper” addition/inventory rests at 343.393 million oz July 11/no changes in silver inventory/rests tonight at 341.453 million oz JULY 8/no change in silver inventory/rests tonight at 341.453 million oz July 7./no change in silver inventory/inventory rests at 341.453 million oz JULY 6/AND ANOTHER FRAUD!! A MASSIVE 7.909 MILLION OZ ADDED INTO THE SLV/INVENTORY RESTS AT 341.453 MILLION OZ july 5/no change in silver inventory/inventory rests at 333.554 milllion oz july 1/no change in silver inventory/inventory rests at 333.544 million oz JUNE 30/no changes in silver inventory/inventory rests at 333.544 million oz June 29/ a small deposit of 760,000 oz/Inventory rests tonight at 333.544 million oz/ June 28/no change in silver inventory/rests tonight at 332.784 million oz June 27/ a small deposit of 570,000 oz in the SLV inventory/Inventory rests at 332.784 million oz . July 18.2016: Inventory 348.580 million oz end NPV for Sprott and Central Fund of Canada 1. Central Fund of Canada: traded at Negative 3.6 percent to NAV usa funds and Negative 4.0% to NAV for Cdn funds!!!!  (the discount is starting to disappear) Percentage of fund in gold 59.2% Percentage of fund in silver:39.6% cash .+1.2%( July 18/2016).  2. Sprott silver fund (PSLV): Premium rises  to +0.75%!!!! NAV (July18/2016)  3. Sprott gold fund (PHYS): premium to NAV  rises TO  0.97% to NAV  ( July 18/2016) Note: Sprott silver trust back  into POSITIVE territory at +.75% /Sprott physical gold trust is back into positive territory at +0.97%/Central fund of Canada’s is still in jail.      

end

And now your overnight trading in gold,MONDAY MORNING and also physical stories that may interest you: Trading in gold and silver overnight in Asia and Europe Mark O’Byrne/David Russell (Goldcore) Gold, Trump and Rates: Bank That Foresaw Rally Flags $1,500 by GoldCore Jul 18, 2016 7:33 AM 0 SHARES

Financial Market Strategists are advising their clients to “buy gold on dips”.

“Gold has seen four major bull markets since 1970: this is another one,” Benjamin Wong, foreign exchange strategist at the Singapore-based bank’s Chief Investment Office, said in an e-mail. “The market has yet to deal with the political uncertainty going into the Nov. 8 presidential election.”

Fears surrounding Brexit saw gold rally to the recent highs of $1,375. However, as the uncertainty created in the wake of the “Leave” vote wanes, global equity markets have rallied, helped in no small part by surprisingly strong employment numbers from the U.S.

However, some feel that the gold market retracement is only temporary and that,“the market has yet to deal with the political uncertainty going into the Nov. 8 presidential election.”

Wong is advising clients that any dips to $1,296 to $1,300 would be opportunities to accumulate. The next rebound may top resistance at about $1,380 and move prices toward $1,437 to $1,455, he believes. “Longer term, if the full force of the inverse head-and-shoulders pattern is applied, there remains scope for $1,525.”

You can read the full article here 

 

Gold and Silver Bullion – News and Prices

Gold falls as safe haven appeal wanes after failed Turkey coup (Reuters)

Turkish Military coup fails and Hundreds are arrested as Erdogan vows revenge (Daily Mail)

Hedge Funds Finally Say No to Gold as U.S. Shares Smoke Records (Bloomberg)

Gold imports fall for the fifth month in 2016, exports grow after 18 months (IBTimes)

Citigroup’s Willem Buiter Says ‘Would Hold Gold’ (Theepochtimes)

‘Big Mother’ investors from mainland China buy big as yuan falls and global economy shudders (scmp)

The Worst Gold Bear Is Now The Most Convinced Bull (Zerohedge)

Gold Prices (LBMA AM)

18 July: USD 1,326.15, EUR 1,200.298 & GBP 1,000.050 per ounce
15 July: USD 1,330.50, EUR 1,194.789 & GBP 994.150 per ounce
14 July: USD 1,325.705, EUR 1,192.99 & GBP 1,001.96 per ounce
13 July: USD 1,340.25, EUR 1,211.45 & GBP 1,009.74 per ounce
12 July: USD 1,352.85, EUR 1,217.84 & GBP 1,029.11 per ounce
11 July: USD 1,358.25, EUR 1,231.66 & GBP 1,059.95 per ounce
08 July: USD 1,356.10, EUR 1,224.83 & GBP 1,047.45 per ounce

Silver Prices (LBMA)

18 July: USD 19.72, EUR 17.83 & GBP 14.89 per ounce
15 July: USD 20.14, EUR 18.08 & GBP 15.06 per ounce
14 July: USD 20.25, EUR 18.23 & GBP 15.15 per ounce
13 July: USD 20.29, EUR 18.31 & GBP 15.25 per ounce
12 July: USD 20.35, EUR 18.35 & GBP 15.47 per ounce
11 July: USD 20.47, EUR 18.53 & GBP 15.78 per ounce
08 July: USD 19.72, EUR 17.82 & GBP 15.20 per ounce


Recent Market Updates

– “We Are On the Cusp of an Explosion in the Silver Price” – John Embry
– Stocks Rally – Is Brexit Systemic Risks Contained?
– Britain has a new prime minister – here’s what that means for you
– Metals Caught Between Global Gloom, U.S. Job Gains as Gold Slips
– Central Bank Resumes Monthly Gold Buying in Bid to Diversify Reserves
– Property Fund Turmoil in the UK has Eerie Echoes of Bear Stearns
– “In Gold We Trust” Annual Report – New Bull Market “Emerging”
– 3 Charts Show “How Precious Brexit Is” for Gold and Silver Bullion
– Gold, Silver Best Performing Assets In H1, 2016 – Up 26% & 38%
– Gold Surges to $1,313/oz – Fed Concerned Re Outlook, BREXIT and May “Consider Using Helicopter Money”
– Gold Prices Higher For 5th Session On BREXIT and FED

end

A gold ETF that lets you redeem shares for gold

Submitted by cpowell on Sat, 2016-07-16 14:24. Section:

There are others, like the Sprott gold and silver ETFs. But it’s good that the idea of redeemability for ordinary investors is catching on and that suspicion of “paper gold” is growing.

* * *

A Gold ETF That Lets You Redeem Shares for Gold

By Lewis Braham
Barron’s, New York
Saturday, July 16, 2016

How much is fear worth? That, in a nutshell, is the difficulty in valuing gold. It’s the currency of last resort for those who are afraid that all other assets will eventually become worthless. The greater investors’ angst, the higher gold’s value. Thus it commands a “fear premium” unlike any other asset.

That anxiety can translate into a desire among certain investors to keep physical gold in vaults in their basements, or shoved under their mattresses. If the much-anticipated global financial meltdown or zombie apocalypse occurs, having a bar or two on hand could prove useful — if not to barter, then to at least bash a zombie over the head. ..

If you’re among the nail-biting set, this year may be the one to buy the VanEck Merk Gold Trust exchange-traded fund (ticker: OUNZ). With Brexit in the rearview mirror and a contentious presidential election on the horizon, there is no shortage of fear. VanEck Merk is up 26.7% year-to-date, a fraction higher than the largest gold ETF, the $41.7 billion SPDR Gold Trust (GLD).

Both ETFs have identical 0.4% expense ratios. But VanEck has a unique feature that gives it added appeal. Retail investors can redeem their shares in ounces of physical gold that will be delivered to them for a fee. This made the upstart ETF, which has gathered $156 million since its May 2014 launch, very interesting, even during last year’s bear market. It had a 46% growth in investor inflows in 2015, according to Morningstar, while the precious-metals sector saw minus 6.4% in outflows.

That’s off a small base, but the fact that investors were buying this fund while gold was getting hammered is significant. “Since the launch of SPDR Gold Trust, there have been some in the gold investment community who refer to it in a negative way as ‘paper gold,'” says Dave Nadig, FactSet’s director of ETFs. “There’s a belief system that’s somewhat conspiratorial that there’s no gold in the vault. Having a sense of physical access to the gold is important to those investors.”

Indeed, Axel Merk, who as president of Merk Investments designed the new ETF, consulted the doubting Thomases in the gold blogosphere before launching it. “When we structured this ETF, we wanted to offer what SPDR Gold offers and more,” he says. “We think we’ve designed a better product.”

While Van Eck provides flexibility and added safety, it’s not the best option for acquiring physical gold directly, especially for small investments. Share exchanges for coins and bars are cost-prohibitive with small transactions because of the minimum fees. For instance, to exchange ETF shares for Australian bars costs $30 an ounce, but for a minimum fee of $1,200. With gold currently at $1,343, you’d lose almost your entire investment for one ounce. But with a 40-ounce conversion — or $53,720 currently — your $1,200 fee is 2.2% of your investment, a reasonable outlay for a secure delivery of gold to anywhere in the U.S. from a London-based vault.

So far, only a half-dozen investors have redeemed some 200 total ounces in physical gold, Merk says. “Most people want to keep the ETF but appreciate the functionality,” he says. “One delivery we had, the investor said, ‘Well, I’m going to take five ounces because I want to test the process in case I want to eventually take more.'” With the geopolitical outlook increasingly uncertain, the ETF’s flexibility, despite the exchange costs, may provide just the right level of security that nervous investors need to stay in the game.

END

Bill Murphy interviewed by E. Johnson states that silver is holdup up quite well against huge suppression efforts:

(courtesy Bill Murphy/GATA/Finance liberty)

Silver holding up against suppression efforts, GATA chairman says

Submitted by cpowell on Sun, 2016-07-17 14:08. Section:

10:07a ET Sunday, July 17, 2016

Dear Friend of GATA and Gold:

Interviewed by Elijah Johnson of Finance and Liberty, GATA Chairman Bill Murphy argues that silver is holding up against the longstanding attempts to suppress its price in the futures market, so much so that gold is being attacked to frighten silver longs out of their positions. Murphy also expresses frustration with the refusal of mainstream financial news organizations to report manipulation of the monetary metals markets as documented extensively by GATA. The interview is 16 minutes long and can be heard at YouTube here:

https://www.youtube.com/watch?v=VoHZsmOTDNg&index=1&list=PLNwUWnJgSq_LsS…

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org

 

END

 

DAVE is in my camp with respect to GLD and SLV as being complete frauds:

(courtesy Dave Kranzler/IRD)

 

GLD/SLV Ponzi Scheme – GET Physical Gold/Silver

July 18, 2016Financial Markets, Gold, Market Manipulation, Precious

MetalsComex fraud, GLD, LBMA price rigging, New Silk Road, silver eagles, SLV

A lot of investors have invested in GLD and SLV under the mistaken assumption that they are investing in “gold.” In the latest episode of the Shadow of Truth, we discuss why GLD/SLV are Ponzi schemes created as a mechanism to control the price of gold/silver. We also report the latest on China’s massive investment in the new Silk Road and why it will change the world – The Daily Coin published and extensive article on this topic: Silk Road. Investment Research Dynamics explains why the Central Banks are losing control of their precious metals price control scheme: LINK.

http://investmentresearchdynamics.com/gldslv-ponzi- scheme-get-physical-goldsilver/

***

end

Your early MONDAY morning currency, Asian stock market results,  important USA/Asian currency crosses, gold/silver pricing overnight along with the price of oil Major stories overnight    

:

1 Chinese yuan vs USA dollar/yuan DOWN to 6.7038 (  BIG DEVALUATION SOUTHBOUND  /CHINA UNHAPPY TODAY CONCERNING USA DOLLAR RISE/MORE $ USA DOLLARS LEAVE CHINA/OFFSHORE YUAN WIDENS TO 6.7131) / Shanghai bourse  DOWN 10.73 OR 0.35%   / HANG SANG CLOSED UP 143.93 OR 0.66% 

2 Nikkei closed /USA: YEN RISES TO 105.61

3. Europe stocks opened ALL IN THE RED EXCEPT LONDON   /USA dollar index DOWN to 96.61/Euro UP to 1.1054

3b Japan 10 year bond yield: REMAINS AT  -.226%     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 105.61

3c Nikkei now WELL BELOW 17,000

3d USA/Yen rate now well below the important 120 barrier this morning

3e WTI::  45.73  and Brent: 47.36

3f Gold DOWN  /Yen DOWN

3g Japan is to buy the equivalent of 108 billion uSA dollars worth of bond per month or $1.3 trillion. Japan’s GDP equals 5 trillion usa.

Japan to buy 100% of all new Japanese debt and by 2018 they will have 25% of all Japanese debt. Fifty percent of Japanese budget financed with debt.

3h Oil DOWN for WTI and DOWN for Brent this morning

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund FALLS to -.022%   German bunds BASICALLY negative yields from  10+ years out

 Greece  sees its 2 year rate FALL to 7.39%/: 

3j Greek 10 year bond yield FALL to  : 7.83%   (YIELD CURVE NOW  FLAT)

3k Gold at $1324.45/silver $19.75(7:45 am est)   SILVER FINAL RESISTANCE AT $18.50 BROKEN 

3l USA vs Russian rouble; (Russian rouble UP 60/100 in  roubles/dollar) 63.08-

3m oil into the 45 dollar handle for WTI and 47 handle for Brent/

3n Higher foreign deposits out of China sees huge risk of outflows and a currency depreciation  (already upon us). This can spell financial disaster for the rest of the world/China forced to do QE!! as it lowers its yuan value to the dollar/GOT a BIG DEVALUATION DOWNWARD from POBC.

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 105.61 DESTROYING WHATEVER IS LEFT OF OUR YEN CARRY TRADERS

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning .9839 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0869 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

3p BRITAIN VOTES AFFIRMATIVE BREXIT

3r the 10 Year German bund now NEGATIVE territory with the 10 year RISES to  -.022%

/German 10+ year rate  negative%!!!

3s The Greece ELA NOW a 71.4 billion euros,AND NOW THE ECB WILL ACCEPT GREEK BONDS (WHAT A DISASTER)

The bank withdrawals were causing massive hardship to the Greek bank. the Greek referendum voted overwhelming “NO”.  Next step for Greece will be the recapitalization of the banks and that will be difficult.

4. USA 10 year treasury bond at 1.566% early this morning. Thirty year rate  at 2.278% /POLICY ERROR)

5. Details Ransquawk, Bloomberg, Deutsche bank/Jim Reid.

(courtesy Jim Reid/Bloomberg/Deutsche bank/zero hedge)

HELICOPTER MONEY COMING! US Futures Rebound Sharply From Friday’s Coup Fears, Focus Shifts To M&A

Having panicked briefly on Friday night on news of a Turkish coup, which has since not only failed but been cast away as speculation rises that it was staged and designed to give Erdogan even more authoritarian power, markets have moved on and are now focusing on the main overnight event which was the surprising $32 billion bid by Japan’s SoftBank for U.K.’s semiconductor giant ARM Holdings Plc which has soared 45%, crushing the recently rising short base, sending comparable semis higher in European trading and pushing the Stoxx Europe 600 Index up by 0.6%, after surging 3.2% last week. Safe haven assets, including the yen, gold and U.S. Treasuries fell as geopolitical concerns faded away.

That said, there are still some aftershocks in Turkey as markets digest the fallout from the failed coup and the inevitable concentration of even more power in Erdogan’s hands who has unleashed a historic purge to eliminate his key enemies.

Turkish officials over the weekend sought to limit the impact on financial markets by promising unlimited liquidity to lenders and measures to support the currency. Turkey’s lira recovered more than half of its loss from Friday, while the Borsa Istanbul 100 Index sank 2.7% after a 6.2% jump last week that marked its best performance since October. Turkish Airlines tumbled as much as 6.5% . President Recep Tayyip Erdogan ordered reprisals after the attempted takeover by the military led to the deaths of more than 190 civilians and so far more than 6,000 people, including members of the judiciary, have been detained.

The failed putsch in Turkey came less than a week after global equities had recovered from the selloff that followed the U.K.’s June 23 vote to leave the European Union, an event that wiped almost $4 trillion off the value of the securities over two trading days, and which has since seen US stocks surge to all time highs.  As Bloomberg notes, Hermes Asset Management is among investors seeing potential for a relief rally in Turkish assets even amid longer-term concern about the country’s political and economic situation. Rabobank and CrossBorder are predicting outflows from Turkey. Turkey’s deputy prime minister posted on Twitter that there’s “no need to worry.”

“Geopolitical risk has reared its head again,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which manages more than $110 billion. “But it’s at least the fourth coup in Turkey since 1960 and I suspect no lasting impact on global markets.”

Elsewhere, the MSCI Asia Pacific excluding Japan Index rose 0.4%, after surging 4.5 percent last week. Benchmarks gained in Australia, Hong Kong and India, while the Shanghai Composite Index declined after data showed new home-price gains moderated last month in China. Markets were shut in Japan and Thailand for holidays. Malaysia Airports Holdings Bhd., owner of Istanbul’s second-biggest airport, tumbled more than 5 percent on concern fewer people will visit Turkey following the attempted coup. Lenovo Group Ltd., the world’s biggest personal-computer maker, rallied to a two-month high in Hong Kong after a filing last week showed its chief executive boosted his stake. Futures on the S&P 500 index rose 0.5 percent ahead of earnings from companies including Bank of America Corp., Charles Schwab Corp. and International Business Machines Corp.

Turkey’s 10-year bonds tumbled 2.5 percent, pushing their yield up by
41 basis points to this month’s high of 9.30 percent. The rate on
German notes due in a decade declined by two basis points to minus 0.01
percent. The yield on similar-maturity U.S. Treasuries rose three basis points to 1.58 percent. “There seems to be a reasonable resolution to the events” in Turkey, said Bill Bovingdon, the chief investment officer at Altius Asset Management in Sydney.

Market Snapshot

  • S&P 500 futures up 0.1% to 2156
  • Stoxx 600 up 0.1% to 338
  • FTSE 100 up 0.% to 6697
  • DAX unch at 10059
  • German 10Yr yield up less than 1bp to -0.03%
  • Italian 10Yr yield down less than 1bp to 1.21%
  • Spanish 10Yr yield down less than 1bp to 1.16%
  • S&P GSCI Index down 0.5% to 360.3
  • MSCI Asia Pacific up 0.4% to 134
  • Nikkei 225 closed
  • Hang Seng up 0.6% to 21688
  • Shanghai Composite up less than 0.1% to 3054
  • S&P/ASX 200 up 0.3% to 5430
  • US 10-yr yield down less than 1bp to 1.54%
  • Dollar Index down 0.03% to 96.05
  • WTI Crude futures down 1.1% to $45.18
  • Brent Futures down 1.2% to $46.79
  • Gold spot down 0.2% to $1,332
  • Silver spot down 0.4% to $20.23

Global Headline News

  • SoftBank to Buy Britain’s ARM for $32b in Record Deal: SoftBank to secure leader in global mobile computing with offer that has 43% premium to Friday close
  • Turkey Moves to Calm Investors After Coup Attempt Quashed: Central bank pledges unlimited liquidity to commercial lenders
  • NextEra’s $2.6b Hawaii Deal in Doubt as Regulator Says No: State Public Utilities Commission votes 2-0 against purchase
  • Clinton Maintains Lead of 46% to 41% Over Trump: WSJ/NBC Poll
  • Trump Formally Introduces Mike Pence as VP Nominee
  • Privacy Suit Against Apple, App-Makers Proceeds as Class Action
  • ‘Secret Life of Pets’ Fends Off ‘Ghostbusters’ to Stay No. 1
  • Three Police Officers Killed, Three Wounded in Baton Rouge: NYT

Looking at regional markets, we start in Asia which kick-started the week mostly higher, following the weak lead from the U.S., as upcoming key-risk events kept participants cautious.ASX 200 (+0.5%) traded with modest gains, with the energy sector outperfoming as the rally in natural gas extended overnight, while significant JPY weakness coincided with the initial outperformance in US futures. Elsewhere, Chinese markets traded in a subdued manner with the Hang Seng (+0.7%) narrowly in positive territory, while continued lacklustre liquidity injections from the PBoC saw sentiment in the Shanghai Comp (-0.3%). As a reminder, Nikkei 225 was closed for Ocean Day. Japanese Chief Cabinet Security Suga stated the BoJ has options for additional easing and has no intentions to issue deficit bonds.

Top Asian News

  • Temasek Said to Weigh Buyout of Singapore Rail Operator SMRT: State investment firm currently owns 54% of subway company
  • China Funds Running From Company Defaults Bet Big on Bank Debt: Certificates of deposit issuance triples to $928b
  • Abe’s Enforcer Rules Out Deficit Bonds to Fund Stimulus Package: BOJ still has easing options, Suga says in interview
  • China Home Price Gains Cool as Smaller Cities Impose Curbs: New-home prices gained in 55 cities in June versus 60 in May
  • Singapore Exchange Echoes NYSE in Spinning Off Policing Role: Regulatory unit will not add to IPO process, bourse says
  • Exxon’s $2.5b Bid for PNG’s InterOil Tops Oil Search: InterOil determines Exxon’s offer superior to Oil Search bid

European equities kicked of the session in positive territory, before paring much of the gains by the North American crossover to trade relatively mixed (Euro Stoxx: -0.40%). On a sector specific breakdown, chip names significantly outperform today, benefitting from Softbank’s takeover of ARM holdings (+42%). Financials also trade higher today, with Italian banks benefitting from reports that the Italian government is working on plans to set up a EUR 50bIn bad bank which would aim to clean up the banks, while the latest BoE comments from Weale strike a less dovish tone then some of the other MPC members of late, in particular Vlieghe who noted over the weekend that a rate cut should be accommodated with additional stimulus. Fixed income markets have remained elevated this morning on light newsflow, up around 40 ticks this morning, while looking ahead the most notable highlight from an auction perspective would be the UER 2.8-3.5bIn Belgian auction.

Top European News

  • Draghi Seen Taking Carney Cue by Deferring ECB Action for Now: Economists see little chance of new ECB stimulus on Thursday
  • Opera Plunges as $1b Buyout Scrapped on State Rebuff: Chinese consortium paying $600m to get browsers
  • EU Said to Study Nuclear Option to Force May’s Hand Over Brexit: Britain could in theory see EU voting rights suspended
  • Police Make Further Arrests as They Seek Truck Killer’s Motives: Govt defends security measures; 85 still hospitalized

In FX, the lira jumped 2.9 percent versus the dollar, after sliding 4.6 percent on Friday. The South African rand climbed 1.9 percent, having dropped 2.4 percent in the last session as news of Turkey’s coup attempt hit emerging-market assets. Mexico’s peso rose 0.8 percent. The yen fell 0.9 percent to 105.78 per dollar. It tumbled 4.1 percent last week as Prime Minister Shinzo Abe outlined plans for a “bold” stimulus package in the wake of an election victory. The Bloomberg Dollar Spot Index gained 0.1 percent. It climbed 0.4 percent in the last session as U.S. reports showed retail sales rose in June by more than economists predicted and manufacturing expanded by the most since January. The odds of the Federal Reserve increasing interest rates by December more than doubled last week to 44 percent in the futures market. China’s yuan fell as much as 0.17 percent to its weakest level since 2010, having lost ground in all but one of the last 11 weeks. “We’re seeing Asian currencies weaker because of the dollar,” said Irene Cheung, a foreign-exchange strategist at Australia & New Zealand Banking Group Ltd. in Singapore. “I’m not sure whether the Turkey situation has really stabilized and, if there’s any concern, it should be good for the dollar.”

In commodities, crude oil was little changed at $45.94 a barrel in New York. It gained 0.6 percent in the last session as news broke of the coup attempt in Turkey, a vital conduit for oil passing from Russia and Iraq to the Mediterranean Sea. Gold declined 0.9 percent to about $1,326 an ounce, trimming this year’s advance to 25 percent. The metal is in a major bull market and may surge to more than $1,500 as low interest rates buoy demand and the U.S. presidential election looms, according to DBS Group Holdings Ltd. Copper fell 0.8 percent in London, extending Friday’s retreat from the highest level since April. Tin dropped 1.4 percent, slipping from a four-month high. Nickel rallied 0.7 percent amid a clampdown on polluting mines in the Philippines, the world’s largest producer of nickel ore. Corn climbed as much as 1.4 percent in Chicago, where it’s posted declines in each of the last four weeks. Heat in the U.S. Midwest intensified over the weekend and this may damage crops, said Michael Pitts, commodity sales director at National Australia Bank Ltd. in Sydney.

It’s a particularly quiet start to the week today with no data due out in Europe and just the July NAHB housing market index due in the US this afternoon. In the US 112 companies are set to report, or 26% of the S&P 500 market cap. This will include the remaining banks in BofA, Morgan Stanley and Goldman Sachs, as well as the big tech names Microsoft, Amazon, Intel and IBM. In Europe we’ll also get quarterly reports from 73 Stoxx 600 companies including Roche, SAP and Daimler.

Bulletin Headline Summary from RanSquawk and Bloomberg

  • European equities are relatively mixed, while chipmakers outperform after Softbank’s USD 31 bIn purchase of ARM Holdings
  • GBP saw a brief bout of strength after BoE’s Weale highlighted that there is no rush to cut interest rates
  • Looking ahead, highlights include ECB’s Villeroy, as well as earnings from IBM & Bank of America
  • Treasuries lower overnight along with European equities and gold as military coup in Turkey failed; today will see NAHB housing market index along with $69b in bill sales.
  • Friday’s failed plot to topple President Recep Tayyip Erdogan risks shattering what’s left of Turkey’s image as a stable country that can attract enough investment to finance one of the highest current-account deficits among G-20 economies; Turkey’s lira rebounded from its biggest retreat in eight years and bonds tumbled as the cost of insuring the country’s debt soared, while shares in Turkish Airlines and banks led a slump in stocks
  • Economists in a Bloomberg survey predict the ECB will keep policy unchanged on Thursday but announce fresh measures before the end of the year
  • Bank of England policy maker Martin Weale said he needs to see firmer evidence of the impact of the U.K.’s vote to leave the European Union before supporting additional stimulus at the central bank’s August meeting
  • No other country is feeling the fallout from the U.K.’s vote to leave the European Union more than Ireland, with its prime minister under pressure, economists slashing growth forecasts and companies warning of Brexit’s dire consequences
  • London’s seven-year housing boom may be about to end and its residential properties could experience a severe downturn, according to Societe Generale analysts
  • Japan’s top government spokesman ruled out the issuance of deficit bonds to fund an economic stimulus package planned for the autumn, hinting at the use of construction bonds for longer-term investments
  • This year’s Republican National Convention will be defined by Donald Trump, who responded to the killing of three police officers in Baton Rouge, Louisiana with a dire warning about the direction the nation was headed. “It will only get worse!” he tweeted

US Event Calendar

  • 8am: NAHB Housing Market Index, July, est. 60 (prior 60)
  • 4pm: Total Net TIC Flows, May (prior $80.4b)

DB’s Jim reid concludes the overnight wrap

Markets over the last 36 working hours have been diverted by the tragic events in Nice and Turkey. Whilst both disturbing, events in Turkey had the most potential to be a major macro event but the quick resolution of the attempted coup on Friday night will probably limit its impact. In very late trading on Friday as the story broke, the Turkish Lira was down as much as -6% against the USD, before finishing -4.78% weaker by the close – the biggest decline since 2008. This morning it’s back to only -2.09% lower since just before the coup emerged, with the crackdown on those involved and responsible well underway. Our EM strategists noted that local media outlets have reported that followers of Fethullah Gulen, a preacher in self-exile in the US, were behind the plot. At least 6000 people have been detained in relation to the failed coup including President Erdogan’s top military aide Col Ali Yazici. Meanwhile the AKP government has embarked on a massive purge in the army and judiciary following the attempt. Accordingly, the Turkish Supreme Board of Judges and Prosecutors (HSYK) ordered the detention of nearly 2750 judges. Arrest warrants have been issued for 140 Supreme Court members and 48 members of the Council of State on the basis of being part of the Gulen movement. Our colleagues also note that the Turkish Parliament is still the legislative power in the country and held an extraordinary session on Saturday displaying a united stance against the failed coup.

As we refresh our screens this morning, the Hang Seng (+0.05%) and ASX (+0.53%) are currently up, while the Shanghai Comp (-0.39%) and Kospi (-0.02%) have retreated. Credit markets in Asia and Australia are little changed and so all things considered there’s not really been too much of a reaction. It’s worth noting that markets in Japan are shut today for a public holiday, so this could be keeping things quiet also. Meanwhile, Oil markets are a touch higher (Brent +0.46%) and Gold (-0.61%) has eased off slightly. Government bond markets are a touch weaker also.

Sticking with bond markets, it’s worth quickly recapping the impressive move higher for yields across most government bond markets last week, which coincided with a pretty strong five day gain for risk assets. Indeed 10y Bunds in particular stood out after closing in positive territory on Friday (at 0.006%) for the first time in the post-Brexit era (they last closed in positive territory on June 23rd). Bund yields rose 19.5bps last week or a more eye opening +103%, with that absolute weekly move higher in yield the most since December last year. 10y government bonds in France were 12.8bps higher last week which was also the biggest move up this year, while similar maturity bonds in Spain and Italy were 8.0bps and 6.1bps higher respectively. 10y Treasuries were also an impressive 19.3bps higher and back to the highest since June 24th.

Although last week saw yields rise, the past week did see the first non-financial corporate (albeit a 100% state owned one) issue a EUR bond with a negative yield as Deutsche Bahn priced a 5 year zero coupon bond at a yield of -0.006%. We highlighted in a Credit Bites on Friday how much of the Euro corporate bond universe now trades with a negative yield after the push lower in rates since the UK referendum. We find it’s actually been as much due to spreads tightening as falling yields though.

Moving on, as we noted earlier, last week was another relatively strong one for risk assets despite markets running out of steam slightly on Friday. Indeed despite a backdrop of relatively solid data and better than expected results out of Citi – which like JP Morgan benefited from decent fixed income trading revenues – the S&P 500 (-0.09%) edged slightly lower to pare its five day gain to +1.49%. The Dow (+0.05%) did however manage to eke out a small gain to take its weekly performance to +2.04%. Prior to this there was a similar level of week-end fatigue across European equities with the Stoxx 600 (-0.17%) also dipping a touch lower, although still finishing with a strong +3.23% gain for the week. The FTSE MIB (-0.29% on Friday) and European Banks (-0.22% on Friday) closed up +4.25% and +8.38% over the five days respectively.

Much of the focus on Friday and certainly prior to the Turkey headlines was the bumper set of data released out of the US. Retail sales arguably stole the show after coming in much stronger than expected. Indeed the headline printed at +0.6% mom in June (vs. +0.1% expected), although we did see the May reading revised down three-tenths to +0.2% mom. Both the ex auto and ex auto and gas readings came in at +0.7% mom (both also exceeding expectations) while the control group component (+0.5% mom vs. +0.3% expected) also beat the consensus forecast. That means the annualized quarterly reading for the control group component is +7.4% and the best showing since a similar increase in Q2 2014. Also coming in better than expected on Friday was the June industrial production print (+0.6% mom vs. +0.3% expected), while manufacturing production (+0.4% mom vs. +0.3% expected) was also a smidgen ahead. The Empire manufacturing reading for July did however decline 5.5pts to +0.55 (vs. 5.00 expected).
On the inflation front June CPI (+0.2% mom vs. +0.3% expected) actually rose a little less than expected, keeping the YoY rate unchanged at +1.0%. The core did however rise to +2.3% yoy following a +0.2% mom monthly increase. The more disappointing data on Friday came in the form of the initial July flash reading for the University of Michigan consumer sentiment survey. The headline sentiment reading tumbled 4pts from June to 89.5 after the expectation was for no change, with both the current conditions (-2.1pts to 108.1) and expectations (-5.3pts to 77.1) components falling. The text in the accompanying statement highlighted the Brexit vote as playing a large part in the dip lower and so it’ll be interesting to see just how much of a hit the global July PMI’s take when they get released on Friday. Meanwhile and just back on the Michigan survey, 1y inflation expectations actually nudged up two-tenths to 2.8%, while 5-10y expectations stayed put at 2.6%.

The end result of all that data was for the Atlanta Fed to revise up its Q2 GDP forecast by one-tenth to 2.4%. The NY Fed also pushed their forecast up to 2.2% from 2.1%.

Away from the data there was some focus over at the BoE where Chief Economist Andy Haldane said that ‘a package of mutually-comprehensive monetary policy measures is likely to be necessary’ next month when the ‘precise size and extent of the necessary stimulatory measures can be determined as part of the August inflation report round’. Meanwhile over at the Fed, St Louis Fed President Bullard highlighted that there are ‘upside’ risks to his view for just one rate hike this year and none next year.

Taking a look at the week ahead now. It’s a particularly quiet start to the week today with no data due out in Europe and just the July NAHB housing market index due in the US this afternoon.

Away from the data it’s a quiet week for central bank speak with the BoE’s Weale the only notable speaker when he is set to speak this morning (9.15am BST) on the impact of Brexit on monetary policy. Earnings will be a focus however. In the US we’ve got 112 companies set to report, or 26% of the S&P 500 market cap. This will include the remaining banks in BofA, Morgan Stanley and Goldman Sachs, as well as the big tech names Microsoft, Amazon, Intel and IBM. In Europe we’ll also get quarterly reports from 73 Stoxx 600 companies including Roche, SAP and Daimler.

ASIAN AFFAIRS

 

i)Late  SUNDAY night/MONDAY morning: Shanghai closed DOWN 10.73 POINTS OR 0.35%/ /Hang Sang closed UP 143.93 OR 0.66%. The Nikkei closed FOR HOLIDAY/  Australia’s all ordinaires  CLOSED UP 0.53% Chinese yuan (ONSHORE) closed DOWN at 6.6738 ON BIG DEVALUATION /Oil FELL to 45.93 dollars per barrel for WTI and 47.36 for Brent. Stocks in Europe MOSTLY IN THE RED. Offshore yuan trades  6.7131 yuan to the dollar vs 6.67038 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE WIDENS CONSIDERABLY AS  MORE USA DOLLARS LEAVES THEIR SHORES. 

FIRST  REPORT ON JAPAN  SOUTH KOREA AND CHINA a) JAPAN ISSUES

Today’s stock market rises is mainly due to the the higher: USA/Yen cross.  This carry trade is due to investors borrowing yen knowing it will fail and buying assets like the S and p

(courtesy zero hedge)

Get Back To Work Kuroda-San

Today’s quizzical meltup brought to you by the number ‘106’ and the words “Bank of Japan.”

Because… fun-durr-mentals

b) REPORT ON CHINA

 

This is scary! USA warships are surrounding the disputed Chinese waters. And as I have stated on many occasions:  China is the long on the comex in both gold and silver ready to pounce on a moments notice:

 

TWO STORIES

(courtesy Mac Slavo/SHTFPlan.com)

 

U.S. Warships Surround Disputed Chinese Waters, Prepared For War: “WWIII At Stake”

Submitted by Mac Slavo via SHTFPlan.com

Territorial disputes are a delicate thing… and potentially deadly as well.

That’s why the U.S. is backing up its positions with an ever-increasing presence of warships  in the South China Sea.

China is very touchy about these territories, and unwilling to give up what they perceive as their waters, even as a UN tribunal just denied their claims and strengthened the U.S. hand.

Indeed, the entire situation is combustible and very dangerous.

As James Holbrooks of the Underground Reporter noted:

In a congressional hearing on Wednesday, former Director of National Intelligence and retired Navy admiral Dennis Blair told the panel that the United States should be prepared to use military force to oppose Chinese aggression in the South China Sea.

“I think we need to have some specific lines and then encourage China to compromise on some of its objectives,” Blair, who headed the U.S. Pacific Command while in the Navy, said at the hearing.

The admiral’s recommendation came the day after a United Nations tribunal invalidatedChina’s claim of territorial rights to nearly all of the waters in the South China Sea.

The U.S., citing the territorial dispute and security concerns raised by its allies in the region, have for months been sending warships into the South China Sea as a check against Chinese hostility.

Beijing, acutely aware of the military buildup off its coast, has publicly warned the U.S. it’s more than ready to defend against provocations. “China hopes disputes can be resolved by talks… but it must be prepared for any military confrontation.”

It seems that the situation is being deliberately stoked into conflict, and that tensions are programmed to reach a boiling over point. If true, there is no indication of where the point of no return would be.

The U.S. has the excuse of protecting its ally, and former territory, the Philippines, and thus has a pretext to play policeman in the region.

But in turn, that is only a thinly-veiled ruse to amplify the military pressure, and let bloated speech and menacing saber-rattling episodes set the tone for ‘diplomacy’ with the Red Dragon.

Now, there is not only an escalation, but an acknowledgement on both sides of the Pacific that things are headed towards war – and it is being openly discussed in those stark terms:

“If our security is being threatened, of course we have the right to demarcate a zone,” Vice Foreign Minister Liu Zhenmin said Wednesday at a briefing in Beijing. “We hope that other countries will not take this opportunity to threaten China and work with China to protect the peace and stability of the South China Sea, and not let it become the origin of a war.”

And war, it appears, is becoming increasingly likely by the day — with other countries in Southeast Asia beginning to take sides.

[…]

So, with the U.S. demanding compromise from a China who refuses to bow down — and forcing local powers to choose sides in the process — it seems the stage is being set for a potential military conflict in the South China Sea that could engulf the entire region.

Are we really to expect a looming world war from China, who has played the parts of villain, ally, trade partner and rival all at the same time?

No one can say, but there is plenty of worry that war could really happen. Even billionaire George Soros warned that the potential danger of WWIII breaking out with China was ‘not an exaggeration’:

The US government has little to gain and much to lose by treating the relationship with China as a zero-sum game. In other words it has little bargaining power. It could, of course, obstruct China’s progress, but that would be very dangerous.President Xi Jinping has taken personal responsibility for the economy and national security. If his market-oriented reforms fail, he may foster some external conflicts to keep the country united and maintain himself in power. This could lead China to align itself with Russia not only financially but also politically and militarily. In that case, should the external conflict escalate into a military confrontation with an ally of the United States such as Japan, it is not an exaggeration to say that we would be on the threshold of a third world war.

And yet, President Obama and numerous other U.S. officials have been deliberately stoking the tension and adding fuel to the fire with provocation in the disputed waters.

As Michael Snyder wrote several months ago:

Barack Obama sent a guided missile destroyer into disputed waters in the South China Sea to see if the Chinese would start shooting at it. Yes, this is what he actually did. Fortunately for us, the Chinese backed down and did not follow through on their threats to take military action. Instead, the Chinese have chosen to respond with very angry words. The Chinese ambassador to the United States, Cui Tiankai, says that what Obama did was “a very serious provocation, politically and militarily.” And as you will see below, a state-run newspaper stated that China “is not frightened to fight a war with the US in the region”. So why in the world would Obama provoke the Chinese like this? Yes, the Chinese claims in the South China Sea are questionable. But there are other ways to resolve things like this.

Most Americans assume that an actual shooting war between the United States and China is not even within the realm of possibility, but many of our leaders see things very differently. For instance, just check out what CIA Deputy Director Michael Morellthinks…

The current posturing in the area has led to heightened tensions between the world’s preeminent military powers, and in May Former CIA Deputy Director Michael Morell told CNN that the confrontation indicates there is “absolutely” a risk of the U.S. and China going to war sometime in the future.

Not long ago, the U.S. also demonstrated ballistic missiles – armed with nuclear warheads – over the coast of California in an apparent demonstration towards China regarding the readiness and seriousness of their clash.

Though it isn’t on the front burner right now amid other sensational headlines, keep an eye to the fact that World War III is slowly being brewed on the back burner. Someday, it could ignite into a full blown nightmare. Stay vigilant. Hope for peace, prepare for war.

 

 

END

 

war of words continue unabated.  And you do not think that it is China that is standing for gold and silver at the comex

(courtesy zero hedge)

 

China Warns US Patrols In South China Sea Could End In “Disaster” As It Launches Navy Drills

Less than a week after a Hague tribunal found that China has no territorial rights in the South China Sea, contrary to Beijing’s “Nine Dash Line” claims, China has made it abundantly clear that it will no comply with the ruling when overnight a senior Chinese admiral said that Freedom of navigation patrols carried out by foreign navies in the South China Sea could end “in disaster” while also announcing the unexpected start of navy drills in the contested waters, in the most direct warning to the United States yet.

 

According to AP, Hainan’s maritime administration said an area southeast of the island province would be closed from Monday to Thursday, but gave no details about the nature of the exercises. The announcement came during a three-day visit to China by US Chief of Naval Operations Admiral John Richardson to discuss the South China Sea dispute and ways to increase interaction between the two militaries, which continue to have a tense relationship.


Chinese missile frigate Yuncheng launches an anti-ship missile during a military exercise

in the waters near south China’s Hainan Island and Paracel Islands, July 8, 2016

Further provoking a US response, Beijing also stated that it would not halt the construction on islands and reefs in the South China Sea, state news agency Xinhua reported the head of the country’s navy as saying, adding that China will not leave the outcropping that is under construction half finished. Furthermore, despite the meeting between the US and Chinese militaries, Sun Jianguo, an admiral and deputy chief of the Joint Staff Department of China’s Central Military Commission, said behind closed doors on  Saturday that freedom of navigation patrols by foreign navies in the South China Sea could end “in disaster,” according to Reuters.

“When has freedom of navigation in the South China Sea ever been affected? It has not, whether in the past or now, and in the future there won’t be a problem as long as nobody plays tricks,” Sun said.

 

“But China consistently opposes so-called military freedom of navigation which brings with it a military threat, and which challenges and disrespects the international law of the sea,” Sun added.

 

“This kind of military freedom of navigation is damaging to freedom of navigation in the South China Sea, and it could even play out in a disastrous way,” he said, without elaborating.

 

He said the court case at The Hague must be used by China’s armed forces to improve its capabilities “so that when push comes to shove, the military can play a decisive role in the last moment to defend our national sovereignty and interests”.

With tensions in the South China Sea already riding high, the comments are seen as the loudest warning to the US, which has conducted such patrols close to Chinese-held islands over the past year. Those patrols prompted Beijing to send fighter jets and ships to track and warn off the American ships, while accusing the US of threatening its national security.

In a further development, Chinese air force spokesman Shen Jinke was quoted by state media as sayingthat air force fighters and bombers had recently conducted patrols over the South China Sea and would make that “a regular practice” in future.

In short,

Despite the warnings, China and the United States have been maintaining open lines of communication, with U.S. Chief of Naval Operations John Richardson meeting the head of the Chinese navy, Wu Shengli, in Beijing on Monday. “I think that you can visit China this time at our invitation, that shows both sides attach great concern to maritime security,” Wu told Richardson in brief comments in front of reporters.

Victor Gao, director of the China National Association of International Studies, told RT that he believes the US was “very much involved in this arbitration case brought by the Philippines…trying to put pressure on China.”

“China will stand firm on the matter of principle and China will also use all military resources to make sure that the US will not win this battle against China,” he said.

Separately, in yet another act of defiance to the trbunal verdict, China landed two civilian aircraft on new airstrips on the disputed Mischief and Subi reefs and dispatched its coast guard to block a Philippine fishing boat from reaching a contested shoal.

The small glimmer of good news is that according to the latest US Naval map update, where there were two US aircraft carriers in the South China Sea, now there is just one, as the John Stennis – after hosting Joe Biden on July 14 while the ship and John C. Stennis Strike Group (JCSSG) were participating in the Rim of the Pacific maritime exercise – appears to be quietly leaving the area.

EUROPEAN AFFAIRS

Deutsche bank claims to love helicopter money.  I guess that the big inflation that is forthcoming will basically knock its debt to zero as the world hyperinflates:

(courtesy zero hedge)

Deutsche Bank Loves Helicopter Money: Why “Big Inflation Is Coming… But Will First Require A Crisis”

Just over a month ago, Deutsche Bank’s chief economist David Folkerts-Landau, unleashed an epic rantagainst the ECB, warning of social unrest and another great depression unless the ECB changes its ways. Some thought that DB was genuinely concerned about central planning, and was urging the ECB to stop all intervention altogether, but that naive read was quickly stomped out just one week ago when it emerged that the Deutsche Bank economist was merely acting out of purely selfish reasons when he called for a €150 billion bailout of Europe’s banks, with the unspoken demand that Deutsche Bank should be on the very top.

Finally, any doubt was squashed this weekend, when DB’s macro strategist Alan Ruskin issued a positively glowing review of Helicopter Money, barely stopping short of demanding it be unleashed immediately. To wit:

Because Helicopter money is less directed at using currency weakness as a core transmission mechanism than QE or particularly negative rates, Helicopter money should be more, rather than less acceptable to an international community worried about currency wars

What was less emphasized is that unlike NIRP, “helicopter money”, if it works, pushes the long end of the yield curve higher ahead (after all the endgame is soaring, if not hyper, inflation), something the global banking sector cripped by trillions in debt,desperately needs, and thus is precisely what Deutsce Bank needs, whose stock continues to trade just barely off all time lows.

As such, any delusions that DB was raging against failed monetary policy in general can be forgotten. All DB wanted was monetary policy that benefits, drumroll, Deutsche Bank… as the following amusing DB table “ranking” various monetary approaches shows. Needless to say, DB really likes helicopter money.

So, for those who care, here is Deutsche Bank’s evelator pitch for why helicopter money should be next:

  • We have evolved to the point where familiarity with QE breeds acceptance, while unfamiliar ‘helicopter money’ policy, unfairly breeds contempt.
  • Compared with the scale of QE liquidity dropped into financial institutions, piling up in the form of excess reserves, the exante and expost calibration of Helicopter money can be considered almost surgical.  Helicopter money legacy issues are miniscule compared with the QE overhang of liquidity in the system, and a costly and bloated Central bank balance sheet, which is so difficult to reverse.
  • QE forces a substitution into riskier assets, which is another way of saying it inflates and distorts the price of risky and less risky assets, with implications for all balance sheets, and inter-temporal economic decisions. Helicopter money is less likely to distort every asset price in the economy, when compared with deliberate financial repressive policies like QE and negative rates.
  • One of the big criticisms of helicopter money is that it is open to political abuse and that the coordination of fiscal and monetary policy, threatens Central Bank independence. This is less of a worry if there is a clear institutional framework whereby the Central Bank has the final say on whether to participate in any helicopter scheme or not, and they can ‘right size’ the stimulus.
  • If one has to be cautious about Helicopter money it is less about whether it can be successful, and more about how in these times of excessive demand management, any effective tool is apt to be used to the point of abuse.
  • Helicopter policy that successfully supports growth (with contemporaneous rightward shifts of the IS and LM curve) inclusive of favorable multiplier effects, will likely temporarily drive nominal interest rates higher, and the question for real interest rates (that with nominal rates is a key FX driver) is whether inflation expectations rise more rapidly than nominal rates.
  • Carefully calibrated and contained Helicopter actions, by an independent and historically credible Central Bank (not an oxymoron), would likely have a contained impact on inflation expectations. This is especially true, if Helicopter money is pursued in emergency deflationary circumstances. As such, any initial kneejerk selling of a currency when a G10 country pursues a measured Helicopter solution that is befitting of its large disinflationary output gap, is likely to be a medium-term buy the currency dip opportunity.
  • Because Helicopter money is less directed at using currency weakness as a core transmission mechanism than QE or particularly negative rates, Helicopter money should be more, rather than less acceptable to an international community worried about currency wars.

Some more details:

Compare the graphic moniker ‘helicopter money’ with the liquidity creation known as “QE’. ‘Helicopter money’ evokes pictures of a 100 trillion Zimbabwean dollar note that once bought two loaves of bread. ‘QE’ in contrast is an austere word, well-suited to the economics of Scrabble, depicting familiar unorthodox policies, and surely something infinitely more responsible? Wrong. In our opinion, QE represents poorly calibrated liquidity dropped into financial institutions, piling up in the form of excess reserves, while the calibration of Helicopter money can be almost surgical in comparison.

One of the biggest differences between QE and ‘Helicopter money’ is that QE is not overtly coordinated with fiscal stimulus – even if it may have a covert fiscal objective. Japan QE is a good example of this, buying close to 16% of GDP per annum in QE related assets. The BOJ has accumulated assets of more than 50% of GDP which largely covers the total expansion in General Government debt over this period. A possible conversion of Central Bank holdings of debt to zero coupon perpetuals is one example of the market discourse on how monetary policy QE can ultimately help debt management. Securing fiscal sustainability through public sector debt ‘write-offs’, is a job for which QE is better equipped than helicopter money, where the fears on the latter are centered on ‘inflating debt’ away.

* * *

Helicopter policies are not advocated in ‘a normal world’. They are however almost inevitable in the next recession, if this is indeed a world of where secular stagnation with unusually low equilibrium real interest rates are prevalent. The good news is that these policies have been given ‘a bad rap’. You may have heard the joke about the helicopter money dropped on country A where recipients saved it, country B that spent it, and country C where the citizens simply returned the money to the police. The point being that the impact of helicopter money cannot be perfectly calibrated, but it is almost surgical when compared with the scatter shot impact of the unorthodox policies currently pursued.

We have evolved to the point where familiarity with QE breeds acceptance, while unfamiliar helicopter money unfairly breeds contempt. If one has to be cautious about Helicopter money it is less about whether it can be successful, and more about how in times of desperate/excessive demand management an effective policy tool is apt to be used to the point of abuse

But most of all whether it can bail out Deutsche Bank. Thanks Alan, we get it.

* * *

Finally, here is One River’s CIO, Eric Peters, with an anecdote why Helicopter Money – and its associated big inflation – is coming, but why a major crisis will be needed first.

Anecdote: “Has Brexit created the political Lehman moment?” asked the CIO on the outskirts of the Eurozone. We were discussing whether Britain’s populist revolt is the catalyst for a global fiscal stimulus, or if this latest risk-asset rally in anticipation of more stimulus is another bounce to fade.

“Has Brexit absolved markets of the need to fall sharply?” he continued. You see, the way this usually works is that economic weakness provokes a deep market decline that sparks public panic. Protest. And under the cover of crisis, policy makers ease aggressively, reform.

So in normal circumstances, at 1,700 in the S&P 500 you’d expect stimulus. And at 2,150 you’d expect nothing. But we no longer live in normal circumstances.

“For fiscal stimulus to be big enough, it must come from Japan and Europe, China too.” A 10trln Yen stimulus seems pretty well discounted. Yamamoto has pushed for a 3-year 30trln Yen package. Satoshi Fujii has pushed for 37trln Yen. “Will they pull out the bazooka? That’s hard without the explicit use of helicopter money, which remains off limits for now. But they’ll do enough to make this work.”

Of course, Europe is another story. Germany must let their southern neighbors cheat on deficits and bank recapitalizations. “Spanish election showed if you let them cheat and growth surprises positively then extremists don’t do so well. Europe can only survive as an inflation zone. Will it be formally tolerated? Probably not. Will governments cheat anyway with ECB support?” Probably.

“So Japan will be the flag bearer of fiscal stimulus.”
Which will be sufficient to breath some inflationary spirit into the
system. “But this is all febrile and can get over-turned by the
slightest change in wind direction,” he said, tentative.

“This will be the little inflation before the big helicopter-driven inflation.”

But that will first require a crisis.

We agree, and look forward to just what this massive crisis is that unleashes the final episode of monetary lunacy

.

END

RUSSIAN AND MIDDLE EASTERN AFFAIRS

Sunday morning:  Erdogan’s arch enemy Gulen accuses him of staging the coup.  Gulen is absolutely correct when he states that the “coup” was staged!!

(courtesy zerohedge)

Erdogan’s Arch-Enemy Accuses Turkish President Of Staging Coup, Compares Him To Hitler

Long before Turkey’s president Recep Tayyip Erdogan accused Fethullah Gulen, a Turkish cleric who lives in self-imposed exile on 1857, Mt.Eaton Road in  Saylorsburg, Pennsylvania, last night and again today of being the “terrorist” mastermind behind Friday’s failed coup attempt and demanding – unofficially, on prime time TV but not via diplomatic channels – that the US extradite the 77 year old, he was doing precisely that. For years, Erdogan had used the cleric as a scapegoat punching bag, who had somehow managed to create an entire “parallel state” in Turkey which was just waiting for its opportunity to pounce and snatch Turkey from Erdogan. Hence the perpetual (fake) fear of coups. Hence the public displays of (fake) paranoia. Hence the relentless – and all too real – concentration of power.

And as many expected, Erdogan once again accused Gulen of being responsible for the Friday coup, no matter how ridiculous such an allegation sounded. This time Turkey went so far as accusing the US of being “behind the coup” for harboring Gulen.  “Today, after this coup attempt, I’m once again calling on you, I’m saying: Extradite this man in Pennsylvania to Turkey now,” Erdogan said on Saturday in televised remarks from Istanbul in a personal appeal to President Barack Obama. Turkey’s secretary of labor, Suleyman Soylu, went one better and told TV channel Haberturk: “The US is behind this coup.”

As for Gulen’s position, he had denied as recently as yesterday, the accusations and said Saturday morning in an emailed statement through a spokeswoman that he denounced the overnight coup attempt. In a video released by the New York Times, a man appearing to be a doctor measured Mr. Gulen’s blood pressure, possibly to point out the cleric’s ailing health.

View image on Twitter

James FontanellaKhan @JFK_America

Gulen in rare interview was assisted by his doctors due to his poor health

2:57 PM – 16 Jul 2016

“I don’t know if they are my followers, but because of all things that have taken place (in Turkey) they may have been sympathetic…But honestly, I don’t know any of them,” Mr. Gulen said in the video, shown apparently sitting on a couch in his Pennsylvania home.

However, for the best explanation of Gulen’s position, one which incidentally also is accurate in describing what happened in Turkey on Friday night, we go to the FT, which was granted a rare interview from Gulen’s residence in rural Pennsylvania and where a “frail Mr Gulen” said accusations by Mr Erdogan that he had masterminded the uprising were absolutely groundless.

View image on Twitter

In fact, as the FT reports, Gulen “has tried to turn the accusation against his political rival by suggesting that Mr Erdogan’s ruling AKP party had staged the uprising.

“I don’t believe that the world takes the accusations made by president Erdogan [against me] seriously,” the moderate Islamic preacher said from a room inside his home at the Golden Generation Worship and Retreat Center, nestled in the rolling hills of the Pocono Mountains..

An aerial view of Gulen’s Golden Generation Worship and Retreat Center in rural PA.

There is a possibility that it could be a staged coup [by Mr Erdogan’s AKP] and it could be meant for further accusations” against Gulenists and the military, he said.

Considering just how poorly executed the coup was, and how much Erdogan stood to gain by crushing it with the help of a Skyped conversation as he “heroically” flew back to Istanbul, to be followed shortly thereafter by the arrest of nearly 3000 judges and prosecutors, we have a feeling Gulen is spot on in which assessment.

Gulen then said that he was not worried about being deported from America despite Turkey putting further pressure on the US government to extradite him in the aftermath of Friday’s coup attempt. He said Erdogan’s calls for his extradition were just his latest bluff, as he compared the Turkish president’s political tactics to those of Adolf Hitler’s Nazis in 1940s Germany.

It is very clear that there is intolerance among the leadership of the ruling party and the president,” Mr Gulen said, speaking in Turkish and communicating with reporters through a translator.

They have confiscated properties and media organisations, broken doors and harassed people in a fashion similar to Hitler’s SS forces,” Mr Gulen said, as he described how his followers in Turkey had been mistreated over recent years by Mr Erdogan’s party.

Come to think of it…

Then again, maybe Erdogan will get his witch after all.

The FT adds that in a sign of the rising tension around Mr Gulen, about a dozen people started assembling outside his compound around noon on Saturday, shattering the rural calm that usually surrounds the residence. “The US should stop protecting him,” screamed a woman wearing a headscarf and waving a Turkish flag in her right hand and a flag portraying Mr Erdogan in the other. “Gulen is a criminal,” she shouted as protesters gathered outside the Imam’s residence.

Financial Times @FT

Watch: A report from Fethullah Gulen’s US compound, where he denied charges of orchestrating Turkey’s military coup.

5:32 PM – 16 Jul 2016

Meanwhile, Pennsylvania state troopers and a small group of armed private security forces hired by Mr Gulen’s centre were keeping the protests at bay. Gulen told reporters that he had not received any communications from the US government about a potential extradition.

Here Alp Aslandogan, a media adviser to Mr Gulen, repeated precisely what we said earlier today: Erdogan wants “the best of both worlds, accusing him of being a puppet for the US and also asking the US to extradite him,” Mr Aslandogan said.

Gulen, who is aged 77, was visibly weak. He suffers from diabetes and heart disease, according to his doctor. The preacher, who has been living in self imposed exile in Pennsylvania since 1999, lives in modest conditions despite the vast expanse of the complex. The FT was able to access his bedroom and praying areas, which were ornately decorated with Islamic art and several Turkish flags.

Despite accusing Mr Erdogan’s ruling party of having put democracy at risk in Turkey, Gulen said that he was against all kinds of military coups, as he had been a victim of such uprises in the past.

* * *

Meanwhile, Erdogan lives in a brand new palace which cost more than $600 million to build, with 1.6 million square feet of floorspace, 1,000 – yes, really – rooms, features thousands of trees imported from Italy at a cost of up to $10,000 each; the taxpayer-footed electricity bill from the palace will run $313K/month.

end Sunday: This is a major reason why everyone believes the coup was staged:  Two F 16 were staring at Erdogan’s plane as it was coming towards Istanbul and they did not fire!! (courtesy zero hedge) “Why They Didn’t Fire Is A Mystery” – Coup Pilots Had Erdogan’s Plane In Their Sights And Did Nothing

Looking back at the failed Turkish coup, one question that nobody has been able to answer is why, if the coup was indeed a serious attempt at government overthrow, did the organizers not do the first thing that military coups have done since time immemorial: either capture, or simply eliminate the existing ruler, the vacationing president Erdogan?

The following brief story will only add to the confusion (or maybe not).

As Reuters reports, at the height of the attempt to overthrow Turkish President Tayyip Erdogan, the rebel pilots of two F-16 fighter jets had Erdogan’s plane in their sights. And yet he was able to fly on.

The government narrative, completely fabricated as it may be, is the following:

Erdogan said as the coup unfolded that the plotters had tried to attack him in the resort town of Marmaris and had bombed places he had been at shortly after he left. He “evaded death by minutes”, the second official said. Around 25 soldiers in helicopters descended on a hotel in Marmaris on ropes, shooting, just after Erdogan had left in an apparent attempt to seize him, pro-government broadcaster CNN Turk said. Prime Minister Binali Yildirim had also been directly targeted in Istanbul during the coup bid and had narrowly escaped, the official said, without giving details.

Flight tracker websites showed a Gulfstream IV aircraft, a type of business jet owned by the Turkish government, take off from Dalaman airport, which is about an hour and a quarter’s drive from Marmaris, at about 2240 GMT on Friday.  It later circled in what appeared to be a holding pattern just south of Istanbul, around the time when a Reuters witness in the airport was still hearing bursts of gunfire, before finally coming in to land.

View image on Twitter

David Cenciotti @cencio4

This is probably Erdogan’s plane: Turkish Government GIV TC-ATA circling now @avischarf

7:28 PM – 15 Jul 2016

It is what happened during Erdogan’s trip that is confusing. Again from Reuters:

The Turkish leader was returning to Istanbul from a holiday near the coastal resort of Marmaris after a faction in the military launched the coup attempt on Friday night, sealing off a bridge across the Bosphorus, trying to capture Istanbul’s main airport and sending tanks to parliament in Ankara.

A senior Turkish official confirmed to Reuters that Erdogan’s business jet had been harassed while flying from the airport that serves Marmaris by two F-16s commandeered by the coup plotters but that he had managed to reach Istanbul safely.

At least two F-16s harassed Erdogan’s plane while it was in the air and en route to Istanbul. They locked their radars on his plane and on two other F-16s protecting him,” a former military officer with knowledge of the events told Reuters.

“Why they didn’t fire is a mystery,” he said.

Actually, now that we have seen the unprecedented crack down on all political opponents including the start of what is set to be a historic witch hunt, it is no mystery at all.

end

Sunday afternoon:  Erodgan arrest 6,000 citizens in a purge.  Amazing how he prepared the list in a such a short time and knew who were the “perpetrators”.  In another both the all important Incirlik Airbase commander was detained

(courtesy zero hedge)

“A Gift From God” – Erdogan Arrests 6,000 In Historic “Systemic Purge”, Incirlik Airbase Commander Detained

Perhaps the most surprising consequence from Friday’s failed Turkish coup, was the Turkish government’s cutting electricity and suspending operations at the giant US airbase at Incirlik, which not only serves as the focal point of many US anti-ISIS missions, but also houses at least 50 B61 nuclear bombs. However, a piece of the puzzle was revealed today when a Turkish government official said the Turkish commander of the Incirlik air base has been detained. The official said Sunday that Gen. Bekir Ercan Van, 10 other soldiers and one police officer from the Incirlik base are arrested for their role in the botched Friday coup attempt.

The Turkish private DHA news agency showed footage of Van handcuffed and pushed into a van outside a courthouse.

sendika.org @sendika_org

DHA: ‘da komutanı Tuğgeneral Bekir Ercan Van ile 10 asker ve bir emniyet müdürü tutuklandı.

5:52 AM – 17 Jul 2016

Meanwhile, the counter-coup, this time with the implicit blessing of all western powers, is picking up speed.

Earlier today, according to AP reports, Turkish President Erdogan vowed to “systemically purge” all state institutions of supporters of an Islamist cleric his government blames for Friday’s failed coup attempt. Speaking at a funeral in Istanbul on Sunday, Erdogan vowed to “clean all state institutions of the virus” of Fethullah Gulen supporters.

He also promised a purge of the armed forces even before the coup attempt was over. “They will pay a heavy price for this,” he said. “This uprising is a gift from God to us because this will be a reason to cleanse our army.”

BBC News (World) @BBCWorld

President Erdogan attends funeral for some of those who died in coup attempt in http://bbc.in/29Muj70 

7:09 AM – 17 Jul 2016

He said Turkey, through the justice ministry and foreign ministry, would request the extradition of the cleric, who is based in the United States, and his backers.

At a rally late on Saturday, his supporters demanded that the coup leaders be executed. “Let’s hang them!” chanted the crowd in Ankara’s central Kizilay square. Erdogan told them that parliament may consider a proposal to bring back the death penalty, which has been abolished. Crowds chanted “Fethullah will come and pay,” ”Allah is Great” and “We want the death penalty.”

Ironically, Erdogan said that in democracies, “you cannot push the wish of the people to one side” but also said “we are not after revenge.”

The cleric, whose movement is labelled a terrorist group by Turkey, has denied any involvement in the coup effort. Yesterday, in an interview with the FT, Gulen accused Erdogan of staging the coup himself.

Whether or not that is true, the aftermath is clear: Erdogan has a green light to arrest virtually anyone he considers a remote threat, starting with the army and the judicial, and is doing just that.

The Turkish government has accelerated its crackdown on alleged plotters of the botched coup against Erdogan, issuing dozens of arrest warrants for judges and prosecutors and detaining military officers.

Already, three of the country’s top generals have been detained, alongside hundreds of soldiers. The government has also dismissed nearly 3,000 judges and prosecutors from their posts, while investigators were preparing court cases to send the conspirators to trial on charges of attempting to overthrow the government. At least 265 people were killed and over 1,400 were wounded. Government officials say at least 104 conspirators were killed.

Earlier today, Turkey’s justice minister said some 6,000 people have been detained in a government crackdown on alleged coup plotters and government opponents. Justice Minister Bekir Bozdag says in a television interview that “the cleansing (operation) is continuing. Some 6,000 detentions have taken place. The number could surpass 6,000.

Bozdag also said he was confident that the United States would return Islamic cleric Fethullah Gulen to Turkey. The U.S. says it will look at any evidence Turkey has to offer against Gulen, and judge accordingly. Bozdag says “the United States would weaken itself by protecting him, it would harm its reputation. I don’t think that at this hour, the United States would protect someone who carried out this act against Turkey.”

But the best news of all for Erdogan is that he now has the full popular support to enforce a historic crackdown on all oppositions. Chanting, dancing and waving flags, tens of thousands of Turks marched through the streets into the wee to defend democracy and support the country’s long-time leader after a failed military coup shocked the nation.

It was an emotional display by Turks, who rallied in headscarves and long dresses, T-shirts and work boots, some walking hand-in-hand late Saturday and early Sunday with their children. Rather than toppling Turkey’s strongman president, the attempted coup that left some 265 dead and 1,440 wounded appears to have bolstered Recep Tayyip Erdogan’s popularity and grip on power. Gozde Kurt, a 16-year-old student at the rally in Istanbul, says Sunday that “just a small group from Turkish armed forces stood up against our government … but we, the Turkish nation, stand together and repulse it back.”

The Yeni Safak newspaper used the headline “Traitors of the country,” while the Hurriyet newspaper declared “Democracy’s victory.”

It is anything but.

* * *

Update: now that the Incirlik commander has been arrested, things appear to be back to normal

  • U.S. RESUMES ANTI-TERROR STRIKES OUT OF INCIRLIK, COOK SAYS

View image on Twitter

Fox News @FoxNews

US jets resume strike missions against ISIS from ‘s | http://fxn.ws/29LZXXI 

10:05 AM – 17 Jul 2016

* * *

Update 2: As expected, Erdogan is taking his time with the formal extradition request.  Recall what Gulen’s media advisor said yesterday: “Erdogan wants the best of both worlds, accusing him of being a puppet for the US and also asking the US to extradite him.” He is so far, spot on:

  • KERRY SAYS U.S. HAS NO EXTRADITION REQUEST ON GULEN FROM TURKEY

* * *

Update 3: Turkey has isued an arrest warrant issued against Erdogan top military aide Colonel Ali Yazici

Michael Horowitz @michaelh992

Arrest warrant issued against Erdogan top military aide Colonel Ali Yazici

10:05 AM – 17 Jul 2016 end Sunday afternoon: John Kerry blasts Turkey for accusing the USA of orchestrating the”failed: coup.  He stated that he had no idea the coup was forthcoming: Erdogan demands Gulen to be extradicted! (courtesy zero hedge) John Kerry Blasts Turkey For Accusing US Of Orchestrating Failed Coup, Admits US Had No Idea It Was Coming

In a confirmation that either the NSA remains painfully confused about global geopolitical developments (one can’t help but wonder if instead of surveilling the world for dangerous developments, the US “superspy” agency remains mostly focused on local eavesdropping), or that indeed the Turkish “coup” was staged as there was no actual preparation for it, earlier today John Kerry once again repeated that “US intelligence had no infromation” about the upcoming coup.

While this was hardly surprising, a more notable development following Turkey accusing the US of being “behind the Turkish coup”, was the US expressing concern that their longtime NATO ally and critical regional partner believed that Washington would try to overthrow their government calling the claims “harmful to bilateral relations.”

As Reuters reports, John Kerry urged Turkey on Saturday to exercise restraint after a failed military coup sparked a government crackdown, and warned its NATO ally that public suggestions of a U.S. role in the plot were “utterly false” and harmful to relations. Kerry also said that authorities should respect the rule of law during their probe of the coup.

Suggesting that US diplomatic relations with Turkey are deteriorating rapidly, Kerry added that “public insinuations or claims about any role by the United States in the failed coup attempt are utterly false and harmful to our bilateral relations,” the State Department said.

Responding to unofficial demands that the US hand over the cleric Fethullah Gulen, Kerry said the United States was willing to help Turkey as it tries to identify those involved in the coup attempt, but made clear it would only act if there was evidence against Gulen. “We fully anticipate that there will be questions raised about Mr Gulen, and obviously we invite the government of Turkey … to present us with any legitimate evidence that withstands scrutiny and the United States will accept that and look at it and make judgments appropriately,” he said.

This impasse so far has led to two practical questions.

The first one, a somwhat ironic spin on US foreign policy, asks whether Turkey has the right to drone Gulen since he is a “terrorist” and considered a threat to Turkey’s government. Naturally, the US would and has done so repeatedly when “people of interest”  abroad have to be eliminated. One wonders how Obama would respond to such an escalation by Turkey on US soil.

Col. Morris Davis @ColMorrisDavis

If Fethullah Gulen is considered a threat to Erdogan & Turkey’s gov’t doesn’t Turkey have a right to drone strike him in Pennsylvania? @CNN

1:38 PM – 16 Jul 2016

The second question is whether Turkey will ever formally submit an official extradition request. While there are rumors that this is imminent…

Barzan Sadiq @BarzanSadiq

: We will formally submit a request to to hand over .

7:38 AM – 17 Jul 2016

… so far it has not happened.

Jon Williams @WilliamsJon

: Been no formal request for extradition of man Erdogan blames for , . “Look forward to receiving it”

9:54 AM – 17 Jul 2016

It most likely won’t as Gulen had zero responsibility for the “failed” staged coup, and since Erdogan has nothing to gain from the cleric’s extradition.

 

 END Monday morning: This morning 8,000 cops has been added to the list to people purged by Erdogan and the world is now very aware that the coup was staged: (courtesy zero hedge) Erdogan Purges 8,000 Cops As Europe Voices Concern Coup Was Staged With “Prepared Arrest Lists”

Overnight Turkish president Erdogan’s counter-coup witch hunt continued, when thousands of police officers were suspended on Monday, widening a systemic purge of Erdogan’s enemies first in the armed forces and then judiciary after a failed military coup, now focusing on the interior police force, and raising concern among European allies that it was abandoning the rule of law. Reuters reports that at least 8,000 police officers have been removed from their posts, in addition to 1,500 at the ministry of finance, on suspicion of links to Friday’s coup.

Thirty regional governors and more than 50 high-ranking civil servants have also been dismissed, CNN Turk said. Thousands of members of the armed forces, from foot soldiers to commanders, were rounded up on Sunday, some shown in photographs stripped to their underpants and handcuffed on the floors of police buses and a sports hall. Several thousand prosecutors and judges have also been removed.

At the same time speculation that the terribly planned “coup” was anything but came from the European Commission itself. As Reuters adds, the swift rounding up of judges and others after a failed coup in Turkey indicated the government had prepared a list beforehand, according to EU commissioner dealing with Turkey’s membership bid, Johannes Hahn, said on Monday. 

“It looks at least as if something has been prepared. The lists are available, which indicates it was prepared and to be used at a certain stage,” Hahn said. “I’m very concerned. It is exactly what we feared.”

It is also exactly what Erdogan has expected and hoped for. And with broad western support for Erdogan over the weekend, his mission to concentrate all Turkish power in his own hands is now assured.

Meanwhile, Erdogan on Sunday told crowds of supporters, called to the streets by the government and by mosques across the country, that parliament must consider their demands to apply the death penalty for the plotters. “We cannot ignore this demand,” he told a chanting crowd outside his house in Istanbul late on Sunday. “In democracies, whatever the people say has to happen.”

Once again, Europe pushed back however, when Volker Kauder, parliamentary leader of German Chancellor Angela Merkel’s party bloc, said Turkey must obey the rule of law. “If the death penalty were to be decided, the negotiations would certainly be at an end,” Kauder says in ZDF television interview, referring to talks with the EU. “We mustn’t let it go unchallenged if the rule of law isn’t obeyed.”

Austrian Foreign Minister Sebastian Kurz also said it would be unacceptable for Turkey to reintroduce the death penalty, which it abolished in 2004. Abolishing capital punishment was a prerequisite for talks with Turkey on membership of the European Union, to which it still aspires.

But… this is Turkey: the law is whatever Erdogan says it is.

Others also realized what they have done, but it was too late. EU foreign policy chief Federica Mogherini warned the Turkish government on Monday against taking steps that would damage the constitutional order. “We were the first… during that tragic night to say that the legitimate institutions needed to be protected,” she told reporters on arrival at an EU foreign ministers meeting, which was also to be attended by U.S. Secretary of State John Kerry.

“We are the ones saying today rule of law has to be protected in the country,” she said in Brussels. “There is no excuse for any steps that take the country away from that.”

Actually the excuse came and went over the weekend, when – with Europe’s blessing – Erdogan not only repelled the fake coup, but also got a green light to crackdown on anyone who is even remotely critical of him.

And, oh yes, Erdogan still holds all the leverage:

end

 

Late Monday morning:

 

Kerry threatens Turkey’s expulsion from NATO: however the threats look hollow. Europe remains silent as Turkey holds 2 million migrants in its country.  The USA is demanding the rule of law and no killing of the purged citizens!

(courtesy zero hedge)

John Kerry Threatens Turkey With NATO Expulsion

Turkey accused the US of being behind the military coup“, to which John Kerry promptly responded that such allegations are “utterly false” and harmful to relations. Kerry also said that authorities should respect the rule of law during their probe of the coup. Kerry also noted that there would be no prompt deportation of Gulen (something which is also in Erdogan’s favor), when he said that “we fully anticipate that there will be questions raised about Gulen, and obviously we invite the government of Turkey … to present us with any legitimate evidence that withstands scrutiny and the United States will accept that and look at it and make judgments appropriately,” he said.

This however did not lead to any moderation in Turkish rhetoric, and yesterday, Prime Minister Binali Yildirim threatened to go to war with any country that would “stand by” the exiled Fethullah Gulen; this would naturally imply the US which is where Gulen is currently located. “The US is behind the coup attempt. A few journals that are published there [in the US] have been conducting activities for several months. For many months we have sent requests to the US concerning Fethullah Gulen. The US must extradite him,” said the Labor Minister in a statement.

Curiously, despite all the posturing, Turkey has yet to send out a formal extradition request.

However, the tensions between Turkey and US appear to have spilled over this morning, when moments ago John Kerry threatened Turkey that it could lose its NATO membership “if it fails to uphold the principles of democracy in the wake of an attempted coup” the US has warned. 

“NATO also has a requirement with respect to democracy and NATO will indeed measure very carefully what is happening,” Kerry tells reporters in Brussels after attending a meeting of European Union foreign ministers. It was unclear how that “requirement” fits with Turkey – one of the world’s largest, US-supplied military forces – housing the all-important Incirlik airbase which provides the US (and NATO) with a convenient staging point for air missions across the entire middle east.

“My hope is that Turkey is going to move in ways that do respect what they have said to me many times is the bedrock of their country,” he says.  Kerry adds: “I spoke with the foreign minister three times in the last days and he assured me that they fully intended to respect the democratic process and the law; now obviously a lot of people have been arrested and arrested very quickly” and “the level of vigilance and scrutiny is obviously going to be significant in the days ahead.”

This is happening as none other than one of the EU’s top bureaucrats voiced a suggestion that the coup had indeed been staged. As Reuters reported earlier, the swift rounding up of judges and others after a failed coup in Turkey indicated the government had prepared a list beforehand, according to EU commissioner dealing with Turkey’s membership bid, Johannes Hahn, said on Monday. “It looks at least as if something has been prepared. The lists are available, which indicates it was prepared and to be used at a certain stage,” Hahn said. “I’m very concerned. It is exactly what we feared.”

So very concerned that Europe is doing, drumroll, precisely nothing. Why? Because Erdogan still holds two million Syrian refugees as the most important bargaining chip that allows him to do anything and everything and get away with it, or else unleash another wave of migrants into Germany, leading to another collapse in the popularity of the German chancellor if not worse.

That said, we wonder if Kerry has seen the latest news according to which Turkey has “democratically” purged around 8,000 police officers following the failed coup, with more than 6,000 people in the army, the judiciary and other state bodies arrested as part of President Recep Tayyip Erdogan’s response to Friday’s staged coup, in which rebel pilots held Erdogan’s Gulfstream in their sights and yet inexplicably did not shoot.

At a joint news conference with EU foreign police chief Federica Mogherini, US Secretary of State John Kerry said that America stands “squarely on the side of the elected leadership in Turkey,” but that “we urge the government of Turkey to to uphold the highest standards of respect for the nation’s democratic institutions and the rule of law”.

“We will certainly support bringing the perpetrators of the coup to justice but we also caution against a reach that goes beyond that and stress the importance of the democratic rule being upheld,” he added.

We, on the other hand, expect the hollow jawboning and empty threats to continue even as Erdogan rounds up tens of thousands of political opponents and throws them in prison without any due process, all in the name of the “democratic process.”

 

end

 

Late Monday morning;  What on earth is this madman planning?:Erdogan halts all public employees from travelling (so it is easier to hunt them down!)

PART A

(courtesy zero hedge) Lira Slumps After Turkish Parliament Evacuation On Report Of “Imminent Attack”

Update: to nobody’s surprise, moments ago the Turkish police is said to have denied such reports of an “imminent attack.”

* * *

Whether credible, or the latest in a long line of false flag events to spread panic and fear and further cement Erdogan’s authoritarian power, moments ago newswires reported that people are being evacuated form the Turkish parliament building as there has been information about an imminent attack on the building, the Cumhuriyet newspaper reported on Monday.

“We have been informed of an attack. The Meclis is being evacuated,” the newspaper quotes member of the Peoples’ Democracy Party Ziya Pir.

Michael Horowitz @michaelh992

Seems to be related to a suspicious person, not a serious threat, more like a security precaution

Michael Horowitz @michaelh992

Picture of one of the entrances to the Parliament in , buses blocking it pic.twitter.com/lh8W6D6Ew4

8:15 AM – 18 Jul 2016

The news has pushed the Turkish Lira to intraday lows, which sending gold and safe haven assets modestly higher. US equity futures, in true form, remain unchanged.

And in other news, while algos focus on this latest “staged” attack, the real news was reported by Turkish NTV which said that Turkey bans all trips by public employees, ostensibly to make it easier for Erdogan to hunt them down and arrest them, all in the name of the “democratic process” so important to NATO.

 

end

 

 

Part B:  What on earth is this madman planning?:

(courtesy zerohedge)

Turkish Prosecutors Raid Incirlik Airbase Housing US Warplanes And 50 Nuclear Bombs

The saga surrounding the Turkish Incirlik air base, which is not only the headquarters to the US 39th Air Base Wing but also vaults over 50 B1 nuclear bombs, and is critical to all US missions not only against ISIS but the entire middle east continues. Moments ago, Turkey’s state-run news agency says seven prosecutors, charged with investigating a foiled coup, have entered the Incirlik Air Base.

View image on Twitter

TurkishNY @TurkishNY

İncirlik Üssü’ne Operasyon Başlatıldı http://ift.tt/2a4KOAo 

10:44 AM – 18 Jul 2016

A Turkish brigadier general at the base has already been detained for his alleged role in Friday’s uprising.

View image on Twitter

habersom @habersom

Darbe için kullanılan İncirlik Üssü’nde arama yapılıyorhttp://www.habersom.com/darbe-icin-kullanilan-incirlik-ussunde-arama-yapiliyor/ …

10:39 AM – 18 Jul 2016 · Muğla, Türkiye, Turkey

On Saturday, Turkish Prime Minister Binali Yildirim said that Turkish airspace was closed due to the coup attempt in the country. US media reported that the Incirlik base in southern Turkey has been left without electricity and local authorities prevented movement to and from the base. Air operations from the base have also been suspended. On Sunday, the US-led coalition resumed flights from the Incirlik airbase.

The former commander of the base was accused by Ankara of involvement in the attempted coup. The United States rejected asylum application of Gen. Bekir Ercan Van.

In July 2015, Turkey agreed to open up Incirlik to US manned and unmanned aircraft to conduct anti-terror operations in Syria against Daesh.

It is unclear as of this moment, what the Turkish “probe” is seeking.

 

end

 

Your scapegoat!  What a complete farce!!

(courtesy zero hedge)

 

Former Turkey Air Force Commander Unsure If He Was Ring-Leader In Coup, Pleads Guilty

The farcical ‘coup’ fallout continues. Having earlier denied his involvement in the coup in statements he made to Turkish media (insisting he worked to quell the uprising), Turkey’s state-run news agency reports that former Air Force commander General Akin Ozturk has now pleaded guilty to organizing the coup attempt. “I started to act aiming to stage a coup,” Ozturk admitted during interrogation… but, adding to the confusion, CNN Turk additionally reports that Ozturk stated “he was not the one to plan the coup.”

Earlier today,

Turkey’s state-run news agency says a total of 103 generals and admirals have been detained for questioning across Turkey over the failed coup.

Anadolu Agency says Monday that 41 of them have been ordered jailed pending trial so far.

Earlier, the agency said prosecutors in Ankara were questioning 27 generals and admirals, including former Air Force commander Gen. Akin Ozturk, who has been described as the ringleader of the foiled uprising.

Ozturk, who remained in active duty, has denied he was involved and insisted he worked to quell the uprising in statements he made to Turkish media.

And now…

The ex-commander of the Turkish Air Force has pleaded guilty to organizing the coup attempt, Anadolu news agency reported.

“I started to act aiming to stage a coup,” Akin Ozturk said during the interrogation.

NOTE – The Turkish State Media has since deleted this tweet!

But…

View image on Twitter

CNN Türk ENG @CNNTURK_ENG

Former Air Force Commander Akın Öztürk says he was not the one to plan the coup

12:31 PM – 18 Jul 2016

So, to be clear, he did not plan it but acted with intent to stage it… and that is how Erdogan gets his scapegoat (as Sputnik News reports, according to Sabah newspaper, Ozturk may be linked to Turkish Islamic scholar Fethullah Gulen staying in self-imposed exile in the United States, who was blamed by Ankara for the attempted coup.)

 

end

 

What a joke;  Now Ozturk is not responsible for the “coup” but states that it is the “Gulen” movement

(courtesy zero hedge)

 

Turkey Caught Fabricating Story Of Who Is Responsible For “Military Coup”

Earlier today, when we commented on Turkey’s crackdown of the alleged “mastermind” behind Friday’s military coup (besides the US, of course), we noticed something unexpected.  While initially, the Turkish national media, Anadolu news agency, reported that the the ex-commander of the Turkish Air Force, Akin Ozturk, had pleaded guilty to organizing the coup attempt, saying  “I started to act aiming to stage a coup,” this report by Anadolu…

 

… was promptly scrubbed, and replaced by its complete opposite, when CNN Turk reported that “Ozturk, who remained in active duty, has denied he was involved and insisted he worked to quell the uprising in statements he made to Turkish media.”

View image on Twitter

is-deciderHtmlWhitespace" cite="https://twitter.com/CNNTURK_ENG/status/755077560703344641">

CNN Türk ENG @CNNTURK_ENG

Former Air Force Commander Akın Öztürk says he was not the one to plan the coup

12:31 PM – 18 Jul 2016

 

Furthermore, shortly after Anadolu tweeted its original “news” which included the commander’s quote shown above, the tweet in question was quickly deleted and scrubbed.

We were confused because this was a rather significant error. However, it wasn’t only us. As it turns out AP, which was also keeping track of the fluid narrative, encountered the same inconsistency, and moments ago reported the following retraction.

So what is the latest official story, at least until it changes once more. Here is the latest from AP:

Turkey’s state-run news agency says a former Air Force commander accused of a role in a failed coup Friday night has been placed under arrest by the Ankara Chief Public Prosecutor’s Office along with 25 others.

 

The government has accused Gen. Akin Ozturk of being the ringleader of the coup, though he told prosecutors he did not plan or direct it. The Anadolu news agency, relying on prosecutors, initially said Ozturk had confessed to a role in the coup, but later retracted that report.

So why did Turkey initially cast blame on the former Air Force commander only to scrub the story?  Simple: it found an easier way to scapegoat Erdogan’s US-based nemesis, Fethullah Gulen. Namely, after the fact, the “prosecutor” decided that it is far better for Ozturk to blame the “Gulen movement” than to take responsibility personally… which he has promptly done.

“I don’t know who planned or directed it. According to my experiences, I think that the (Gulen movement) attempted this coup. But I cannot tell who within the Armed Forces organized and carried it out. I have no information. I have fought against this structure (meaning Gulen movement),” Ozturk was quoted as saying.

We wonder how much physical intervention was required to have Ozturk change his story so dramatically, and worse, why the Turkish government allowed such a dramatic error to occur, one which confirms that Erdogan is now openly fabricating the narrative as he sees fit, all with the intent of bringing down even more public anger on the 77 year old cleric based in Pennsylvania. .

end

I do not think that this was centrally planned!   Turkish stocks crash by 10% ..the most in over 3 years!

(courtesy zero hedge)

Turkish Stocks Crash Most In 3 Years, Give Up Brexit Gains

What goes up in a linear centrally-planned way, plunges cliff-diver-like on a ‘failed’ coup…

Borsa Istanbul 100 is down over 10% – the biggest single-day plunge since June 2013…

So much for central-planning?

Just take a look at that chart – off the Brexit crash the Turkish stock market rallied 13 out of 14 days.

OIL ISSUES

Oil tumbles back to the into 45 dollar handle as the staged coup  (“failed” coup) does not hinder flows:

(courtesy zero hedge)

WTI Tumbles To $45 Handle As ‘Failed Coup’ Leaves Flows Unhindered

Despite Turkish turmoil, oil prices have resumed their downturn as the ‘failed coup’ has left flows unhindered and a stronger dollar (and waning gasoline demand) pushed WTI back to a $45 handle this morning.

Catalysts for the downside push appear to be:

  • 0il tankers loading, unloading cargoes normally at Turkey’s ports and supplies arriving in ships and pipelines from neighboring countries, according to Turkey’s Energy Ministry.
  • Demand for gasoline in the U.S. fell last week even though it remains higher than the same period last year, as well as the five-year average.
    However, overproduction in the past means gasoline inventories remain at a high level of around 240 million barrels, says the Oil Market Journal. The worry is that, as the end of the U.S. driving season is around the corner, demand for gasoline will plunge, leaving gasoline stocks elevated.
    “With demand failing to meet expectations, and stocks holding high, we believe the risks remain to the downside,”
    the note says.
  • And the US dollar is strengthening.
  • end
 end Your early morning currency/gold and silver pricing/Asian and European bourse movements/ and interest rate settings/MONDAY morning 7:00 am

Euro/USA   1.1054 UP .0026 (STILL  REACTING TO BREXIT/ANOTHER ATTACK IN PARIS)

USA/JAPAN YEN 105.61  UP 0.973(Abe’s new negative interest rate (NIRP), a total DISASTER/SIGNALS U TURN WITH INCREASED NEGATIVITY IN NIRP/JAPAN OUT OF WEAPONS TO FIGHT ECONOMIC DISASTER/NOW WILL INITIATE HELICOPTER MONEY

GBP/USA 1.3225 UP .0050(MORE STIMULUS PLANNED)

USA/CAN 1.2951 DOWN .0003

Early THIS MONDAY morning in Europe, the Euro ROSE by 26 basis points, trading now JUST above the important 1.08 level RISING to 1.1054; Europe is still reacting to BREXIT,deflation, announcements of massive stimulation (QE), a proxy middle east war, and the ramifications of a default at the Austrian Hypo bank, an imminent default of Greece, Glencore, Nysmark and the Ukraine, along with rising peripheral bond yield further stimulation as the EU is moving more into NIRP, and NOW THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE / Last night the Shanghai composite  CLOSED DOWN 1-.73 POINTS OR 0.35%   / Hang Sang CLOSED UP 143.93 PTS OR 0.66% /AUSTRALIA IS HIGHER BY 0.53%/ EUROPEAN BOURSES ARE ALL IN THE RED (EXCEPT LONDON)   as they start their morning

We are seeing that the 3 major global carry trades are being unwound. The BIGGY is the first one;

1. the total dollar global short is 9 trillion USA and as such we are now witnessing a sea of red blood on the streets as derivatives blow up with the massive rise in the rise in the dollar against all paper currencies and especially with the fall of the yuan carry trade. The emerging market which house close to 50% of the 9 trillion dollar short is feeling the massive pain as their debt is quite unmanageable.

2, the Nikkei average vs gold carry trade ( NIKKEI blowing up and the yen carry trade HAS BLOWN up/and now NIRP)

3. Short Swiss franc/long assets blew up ( Eastern European housing/Nikkei etc.

These massive carry trades are terribly offside as they are being unwound. It is causing global deflation ( we are at debt saturation already) as the world reacts to lack of demand and a scarcity of debt collateral. Bourses around the globe are reacting in kind to these events as well as the potential for a GREXIT>

The NIKKEI: this MONDAY morning: closed FOR HOLIDAY 

Trading from Europe and Asia:
1. Europe stocks ALL  IN THE RED AS  THEY START THEIR DAY

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 143.93 OR 0.66%  ,Shanghai CLOSED DOWN 10.73 OR 0.35%   / Australia BOURSE IN THE GREEN: /Nikkei (Japan) CLOSED HOLIDAY/India’s Sensex IN THE RED  

Gold very early morning trading: $1326.10

silver:$19.77 

Early MONDAY morning USA 10 year bond yield: 1.566% !!! DOWN 3 in basis points from FRIDAY night in basis points and it is trading WELL BELOW resistance at 2.27-2.32%. The 30 yr bond yield RISES to 2.278 UP 4 in basis points from FRIDAY night. (SPREAD GOES AGAINST THE BANKS)

USA dollar index early MONDAY morning: 96.61 DOWN 04 CENTS from FRIDAY’s close.

This ends early morning numbers MONDAY MORNING

END

And now your closing MONDAY NUMBERS

Portuguese 10 year bond yield:  3.13% PAR in basis points from FRIDAY  (does not buy the rally)

JAPANESE BOND YIELD: -0.226% PAR  in   basis points from FRIDAY

SPANISH 10 YR BOND YIELD: 1.24%  UP 1 IN basis points from FRIDAY( this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 1.25 DOWN 1 IN basis points from FRIDAY (again totally nuts/)

the Italian 10 yr bond yield is trading 1 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: -.023% UP  4 IN  BASIS POINTS ON THE DAY

END

 

IMPORTANT CURRENCY CLOSES FOR FRIDAY

Closing currency crosses for FRIDAY night/USA DOLLAR INDEX/USA 10 YR BOND YIELD/3:30 PM

 

Euro/USA 1.1075 UP .0047 (Euro =UP 47 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 106.03 UP 1.405(Yen DOWN 141 basis points/HELICOPTER MONEY )

Great Britain/USA 1.3265 UP 0.0090 ( Pound UP 90 basis points/BREXIT DECISION AFFIRMATIVE/QE TO START AGAIN/UK DOWNGRADED/NEW PRIME MINISTER T. MAY/REACTING TO FRANCE’S ISLAMIC ATTACK LAST NIGHT

USA/Canada 1.2945-DOWN 0.0009 (Canadian dollar UP 9 basis points AS OIL FELL (WTI AT $45.43). Canada keeps rate at 0.5% and does not cut!

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

This afternoon, the Euro was UP by 47 basis points to trade at 1.1075

The Yen FELL to 106.03 for a LOSS of 141 basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY TO COMMENCE

The POUND was UP 90 basis points, trading at 1.3265 AS PRIME MINISTER THERESA MAY TAKES OFFICE

The Canadian dollar ROSE by 9 basis points to 1.2945, WITH WTI OIL AT:  $45.38

CANADIAN RATES WERE NOT CUT

The USA/Yuan closed at 6.6810

the 10 yr Japanese bond yield closed at -.226% PAR  IN BASIS  points in yield/

Your closing 10 yr USA bond yield: DOWN 2 IN basis points from FRIDAY at 1.580% //trading well below the resistance level of 2.27-2.32%)

USA 30 yr bond yield: 2.229 PAR  in basis points on the day 

BANKS NEED THE LONGER BOND HIGHER IN YIELD: INSTEAD THE SPREAD LESSENS.

Your closing USA dollar index, 96.52 DOWN 6 CENTS  ON THE DAY/4 PM 

Your closing bourses for Europe and the Dow along with the USA dollar index closing and interest rates for MONDAY

London:  CLOSED UP 26.18 OR 0.39%
German Dax :CLOSED DOWN  3.77 OR  0.04%
Paris Cac  CLOSED DOWN 14.77  OR 0.34%
Spain IBEX CLOSED DOWN 6.60 OR 0.08%
Italian MIB: CLOSED UP 14.14 OR 0.08%

The Dow was UP 16.50  points or 0.09%

NASDAQ up 26.20 points or 0.52%
WTI Oil price; 45.39 at 4:30 pm;

Brent Oil: 47.06

USA DOLLAR VS RUSSIAN ROUBLE CROSS:  62.83 (ROUBLE DOWN  85/100 ROUBLES PER DOLLAR FROM TUESDAY) 

TODAY THE GERMAN YIELD FALLS TO +.0230%  FOR THE 10 YR BOND

END

This ends the stock indices, oil price, currency crosses and interest rate closes for today

Closing Price for Oil, 5 pm/and 10 year USA interest rate:

WTI CRUDE OIL PRICE 5 PM:45.24

BRENT: 47.03

USA 10 YR BOND YIELD: 1.581% 

USA DOLLAR INDEX: 96.56 down 1 cent

The British pound at 5 pm: Great Britain Pound/USA: 1.32489 up .0075 or 75 basis pts.

German 10 yr bond yield at 5 pm: -.023%

END

And now your more important USA stories which will influence the price of gold/silver

Trading Today in Graph form;  VERY IMPORTANT FOR YOU TO VIEW ALL THE CHARTS TODAY

Failed ‘Coup’ Sparks Yen-Driven Buying Spree In US Stocks

ll is well…

 

First, this is what happened in Turkey – Lira and stocks held losses…

 

And this is what happened in US markets…

 

Nasdaq was the day’s big winner thanks to ARM’s Softbank-driven M&A contagion… (note that the rally stalled as Europe closed) – New Record High Closes For The Dow & S&P

 

BofA surged off technical support after earnings…

 

But today’s buying panic was all thanks to Kuroda and The Bank of Japan deciding 106 was the level…

 

And VIX was driven back to a 12 handle… Notice the after-hours plunge in S&P Futs on the coupe headlines…

 

Treasury yields rose modestly on the day off post-coup lows…

 

But note 30Y is back at the point post-Brexit when it decoupled from stocks…

 

FX markets were relatively quiet today aside from the exuberant selling in JPY (and some cable strength on chatter of no rate cut soon), USD Index ended modestly lower…

 

Despite the weaker USD, only copper managed gains in comodity land with PMs giving up Coup-driven safe-haven gains and crude slumping…

 

As stocks remain entirely decoupled from oil also…

 

Finally, perhaps of note, if the S&P 500 fails to close this week’s trading above last Friday’s close, history-conscious investors might feel a sinking sense of deja vu. As Neil Azous of advisory firm Rareview Macro pointed out in a Monday morning note, the S&P made its closing weekly high for 2015 on July 17. And while stocks managed to climb higher in the following session, the index didn’t have a higher weekly close until two Fridays ago.

 

Charts: Bloomberg

END

 

The big non profit insurance Land of Lincoln is closing its doors leaving 49,000 policy holders in the dark. They will lose coverage in a couple of months.  It is the 16th co op to fail as it lost 90 million dollars due to the fact that premiums could not match payouts. Also Connecticut saw its only op op bite the dust.  Obamacare is one complete failure. Wait until November when the premiums are set to rise by 30 -50%.

(courtesy Mike Krieger)

Illinois Obamacare Co-Op Goes Bust Leaving Tens of Thousands At Risk

Submitted by Mike Krieger via Liberty Blitzkrieg blog,

The fact that Obamacare is a gigantic train wreck barreling uncontrollably into a brick wall is pretty much undeniable at this point. I’ve covered this reality from several angles in 2016, with one of the more popular posts being, The Health Insurance Scam – “Coverage” Doesn’t Mean Affordability or Access, in which I noted: 

Politicians, particularly those of the Democratic persuasion, love to throw around statistics about how many additional people have healthcare coverage without ever talking about the cost of such coverage, or whether it actually translates into actual access in the real world.

While a greater number of Americans having health insurance is a good thing when it comes to protecting against unexpected catastrophic events or extended hospital stays, it doesn’t tell you anything about two very important variables: 1) How much does it cost? 2) What kind of access does it provide? As usual, the devil is in the details.

We’ve all seen headlines about higher monthly premiums, but that’s just the tip of iceberg. Once you’ve paid your premium, you’re far from off the hook. Another one-two punch of deductibles, copays and out of pocket maximums appear which can collectively run into the thousands if not tens of thousands of dollars for families.

In my opinion, the above situation represents the number one failure of Obamacare, but there are others. Today’s piece focuses in on the state of Obamacare co-ops, which were “created under the federal health law to provide cost-effective coverage and competition in state insurance markets.”

Just like with Obamacare in general, stark reality is not living up to the sales pitch, and 16 of the 23 nonprofit cooperatives created nationwide have now failed.

As the Chicago Tribune reports:   

The Illinois Insurance Department moved Tuesday to shut down Land of Lincoln because of its unstable financial health, leaving about 49,000 policyholders in a lurch. They will lose coverage in the coming months, but neither regulators nor the company have said exactly when.

Policyholders will be able to buy insurance from a different carrier to cover them for the rest of 2016, according to the state Insurance Department. But switching plans is going to cost them.

The co-pays and deductibles enrollees have been paying since January will not transfer to new plans. A new plan will reset deductibles and out-of-pocket maximums paid by consumers.

Beyond the impact on consumers, the demise of Land of Lincoln is a significant setback for the Affordable Care Act in Illinois. The insurer was one of 23 nonprofit cooperatives nationwide created under the federal health law to provide cost-effective coverage and competition in state insurance markets. With Land of Lincoln’s failure, the list of co-ops has shrunk to seven.

Just last week, Connecticut took control of its health insurance co-op, but policyholders will have coverage until the end of the year, avoiding the disruption that is coming to Illinois, disruption that Illinois’ top insurance regulator warned the federal government about two weeks ago.

After a slow start in 2014, Land of Lincoln grew rapidly last year, finishing 2015 with more than 35,000 individual policyholders and about 15,000 members in small and large employer plans. The co-op captured about 6 percent of the individual market in Illinois, which was good for second place but well behind Blue Cross’ 83 percent market share.

Pretty massive concentration for a “free market.”

But Land of Lincoln lost more than $90 million in 2015, as the premiums it collected fell well short of the health-care costs of its enrollees. The shortfall in premium revenue was a problem also experienced by large, established insurers like Blue Cross that also participated in the restructured individual markets.

Shortfalls in anticipated levels of federal funding also put Land of Lincoln in a bind. While big insurers have the financial reserves to cushion against losses, Land of Lincoln was in a precarious condition at the end of last year. Still, Illinois insurance regulators allowed the company to sell plans for 2016 to consumers.

The company has continued to lose money this year, even after increasing rates by an average of 29.7 percent. Through May, the co-op lost more than $17 million, according to the state Insurance Department.

Land of Lincoln is the latest casualty in the health-care law co-op program. According to Americans for Tax Reform, the company is the 16th co-op to fail. The federal government financed co-ops with low-interest loans totaling $2.4 billion. In Illinois, the Metropolitan Chicago Healthcare Council, a hospital trade association, received $160 million in funding to start Land of Lincoln.

The company’s collapse will hit hospitals and physicians throughout Illinois. The company had nearly $49 million in unpaid claims at the end of the first quarter.

Very sad for the people affected. Obamacare is a dead man walking.

 

END

 

Big derivative underwriter Bank of America reports that its profit tumbles by 19%

(courtesy zero hedge/B of A)

Bank of America Profit Tumbles 19% As NIM Hits Record Low, EPS “Beat” On Surge In Cost-Cutting

Moments ago Bank of America joined the parade of “beating” banks despite declining earnings, when it reported adjusted Q2 EPS of $0.37 (excl. DVA), “higher” than a sharply reduced in recent weeks consensus estimate of $0.33, even as profits tumbled 19% from the $0.45 a year ago on sliding revenues of $20.6 billion ($20.4bn reported), vs consensus of $20.4 billion: the top line was $1.6 billion lower than a year ago if $0.9bn higher than Q1.  The bank said its quarterly profit fell as the second largest U.S. lender by assets was hurt by the continued drag of low interest rates, though the bank’s results beat expectations.

BoFA reported net interest income (FTE basis) of $9.44b vs $9.39b Q/Q while non-interest income rose to $11.19b vs $10.34b a year ago.  BofA adds that excluding market-related adjustments, net interest income was $10.4B (FTE basis), which decreased $0.2B from 1Q16, driven primarily by lower long-end rates and seasonal impacts to loan yields. At the same time, it ncreased $0.4B from 2Q15, driven primarily by higher shortend rates and an increase in commercial loans funded by strong deposit growth, partially offset by lower long-end rates.

The problem observed with other banks, namely the collapse in Net Interest Margin was evident at BofA too, which reported a Net Interest Yield of only 2.03%, the lowest on record. As a result, net interest income fell 12% to $9.21 billion from $10.46 billion a year ago.

BofA, however, is hopeful that long-end rates will rebound, and reported that a +100 bps parallel shift in interest rate yield curve is estimated to benefit NII by $7.5B over the next 12 months. Now if only long-yield were to rebound.

Something else BofA did that was also observed at JPM: increasing total loans – which rose to $900 billion – to offset the decline in margins, coupled with another increase in total deposit.

On the positive side, sales and trading revenue in the global markets division climbed 14%, with fixed income up 27% and equities down 8%.  Trading revenue, excluding an accounting adjustment, rose 12% to $3.7 billion from $3.32 billion in the second quarter of last year. J.P. Morgan Chase & Co. last week reported a 23% increase in trading revenue, and Citigroup Inc. reported a 15% increase. The breakdown:

  • 2Q trading $3.7b, est. $3.44b (Bloomberg survey of 5 ests.).
  • FICC $2.46b, est. $2.34b (Bloomberg survey of 5 ests.)
    • “FICC revenue increased $0.5B, or 22%, from 2Q15, due to stronger performance globally across rates and currencies products, higher secondary trading in loans and securitized products as a result of improved credit market conditions, as well as solid performance in municipal bonds from strong retail demand”
  • Equities $1.08b, est. $1.10b (Bloomberg survey of 5 ests.)
    • “Equities revenue decreased $0.1B, or 8%, from 2Q15, driven by a decline in client activity in Asia compared to the strong year ago quarter, which benefitted from increased volumes related to stock market rallies in the region”
  • 2Q i-banking $603m vs $494m q/q, $718m y/y

Breakding down BofA’s investment banking fees:

BofA managed the decline in revenues by drastically slashing expenses, and as Brian Moynihan added, expenses were down 3% Y/Y to a “level not seen since 2008” as the company continued to eliminate both headcount and cut compensation. Expenses declined 3.3% to $13.49 billion from $13.96 billion a year ago. The bank continued to cut jobs and sell or shutter branches.

Looking at the bank’s loan book, unlike Wells Fargo, nothing major stuck out immediately. Total Q2 credit losses rose by $0.2 billion from a year ago to $976MM, fractionally less than the $999 million expected. The breakdown:

  • Net charge-offs $985b vs $1.1b q/q, $1.1 y/y
  • Net charge-off ratio 0.44% vs 0.48% q/q
  • Net reserve release $9m vs $71m release q/q, $288m y/y; reserve releases in consumer were mostly offset by increased commercial reserves
  • Provision for credit losses $976m vs est. $998.7m
  • Utilized energy exposure down 3% q/q, 6% y/y $21.2b, driven mainly by decreases in lower-risk subsectors;
  • Exposure of $7.6b to higher-risk subsectors (E&P, Oilfield Services) down 1%, represents; 57% of utilized exposure is criticized
  • Energy reserves unchanged q/q at $1.0b

Finally, the bank repurchased $1.4b in common stock.

Overall, a quarter which came in line with reduced expectations, even as the ongoing environment of low rates continues to pressure both revenues and EPS, forcing the bank to accelerate cost-cutting as well as reducing its risky loan exposure.

Full breakdown of its Q2 earnings (pdf)

 

end

 

This ought to be good:  SEC reviewing potential fraud charges against Chrysler: for falsely reporting sales and number of vehicles sold.  No doubt if Chrysler is doing it then they all are:

 

(courtesy zerohedge)

 

Fiat Chrysler Shares Slide On Reports Of SEC Securities Fraud Probe

Fiat Chrysler is under investigation by the U.S. Justice Department for fraud, according to people familiar with the matter. As Bloomberg reports, prosecutors are scrutinizing whether the carmaker violated U.S. securities laws, they said. The inquiry is in early stages, according to two people, who asked not to be identified because the investigation is confidential and declined to specify what conduct is being investigated.

A civil lawsuit against Fiat Chrysler may provide clues about what prosecutors are looking at.

 A Chicago-area dealer alleges the company inflated its U.S. car sales by paying dealers to report selling more vehicles than they actually did.

Fiat Chrysler shares are sliding on the news…

A criminal investigation could deliver a blow to the automaker, which has posted record vehicle sales since Fiat acquired full control of Chrysler in 2014 through a government-backed bailout that brought the maker of Jeep and Dodge brands out of bankruptcy in 2009. In December, Fiat Chrysler said it had the best month of U.S. sales in the company’s 90-year history with 217,527 vehicles sold — recording its 69th consecutive month of year-over-year sales gains.

That performance was challenged in a private lawsuit filed in January by dealerships in Illinois and Florida that alleged the sales were padded through a scheme by which dealers — sometimes unbeknownst to their owners — were paid to create false New Vehicle Delivery Reports. Similar claims were made in a 2015 lawsuit filed by a dealer of Fiat Chrysler-owned Maseratis.

Fiat Chrysler, in a Jan. 14 regulatory filing, said an internal investigation concluded the padding allegations were baseless and that the lawsuit was “nothing more than the product of two disgruntled dealers.”

In the sales-padding cases, a federal judge in Chicago is considering Fiat Chrysler’s request to dismiss one of the lawsuits while a judge in Brooklyn is deciding whether to merge two other cases.

Fiat Chrysler isn’t the only carmaker accused of boosting sales numbers by getting dealers to inflate their figures. Similar claims have also been made against Bayerische Motoren Werke AG, also known as BMW, for paying its dealers as much as $1,750 a vehicle in December to put new models in their service fleets, the cars owners use when their vehicles are being worked on. Dealers booked the sales immediately, and the deliveries helped the company hit its target, people familiar with the practice told Bloomberg News in February.

And dare we suggest that if Fiat Chrysler was doing it (and its sales numbers did not appear outlying relative to its peers), then perhaps, just perhaps, every other car-maker is playing similar tricks.

 

end

 

The largest uSA pension fund just recorded its worst annual return due to heavylsoses in stocks  This will happen to many more hedge funds as the true value of stocks is well below what is trading right now:

(courtesy zero hedge)

 

Largest US Pension Fund Suffers Worst Annual Return Since Financial Crisis Due To Heavy Stock Losses

While we have often documented the dramatic underperformance by the hedge fund industry over the past decade courtesy of a centrally-planned market in which it no longer pays to “hedge”, culminating with countless hedge fund closures and substantial redemptions (mostly by now redundant Fund of Funds managers), today we learn that “vanilla” asset managers were also hurt over the past year in which the S&P went nowhere, and not just in Japan where the gargantuan, $1.4 trillion GPIF recently suffered major losses, but in the US as well.

Case in point: Calpers, the largest U.S. public pension fund which as the WSJ reports posted its lowest annual gain since the last financial crisis due to heavy losses in stocks.

The California Public Employees’ Retirement System, or Calpers, said it earned 0.6% on its investments for the fiscal year ended June 30, according to a Monday news release, barely turning a profit fro the full year. The last time Calpers lost money was during fiscal 2009 when the fund’s holdings fell 24.8%.

It was the second straight year Calpers failed to hit its internal investment target of 7.5%. In 2015,Calpers earned only 2.4%, which suggests that as a result of the dramatic two-year underperformance relative to the funds’ own internal target returns, public pensions in California are not only significantly underfunded as of this moment, and getting worse.

Calpers oversees retirement benefits for 1.7 million public-sector workers.

As the WSJ notes, “workers or local governments often must contribute more when pension funds fail to generate expected returns.” The problem is when either workers nor local governments can, or want to, contribute more.

Unlike scores of underperforming hedge funds whose primary investors are already wealthy individuals who can weather a down year (or more, in the case of Pershing Square), Calpers’ annual results are watched closely in the investment world. It is considered a bellwether for U.S. public pensions because of its size and investment approach. Many pensions currently are struggling because of a sustained period of low interest rates.

“This is a challenging time to invest,” Ted Eliopoulos, Calpers’ chief investment officer, said in the release. Which is odd, because one look at the ticker shows the S&P trading at all time highs.

The giant California plan ended 2016 with roughly $295 billion in assets, and more than half of those funds are invested with publicly traded stocks. Those investments declined 3.4%, though the performance beat internal targets.

Fixed income produced the largest returns at 9.3%, though the results under performed Calpers’ benchmark. The California retirement giant’s private-equity portfolio posted returns of 1.7%.

Real estate holdings returned 7.1%, but that was below Calpers’ internal target by more than 5.6 percentage points.

Which brings us to a post from two weeks ago, namely BofA’s take why bond yields are set to hit record lows after the current hiccup: it has to do with pension fund capital reallocation and disenchantment with the equity asset class, which absent PE multiples soaring to 30x or more, will hardly generate substantial returns from this moment on. As BofA wrote, “treasuries make up nearly 50% of the positive-yielding DM sovereign bonds; curves are 100bp flatter; and there is a greater likelihood that 10y yields probably won’t go back to even 2.5%. We would expect a bigger capitulation by pension managers in the coming months/years.

Ironically, if more of Calpers’ assets were invested in Treasuries, it would had an absolutely stellar return courtesy of a record YTD profit generated by longer maturity bonds, especially the 10 and 30Y as everyone rushes to capture whatever yields they can.

The full breakdown of Calpers’ returns per its press release, is shown below, where only inflation-linked assets underperformed stocks.

We dread to imagine what will happen to Calpers returns when the S&P actually declines from its all time highs, or when the market is no longer propped up by every single central bank.

 

end

 

After hours:

NETFLIX

 

One of the 4 horsemen driving the USA markets is NETFLIX and it has been a “growth” story.  Well in after hours the company stated that the company is just not growing as fast as they would like.  The market agrees!

 

(courtesy zero hedge)

 

Netflix Plummets As Growth Story Comes To A Halt: Company Says “We Are Not Growing As Fast As We Would Lke”

While NFLX moments ago reported Q2 EPS of $0.09 that beat expectations $0.03, the reasons the stock is plunging after hours is because it appears that Netflix growth story is officially over, and not just because the company guided far lower on international net additions, seeing only 2.00 million, 20% below Wall Street’s forecast of 2.54MM, but because as the Company itself admitted, “we are growing, but not as fast as we would like or have been. Disrupting a big market can be bumpy, but the opportunity ahead is as big as ever and we continue to improve every aspect of our business.”

It wasn’t just the abysmal international guidance: NFLX also reported that it expects a paltry 300,000 net US streaming additions in Q3, less than half of the street’s 695,000 forecast.

 

Some more details:

  • NETFLIX 2Q INTL STREAMING NET ADDS 1.52M, EST. 2.15M
  • NETFLIX SEES 3Q INTERNATIONAL STREAMING NET ADDS 2M, EST. 2.54M
  • NETFLIX SEES 3Q DOMESTIC NET ADDS 0.30M, EST. 695K
  • NETFLIX SEES 3Q EPS 5C, EST. 7C

It appears that unscalability of NFLX barriers to entry was a little exagerated:

As Internet TV rises in popularity, so do the SVOD offerings. In the US, for example, CBS All Access, Seeso, Amazon Prime Video, Hulu, YouTube Red, and many others are all growing. Our view, however, is that we are all growing primarily against linear TV hours and that competition did not contribute materially to our miss in Q2. First, increased competition would show up mostly in soft gross additions rather than churn. Second, we experienced a similar uptick in churn in early April in Canada, where there has been no recent increase in SVOD competition but where ungrandfathering is also underway.

This is how Reed Hastings justifies the ugly forecast:

Our global member forecast for Q2 was 2.5m and we came in at 1.7m. Gross additions were on target, but churn ticked up slightly and unexpectedly, coincident with the press coverage in early April of our plan to ungrandfather longer tenured members and remained elevated through the quarter. We think some members perceived the news as an impending new price increase rather than the completion of two years of grandfathering. Churn of members who were actually ungrandfathered is modest and conforms to our expectations. With our large subscriber base, slight variances in retention versus forecast can result in significant swings in net adds, particularly in a seasonally small net add quarter like Q2.

 

Our global membership forecast for Q3 includes an impact from the spectacle of the Olympics, on par with what we experienced four years ago, and does not include any boost in the US from the Comcast X1 launch due to uncertainty on timing as we and Comcast will only release Netflix on the X1 when the viewer experience is great.

 

For Q3, we forecast US net adds of 0.3 million as ungrandfathering continues. We expect US contribution margin to improve year over year in both Q3 and Q4 and we anticipate meeting our 40% US contribution margin target by 2020, or even earlier.

 

International net additions in Q2 came to 1.5 million compared to our 2.0 million forecast. Ungrandfathering occurred in Canada, UK/Ireland, Latin America, and the Nordics during Q2 where, like the US, we saw a similar, earlierthanexpected impact on retention. In our newer markets, we continue to learn and believe that growth will unfold over a multiyear period, similar to our
experience in Latin America.

 

International revenue rose 67% year over year. Excluding the impact of F/X ($ 37 million impact on a y/y basis), international ASP increased 8.7%. International contribution profit totaled $ 69 million as content spending was slightly lower than our forecast.

 

For Q3, we expect international net additions of 2.0m. Our approach in expanding our global footprint in January was to launch a service targeting early adopters and then to listen, learn and iterate quickly. Now that we are six months in, we will localize Netflix in Poland and Turkey with the addition of local language in the user interface, subtitles and dubbing. Localization in other markets will take place over time as economically prudent.

 

International contribution loss in Q3 is expected to be $ 95 million as improving profitability in our earlier foreign markets funds the investment in newer international territories. We remain confident in these investments because of our success in all of the markets launched prior to 2014 which are individually profitable on a contribution profit basis. These 20102013 launch markets are on track to deliver aggregate contribution profit of around $500 million in 2016.

This is what market saturation looks like: NFLX posted its first decline in internet traffic share in years.

So NFLX growth is slowing down. Is its cash burn? Nope.

“In Q2’16, free cash flow amounted to $ 254 million, compared with $ 261 million in Q1’16. We finished the quarter with cash and equivalents of $1.8 billion, while gross debt was unchanged at $2.4 billion. We still plan to raise additional capital through the high yield market later in 2016/early 2017.”

 

Our capital requirements continue to be driven by our investment in original content, particularly programming that we produce, which requires more cash upfront relative to licensed content. Original content provides Netflix with many benefits: new programming that debuts on Netflix, exclusivity, greater creative and business control, global rights and brand halo. These merits outweigh the timing of cash payments.

And visually, the company has burned more than $1 billion in the past year, with $254MM in Q2 cash burn compare to $229MM a year ago.

And then there is the great Chinese myth:

Unfortunately, this year the regulatory climate in China for our service has become more challenging. Disney’s streaming service, launched in conjunction with Alibaba, was closed down, as was Apple’s movie offering. We continue to explore options and, in the meantime, have plenty of work to do in our newly opened markets.

The sad summary that may well have closed the chapter on NFLX’s growth story:

Our global expansion is an exciting opportunity that will unfold over many years. Continued US growth will be a part of it and there is no change to our view that in the US Netflix can reach 6090 million members. We continue to expect to run around breakeven on a net income basis in 2016 and to generate material profits in 2017 and beyond. We will drive operating profit growth in 2017 by reducing our international losses and continuing to grow US profit.

The stock, predictably, is plunging 15%.

To 5-month lows…

 

More shortly.

end

 

AFTER HOURS IBM:

 

A good indicator describing the global  growth scene.  Basically there is none:

Just take a look at iBM

(courtesy zero hedge)

 

IBM “Beats” Despite 17th Straight Revenue Decline; Margin Miss; Spike In Net Debt

After 16 consecutive quarters, or 4 years, of declining annual revenue growth, there were some whispers that this could be the quarter IBM finally breaks the trend. Alas, it was not meant to be, and moments ago IBM reported Q2 revenues of $20.24BN, which will beating consensus of $20.03BN, was still 2.8% lower than a year ago.

 

The breakdown of the declining revenue was as follows:

  • Technology services & Cloud platforms rev. $8.86b vs $8.4b q/q, down 0.5% y/y
  • Cognitive solutions (includes software) rev. $4.68b vs $4.0b q/q, up 3.5% y/y
  • Systems rev. $1.95b vs $1.7b q/q, down 23.2% y/y
  • Business services rev. $4.26b vs $4.1b q/q, down 2% y/y

But more troubling is that despite the relatively modest drop in revenue, GAAP profit tumbled 27% to $2.61BN, with Net Income plunging 29% to $2.5BN, to a big extent as a result of a 2% drop in gross profit which dropped to 47.9%. Even non-GAAP did not help, with adjusted profit dropping 25% and non-GAAP margin of 49.0% missed Wall Street expectations of 49.3%.

Still, thanks to Wall Street’s generosity, EPS estimates which had constantly declined into quarter end, IBM beat consensus of $2.89, reporting $2.95 in bottom line. How did it do it? The same way it has always beaten on the bottom line for the past several years: by constantly dragging its effective tax rate ever lower rate as has been the case for the past decade, shown clearly in the chart below.

 

But what may be most troubling is that in a quarter in which IBM barely spent anything on buybacks, traditionally the biggest source of upside for its stock, spending only $0.8bn on repurchases, when coupled with the $1.3 billion in dividends, IBM posted the biggest one quarter increase in net debt since Q1, as net leverage rose from $31.2BN to $34.5BN, the highest net debt print since Q3 2014 when concerns about a credit downgrade of the company first emerged. The reason? IBM’s recent M&A spree:

“In the first half of 2016, we grew our R&D investment, closed 11 acquisitions for more than $5 billion and invested nearly $2 billion in capital expenditures, while returning more than $4 billion to shareholders through dividends and gross share repurchases,” said Martin Schroeter, IBM senior vice president and chief financial officer. “These investments are key in helping us build new markets and maintain our leadership in enterprise IT.”

The only problem is that so far these acquisitions have not resulted in either a notable revenue pickup, nor – certainly – in an increase in profit or cash flow.

We would be watching IBM’s net debt very closely.  We have a feeling the rating agencies are.

end This is huge:  the Republican platform calls for the return to Glass Steagall. This will bury the banks: (courtesy zero hedge) Republican Platform Unexpectedly Calls For A Return To Glass-Steagall

While we know better than to trust politician promises, we were surprised to read that today the GOP joined the Democrats in calling for a repeal of Gramm-Leach-Bliley, the Financial Services Modernization Act of 1999 pushed through by none other than Bill Clinton, and will seek a return to Glass-Steagall, the banking law launched in 1933 in the aftermath of the Great Depression meant to prohibit commercial banks from engaging in the investment business, and which according to many was one of the catalysts that led to the Global Financial Crisis.

According to The Hill, Paul Manafort, Donald Trump’s campaign manager, told reporters gathered in Cleveland Monday that the GOP platform would include language advocating for a return of that law, which was repealed under President Bill Clinton, husband of, well you know…

“We also call for a reintroduction of Glass-Steagall, which created barriers between what big banks can do,” he said.

Including that language in the GOP platform comes shortly after Democrats agreed to similar language in their own, calling for an “updated and modernized version” of the law.

However before anyone gets their hopes up, recall that a party platform is not binding but is thought to reflect the values of the party…. until the values change as a result of Wall Street “incentives” because if there is one thing US “commercial banks” can not afford it is a separation of their depository and investment activities.

The GOP platform has not yet been officially released, although the convention is expected to approve it later Monday. Nonetheless, the embrace of Glass-Steagall by both parties is a telling indication of how unpopular Wall Street remains with the public, years after the financial crisis.

Manafort mentioned the return of Glass-Steagall specifically as a counterpoint against Hillary Clinton, arguing it was Democrats that were the ones actually beholden to big banks. “We believe the Obama-Clinton years have passed legislation that has been favorable to the big banks, which is why you see all the Wall Street money going to her,” he said. “We are supporting the small banks and Main Street.”

Maybe: we’ll believe it when we see it. However, we are absolutely convinced that the first promise Hillary will reneg on, if she ever admits making it, is to return to Glass Steagall.  After all they didn’t spend all those millions of depositor funds on “speeches” just to allow Hillary to prevent them from accessing the very same funds.

Photo: Bill Clinton signs the Gramm–Leach–Bliley Act, which repealed Glass-Steagall

According to the Hill, the news that Republicans were embracing Glass-Steagall was met with surprised optimism from advocates for tougher rules on the financial industry and resigned sighs from the industry itself (actually what it probably meant is skeptical pessimism).

One bank lobbyist said backing the bill in the GOP platform was a naked attempt by Trump to win over disappointed backers of former Democratic presidential candidate Bernie Sanders, a vocal proponent of the law’s return. Trump has explicitly called on Sanders supporters to join his campaign, although Sanders himself has backed Clinton. We doubt the bank lobbyist had anything to add about Hillary’s own proposal to return to Glass-Steagall aside from laughter of course.

The lobbyist also questioned how thoroughly the campaign examined the policy. “I really am not sure if the Trump team has done any analysis of this,” the lobbyist said.

Dennis Kelleher, president and CEO of the financial reform advocacy group Better Markets, offered cautious optimism for the move. However, he noted that Republicans have a much longer record of pushing to ease rules for the financial sector, rather than tighten them. “It’s potentially great news for financial reform and protecting taxpayers, as long as it’s not another Republican Trojan Horse that looks good, but concealed underneath are killer loopholes and big bank giveaways,” he said.

Sadly, Dennis is right to be skeptical: it is another Trojan Horse, and one which will be promptly scrubbed from the collective memory if Trump were to win.

While not part of her financial regulation plan, Clinton’s campaign did support the Glass-Steagall language in the Democratic platform, as part of a number of compromises made with the Sanders campaign. Keep in mind, it was Hillary’s husband who back in 1999 signed into the law the act that repealed Glass-Steagall.

As The Hill concludes, the bipartisan embrace of the law’s return is particularly striking, given that legislative efforts to do just that have gained zero momentum in Congress. Legislation to reestablish Glass-Steagall has been introduced in both chambers in recent years, but such a bill has never even gotten a hearing, let alone serious consideration by legislators. In the Senate, a bill from Sen. Elizabeth Warren (D-Mass.) has just nine cosponsors, while a companion bill in the House has just eight backers.

The reason why? Simple. It is the banks, not the executive, not the legislative, that decides what happens in America, either directly or through the bank-owned Federal Reserve bank. How much privately-owned? We don’t know, but we remember what Bernanke’s former advisor said just three months ago: “People Would Be Stunned To Know The Extent To Which The Fed Is Privately Owned“.

As such one can’t help but be amused by the amount of energy and passion expended over the most theatrical – and certainly entertaining – presidential race in recent history.

end Well that about does it for tonight I will see you tomorrow night h.

July 15/Military coup in Turkey/Turkish lira crashes/Shots fired!/Gold rises by 10 dollars immediately on the news!/The open interest surprisingly rises today despite the whack yesterday/USA industrial production falters/New York empire manufacturing...

Fri, 07/15/2016 - 19:15

Gold:1328.30 DOWN $3.00

Silver 20.10  DOWN 18 cents

 

In the access market 5:15 pm

Gold: 1337.25  (Turkish military)

Silver: 20.22

.

And now for the July contract month

For the July gold contract month,  we had another monstrous  352 notices served upon for 35,200 ounces.  The total number of notices filed so far for delivery:  5032 for 503,200 oz or 15.6576 tonnes

In silver we had 190 notices served upon for 950,000 oz.  The total number of notices filed so far this month for delivery:  1780 for 8,900,000 oz

The following is what I said yesterday and it fully pertains to events today:

“The crooks will now do anything to orchestrate a sell off in our precious metals.  They are very concerned about silver as they lean on gold hoping to generate a waterfall in price.  The bankers are massively short comex paper and need lower prices so as to cover and ameliorate those losses.”

Everyday that statement seems to be true.  Central bankers do not have any above ground supplies of silver like they do with respect to gold.  This is their Achilles heal and it will bring them down!”

Let us have a look at the data for today

.

Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 305.20 tonnes for a gain of 2  tonnes over that period

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

In silver, the total open interest ROSE BY 840 contracts UP to 217,216, AND STILL CLOSE TO AN  ALL TIME RECORD. THE OI ROSE IN CONTRAST TO THE  PRICE OF SILVER WHICH FELL BY 9 CENTS IN YESTERDAY’S TRADING.In ounces, the OI is still represented by just over 1 BILLION oz i.e. 1.086 BILLION TO BE EXACT or 155% of annual global silver production (ex Russia &ex China).

In silver we had 190 notices served upon for 950,000 oz.

In gold, the total comex gold FELL BY A HUMONGOUS 12,815 contracts despite gold’s FALL in price YESTERDAY to the tune of $11.30. The total gold OI stands at 609,352 contracts. The bankers are to be congratulated for doing another fine criminal job in fleecing unsuspecting GOLD longs. BUT NOT SO FAST WITH RESPECT TO SILVER

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

With respect to our two criminal funds, the GLD and the SLV:

GLD

we had no  changes in gold inventory./

 

the GLD is a massive fraud and a massive farce on investors!

Total gold inventory rest tonight at: 962.85 tonnes

SLV

we had no changes into the SILVER INVENTORY TO THE SLV

Inventory rests at 348.580 million oz.

First, here is an outline of what will be discussed tonight:

1. Today, we had the open interest in silver ROSE by 840 contracts UP to 217,216 as the price of silver FELL BY 9 cents with YESTERDAY’S trading. The gold open interest fell by 12,815 contracts down to 609,352 as  the price of gold FELL by $11.10 YESTERDAY.

(report Harvey).

 

2 a) Gold/silver trading overnight Europe, Goldcore

(Mark OByrne/zerohedge

3. ASIAN AFFAIRS

i)Late  THURSDAY night/FRIDAY morning: Shanghai closed UP 0.278 POINTS OR 0.01%/ /Hang Sang closed UP 98.19 OR 0.46%. The Nikkei closed UP 111.96 POINTS OR 0.68% Australia’s all ordinaires  CLOSED UP 0.33% Chinese yuan (ONSHORE) closed UP at 6.6831 /Oil FELL to 45.40 dollars per barrel for WTI and 47.20 for Brent. Stocks in Europe ALL IN THE RED. Offshore yuan trades  6.6925 yuan to the dollar vs 6.6831 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE WIDENS SLIGHTLY AS A LITTLE MORE USA DOLLARS LEAVES THEIR SHORES. 

REPORT ON JAPAN  SOUTH KOREA AND CHINA a) REPORT ON JAPAN b) REPORT ON CHINA

i)China even after a huge influx of cash in June, and a big devaluation of about 10% from the start of the year, saw their economy just muddling along:

a) Chinese GDP rose to 6.7% from expected 6.6%

b)Retail sales better than expected at 10.6%

c) Industrial Production beat at 6.2%

take these figures with a grain of salt!

( zero hedge)

ii)How did China grow? The added a huge amount of cash to stimulate their economy. This will not last

( zero hedge)

4 EUROPEAN AFFAIRS

i)Horrific event in Nice France last night:

Two commentaries

( zero hedge)

ii)Look who is lining up to be first in order to pass a trade deal with the UK. You will see almost all countries rush to make deals.  The BREXIT will have no effect on England and will only benefit them as I have outlined to you.

( zerohedge)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

Oh my goodness! We have just got a military coup in Turkey: Martial law declared

(courtesy zero hedge)

6.GLOBAL ISSUES

Global corporate defaults hit 100 and is on a pace to surpass its financial crisis record:

( zero hedge)

7.OIL ISSUES

Boy this is fastest pace of rig counts in over 4 years:

(courtesy zero hedge)

8.EMERGING MARKETS

none today

9. PHYSICAL STORIES

i)John Hathaway writes that gold is underowned . We are in a period of extreme global problems and now is the time to accumulate gold.

( John Hathaway/GATA)

ii)After 8 months the gold monetization scheme yields just 3 tonnes.  Actually I am even surprised that they received that quantity.  Indians know better not to receive paper gold for their treasures.

( Times of India/GATA)

iii)This is the story that has propelled markets around the world for the past 4 days: the introduction of helicopter money.  Generally this should be good for gold but the bankers have other thoughts for us:

( Bloomberg/GATA)

iv)Despite massive manipulation in gold and silver, this correlation is quite fascinating.The current TIPS yield is now close to zero at  only 3 basis points.

Here is the chart correlation:

(courtesy zero hedge/Gavekal)

10.USA STORIES WHICH MAY INFLUENCE THE PRICE OF GOLD/SILVER

i)Retail sales jump but the rise was mainly on a downward revision in the previous month. Still at recessionary levels;

( zerohedge)

 

ii)Yesterday we had surging PPI: today a surging CPI as the core jumps to a near 4 yr high as rent rises along with education and medical care.

The Fed has a problem..

( zero hedge)

 

iii)The all important New York, Empire manufacturing index drops as new orders tumble and worse: labour conditions fall apart..big problems in the New York mfg area:

( Empire /NY mfg index/zero hedge)

iiib)this is a biggy!!

USA industrial production declines for the 10th straight month.It is always manufacturing that carries a country and thus the USA is faltering!

( zero hedge)

iiic) another biggy!

The following is one of my favourite indicators predicting the health of the USA economy. The higher the Business inventories/sales ratio, the greater the chance for a severe recession.  The ratio just hit a high of 1.40 signifying a deep recession is forthcoming

( zero hedge)

iii d) The University of Michigan Consumer Expectations or consumer confidence falls to a two yr low:

( zero hedge)

iv)The credit manager’s report shows it’s index crashing to 7 yr lows as new credit is not forthcoming.

( zero hedge)

v)Russia is reportedly set to release Clinton’s intercepted emails through Wikileaks:

( Oil Price.com) vi)Late tonight, the USA released the redacted Saudi 28 pages

(courtesy zero hedge)

Let us head over to the comex: The total gold comex open interest FELL TO AN OI level of 609,352 for a  LOSS of 12,815 contracts DESPITE  THE FACT THAT THE PRICE OF GOLD FELL BY $11.10 with respect to YESTERDAY’S TRADING. We are now in the non active month of July. Somebody big is continually standing for the gold metal as July is generally a poor delivery month. The open interest for the front July contract stands at 420 for a LOSS of 2 contracts. We had 3 notices filed on yesterday, so we gained 1 contract or an additional 100 gold ounces that will stand for delivery in this non active month of July. We  are again witnessing the same scenario as in May and June whereby the front delivery month increases in OI standing for metal or a slight contraction.  The next big active contract month is August and here the OI fell by 28,440 contracts down to 321,133  as this month continues its wind down until first day notice for the August contract, Friday,July 29/2016: 2 weeks away.  The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was  GOOD at 231,209. The confirmed volume  yesterday (which includes the volume during regular business hours + access market sales the previous day was excellent at 304,515 contracts.The comex is not in backwardation. Today, we had 352 notices filed for 35,200 oz in gold And now for the wild silver comex results. Total silver OI ROSE by 840 contracts from 216,376 UP TO 217,216.  We are still close to the new all time record high for silver open interest set on June 24. The front active delivery month is July and here the OI fell BY 173 contracts down to 927. We had 207 notices served on YESTERDAY so we gained 34 contracts or 170,000 additional silver ounces that will stand for delivery.The next non active month of August saw it’s OI rose by 18 contracts up to 508. The next big active month is September and here the OI ROSE by 411 contracts UP to 157,573.   The volume on the comex today (just comex) came in at 42,244 which is very good. The confirmed volume yesterday (comex + globex) was EXCELLENT at 67,877. Silver is not in backwardation. London is in backwardation for several months. We had 190 notices filed for 950,000 oz. in silver JULY contract month :INITIAL standings for JULY July 15. Gold Ounces Withdrawals from Dealers Inventory in oz   nil OZ Withdrawals from Customer Inventory in oz  nil nil oz Deposits to the Dealer Inventory in oz NIL Deposits to the Customer Inventory, in oz   95,863.347 oz HSBC No of oz served (contracts) today 352 notices  35,200 oz No of oz to be served (notices) 68 contracts 6800 oz Total monthly oz gold served (contracts) so far this month 5032 contracts (5,032,000 oz) (15.6576 tonnes) Total accumulative withdrawals  of gold from the Dealers inventory this month   NIL Total accumulative withdrawal of gold from the Customer inventory this month   226,500.6 OZ Today we had 0 dealer DEPOSIT total dealer deposit: NIL   0z Today we had 0 dealer withdrawals: total dealer withdrawals:  nil oz We had one customer deposit: i) Into HSBC: 95,863.347 oz Total customer deposit: 95,863.347 oz Today we had 0 customer withdrawal: Total customer withdrawals  nil   oz Today we had 0  adjustments: Today, 0 notices was issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 352 contracts of which 0 notices was stopped (received) by JPMorgan dealer and 209 notices was stopped (received)  by JPMorgan customer account.  To calculate the initial total number of gold ounces standing for the JULY contract month, we take the total number of notices filed so far for the month (5032) x 100 oz  or 503,200 oz , to which we  add the difference between the open interest for the front month of JULY (420 CONTRACTS) minus the number of notices served upon today (352) x 100 oz   x 100 oz per contract equals 510,000 oz, the number of ounces standing in this active month.    Thus the INITIAL standings for gold for the JULY. contract month: No of notices served so far (5032) x 100 oz  or ounces + {OI for the front month (420) minus the number of  notices served upon today (352) x 100 oz which equals 509900 oz standing in this non   active delivery month of JULY  (15.863 tonnes). We  gained 100 gold ounces that will stand for metal in this non active month of July. Since the comex allows GLD shares to be used for settling, it may take quite a while for the physical gold to enter the comex vaults.  So far I have seen little evidence of any settling of contracts but I will continue to monitor it for you.    We now have partial evidence of gold settling for last months deliveries We now have  +  6.889 TONNES FOR MAY + 49.09 TONNES FOR JUNE +  15,866 TONNES FOR JULY + 12.3917 tonnes (April) +2.2311 tonnes (March) + 7.99 (total Feb)- .940 (probable delivery on March 1) tonnes -.0434 tonnes (March 11,12,17,18) + March 31: 1.2470 and then  April 1,2: – .0006 tonnes  and last week April 16.3203 and April 22 .(0009 tonnes) + april 29  .205 tonnes + May 5:  3.799 and May 6: 1.607 tonnes –MAY 12  .0003- May 18: 1.5635 tonnes-May 19/   2.535 tonnes-May 27 .0185 – .024 TONNES MAY 31 -jUNE 4: .5044 ; june 10 -.0008 / June 22:0.48 tonnes /June 23: 0489 tonnes, June 24..018; june 29 .036 tonnes; JUNE 30 2.49 /july 1 17.78 tonnes = 45.718 tonnes still standing against 46.653 tonnes available.  Total dealer inventor 1,532,061.922 tonnes or 47.653 tonnes Total gold inventory (dealer and customer) =9812,213.768 or 305.20 tonnes    Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 305.20 tonnes for a  gain of 2  tonnes over that period.    THE GOLD COMEX IS AN ABSOLUTE FRAUD. THE USE OF KILOBARS AND EXACT WEIGHTS MAKES THE DATA TOTALLY ABSURD AND FRAUDULENT!!      end GOOD ACTIVITY AGAIN INSIDE THE SILVER COMEX And now for silver   JULY INITIAL standings  July 15.2016 Silver Ounces Withdrawals from Dealers Inventory NIL Withdrawals from Customer Inventory  858,631.546 OZ (DELAWARE SCOTIA) Deposits to the Dealer Inventory 519,385.770 oz CNT Deposits to the Customer Inventory  1,239,931.479 OZ CNT,SCOTIA No of oz served today (contracts) 190 CONTRACTS  (950,000 OZ) No of oz to be served (notices) 737 contracts 3,685,000 oz) Total monthly oz silver served (contracts) 1780 contracts (8,900,000 oz) Total accumulative withdrawal of silver from the Dealers inventory this month  NIL oz Total accumulative withdrawal  of silver from the Customer inventory this month  4,552.707.0 oz today we had 1 deposit into the dealer account  i) into CNT: 519,385.770 oz total dealer deposit :519,385.770 oz we had 0 dealer withdrawal: : total dealer withdrawals:  NIL oz we had 2 customer deposits: i) Into CNT: 80,837.709 oz ii) Into Scotia: 1,159,073.770  oz Total customer deposit: 1,239,931.479 oz We had 1 customer withdrawals i) Out of DELAWARE: 198,126.536 oz ii) Out of Scotia:  660,505.01 oz : total customer withdrawals:858,631.546. oz        we had 1 adjustment i) out of CNT:  154,218.600 oz was adjusted out of the customer and this landed into the dealer account of CNT The total number of notices filed today for the JULY contract month is represented by 190 contracts for 950,000  oz. To calculate the number of silver ounces that will stand for delivery in JULY., we take the total number of notices filed for the month so far at (1780) x 5,000 oz  = 8,900,000 oz to which we add the difference between the open interest for the front month of JULY (927) and the number of notices served upon today (190) x 5000 oz equals the number of ounces standing    Thus the initial standings for silver for the JULY contract month:  1780(notices served so far)x 5000 oz +(927 OI for front month of JULY ) -number of notices served upon today (190)x 5000 oz  equals  12,585,000 oz  of silver standing for the JULY contract month. We gained 34 contracts or 170,000 additional oz that will  stand for delivery in this active month of July.   Total dealer silver:  27.180 million (close to record low inventory   Total number of dealer and customer silver:   152.701 million oz (close to a record low) The total open interest on silver is NOW NEAR its all time high with the record of 218,979 being set June 24.2016.  The registered silver (dealer silver) is NOW NEAR  multi year lows as silver is being drawn out at both dealer and customer levels and heading to China and other destinations. The shear movement of silver into and out of the vaults signify that something is going on in silver. END And now the Gold inventory at the GLD July 15./no change in gold inventory at the GLD/Inventory rests at 962.85 tonnes July 14/a good sized withdrawal of 2.37 tonnes from the GLD/this would be a “paper withdrawal”/inventory rests tonight at 962.85 tonnes.. July 13/ we had a huge paper withdrawal of 15.98 tonnes of gold from the GLD/inventory rests at 965.22 tonnes. July 12/we had no changes in gold inventory at the GLD/Inventory rests at 981.20 tonnes July 11/no changes in gold inventory at the GLS/Inventory rests at 981.20 tonnes JULY 8/ A  good sized deposit of 2.91 tonnes into the GLD/Inventory rests at 981.20 July 7/a good sized withdrawal of 4.15 tonnes from the GLD/Inventory rests at 978.29 tonnes (this was nothing but a paper entry/no physical moved) JULY 6/WHAT A FRAUD!! A MASSIVE 28.53 TONNES OF PAPER GOLD ADDED INTO THE GLD July 5/no change in inventory/rests tonight at 982.44 July 1/a huge change in the gold inventory/ a deposit of 3.86 tonnes/rests tonight at 953.91 tonnes JUNE 30/no change in gold inventory /inventory rests tonight at 950.05 tonnes June 29/ a good sized deposit of 2.67 tonnes/inventory rests at 950.05 tonnes June 28/ a huge deposit of 13.067 tonnes into inventory/new inventory rests so far at 947.38 tonnes.  This was a paper addition June 27/a huge deposit of 18.415 tonnes into the GLD inventory/the new inventory rests at 934.313 tonnes.  The addition was a paper addition and not physical xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx July 15 / Inventory rests tonight at 962.85 tonnes

end

Now the SLV Inventory July 15/ no change in  silver inventory at the SLV/Inventory rests at 348.580 million oz July 14/no changes in silver inventory at the SLV/Inventory rests at 348.580 million oz/ July 13./ a huge addition of 5.187 million oz into silver inventory at the SLV/ this is a paper addition as inventory rests at 348.580 million oz July 12/ a huge addition of 1.94 million oz into silver inventory at the SLV/a “paper” addition/inventory rests at 343.393 million oz July 11/no changes in silver inventory/rests tonight at 341.453 million oz JULY 8/no change in silver inventory/rests tonight at 341.453 million oz July 7./no change in silver inventory/inventory rests at 341.453 million oz JULY 6/AND ANOTHER FRAUD!! A MASSIVE 7.909 MILLION OZ ADDED INTO THE SLV/INVENTORY RESTS AT 341.453 MILLION OZ july 5/no change in silver inventory/inventory rests at 333.554 milllion oz july 1/no change in silver inventory/inventory rests at 333.544 million oz JUNE 30/no changes in silver inventory/inventory rests at 333.544 million oz June 29/ a small deposit of 760,000 oz/Inventory rests tonight at 333.544 million oz/ June 28/no change in silver inventory/rests tonight at 332.784 million oz June 27/ a small deposit of 570,000 oz in the SLV inventory/Inventory rests at 332.784 million oz . July 15.2016: Inventory 348.580 million oz end NPV for Sprott and Central Fund of Canada 1. Central Fund of Canada: traded at Negative 3.5 percent to NAV usa funds and Negative 3.8% to NAV for Cdn funds!!!!  (the discount is starting to disappear) Percentage of fund in gold 58.6% Percentage of fund in silver:40.2% cash .+1.2%( July 15/2016).  2. Sprott silver fund (PSLV): Premium falls  to -0.27%!!!! NAV (July15/2016)  3. Sprott gold fund (PHYS): premium to NAV  falls TO  0.13% to NAV  ( July 15/2016) Note: Sprott silver trust back  into NEGATIVE territory at -.27% /Sprott physical gold trust is back into positive territory at +0.13%/Central fund of Canada’s is still in jail.      

end

 

At 3:30 pm we receive the COT report which gives us position levels of our major players.

Let us head over first to our Gold COT:

 

 

Gold COT Report – Futures Large Speculators Commercial Total Long Short Spreading Long Short Long Short 378,081 80,618 79,128 123,258 448,710 580,467 608,456 Change from Prior Reporting Period -11,509 6,991 -9,729 -477 -15,232 -21,715 -17,970 Traders 202 93 101 56 62 314 214     Small Speculators         Long Short Open Interest       52,553 24,564 633,020       1,764 -1,981 -19,951       non reportable positions Change from the previous reporting period   COT Gold Report – Positions as of Tuesday, July 12, 2016 Our Large Speculators:

Those large specs that have been long in gold pitched a huge 11509 contracts from their long side (as they were fleeced by the bankers)

Those large specs that have been short in gold added 6991 contracts from their short side.

 

Our commercials;

Those commercials that have been long in gold pitched 477 contracts from their long side

Those commercials that have been short in gold covered a huge 15,232 contracts from their short side.

 

Our small specs:

Those small specs that have been long in gold added 1764 contracts to their long side.

Those small specs that have been short in gold covered 1981 contracts from their short side.

Conclusions:

bullish as the commercials go net short by 14,800 contracts.

 

And now our silver COT

 

Silver COT Report: Futures Large Speculators Commercial Long Short Spreading Long Short 114,376 26,724 19,615 54,035 154,155 3,028 1,130 1,207 -1,683 -331 Traders 112 60 40 39 43 Small Speculators Open Interest Total Long Short 214,617 Long Short 26,591 14,123 188,026 200,494 718 1,264 3,270 2,552 2,006 non reportable positions Positions as of: 171 127   Tuesday, July 12, 2016   © SilverSeek.c Our large speculators:

Those large specs that have been long in silver added 3028 contracts to their long side

Those large specs that have been short in silver added 1130 contracts to their short side

 

Our commercials:

Those commercials that have been long in silver pitched 1683 contracts from their long side

Those commercials that have been short in silver covered a tiny 331 contracts from their short side

 

Our small specs

Those small specs that have been long in silver added 718 contracts to their long side

Those small specs that have been short in silver added 1764 contracts to their short side

 

CONCLUSIONS

commercials go net short by 1300 contracts.  If you compare with gold you can see that the commercials are trapped!

 

end

 

 

 

And now your overnight trading in gold,FRIDAY MORNING and also physical stories that may interest you: Trading in gold and silver overnight in Asia and Europe Mark O’Byrne/David Russell (Goldcore) Gold Falls After Central Bank’s Surprise Move by GoldCore Jul 15, 2016 7:25 AM

The  gold price continued to fall overnight after the Bank of England, contrary to expectations, kept interest rates unchanged at yesterday’s meeting.

The market had earlier priced in an over 80 percent chance of a 25-basis point cut in the July meeting, though some had reckoned that the BoE may prefer to wait till August when more data will be available to assess the impact from the Brexit decision.

Gold prices have rallied more than 25% since the beginning of 2016, but is the rally now over, or would it be foolish not to buy gold?

To help answer that question let’s take a look at what has driven the gold price higher in 2016.

One of the key drivers continues to be interest rates.

Demand for gold typically climbs when interest rates are low. Although gold has no yield, it tends to offer investors a better place to park their money when returns from bonds and cash savings are poor – as they are when rates are low.

At the end of last year, it seemed the tide was turning, with the US Federal Reserve increasing rates for the first time in seven years. But the Fed folded on a rate rise in June and expectations for further hikes this year have receded.

Meanwhile, the Bank of England this week dashed expectations that it would slash rates below 0.5pc over fears Brexit could plunge the economy into recession.

An article in The Telegraph looks at this and the 4 other key forces driving the rally in gold.

You can read the full article here 


Gold and Silver Bullion – News and Prices

Gold slips, on track for first weekly decline since May (Reuters)

Gold Heads for First Weekly Loss Since May as Haven Allure Fades (Bloomberg)

Gold marks 5th loss in six sessions (MarketWatch)

Nice terror attack: Lorry driver kills 84 during rampage at Bastille Day celebrations (Telegraph)

Selling spree: Price spike dulls gold’s luster for Indian buyers (Reuters)

The Fundamental Reason The Silver Price Will Explode Much Higher Than Gold (Silverseek.com)

Could Italy Bring Down The Euro? (Zerohedge)

The Bull Market You Haven’t Seen (Bloomberg)

Gold Prices (LBMA AM)

15 July: USD 1,330.15, EUR 1,194.79 & GBP 994.15 per ounce
14 July: USD 1,325.705, EUR 1,192.99 & GBP 1,001.96 per ounce
13 July: USD 1,340.25, EUR 1,211.45 & GBP 1,009.74 per ounce
12 July: USD 1,352.85, EUR 1,217.84 & GBP 1,029.11 per ounce
11 July: USD 1,358.25, EUR 1,231.66 & GBP 1,059.95 per ounce
08 July: USD 1,356.10, EUR 1,224.83 & GBP 1,047.45 per ounce
07 July: USD 1,367.10, EUR 1,233.40 & GBP 1,052.80 per ounce

Silver Prices (LBMA)

15 July: USD 20.14, EUR 18.08& GBP 15.06 per ounce
14 July: USD 20.25, EUR 18.23& GBP 15.15 per ounce
13 July: USD 20.29, EUR 18.31 & GBP 15.25 per ounce
12 July: USD 20.35, EUR 18.35 & GBP 15.47 per ounce
11 July: USD 20.47, EUR 18.53 & GBP 15.78 per ounce
08 July: USD 19.72, EUR 17.82 & GBP 15.20 per ounce
07 July: USD 19.95, EUR 18.00 & GBP 15.31 per ounce


Recent Market Updates

– “We Are On the Cusp of an Explosion in the Silver Price” – John Embry
– Stocks Rally – Is Brexit Systemic Risks Contained?
– Britain has a new prime minister – here’s what that means for you
– Metals Caught Between Global Gloom, U.S. Job Gains as Gold Slips
– Central Bank Resumes Monthly Gold Buying in Bid to Diversify Reserves
– Property Fund Turmoil in the UK has Eerie Echoes of Bear Stearns
– “In Gold We Trust” Annual Report – New Bull Market “Emerging”
– 3 Charts Show “How Precious Brexit Is” for Gold and Silver Bullion
– Gold, Silver Best Performing Assets In H1, 2016 – Up 26% & 38%
– Gold Surges to $1,313/oz – Fed Concerned Re Outlook, BREXIT and May “Consider Using Helicopter Money”
– Gold Prices Higher For 5th Session On BREXIT and FED

-END-

John Hathaway writes that gold is underowned . We are in a period of extreme global problems and now is the time to accumulate gold.

(courtesy John Hathaway/GATA)

John Hathaway: A momentous period for gold, weeks where decades happen

Submitted by cpowell on Thu, 2016-07-14 14:47. Section:

10:40a ET Thursday, July 14, 2016

Dear Friend of GATA and Gold:

In his investor letter for the second quarter, Tocqueville Gold Fund manager John Hathaway writes: “We have entered a momentous period for gold: ‘weeks where decades happen.’

“The rewards of gold exposure, in our opinion, promise to be of historic magnitude. At such a moment it would be counterproductive for investors to dwell upon issues of market timing. Gold is extremely underowned, and therefore likely to react dynamically to even modest inflows. Despite strong recent gains, we believe that the current alignment of political and economic factors is unusually compelling. In our view, substantial gains lie ahead.”

Hathaway’s letter is posted at the Tocqueville Internet site here:

http://tocqueville.com/insights/gold-strategy-investor-letter-2Q16

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org

END

After 8 months the gold monetization scheme yields just 3 tonnes.  Actually I am even surprised that they received that quantity.  Indians know better not to receive paper gold for their treasures.

(courtesy Times of India/GATA)

After 8 months India’s government has paperized only 3 tonnes of gold

Submitted by cpowell on Thu, 2016-07-14 17:55. Section:

Government Mobilizes 3.1 Tonnes of Gold under Monetization Scheme

By the Press Trust of India
via The Times of India, Mumbai
Thursday, July 14, 2016

NEW DELHI — Government today said it has netted 3.1 tonnes of idle household and temple gold under the monetization scheme since its launch in November 2015.

“As of now 3.1 tonnes of gold have been deposited under the Gold Monetization Scheme,” the joint secretary in the Finance Ministry, Saurabh Garg, said.

This is much lower than 800-1,000 tonnes of annual gold imports, he said, adding that estimates say 300 tonnes are for investments, while the balance is jewellery.

“We are hoping that the investment part can shift to the Gold Monetisation Scheme,” he added.

Under the scheme, banks are authorized to collect gold for up to 15 years to auction them off or lend to jewellers from time to time.

Depositors will earn up to 2.50 percent interest per annum, a rate lower than savings bank deposits.

Currently, there are 46 assaying and hallmarking centers qualified to act as collection and purity testing centers for handling gold under the scheme.

All gold deposits under the scheme have to be made at centers. Banks can also accept deposits at designated branches, especially from larger depositors.

India imports about 1,000 tonnes of gold every year and the precious metal is the second-highest component of the imports bill after crude oil. An estimated 20,000 tonnes of gold are lying with households and temples.

END

(courtesy Bloomberg/GATA)

Bernanke recommended ‘helicopter money’ option to Japan

Submitted by cpowell on Fri, 2016-07-15 11:05. Section:

Bernanke Floated Japan Perpetual Debt Idea to Abe Aide Honda

By Toru Fujioka and Keiko Ujikane
Bloomberg News
Thursday, July 14, 2016

Ben S. Bernanke, who met Japanese leaders in Tokyo this week, had floated the idea of perpetual bonds during earlier discussions in Washington with one of Prime Minister Shinzo Abe’s key advisers.

Etsuro Honda, who has emerged as a matchmaker for Abe in corralling foreign economic experts to offer policy guidance, said that during an hour-long discussion with Bernanke in April the former Federal Reserve chief warned there was a risk Japan at any time could return to deflation. He noted that helicopter money — in which the government issues non-marketable perpetual bonds with no maturity date and the Bank of Japan directly buys them — could work as the strongest tool to overcome deflation, according to Honda. Bernanke noted it was an option, he said. …

… For the remainder of the report:

http://www.bloomberg.com/news/articles/2016-07-14/bernanke-floated-japan…

end

Despite massive manipulation in gold and silver, this correlation is quite fascinating.The current TIPS yield is now close to zero at  only 3 basis points.

Here is the chart correlation:

(courtesy zero hedge/Gavekal)

 

Is This The Critical Threshold For The Gold Rally To Continue?

Amid Gold’s worst week (-2.3%) in the last seven weeks, Gavekal Capital’s Eric Bush explains what he is looking at to confirm the precious metal rally’s continuation

10-year TIPS yield briefly went negative last week and the current yield is just 3 bps. TIPS yields have fallen around 75 basis points since the beginning of the year. This decline in yield has been accompanied by a rally in gold from $1060 to $1342.

One of the more persistent relationships in the market place since 2003 has been this negative correlation between TIPS yields and gold prices.

If history is any guide TIPS yields will probably be negative if gold rallies above $1400.

Source: Gavekal Capital blog

end

Your early FRIDAY morning currency, Asian stock market results,  important USA/Asian currency crosses, gold/silver pricing overnight along with the price of oil Major stories overnight    

:

1 Chinese yuan vs USA dollar/yuan UP to 6.6831 (  REVALUATION NORTHBOUND  /CHINA UNHAPPY TODAY CONCERNING USA DOLLAR RISE/MORE $ USA DOLLARS LEAVE CHINA/OFFSHORE YUAN WIDENS TO 6.6925) / Shanghai bourse  UP 0.278 OR 0.01%   / HANG SANG CLOSED UP 98.19 OR 0.46% 

2 Nikkei closed UP  111.96 OR 0.68% /USA: YEN RISES TO 105.79

3. Europe stocks opened ALL IN THE RED   /USA dollar index DOWN to 95.96/Euro UP to 1.1137

3b Japan 10 year bond yield: RISES TO -.226%     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 105.74

3c Nikkei now WELL BELOW 17,000

3d USA/Yen rate now well below the important 120 barrier this morning

3e WTI::  45.40  and Brent: 47.20

3f Gold UP  /Yen DOWN

3g Japan is to buy the equivalent of 108 billion uSA dollars worth of bond per month or $1.3 trillion. Japan’s GDP equals 5 trillion usa.

Japan to buy 100% of all new Japanese debt and by 2018 they will have 25% of all Japanese debt. Fifty percent of Japanese budget financed with debt.

3h Oil DOWN for WTI and DOWN for Brent this morning

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund RISES to -.023%   German bunds BASICALLY negative yields from  10+ years out

 Greece  sees its 2 year rate RISE to 7.41%/: 

3j Greek 10 year bond yield RISE to  : 7.85%   (YIELD CURVE NOW  FLAT)

3k Gold at $1333.55/silver $20.20(7:45 am est)   SILVER FINAL RESISTANCE AT $18.50 BROKEN 

3l USA vs Russian rouble; (Russian rouble DOWN 27/100 in  roubles/dollar) 63.19-

3m oil into the 45 dollar handle for WTI and 47 handle for Brent/

3n Higher foreign deposits out of China sees huge risk of outflows and a currency depreciation  (already upon us). This can spell financial disaster for the rest of the world/China forced to do QE!! as it lowers its yuan value to the dollar/GOT a SMALL REvaluation UPWARD from POBC.

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 105.74 DESTROYING WHATEVER IS LEFT OF OUR YEN CARRY TRADERS

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning .9788 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0901 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

3p BRITAIN VOTES AFFIRMATIVE BREXIT

3r the 10 Year German bund now NEGATIVE territory with the 10 year RISES to  -.023%

/German 10+ year rate  negative%!!!

3s The Greece ELA NOW a 71.4 billion euros,AND NOW THE ECB WILL ACCEPT GREEK BONDS (WHAT A DISASTER)

The bank withdrawals were causing massive hardship to the Greek bank. the Greek referendum voted overwhelming “NO”.  Next step for Greece will be the recapitalization of the banks and that will be difficult.

4. USA 10 year treasury bond at 1.532% early this morning. Thirty year rate  at 2.259% /POLICY ERROR)

5. Details Ransquawk, Bloomberg, Deutsche bank/Jim Reid.

(courtesy Jim Reid/Bloomberg/Deutsche bank/zero hedge)

HELICOPTER MONEY COMING! Global Stock Rally Halted In Aftermath Of Latest French Terror Attack

The tremendous rally of the past 4 days that has sent global stocks soaring in recent days has finally been capped and European shares, S&P futures are all modestly lower following a deadly terror attack in Nice, France. Meanwhile Asian stocks rose as Chinese economic data beat estimates, with Q2 GDP rising by 0.1% more than the estimated 6.6% on the back of stronger housing data. European stocks halted this week’s rally as French shares retreated following a deadly terror attack in Nice.

As expected in the aftermath of another tragic terrorist attack on French soil, which killed at least 80 and prompted France to extend a state of emergency, travel and leisure shares were among the worst performers on the Stoxx Europe 600 Index. The MSCI Asia Pacific Index briefly exceeded its highest close of the year as the Hong Kong-listed stocks of Chinese companies extended their biggest weekly gain in four months and Taiwan’s equities entered a bull market. Japan’s Topix index capped its best week since 2009 and the yen slid on prospects for stimulus: Japan’s currency has now seen the biggest weekly drop in the 21st century on the back of rising chatter of helicopter money. The pound strengthened, oil fell and gold was poised for its first weekly loss since May.

The impact of the Nice terror attack on markets is not expected to have a lasting impact: past terror attacks on financial markets has typically proved short-lived and actually led to market rebounds. Multiple attacks in Paris in November that left 130 dead, as well as bombings that killed 191 people on Madrid commuter trains in March 2004 and left more than 50 dead in London in July 2005 spurred selloffs in equities that were erased days or weeks later.

“The attack in Nice is of course truly a horrible accident, but in terms of the market reaction, these kinds of shocks do not last very long,” said Michael Kapler, an equities manager at Mittelbrandenburgische Sparkasse in Potsdam, Germany. “There are rumors that the Japanese central bank will deliver the next liquidity push to the markets, and we are expecting the Bank of England to ease in August. The focus is there, as well as on the earnings season both in Europe and the U.S.”

More than $4 trillion has been added to the value of global equities since June 27 as the U.S. economy outperforms projections and speculation mounts that policy makers will take steps to limit the fallout from the U.K.’s vote to leave the European Union.

“We’re seeing better-than-expected growth, particularly in the U.S. economy, and we’ve got a higher likelihood of central bank stimulus,” Michael McCarthy, the Sydney-based chief market strategist at CMC Markets, told Bloomberg Radio. “These ideas are opposing, but at the moment they are both supporting equities. At some point there is going to have to be a resolution of that.”

But not yet, and as the chart below shows, global equities are now valued at $64.5 trillion, the highest level of 2016 as central banks around the globe scramble to preserve confidence in capital markets as the social fabric frays around the globe.

In the main economic news overnight, China’s economic growth held at 6.7% in the second quarter, beating the 6.6% consensus expansion forecast. Figures for factory output, retail sales and new lending also topped estimates, while investment slowed. The U.S. also has a data dump coming on Friday, with gauges of household spending, inflation, industrial production and consumer confidence scheduled

The Stoxx Europe 600 Index fell 0.2 percent as of 9:02 a.m. London time, trimming this week’s gain to 3.2 percent. France’s CAC 40 Index lost 0.3 percent as hotel operator Accor SA slid more than 3 percent. Swatch Group AG tumbled 12 percent after the watchmaker said first-half profit plunged 50 percent to 60 percent, the most in at least a decade. The MSCI Asia Pacific Index added 0.4 percent, boosting this week’s gain to more than 4 percent. Taiwan’s Taiex index extended its advance from a three-year low in August to more than 20 percent, meeting the common definition of a bull market. The Hang Seng China Enterprises Index boosted this week’s advance to more than 6 percent and the Shanghai Composite Index held near a three-month high.

Futures on the S&P 500 Index fell 0.1%, after the benchmark ended the last session at a record. Larry Fink, who runs the world’s largest asset manager as chief executive officer of BlackRock Inc., said Thursday that the stock rally is unlikely to be sustained without support from corporate profits. The earnings season got off to a promising start this week, with JPMorgan Chase & Co. and Alcoa Inc. exceeding estimates. Wells Fargo & Co. and Citigroup are among firms posting results on Friday.

Global Market Snapshot

  • S&P 500 futures down 0.2% to 2153
  • Stoxx 600 down 0.4% to 337
  • FTSE 100 down 0.4% to 6630
  • DAX down 0.3% to 10038
  • German 10Yr yield up less than 1bp to -0.04%
  • Italian 10Yr yield up less than 1bp to 1.22%
  • Spanish 10Yr yield up less than 1bp to 1.17%
  • S&P GSCI Index down 0.5% to 360.5
  • MSCI Asia Pacific up 0.4% to 134
  • Nikkei 225 up 0.7% to 16498
  • Hang Seng up 0.5% to 21659
  • Shanghai Composite up less than 0.1% to 3054
  • S&P/ASX 200 up 0.3% to 5430
  • US 10-yr yield down less than 1bp to 1.53%
  • Dollar Index down 0.11% to 95.97
  • WTI Crude futures down 1% to $45.21
  • Brent Futures down 1% to $46.88
  • Gold spot down 0.2% to $1,333
  • Silver spot down 0.6% to $20.20

Top Global News

  • Monsanto’s Choice: Live the Dream With BASF, or Just Cash Out: Bayer boosted its bid for Monsanto by $3 a share to $125
  • Blackstone to Purchase 32% Stake in Stockholm Landlord Carnegie: To pay 100 Swedish kronor ($11.8) each
  • Microsoft Wins Protection for E-Mails Stored Outside U.S.: Government warned of loophole in favor of hackers, fraudsters
  • What’s Next for Google as Europe’s Antitrust Complaints Increase: Co. has weeks to appeal but conversations could last years
  • Technology Leaders Call Trump a ‘Disaster’ for U.S. Innovation: Twitter’s Williams, Box’s Levie among 100-plus who sign letter
  • Xerox Said to Reject Merger Deal With R.R. Donnelley: WSJ: Proposal called for deal structured as Reverse Morris Trust
  • Mastercard Seeks to Boost Business in Germany: Reuters: Revenue in Brazil is 5x Germany’s
  • Tesla in Talks for Store in Korea’s Biggest Mall, Shinsegae Says: Starfield Hanam complex covers 70 football fields in area
  • S. Korea FTC May Impose 1t Won Fine on Qualcomm, Maeil Reports: FTC to decide on the size of fine for antitrust violations after final review

* * *

Looking at regional markets, Asian equities were initially buoyed by a plethora of strong Chinese data, in which GDP, Industrial Production and Retail Sales beat expectations. While firm liquidity and lending data releases indicated that tighter liquidity conditions had eased. As such, this has subsequently dictated price action with the ASX 200 (+0.4%), Hang Seng (+0.3%) and Nikkei 225 (+0.6%) all higher despite coming off best levels (some attributing the move to Europe reacting to the terror attacks in Nice) with the latter also supported by a softer JPY as well as index heavyweight Fast Retailing (+18%) hitting limit up following a positive earnings update. The Shanghai Comp (-0.01%) underperformed as the data would reduce the need or likelihood of further easing. JGBs fell overnight amid spill over selling in USTs, coupled with the rise in yields across the curve, although the 10-yr benchmark pulled off worst levels having found support at the 153.00 level.

Chinese Data Recap:

GDP (Q2) Y/Y 6.7% vs. Exp. 6.6% (Prey. 6.7%)

  • GDP SA (Q2) Q/Q 1.8% vs. Exp. 1.6% (Prey. 1.1%, Rev. 1.2%)
  • GDP YTD (Q2) Y/Y 6.7% vs. Exp. 6.6% (Prey. 6.7%)

Industrial Production (Jun) Y/Y 6.2% vs. Exp. 5.9% (Prey. 6.0%)

  • Industrial Production YTD (Jun) Y/Y 6.0% vs. Exp. 5.9% (Prey. 5.9%) 

Retail Sales (Jun) Y/Y 10.6% vs. Exp. 9.9% (Prey. 10.0%)

  • Retail Sales YTD (Jun) Y/Y 10.3% vs. Exp. 10.2% (Prey. 10.2%)

New Yuan Loans (CNY)(Jun) 1.38t1n vs. Exp. 1tIn (Prey. 985.5bIn)

  • Aggregate Financing (CNY)(Jun) 1.63tIn vs. Exp 1.1tIn (Prey. 659.9bIn)
  • Money Supply MO (Jun) Y/Y 7.2% vs. Exp 6.1% (Prey. 6.3%)
  • Money Supply M1 (Jun) Y/Y 24.6% vs. Exp. 22.6% (Prey. 23.7%)
  • Money Supply M2 (Jun) Y/Y 11.8% vs. Exp. 11.4% (Prey. 11.8%)
  • Fixed Assets Ex Rural YTD (Jun) M/M 9.0% vs. Exp. 9.4% (Prey. 9.6%) PBoC to inject CNY

Top Asian News

  • China’s Economy Stabilizes as Consumer Spending Perks Up: Retail sales and factory output beat estimates in June
  • Yen Heads for Biggest Weekly Drop Since 1999 on Stimulus Bets: Currency pivots from June’s best performer to July’s worst
  • Singapore Home Sales Fell in June to Lowest Level in Four Months: Developers sold 536 units last month versus 1,058 in May
  • Infosys Cuts Sales Outlook as Companies Curtail IT Spending: Shares slump as much as ~11% after quarterly sales disappoint
  • Line Shares Send Positive Message at Their Market Debut: Stock soars as much as ~52% in Tokyo
  • Samsung in Talks With BYD on Buying Stake in Electric-Car Maker: BYD says Samsung has been actively pushing talks forward
  • Fast Retailing Surges Most in 7 Years After 3Q Profits Beat Est.: Shares rise as much as 15%, biggest intraday gain since Oct. 2009

European equities enter the North American crossover lower in what has been a relatively choppy start to the session ahead of upcoming data releases from the US with participants also digesting last night’s terror attacks in France. Swiss listed Swatch (-11.1%) are among the worst performers in Europe today after reporting a fall in operating profit and net income for H1. Also underperforming today are Accor (-2.9%) as well as airline names across the board in the wake of the tragic events in France. Fixed income price action has been relatively muted today after the events of yesterday, with Bunds modestly lower today ahead of the key risk events later include a number of speakers, include BoE’s Haldane as well as US data including CPI and retail sales.

Top European News

  • France in Shock as Third Terror Attack Upends Hollande: Bastille Day attack in Nice leaves 84 dead, scores injured
  • Swatch Profit Plunges as Demand Falls Across Europe, Asia: Drop is biggest in operating profit in at least 15 years
  • European June Car Sales Slow as Brexit Vote Cuts Confidence: VW 1H market share lingers at 5-year low, Renault registrations jump the most among top 10 carmakers
  • Carney Brexit Crisis Leadership Morphs to BOE Policy Hesitation: Traders had priced in more than 80% probability of rate cut
  • At Spain’s Undersized Phone Carriers, Years of Deals Beckon: Telecable owner predicts mergers after losing Yoigo auction
  • Husqvarna 2Q Operating Profit Beats Estimates, Sales Miss: Kepler says Gardena a highlight

In FX, the yen slipped 0.4 percent to 105.80 per dollar, headed for a 5 percent weekly loss that would be its steepest slide in 17 years. Ben Bernanke, the former chairman of the Federal Reserve, met Japanese leaders in Tokyo this week and was reported to have previously floated the idea of the nation issuing perpetual bonds. Officials on Wednesday denied a Sankei newspaper report that they’re considering the policy known as helicopter money — which involves direct financing of government spending by the central bank. The pound climbed 0.2 percent, poised for a 3.2 percent weekly advance that would mark its best performance since 2009. The Bank of England kept its benchmark interest rate at a record-low 0.5 percent on Thursday and Theresa May took over as prime minister a day earlier, restoring some calm to U.K. politics after last month’s Brexit vote prompted David Cameron’s resignation. The won rose to its strongest level since April and Taiwan’s dollar climbed to an 11-month high after global funds pumped more than $3 billion into their stock markets this week.

In commodities, crude oil fell 1.2 percent to $45.15 a barrel in New York. Prices almost doubled between January and June, signaling that markets were finally healing as falling U.S. output, rising demand and disruptions from Nigeria to Canada all helped eliminate a global production surplus. Now, as consumption falters and halted supplies return, analysts from BNP Paribas SA and Societe Generale SA warn prices may sink towards $40. Gold fell 0.2 percent, headed for a weekly loss of 2.5 percent. “Gold prices might be further tested if tonight’s data from the U.S., particularly the retail sales data, is better than expected,” said Brian Lan, managing director of Singapore-based GoldSilver Central Pte. “This will again bring out the speculation of a rate hike from the Fed.”

Bulletin Headline Summary from RanSquawk and Bloomberg:

  • European equities trade modestly lower ahead of upcoming data releases with a disappointing update from Swatch weighing on the luxury sector and markets digesting last night’s terror attacks in France
  • BoE’s Haldane has weighed on GBP after eluding to material easing next month from the central bank alongside their QIR
  • Looking ahead, highlights include US Retail Sales, CPI, Empire Manufacturing, Industrial Production, U. of Mich. Sentiment, BoE’s Carney, Fed’s Bullard, Williams & Kashkari

US Event Calendar:

  • 8am: Bank of England’s Carney speaks in Toronto
  • 8:30am: Retail Sales Advance m/m, June, est. 0.1% (prior 0.5%)
  • 8:30am: CPI m/m, June., est. 0.3% (prior 0.2%)
  • 8:30am: Empire Manufacturing, July, est. 5 (prior 6.01)
  • 10am: Business Inventories, May, est. 0.1% (prior 0.1%)
  • 10am: U. of Mich. Sentiment, July P, est. 93.5 (prior 93.5)
  • 1pm: Baker Hughes rig count
  • 1:15pm: Fed’s Kashkari and Bullard speak in St. Louis

DB’s Jim Reid concludes the overnight wrap

We’re straight to the overnight events where firstly there’s some tragic news to report out of France. In what has just been described as a terrorist attack by President Francois Hollande, late last night a truck struck a crowd in Nice celebrating Bastille Day, resulting in a death toll of at least 80 people according to the BBC with many more said to be injured. The driver of the truck was subsequently shot by police, while weapons were discovered inside the truck. The news has dominated the wires overnight and will no doubt influence the European agenda today.

Also overnight we’ve seen the latest data dump in China. Most notable is the Q2 GDP report which showed growth as holding steady at +6.7% yoy. Market expectations were for +6.6%. It also keeps China’s economy on track relative to the government’s growth target of 6.5%-7.0%. June activity data was a bit more mixed. Retail sales (+10.6% yoy vs. +9.9% expected) rose six-tenths from the prior month and industrial production (+6.2% mom vs. +5.9% expected) rose two-tenths. However fixed asset investment (+9.0% ytd yoy vs. +9.4% expected) declined six-tenths from May. Meanwhile we’ve also had the latest credit and money aggregate data this morning. M0, M1 and M2 money supply all grew more than expected in June, while aggregate financing (1.63tn yuan vs. 1.10tn expected) and new yuan loans (1.38tn yuan vs. 1.00tn expected) were both more than expected, expanding from 985bn yuan and 660bn yuan respectively.

Chinese equity markets have been choppy since that data and have fluctuated between gains and losses. Bourses are little changed as we got to print (Shanghai Comp +0.08%, CSI 300 +0.03%). Elsewhere markets are generally firmer. The Nikkei (+1.16%) is again leading the way, while the Hang Seng (+0.80%), Kospi (+0.54%) and ASX (+0.58%) are also up. The China sensitive AUD is up +0.34% having traded softish leading into the data, while the Yen (-0.83%) has continued to sell off.

The Yen sell off has been one of the features of the last few days. Indeed Ben Bernanke’s visit this week has sparked a wave of excitement after he was said to have told PM Abe to push through with Abenomics and that there are tools left to support the economy. Special economic advisor Hamada suggested that the possibility of helicopter money may have also been discussed in the talks. Indeed since then the chatter around helicopter money has only really gathered momentum. Yesterday the focus was on one of Abe’s closest and well respected aides, Etsuro Honda, who said that at a meeting with Bernanke in April the former Fed Chief was said to have floated the idea of the government issuing perpetual bonds which the BoJ would then directly buy. The WSJ is also reporting that Honda has suggested that the government should include a minimum of ¥10tn in its planned extra budget in 2016, as well as increasing its asset purchasing target by including new assets, increasing stock purchases and lengthening the maturity on government bonds it buys. Hondo was quoted as saying that ‘if you take those actions, I believe that you can produce effects similar to those than can be generated by what Bernanke refers to as helicopter money’. Despite the exact details still being unclear, expectations for fiscal stimulus are rising by the day at the moment with the BoJ meeting now just two weeks away. Markets have certainly been boosted by the prospect of such with the Nikkei +9.8% this week as we type and the Yen -5.6%.

Talking of fresh stimulus, kudos to DB’s George Buckley who went against the grain and argued why the BoE wouldn’t cut rates yesterday. It’s clear from what the bank said that they would likely ease soon though. The August meeting is only three weeks away and that’s where we’re likely to see fresh stimulus. Interestingly though, new chancellor Hammond yesterday said that he wants to work closely with the BoE and others in preparing an Autumn statement and plan of action for the economy. To us this strikes at co-ordinated action with a chance that the BoE saves some of its powder until the government is ready to act. As we said immediately after the vote, we think Brexit means that the UK will end up with helicopter money in all but name this year. Higher fiscal spending and more QE.

Away from Japan and the tragic events in France, a big focus for markets today – in what is a bumper day for data – is the June US retail sales print this afternoon. Our US economists highlight that retail sales capture approximately 25% of total consumer spending. Over the past three months spending has accelerated to a 5.8% annualized rate which is the quickest rate of advance since the three months ending June 2015. Our colleagues note however that over the last 12 months, retail sales have increased a modest 2.6%. They believe that this is likely to remain the trend because job growth is slowing while wage pressures remain fairly modest. Going forward, relatively subdued income growth, which has been evident in employee tax withholding receipts, is likely to constrain consumer spending on a sequential basis. Our colleagues are projecting real consumption growth of 2.5% this quarter and next, which would produce modest YoY gains of 2.6%. Energy prices will likely also weigh on spending given the recent rebound. In terms of expectations for this afternoon, our colleagues are forecasting -0.2% mom at the headline and +0.2% mom at the core. The market is a little more optimistic at +0.1% and +0.4% respectively.

In terms of markets yesterday, having taken a pause for breath on Wednesday, equities climbed again with US markets in particular recording fresh new record highs. Indeed that was the case for the S&P 500 (+0.53%) and Dow (+0.73%) as banks led the way following the better than expected results out of JP Morgan. Much of that had to do with stronger than expected trading numbers, particularly in fixed income, while loan growth during the quarter was encouragingly strong and broad-based. There’s unsurprisingly going to be alot of focus on how banks’ view the impact of Brexit, although JPM’s CFO downplayed the event to being a ‘political and economic challenge’ rather than any sort of financial crisis, while also suggesting that the impact on global growth and the US economy should be small.

Meanwhile, European equity markets generally held their reasonably strong opening gains with the Stoxx 600 in particular closing up +0.80%. The FTSE MIB also climbed +1.63% and Euro Stoxx Banks rallied +3.11% to be up an impressive 9% so far this week. Sovereign bond markets were weaker in tow with 10y Bund yields another 5bps higher at -0.042% and 10y Treasuries 6bps higher at 1.536%. They are now up nearly 18bps this week. The one standout yesterday was the FTSE 100 (-0.24%) although that largely had to do with the +1.49% rally for Sterling which closed at 1.3343, but did touch 1.3475 immediately post BoE.

Elsewhere, it was a fairly quiet day for data yesterday although over in the US the June PPI readings came in a little higher than expected. Indeed the headline print of +0.5% mom was two-tenths above consensus and so lifted the YoY rate up to +0.3% from -0.1%. The core ex food and energy reading of +0.4% mom (vs. +0.1% expected) was also well above expectations. The only other data yesterday was last week’s initial jobless claims data which came in unchanged at 254k which lowered the four-week average to 259k. At this time of year it’s not too uncommon to get a bit of volatility in the data given the holiday period.

Before we look at the rest of today’s calendar, we also heard from the hawkish Kansas City Fed’s George who reiterated her view that she thinks rates are too low relative to the performance of the economy and that the Fed should resume gradual rate hikes. Atlanta Fed President Lockhart (centrist) said that he can see at least one and possibly two hikes this year and finally overnight Dallas Fed President Kaplan (slightly hawkish leaning) said the Fed is making good progress towards its dual mandate.

ASIAN AFFAIRS

 

i)Late  THURSDAY night/FRIDAY morning: Shanghai closed UP 0.278 POINTS OR 0.01%/ /Hang Sang closed UP 98.19 OR 0.46%. The Nikkei closed UP 111.96 POINTS OR 0.68% Australia’s all ordinaires  CLOSED UP 0.33% Chinese yuan (ONSHORE) closed UP at 6.6831 /Oil FELL to 45.40 dollars per barrel for WTI and 47.20 for Brent. Stocks in Europe ALL IN THE RED. Offshore yuan trades  6.6925 yuan to the dollar vs 6.6831 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE WIDENS SLIGHTLY AS A LITTLE MORE USA DOLLARS LEAVES THEIR SHORES. 

FIRST  REPORT ON JAPAN  SOUTH KOREA AND CHINA a) JAPAN ISSUES b) REPORT ON CHINA

China even after a huge influx of cash in June, and a big devaluation of about 10% from the start of the year, saw their economy just muddling along:

i) Chinese GDP rose to 6.7% from expected 6.6%

ii)Retail sales better than expected at 10.6%

iii) Industrial Production beat at 6.2%

take these figures with a grain of salt!

(courtesy zero hedge)

Fed Loses Another Excuse As China “Super Friday” Data Dump Beats Expectations

China’s ‘Super Friday’ data dump arrived and despite the 10% devaluation in the Renminbi basket over the past year, and an utterly incredible spike in borrowing (new loans spiked again in June!!), China economic data merely muddles through in its centrally-planned goal-seeked way. Earlier ‘researchers’ proclaimed Chinese GDP at around 6.5% but China GDP grew at 6.7% YoY (beating expectations of 6.6%). While Fixed Asset Investment disappointed (+9.0% vs +9.4% exp), Retail Sales (+10.6%) and Industrial Production (+6.2%) beat expectations.

The devaluation against the USD is starting to accelerate as the broad Renminbi basket has now dropped 10% in the last year (against all of China’s major trading partners)…

The search for yield has once again led to Chinese Corporates, which have rallied back to almost record bubble low yields (despite the utter carnage in Chinese balance sheets as leverage rises). Bonds have replaced stocks for now as the bubble-du-jour in China…

Not easily seen in this chart but SHCOMP has actually rallied bak to April levels in recent weeks amid the world’s flood of central bank largesse.

As Bloomberg notes, whenever China’s GDP beat or met market consensus, the country’s stock market fell. Here’s how the Shanghai Composite did following the last four GDP releases:

  • 1Q on April 15, 2016: +6.7%; SHCOMP -0.1%
  • 4Q on Jan. 19, 2016: +6.8%; SHCOMP +3.2%
  • 3Q on Oct. 19, 2015: +6.9%; SHCOMP -0.1%
  • 2Q on July 15, 2015: +7%; SHCOMP -3%

But it has not helped the macro-economic data much…

  • Industrial Production rose 6.2% (acclerating from 6.0% in May) BEATING expectations of a 5.9% rise (5.3 to 6.2% range)
  • Retails Sales printed +10.6% (faster than May’s 10.0%) BEATING expectations of a 9.9% gain (with 40 economists estimating between 9.2 and 10.2% gains)
  • Fixed Assets Investment rose 9.0% YoY (slowing from 9.6% in May) MISSING expectations of 9.4% (between 8.8 and 9.8%) – lowest since 2000.
  • GDP printed +6.7% (flat from May) BEATING expectations of 6.6% YoY rise (6.3 to 6.8% range among 46 economists) – equal lowest since 2009.

And all of this was achieved with another massive surge in credit…

So The Fed loses another excuse – US Jobs – Fixed! BREXIT – handled! China Growth Fears – No Worries!

end

How did China grow? The added a huge amount of cash to stimulate their economy. This will not last

(courtesy zero hedge)

How Did China’s GDP Beat? By “Shoveling A Stunning Amount Of Cash Into The Economy”

As reported last night, China pleasantly surprised watchers when it reported its latest data dump, including a stronger than expected 6.7% Q2 GDP print and unchanged from the previous quarter, which beat across the board with the exception. The reason for the beat: a buoyant property market and government stimulus boosted demand for factory output. On the other hand, fixed-asset investment, traditionally the biggest driver of Chinese growth, and which includes both infrastructure and manufacturing investment, grew at only 9%, its slowest pace since 2000 in the first six months and down from 9.6 per cent in the year to May.

“The most important data point in today’s release is private investment, which accounts for 62 per cent of total investment but continues to see zero growth in June.” Larry Hu, China economist at Macquarie Securities. “Whether private investment can turn round in the coming months is the key to the Chinese economy in the second half.”

Breaking down the GDP components, we find that investment contributed only 2.5% points to GDP growth in the first half, down from 2.9% last year, while the consumption contribution rose from 4.2% to 4.9%.  This, of course, is a number which can not be indenepdently verified from the traditionally opaque and data-fudging National Bureau of Statistics.

To be sure, as Capital Economics said last night, China GDP should be taken with a grain of salt given the political nature of the data and pressure to meet official 6.5%-7.0% growth target. China’s economy probably only expanded 4.5% in 2Q rather than official figure of 6.7%.

More worrying was that net exports subtracted 0.7%, in yet another confirmation that global trade continues to deteriorate.

Also troubling: China’s industrial economy continues to suffer from rampant overcapacity and deflation. Mining grew 0.1% in the first half, while electricity, heat and water production grew 2.6%.  Facing a bleak demand outlook, privately owned manufacturers have cut spending on new factories, contributing to the sharp slowdown in fixed investment. But a surge in infrastructure investment by state-owned enterprises has taken up the slack, supporting demand for commodities such as steel, copper and cement

* * *

In any case, the take home message, as per the market’s euphoric reaction, is that China’s economy has stopped contracting, if only for the time being. However, as Bloomberg reports, the stabilization comes at a cost, a big one. Instead of tackling a debt pile estimated by Rabobank at a gargantuan 3.5x of the economy’s size, policy makers are only making it worse with a renewed credit binge.

“The amount of cash Beijing is shoveling into the economy is stunning,” said Andrew Collier, an independent analyst in Hong Kong and former president of Bank of China International USA. “Given high fixed-asset investment among state-owned enterprises, it’s likely most of it is being consumed by the inefficient state sector. This is more bad news for structural reform. ”

Our favorite metric of Chinese credit creation, Total Social Financia, the biggest credit creation aggregate, rose 1.63 trillion yuan ($244 billion) in June, topping all 29 analyst forecasts in a Bloomberg survey. That means last month alone saw new credit exceed the 2015 GDP of Chile, Ireland, or Vietnam.

Where is this unprecedented credit deluge going? Sadly, not in productive sectors. Quite the opposite. Instead of funding expansion and hiring among private companies, much of the lending is going into state-owned enterprises, many of which are unprofitable and only kept alive to avoid wide-scale job losses. A reluctance by private companies to invest suggests they aren’t buying into the recovery story, and even worse may be being squeezed out by a bloated and inefficient state sector.

One thing is clear: any promises of reform by China are now dead and buried. As Bloomberg adds, “the credit expansion is at odds with the policy platform President Xi Jinping and Premier Li Keqiang have been articulating. The duo have promised to transform the economic model that has driven China for more than three decades by rebalancing away from manufacturing and investment and towards services and consumption through slashing overcapacity and clearing the way for private enterprise. So far, the evidence suggests that’s progressing slowly at best.”

Actually, so far the evidence suggests precisely the opposite.

“The stabilization in growth has come at a cost, as China’s structural and leverage problems become more severe,” said Bloomberg Intelligence economists Tom Orlik and Fielding Chen. “Credit data for June show expansion in lending continuing to accelerate ahead of growth in the real economy. The reform and deleveraging can is being kicked further down an increasingly bumpy road.”

In a morbid case of irony, China itself warned about the risks of rampant credit growth. In May, state media cited an unnamed official warning that excessive debt was China’s “original sin” and the country can’t borrow its way to long-term economic health.

As we reported a month ago, Goldman Sachs said in a report that China’s debt increase is among the highest in recent history when comparing the magnitude and pace of the increase in China’s debt-to-GDP ratio to those of other countries. The longer reforms are put off, the greater the risks down the road, said Eswar Prasad, a former chief of the International Monetary Fund’s China division and now a professor at Cornell University in Ithaca, New York.

“While there are signs that the Chinese economy has gotten through a particularly rough patch, long-term growth prospects have hardly improved as risks continue to build up and reform momentum has slipped,” Prasad said.

Then there’s the risk of an exogenous shock stemming from a slowd